EXHIBIT 10.4
$33,000,000
CREDIT AGREEMENT
dated as of
July 23, 2001
among
CROWN CRAFTS, INC.,
CHURCHILL WEAVERS, INC.,
HAMCO, INC.
CROWN CRAFTS INFANT PRODUCTS, INC.
as Borrowers,
The Lenders Listed Herein
and
WACHOVIA BANK, N.A.,
as Agent
TABLE OF CONTENTS
CREDIT AGREEMENT
Page
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ARTICLE 1 DEFINITIONS............................................................................................ 1
SECTION 1.01. Definitions............................................................................. 1
SECTION 1.02. Accounting Terms and Determinations..................................................... 28
SECTION 1.03. References.............................................................................. 28
SECTION 1.04. Use of Defined Terms.................................................................... 28
SECTION 1.05. Terminology............................................................................. 28
ARTICLE 2 THE CREDITS............................................................................................ 29
SECTION 2.01. Commitments to Lend..................................................................... 29
SECTION 2.02. Method of Borrowing Revolving Loans..................................................... 32
SECTION 2.03. Notes................................................................................... 34
SECTION 2.04. Maturity of Revolving Loans............................................................. 35
SECTION 2.05. Interest Rates on Revolving Loans....................................................... 35
SECTION 2.06. Fees.................................................................................... 37
SECTION 2.07. Optional Termination or Reduction of Revolving Loan Commitments......................... 37
SECTION 2.08. Mandatory Reduction and Termination of Revolving Loan Commitments....................... 37
SECTION 2.09. Optional Prepayments of Revolving Loans................................................. 37
SECTION 2.10. Mandatory Prepayments................................................................... 38
SECTION 2.11. General Provisions as to Payments....................................................... 39
SECTION 2.12. Computation of Interest and Fees........................................................ 42
SECTION 2.13. All Loans to Constitute One Obligation.................................................. 42
SECTION 2.14. Blocked Account Agreements.............................................................. 42
SECTION 2.15. Issuance of Letters of Credit........................................................... 43
SECTION 2.16. Conditions and Amounts of Letters of Credit............................................. 43
SECTION 2.17. Requests for Issuance of Letters of Credit.............................................. 44
SECTION 2.18. Letter of Credit Reimbursement Obligations; Duties of the Issuing Lender................ 44
SECTION 2.19. Letter of Credit Participations......................................................... 45
SECTION 2.20. Payment of Letter of Credit Reimbursement Obligations................................... 47
SECTION 2.21. Compensation for Letters of Credit and Reporting Requirements........................... 48
SECTION 2.22. Indemnification and Exoneration with respect to Letters of Credit....................... 48
ARTICLE 3 COLLATERAL............................................................................................. 49
SECTION 3.01. Security Agreement...................................................................... 49
SECTION 3.02. Further Assurances...................................................................... 49
ARTICLE 4 REPRESENTATIONS AND WARRANTIES......................................................................... 50
SECTION 4.01. Corporate Existence and Power........................................................... 50
SECTION 4.02. Corporate and Governmental Authorization; No Contravention.............................. 50
SECTION 4.03. Binding Effect.......................................................................... 50
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SECTION 4.04. Financial Information................................................................... 51
SECTION 4.05. Litigation.............................................................................. 51
SECTION 4.06. Compliance with ERISA................................................................... 51
SECTION 4.07. Compliance with Laws; Payment of Taxes.................................................. 51
SECTION 4.08. Investment Company Act.................................................................. 52
SECTION 4.09. Public Utility Holding Company Act...................................................... 52
SECTION 4.10. Ownership of Property; Liens............................................................ 52
SECTION 4.11. No Default.............................................................................. 52
SECTION 4.12. Full Disclosure......................................................................... 52
SECTION 4.13. Environmental Matters................................................................... 52
SECTION 4.14. Capital Stock........................................................................... 53
SECTION 4.15. Margin Stock............................................................................ 53
SECTION 4.16. Insolvency.............................................................................. 53
SECTION 4.17. Insurance............................................................................... 54
SECTION 4.18. Purchase of Collateral.................................................................. 54
SECTION 4.19. Possession of Permits................................................................... 54
SECTION 4.20. Labor Disputes.......................................................................... 54
SECTION 4.21. Surety Obligations...................................................................... 54
SECTION 4.22. Restrictions............................................................................ 54
SECTION 4.23. Leases.................................................................................. 55
SECTION 4.24. Trade Relations......................................................................... 55
SECTION 4.25. Capital Structure....................................................................... 55
SECTION 4.26. Federal Taxpayer Identification Number.................................................. 55
SECTION 4.27. Bona Fide Accounts...................................................................... 55
SECTION 4.28. Good Title to Collateral................................................................ 55
SECTION 4.29. Right to Assign and Grant Security Interest............................................. 56
SECTION 4.30. Trade Styles............................................................................ 56
SECTION 4.31. Account Debtor Capacity and Solvency.................................................... 56
SECTION 4.32. Proceedings with Respect to Accounts.................................................... 56
SECTION 4.33. Location of Collateral.................................................................. 56
SECTION 4.34. Material Contracts...................................................................... 56
SECTION 4.35. Survival of Representations and Warranties.............................................. 56
SECTION 4.36. Force Majeure........................................................................... 57
SECTION 4.37. Senior Subordinated Notes............................................................... 57
ARTICLE 5 COVENANTS.............................................................................................. 57
SECTION 5.01. Information............................................................................. 57
SECTION 5.02. Inspection of Property, Books and Records; Field Audits................................. 60
SECTION 5.03. Maintenance of Existence and Management................................................. 60
SECTION 5.04. Dissolution............................................................................. 61
SECTION 5.05. Consolidations, Mergers and Sales of Assets............................................. 61
SECTION 5.06. Use of Proceeds......................................................................... 61
SECTION 5.07. Compliance with Laws; Payment of Taxes.................................................. 62
SECTION 5.08. Insurance; Net Casualty/Insurance Proceeds.............................................. 62
SECTION 5.09. Change in Fiscal Year................................................................... 63
SECTION 5.10. Maintenance of Property................................................................. 63
SECTION 5.11. Material Contracts...................................................................... 63
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SECTION 5.12. Environmental Matters................................................................... 63
SECTION 5.13. Environmental Release................................................................... 63
SECTION 5.14. Transactions with Affiliates............................................................ 63
SECTION 5.15. No Additional Subsidiaries.............................................................. 64
SECTION 5.16. Restricted Payments..................................................................... 64
SECTION 5.17. Investments............................................................................. 64
SECTION 5.18. Permitted Liens......................................................................... 65
SECTION 5.19. Restrictions on Ability of Borrower and Subsidiaries to Pay Dividends................... 66
SECTION 5.20. Financial Covenants..................................................................... 66
SECTION 5.21. Permitted Debt.......................................................................... 69
SECTION 5.22. Limitation on Issuance and Sale of Capital Stock and Redeemable
Preferred Stock of Subsidiaries......................................................... 70
SECTION 5.23. Change of Principal Place of Business or Location of Collateral......................... 71
SECTION 5.24. Physical Inventories.................................................................... 71
SECTION 5.25. No Adverse Change to Senior Subordinated Notes, et. al.................................. 71
SECTION 5.26. Preservation of Intangibles Collateral.................................................. 71
SECTION 5.27. Records Respecting Collateral........................................................... 71
SECTION 5.28. Reports Respecting Collateral........................................................... 71
SECTION 5.29. Collateral Location Waivers............................................................. 72
SECTION 5.30. Mexican Foreign Stock Pledge............................................................ 72
SECTION 5.31. Payment of Taxes On and Use of Collateral............................................... 73
SECTION 5.32. Dispositions of Equipment Collateral.................................................... 73
SECTION 5.33. Changes to Federal Taxpayer Identification Number....................................... 73
SECTION 5.34. Changes in Credit Collection Policy and Practices; Discounts and Allowances............. 73
SECTION 5.35. Taxes Owing with Respect to Accounts.................................................... 73
SECTION 5.36. Post-Closing Opinions................................................................... 74
ARTICLE 6 DEFAULTS............................................................................................... 74
SECTION 6.01. Events of Default....................................................................... 74
SECTION 6.02. Notice of Default....................................................................... 78
SECTION 6.03. Remedies with Respect to Collateral..................................................... 78
SECTION 6.04. Power of Attorney....................................................................... 79
ARTICLE 7 THE AGENT AND THE LENDERS.............................................................................. 80
SECTION 7.01. Appointment; Powers and Immunities...................................................... 80
SECTION 7.02. Reliance by Agent....................................................................... 81
SECTION 7.03. Defaults................................................................................ 81
SECTION 7.04. Rights of Agent and its Affiliates as a Lender.......................................... 82
SECTION 7.05. Indemnification......................................................................... 82
SECTION 7.06. Payee of Note Treated as Owner.......................................................... 82
SECTION 7.07. Nonreliance on Agent and Other Lenders.................................................. 82
SECTION 7.08. Failure to Act.......................................................................... 83
SECTION 7.09. Resignation of Agent.................................................................... 83
SECTION 7.10. Joinder of Lenders...................................................................... 83
SECTION 7.11. Agreements Regarding Collateral......................................................... 84
SECTION 7.12. Agent Field Audits...................................................................... 84
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SECTION 7.13. Designation of Co-Agent................................................................. 84
SECTION 7.14. Replacement of Certain Lenders.......................................................... 85
ARTICLE 8 CHANGE IN CIRCUMSTANCES; COMPENSATION.................................................................. 86
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair................................ 86
SECTION 8.02. Illegality.............................................................................. 86
SECTION 8.03. Increased Cost and Reduced Return....................................................... 87
SECTION 8.04. Base Rate Loans or Other Euro-Dollar Loans Substituted for Affected Euro-Dollar Loans... 88
SECTION 8.05. Compensation............................................................................ 88
ARTICLE 9 CONDITIONS TO BORROWINGS AND ISSUANCE OF LETTERS OF CREDIT............................................. 89
SECTION 9.01. Conditions to Initial Borrowing and Issuance of Any Letter of Credit.................... 89
SECTION 9.02. Conditions to All Borrowings and Issuances of Letters of Credit......................... 92
ARTICLE 10 MISCELLANEOUS......................................................................................... 92
SECTION 10.01. Notices................................................................................. 92
SECTION 10.02. No Waivers.............................................................................. 92
SECTION 10.03. Expenses; Documentary Taxes............................................................. 93
SECTION 10.04. Indemnification......................................................................... 93
SECTION 10.05. Setoff; Sharing of Setoffs.............................................................. 94
SECTION 10.06. Amendments and Waivers.................................................................. 95
SECTION 10.07. No Margin Stock Collateral.............................................................. 96
SECTION 10.08. Successors and Assigns.................................................................. 96
SECTION 10.09. Confidentiality......................................................................... 98
SECTION 10.10. Representation by Lenders............................................................... 99
SECTION 10.11. Obligations Several..................................................................... 99
SECTION 10.12. New York Law............................................................................ 99
SECTION 10.13. Severability............................................................................ 99
SECTION 10.14. Interest................................................................................ 99
SECTION 10.15. Interpretation......................................................................... 100
SECTION 10.16. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION.......................................... 100
SECTION 10.17. Counterparts........................................................................... 101
SECTION 10.18. Source of Funds -- ERISA............................................................... 101
SECTION 10.19. Credit Inquiries....................................................................... 101
SECTION 10.20. Consequential Damages.................................................................. 101
SECTION 10.21. Entire Agreement....................................................................... 101
SECTION 10.22. Continuing Agreement................................................................... 101
SECTION 10.23. CA-29349/123167........................................................................ 187
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EXHIBITS:
EXHIBIT A-1 - Form of Revolving Loan Note
EXHIBIT A-2 - Form of Term Loan Note
EXHIBIT B - Form of Borrowers' Opinion
EXHIBIT C - Form of Agent's Opinion
EXHIBIT D - Form of Assignment and Acceptance
EXHIBIT E - Form of Notice of Borrowing
EXHIBIT F - [Reserved]
EXHIBIT G - Form of Compliance Certificate
EXHIBIT H - Form of Closing Certificate
EXHIBIT I - Form of Officer's Certificate
EXHIBIT J - Form of Waiver and Agreement
EXHIBIT K - Form of Telephone Instruction Letter
EXHIBIT L - Form of Contribution Agreement
EXHIBIT M - Form of Collateral Information Certificate
EXHIBIT N - Form of Domestic Stock Pledge Agreement
EXHIBIT O - [Reserved]
EXHIBIT P-1 - Form of Letter of Credit Request
EXHIBIT P-2 - Form of Notice of Letter of Credit
EXHIBIT Q - Form of Blocked Account Agreement
EXHIBIT R Form of Consolidated Excess Cash Flow Certificate
EXHIBIT S Form of Assignment of Factoring Credit Balances
EXHIBIT T - Form of Foreign Stock Pledge Agreement
SCHEDULES:
SCHEDULE 2.14 - Depositary Institutions
SCHEDULE 3.01 - Permitted Encumbrances
SCHEDULE 4.01 - Qualification Jurisdictions
SCHEDULE 4.05 - Litigation
SCHEDULE 4.13 - Environmental Matters
SCHEDULE 4.20 - Labor Disputes
SCHEDULE 4.21 - Surety Obligations
SCHEDULE 4.22 - Burdensome Restrictions
SCHEDULE 4.23 - Leases
SCHEDULE 4.25 - Capital Structure
SCHEDULE 4.34 Material Contracts
SCHEDULE 5.14 - Affiliate Transactions
(Schedules to this agreement have been omitted; the Registrant agrees to
furnish supplementally to the Commission, upon request, a copy of these
schedules.)
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of July 23, 2001, is made by and among
CROWN CRAFTS, INC., CHURCHILL WEAVERS, INC., HAMCO, INC. and CROWN CRAFTS INFANT
PRODUCTS, INC., as joint and several Borrowers, the Lenders party hereto from
time to time and WACHOVIA BANK, N.A., as a Lender and Agent.
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions
A. The following terms as defined in this SECTION 1.01 pertaining
to yield maintenance regarding the Term Notes shall, for all purposes of this
Agreement and any amendment hereto (except as herein otherwise expressly
provided), have the meanings set forth herein.
"Called Principal" means, with respect to any Term Note, the principal
of such Term Note that is prepaid (i) in connection with any payment of
principal following a declaration that all principal of the Term Loans is
immediately due and payable pursuant to SECTION 6.01, (ii) following the
commencement of any case under the Bankruptcy Code in which any Borrower is the
debtor and (iii) where mutually agreed by the Borrowers and the Lenders.
"Discounted Value" means, with respect to the Called Principal of any
Term Note, the amount obtained by discounting all Remaining Scheduled Principal
Reduction Amounts with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a discount
factor (as converted to reflect the periodic basis on which interest on such
Term Note is payable, if payable other than on a semi-annual basis) equal to the
Reinvestment Yield with respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called Principal of any
Term Note, the yield to maturity implied by (i) the yields reported, as of 10:00
A.M. (New York City local time) on the Domestic Business Day next preceding the
Settlement Date with respect to such Called Principal, on the display designated
as "Page 678" on the Telerate Service (or such other display as may replace page
678 on the Telerate Service) for actively traded U.S. Treasury securities having
a maturity equal to the Remaining Average Life of such Called Principal as of
such Settlement Date, or if such yields shall not be reported as of such time or
the yields reported as of such time shall not be ascertainable, (ii) the
Treasury Constant Maturity Series yields reported, for the latest day for which
such yields shall have been so reported as of the Business Day next preceding
the Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H. 15 (519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement Date. Such
implied yield shall be determined, if
1
necessary, by (a) converting U.S. Treasury bill quotations to bond-equivalent
yields `in accordance with accepted financial practice and (b) interpolating
linearly between Yields reported for various maturities. For purposes of this
calculation for any Term Note, it is agreed that the mandatory prepayment
schedule applicable to the Term Notes as originally issued (the Scheduled
Principal Reduction Amounts as set forth in this Agreement as of the Closing
Date, with a maturity date of [June 30], 2006 and the Cash Contract Rate as set
forth in this Agreement as of the Closing Date) shall be used.
"Remaining Average Life" means, with respect to the Called Principal of
any Term Note, the number of years (calculated to the nearest one-twelfth year)
obtained by dividing (i) such Called Principal into (ii) the sum of the products
obtained by multiplying (a) each Remaining Principal Reduction Amounts of such
Called Principal (but not of interest thereon) by (b) the number of years
(calculated to the nearest one-twelfth year) which will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due date
of such Remaining Principal Reduction Amounts. For purposes of this calculation
for any Term Note, it is agreed that the mandatory prepayment schedule
applicable to the Notes as originally issued (the Scheduled Principal Reduction
Amounts as set forth in this Agreement as of the Closing Date, with a maturity
date of [June 30], 2006 and the Cash Contract Rate as set forth in this
Agreement as of the Closing Date) shall be used.
"Remaining Scheduled Payments" means, with respect to the Called
Principal of any Term Note, all payments of such Called Principal and interest
thereon that would be due on or after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to its
scheduled due date. For purposes of this calculation for any Note, it is agreed
that the Scheduled Principal Reduction Amounts as set forth in this Agreement as
of the Closing Date, with a maturity date of [June 30], 2006 and the Cash
Contract Rate as set forth in this Agreement as of the Closing Date, shall be
used.
"Settlement Date" means with respect to the Called Principal of any
Term Note, the date on which such Called Principal is to be prepaid pursuant to
SECTION 2.09 or 2.10 or is declared to be immediately due and payable pursuant
to SECTION 6.01, as the context requires.
"Yield-Maintenance Amount" means, with respect to any Term Note, an
amount equal to the excess, if any, of the Discounted Value of the Called
Principal of such Term Note over the sum of (i) such Called Principal plus (ii)
interest accrued thereon as of (including interest due on) the Settlement Date
with respect to such Called Principal. The Yield-Maintenance Amount shall in no
event be less than zero. For purposes of this calculation for any Term Note, it
is agreed that the Scheduled Principal Reduction Amounts as set forth in this
Agreement as of the Closing Date, with a maturity date of [June 30], 2006 and
the Cash Contract Rate as set forth in this Agreement as of the Closing Date,
shall be used.
B. The following other terms as defined in this SECTION 1.01
shall, for all purposes of this Agreement and any amendment hereto (except as
herein otherwise expressly provided), have the meanings set forth herein:
"Accounts Receivable Collateral" shall mean and include all accounts,
instruments, and chattel paper, including, without limitation, all rights of
each Borrower to
2
payment for goods sold or leased, or to be sold or to be leased, or for services
rendered or to be rendered, howsoever evidenced or incurred, and together with
all returned or repossessed goods and all books, records, computer tapes,
programs and ledger books arising therefrom or relating thereto, all whether now
owned or hereafter acquired or arising; provided, however, that the term
Accounts Receivable Collateral shall not include Factored Accounts.
"Account Debtor" shall mean the Person who is obligated on any of the
Accounts Receivable Collateral or Factored Accounts or otherwise is obligated as
a purchaser or lessee of any of the Inventory Collateral.
"Adjusted London Interbank Offered Rate" has the meaning set forth in
SECTION 2.05(c).
"Affected Lender" has the meaning set forth in SECTION 7.14.
"Affiliate" of any relevant Person means (i) any Person that directly,
or indirectly through one or more intermediaries, controls the relevant Person
(a "Controlling Person"), (ii) any Person (other than the relevant Person or a
Subsidiary of the relevant Person) which is controlled by or is under common
control with a Controlling Person, or (iii) any Person (other than a Subsidiary
of the relevant Person) of which the relevant Person owns, directly or
indirectly, 10% or more of the common stock or equivalent equity interests. As
used herein, the term "control" means possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Agent" means Wachovia Bank, N.A., a national banking association
organized under the laws of the United States of America, in its capacity as
agent for the Lenders hereunder, and its successors and permitted assigns in
such capacity.
"Aggregate Real Properties" has the meaning set forth in SECTION
4.13(a).
"Aggregate Revolving Loan Commitments" means the sum of all the
Revolving Loan Commitments, which, as of the Closing Date equals $19,000,000.
"Aggregate Revolving Loan Amount Outstanding" means at any time the sum
of the aggregate principal amount outstanding under the Revolving Loans
(including, without limitation, the Settlement Loans).
"Agreement" means this Credit Agreement, together with all amendments
and supplements hereto.
"Annual Period" means each annual period of 12 consecutive months
ending on a June 30 Quarterly Payment Date.
"Applicable Margin" has the meaning set forth in SECTION 2.05(a).
"Assignee" has the meaning set forth in SECTION 10.08(c).
3
"Assignment and Acceptance" means an Assignment and Acceptance executed
in accordance with SECTION 10.08(c) in the form of EXHIBIT D.
"Assignment of Factoring Credit Balances" means an Assignment of
Factoring Credit Balances and Agreement in the form of EXHIBIT S, or otherwise
acceptable to the Lenders and the Collateral Agent, and entered into from time
to time by the Collateral Agent, one or more Borrowers and a Permitted Factor.
"Authority" has the meaning set forth in SECTION 8.02.
"Balances Collateral" shall mean all property of each Borrower left
with the Agent, the Collateral Agent or any Lender or in the possession, custody
or control now or hereafter of the Agent or any Lender, all deposit accounts of
each Borrower now or hereafter opened with the Agent, the Collateral Agent or
any Lender or with another depositary which has executed a deposit control
agreement or Blocked Account Agreement, all certificates of deposit issued by
the Agent or any Lender to any Borrower or by another issuer which has executed
a Blocked Account Agreement or where the certificate of deposit has been pledged
with the Collateral Agent, in each case as required by SECTION 2.14(b), and all
drafts, checks and other items deposited in or with the Agent, the Collateral
Agent or any Lender by any Borrower for collection now or hereafter, including,
without limitation, all such items described in SECTION 10.05.
"Bankruptcy Code" shall mean Title 11 of the United States Code, as it
may be amended from time to time.
"Base Rate" means for any Base Rate Loan for any day, the rate per
annum equal to the higher as of such day of (i) the Prime Rate, or (ii) one-half
of one percent above the Federal Funds Rate. For purposes of determining the
Base Rate for any day, changes in the Prime Rate or the Federal Funds Rate shall
be effective on the date of each such change.
"Base Rate Loan" means a Revolving Loan which bears or is to bear
interest at a rate based upon the Base Rate, and is to be made as a Base Rate
Loan pursuant to the applicable Notice of Borrowing, SECTION 2.02(f), or ARTICLE
8, as applicable.
"Blocked Account Agreement" means a Blocked Account Agreement
substantially in the form of EXHIBIT Q, with any changes as may be acceptable to
the Required Lenders in their sole discretion, executed and delivered by any
depositary institution with which any Borrower has a demand deposit, operating
account or other such similar depositary relationship.
"Borrowers" means, individually and collectively, as the context
requires, each of the following Persons, each of them being jointly and
severally obligated as Borrowers hereunder: (i) the Parent, Churchill Weavers,
Inc., a Kentucky corporation, Hamco, Inc., a Louisiana corporation, and Crown
Crafts Infant Products, Inc., a Delaware corporation; (ii) any Person which
becomes a Borrower pursuant to the provisions of SECTION 5.15; and (iii) in the
case of each Borrower, its successors and its permitted assigns.
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"Borrowing" means a borrowing hereunder consisting of Revolving Loans
and Refunding Loans made to the Borrowers (i) at the same time by all of the
Lenders, in the case of a Revolving Loan Borrowing, or (ii) separately by
Wachovia, in the case of a Settlement Loan Borrowing, in each case pursuant to
ARTICLE 2. Borrowing is a "Revolving Loan Borrowing" if such Loans are Revolving
Loans, a "Settlement Loan Borrowing" if such Loans are Settlement Loans, a
"Syndicated Borrowing" if such Loans are Syndicated Loans, a "Euro-Dollar
Borrowing" if such Loans are Euro-Dollar Loans, and a "Base Rate Borrowing" if
such Loans are Base Rate Loans.
"Borrowing Base" means the following sum:
(A) an amount equal to 85% of the dollar value of Eligible
Accounts as of the date of determination;
PLUS
(B) an amount equal to the sum of (I) 85% of the dollar value of
Factored Accounts as of the date of determination, net of all
reserves and deductions taken by the Permitted Factor in
connection therewith pursuant to the related factoring
program, disputes, fees and expenses, other than reserves for
letters of credit issued or guaranteed by the Permitted
Factor, and excluding Factored Accounts as to which the
Permitted Factor does not have the credit risk, less (II)
reserves for letters of credit issued or guaranteed by the
Permitted Factor;
PLUS
(C) the lesser of: (I) the sum of (A) plus (B) above, plus the
amount excluded from (B) above for reserves for letters of
credit issued or guaranteed by the Permitted Factor; (II)
$8,500,000; and (III) the sum of: (i) and (ii) below, subject
to clause (iii) below:
(i) subject to clause (iii) below, an amount equal to 45%
of the dollar value of the Eligible Inventory
consisting of finished goods, valued at the lower of
cost (on a first-in, first-out basis) or market value
as at the date of determination;
plus
(ii) subject to clause (iii) below, an amount equal to 45%
of the face dollar value of the Eligible Inventory
consisting of its raw materials, valued at the lower of
cost (on a first-in, first-out basis) or market value
as of the date of determination
(iii) notwithstanding the provisions of clauses (i) and (ii)
above, (1) In-Transit Inventory shall not be included
to the extent that 45% of the dollar value thereof
would exceed $1,500,000, (2) Licensed Inventory
consisting of raw materials shall not be included to
the extent that 45%
5
of the dollar value thereof would exceed $500,000 and (3)
Licensed Inventory (whether consisting of finished goods
or raw materials) shall not be included to the extent that
45% of the dollar value thereof would exceed $2,000,000;
PLUS
(D) for a period not exceeding 60 days after the Closing Date,
amounts recoverable by the Borrowers on account of customs
duties related to the importation of goods, not to exceed
$800,000, as evidenced by documentation acceptable to the
Agent.
"Borrowing Base Certificate" means a certificate in form and substance
reasonably satisfactory to the Agent, showing the calculations of the components
of the Borrowing Base.
"Capital Stock" means any capital stock other than Redeemable Preferred
Stock of the Parent or any Subsidiary (to the extent issued to a Person other
than any Borrower), whether common or preferred.
"Cash Contract Rate" means the fixed contract rate of interest on the
Term Loans payable in cash on each Quarterly Payment Date and on the Term Loan
Maturity Date, which is a rate equal to 10% per annum, and which does not
include Contingent Interest.
"Cash Interest" means, for any period, the aggregate amount of interest
payable during such period on the Revolving Loans, the Term Loans (at the Cash
Contract Rate only) and the Senior Subordinated Debt.
"Casualty" means any act or occurrence of any kind or nature that
results in damage, loss or destruction to the Collateral.
"CERCLA" means the Comprehensive Environmental Response Compensation
and Liability Act, 42 U.S.C. ss.9601 et. seq. and its implementing regulations
and amendments.
"CERCLIS" means the Comprehensive Environmental Response Compensation
and Liability Inventory System established pursuant to CERCLA.
"Certified Public Accountants" means the Parent's independent certified
public accountants as of the Closing Date and such other firm or firms of
naturally recognized independent certified public accountants which may be
retained by the Borrower thereafter for the purpose of auditing its financial
statements.
"Change of Law" shall have the meaning set forth in SECTION 8.02.
"Closing Certificate" has the meaning set forth in SECTION 9.01(e).
"Closing Date" means July 23, 2001.
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"Code" means the Internal Revenue Code of 1986, as amended, or any
successor federal tax code.
"Collateral" means (i) the personal property in which the Collateral
Agent, for the benefit of the Lenders, is granted a security interest pursuant
to SECTION 3.01, (ii) the Real Property conveyed to the Collateral Agent
pursuant to the Mortgages, and (iii) the Domestic Pledged Stock and the Foreign
Pledged Stock pledged to the Collateral Agent pursuant to the Domestic Stock
Pledge Agreement and the Foreign Stock Pledge Agreement, respectively.
"Collateral Agent" means (i) Wachovia Bank, N.A., in its capacity as
"Collateral Agent", as that term is defined in the Intercreditor Agreement, and
(ii) any successor "Collateral Agent" appointed pursuant thereto.
"Collateral Information Certificates" means, individually or
collectively, as the context shall require, the Collateral Information
Certificates dated as of even date herewith, substantially in the form of
EXHIBIT M, executed by each of the Borrowers and containing disclosure of
information pertaining to the Collateral.
"Collateral Locations" shall mean the respective state of organization
of each Borrower, chief executive office of each Borrower and those additional
locations, if any, of each Borrower set forth and described in the Collateral
Information Certificates.
"Collateral Reserve Account" shall mean any non-interest bearing,
demand deposit account which Borrowers are or may be required to open and
maintain with Collateral Agent pursuant to the requirements of SECTION 2.14.
"Commitment" means a Revolving Loan Commitment or a Term Loan
Commitment, or both, as the context shall require.
"Commitment Fee" has the meaning set forth in SECTION 2.06(a).
"Commitment Percentage" means, for each Lender, the percentage equal to
its Revolving Loan Commitment divided by the Aggregate Revolving Loan
Commitments.
"Compliance Certificate" has the meaning set forth in SECTION 5.01(c).
"Condemnation" means any taking of title, of use, or of any other
property interest under the exercise of the power of eminent domain, whether
temporarily or permanently, by any governmental authority or by any Person
acting under governmental authority.
"Condemnation Awards" means any and all judgments, awards of damages
(including, but not limited to, severance and consequential damages), payments,
proceeds, settlements, amounts paid for a taking in lieu of Condemnation, or
other compensation heretofore or hereafter made, including interest thereon, and
the right to receive the same, as a result of, or in connection with, any
Condemnation or threatened Condemnation.
"Consolidated Available Free Cash Flow" means, for each Annual Period,
an amount equal to 70% of Consolidated Free Cash Flow for such Annual Period.
7
"Consolidated Debt" means, at any date, the Debt of the Parent and its
Consolidated Subsidiaries, determined on a consolidated basis as of such date,
but excluding Contingent Interest and amounts payable pursuant to SECTION
2.06(a) of the Senior Subordinated Notes Purchase Agreement.
"Consolidated EBITDA" means the sum of the following, calculated on a
consolidated basis in accordance with GAAP for the Parent and its Consolidated
Subsidiaries, for the relevant fiscal period: (i) Consolidated Net Income; plus
(ii) depreciation and amortization expenses; plus (iii) Consolidated Interest
Expense; plus (iv) income tax expense included in Consolidated Net Income.
"Consolidated Excess Cash Flow" means, for each Annual Period, (i)
Consolidated Available Free Cash Flow for such Annual Period, minus (ii) Cash
Interest paid during such Annual Period, minus (iii) the aggregate of the
Minimum Principal Reduction Amounts paid during such Annual Period.
"Consolidated Free Cash Flow" means, for any period, (i) Consolidated
EBITDA for such Annual Period, minus (ii) capital expenditures made in such
Annual Period, minus (iii) taxes paid in such Annual Period.
"Consolidated Interest Expense" means, for any relevant fiscal period,
interest, whether expensed or capitalized, in respect of Debt of the Parent or
any of its Consolidated Subsidiaries outstanding during such period, determined
on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, for any relevant fiscal period, the
Net Income of the Parent and its Consolidated Subsidiaries determined on a
consolidated basis, but excluding extraordinary items.
"Consolidated Senior Debt" means, on any date of measurement, all
Consolidated Debt, other than Subordinated Debt.
"Consolidated Subsidiary" means, at any date, any Subsidiary or other
entity the accounts of which, in accordance with GAAP, would be consolidated
with those of the Parent in its consolidated financial statements as of such
date.
"Contingent Interest" means the fixed contingent rate of interest
payable on the Term Loans from Consolidated Excess Cash Flow and on the Term
Loan Maturity Date pursuant to SECTION 2.01(c), which is a rate equal to 3% per
annum, and which does not include interest at the Cash Contract Rate.
"Contribution Agreement" means the Contribution Agreement of even date
herewith in substantially the form of EXHIBIT L to be executed by each of the
Borrowers.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrowers, are treated as a single
employer under SECTION 414 of the Code.
8
"Credit Documents" means this Agreement, the Notes, the Contribution
Agreement, the Security Documents, the Collateral Information Certificates, the
Consent and Agreement of the Borrowers at the end of the Intercreditor
Agreement, any other agreement or document evidencing, relating to or securing
the Obligations, and any other agreement, document or instrument delivered from
time to time in connection with this Agreement, the Notes, the Security
Documents or the Obligations, as such documents and instruments may be amended
or supplemented from time to time.
"Debt" of any Person means, at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all payment obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable and accrued expenses arising
in the ordinary course of business, (iv) all obligations of such Person as
lessee under capital leases or leases for which such Person retains tax
ownership of the property subject to a lease, (v) all obligations of such Person
to reimburse any bank or other Person in respect of amounts payable under a
banker's acceptance, (vi) all Redeemable Preferred Stock of such Person (in the
event such Person is a corporation), (vii) all obligations of such Person to
reimburse any bank or other Person in respect of amounts paid or undrawn amounts
available to be paid under a letter of credit or similar instrument, (viii) all
Debt of others secured by a Lien on any asset of such Person, whether or not
such Debt is assumed by such Person, (ix) all obligations of such Person with
respect to interest rate protection agreements, foreign currency exchange
agreements or other hedging arrangements, other than commodity hedging
agreements entered into by such Person as risk protection rather than as an
investment (each valued at the termination value thereof computed in accordance
with a method approved by the International Swap Dealers Association and agreed
to by such Person in the applicable agreement, if any), and (x) all Debt of
others Guaranteed by such Person.
"Debt/EBITDA Ratio" means the ratio of Consolidated Debt to
Consolidated EBITDA.
"Debt Service" means, for any period, the sum of: (i) Cash Interest
paid during such period, plus (ii) the Minimum Principal Reduction Amounts paid
during such period.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Default Rate" means, with respect to any of the Obligations, on any
day, the sum of (i) the applicable Interest Rate Basis, plus (ii) the highest
Applicable Margin, plus (iii) two percent (2%).
"Deferred Principal Amount" has the meaning set forth in SECTION
2.01(c).
"Direct Foreign Subsidiary" means any Foreign Subsidiary owned directly
by any Borrower.
"Dollars" or "$" means dollars in lawful currency of the United States
of America.
9
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in Georgia and New York are authorized by
law to close.
"Domestic Stock Pledge Agreement" means the Stock Pledge Agreement,
substantially in the form of EXHIBIT N, which is an amendment and restatement of
the Original Stock Pledge Agreement, to be executed by the Parent (or, pursuant
to SECTION 5.15, any other Borrower created or acquiring a Domestic Subsidiary),
pledging to the Collateral Agent pursuant thereto, for the equal and ratable
benefit of the Lenders, all of the outstanding capital stock of all Domestic
Subsidiaries, to secure the payment of all of the Obligations, as any of the
foregoing may be amended or supplemented from time to time.
"Domestic Pledged Stock" means the capital stock of the Domestic
Subsidiaries described in and pledged pursuant to the Domestic Stock Pledge
Agreement.
"Domestic Subsidiary" means any Subsidiary which is organized under the
laws of the United States of America or any state, territory or possession
thereof or the District of Columbia.
"EBITDA/Cash Interest Ratio" means the ratio of Consolidated EBITDA to
Cash Interest.
"Eligible Accounts" means that portion of the Accounts Receivable
Collateral of each Borrower consisting of trade accounts receivable actually
owing to such Borrower by its Account Debtors subject to no counterclaim,
defense, setoff or deduction, provided, in each of the foregoing cases, that
such Accounts Receivable Collateral is at all times subject to a duly perfected,
first priority security interest in favor of Collateral Agent, subject only to
any Permitted Encumbrances excluding, however, in any event any such account:
(i) with respect to which any portion thereof is more
than 90 days past invoice date or more than 60 days past due date (or
such lesser number of days which the Agent may establish by written
notice from time to time to the Borrowers in its good faith credit
judgment);
(ii) which is owing by any Subsidiary or other Affiliate;
(iii) which is owing by any Account Debtor having 50% or
more in face value of its then existing accounts with such Borrower
more than 90 days past invoice date or more than 60 days past due date;
(iv) the assignment of which is subject to any
requirements set forth in the Assignment of Claims Act of 1940, as
amended;
(v) which is owing by any Account Debtor whose accounts,
in face amount, with such Borrower exceed 10% of such Borrower's
Eligible Accounts, but only to the extent of such excess; provided,
however, that Account Receivable Collateral from the following Account
Debtors shall not be considered ineligible solely on the basis of
exceeding such 10% limitation, so long as the aggregate amount of
Accounts Receivable Collateral owed by any such Account Debtor
10
does not exceed the following amount for such Account Debtor, and so
long as there is no material deterioration in the creditworthiness of
such Account Debtor: (1) for each of Toys R Us, Sears, Roebuck, Target
and Wal-Mart, $1,000,000, and (2) for each of Burlington Coat Factory,
J.C. Penney and K-Mart, $500,000;
(vi) which arises from a sale to an Account Debtor with
its principal office, assets or place of business outside the United
States, unless the sale is backed by an irrevocable letter of credit
that is issued or confirmed by a bank acceptable to the Agent that is
in form and substance acceptable to the Agent and payable in the full
amount of such account is freely convertible into Dollars at a place of
payment within the United States, and, if requested by the Agent, such
letter of credit, or amounts payable thereunder, is collaterally
assigned to the Collateral Agent;
(vii) which arises from (A) the sale of goods which have
not been delivered and accepted by the Account Debtor (a "bill and
hold" arrangement), or (B) services which have not been performed by
such Borrower and accepted by the Account Debtor;
(viii) which is owing by any Account Debtor which is the
subject (as debtor) of any voluntary or involuntary case or proceeding
under any bankruptcy, insolvency or other similar law or as to which a
trustee, receiver, liquidator, custodian or other similar official has
been appointed for it or for any substantial part of its property;
(ix) which arises from the sale of any Inventory
Collateral that is not Eligible Inventory pursuant to clause (iii) of
the proviso contained in the definition of "Eligible Inventory";
(x) with respect to which the Agent determines in its
good faith credit judgment that collection of such account is insecure,
or that payment thereof is doubtful or will be delayed by reason of
such Account Debtor's financial condition or that the prospect of
payment or performance by such Account Debtor is or will be impaired;
(xi) with respect to which the Account Debtor's executive
offices are located in the State of New Jersey, Minnesota, Indiana or
any other state imposing similar conditions to the right of a creditor
to collect accounts, unless (A) such Borrower has filed a notice of
business activities report, or such other similar report required by
such state, with the appropriate officials of such state for the then
current year, or (B) such Account Debtor has substantial assets
located, respectively, outside of the States of New Jersey, Minnesota,
Indiana or such other state, as the case may be;
(xii) which is owed by, billed to, or will be paid by an
Account Debtor located in the State of Alabama or any other state the
laws of which deny creditors access to its courts in the absence of
qualification to do business as a
11
foreign corporation in such state or in the absence of the filing of
any required reports with such state, unless such Borrower has
qualified as a foreign corporation authorized to do business in Alabama
or such state or has filed such required reports;
(xiii) which is subject to any Lien other than a Permitted
Encumbrance;
(xiv) which consists of "billings over cost" (items which
have been invoiced but for which costs incurred in connection therewith
have not been recognized);
(xv) which is owing by any Account Debtor with respect to
which any Borrower has determined for any reason not to continue
selling goods to or performing services for on open account;
(xvi) which is evidenced by chattel paper or an instrument
of any kind, or has been reduced to judgment;
(xvii) which is owed by an Account Debtor owing any account
with a balance greater than $100,000 which is not an Eligible Account;
(xviii) with respect to which such Borrower has made an
agreement with the Account Debtor (A) for any deduction therefrom,
except for discounts or allowances which are made in the ordinary
course of business for prompt payment and which discounts or allowances
are reflected in the calculation of the face amount of each invoice
related to such Account, but only to the extent of such deduction, or
(B) to extend the time of payment thereof beyond the period set forth
in clause (i) in this definition;
(xix) which arises from a retail sale of goods to a Person
who is purchasing the same primarily for personal, family or household
purposes; or
(xx) which represents a progress billing (unless the
Required Lenders, in the exercise of their sole discretion, after the
Borrower's request, permits the same to not be excluded hereunder) or a
retainage or;
(xxi) which has not otherwise been determined by mutual
agreement of the Agent and the Borrowers to be ineligible for purposes
hereof.
"Eligible Inventory" means the gross dollar value of Inventory
Collateral of any Borrower consisting of: (a) raw materials; and (b) finished
goods, subject to no further processing and held for sale in the ordinary course
of business to customers and not Affiliates of the Borrowers; provided, in each
of the foregoing cases, that such Inventory Collateral:
(i) is at all times subject to a duly perfected, first
priority security interest in favor of Collateral Agent, subject only
to any Permitted Encumbrances, and except for In-Transit Inventory;
12
(ii) is in good and saleable condition;
(iii) is not on consignment from or subject to any
guaranteed sale, sale-or-return, sale-or-approval, or repurchase
agreement with any supplier;
(iv) does not constitute returned goods in transit to
customers,
(v) does not constitute obsolete, repossessed, damaged or
slow-moving (older than 12 months) goods;
(vi) conforms in all respects to the warranties and
representations with respect to Inventory Collateral set forth herein;
(vii) is not subject to a negotiable document of title
(unless issued or endorsed, and delivered to the Collateral Agent);
(viii) is located in the United States on premises owned by
such Borrower or with respect to which the Collateral Agent holds a
Waiver Agreement and is a Collateral Location, except that In-Transit
Inventory shall be included as Eligible Inventory, and Inventory
Collateral shall not be deemed to be ineligible despite the absence of
a Waiver Agreement for the periods after the Closing Date set forth in
Section 5.29;
(ix) meets all standards imposed by any governmental
agency or authority; and
(x) which has not otherwise been determined by mutual
agreement of the Agent and the Borrowers to be ineligible for purposes
hereof.
"Environmental Authority" means any foreign, federal, state, local or
regional government that exercises any form of jurisdiction or authority under
any Environmental Requirement.
"Environmental Authorizations" means all licenses, permits, orders,
approvals, notices, registrations or other legal prerequisites for conducting
the business of the Parent or any Subsidiary required by any Environmental
Requirement.
"Environmental Judgments and Orders" means all judgments, decrees or
orders arising from or in any way associated with any Environmental
Requirements, whether or not entered upon consent, or written agreements with an
Environmental Authority or other entity arising from or in any way associated
with any Environmental Requirement, whether or not incorporated in a judgment,
decree or order.
"Environmental Liabilities" means any liabilities, whether accrued,
contingent or otherwise, arising from and in any way associated with any
Environmental Requirements.
"Environmental Notices" means notice from any Environmental Authority
or by any other person or entity, of possible or alleged noncompliance with or
liability under any
13
Environmental Requirement, including without limitation any complaints,
citations, demands or requests from any Environmental Authority or from any
other person or entity for correction of any violation of any Environmental
Requirement or any investigations concerning any violation of any Environmental
Requirement.
"Environmental Proceedings" means any judicial or administrative
proceedings arising from or in any way associated with any Environmental
Requirement.
"Environmental Releases" means releases as defined in CERCLA or under
any applicable state or local environmental law or regulation.
"Environmental Requirements" means any legal requirement relating to
health, safety or the environment and applicable to the Parent or any Subsidiary
or the Aggregate Real Properties, including but not limited to any such
requirement under CERCLA or similar state legislation and all federal, state and
local laws, ordinances, regulations, orders, writs, decrees and common law.
"Equipment Collateral" shall mean all equipment and fixtures of each
Borrower, whether now owned or hereafter acquired, wherever located, including,
without limitation, all machinery, furniture, furnishings, leasehold
improvements, computer equipment, books and records, motor vehicles, forklifts,
rolling stock, dies and tools used or useful in such Borrower's business
operations, and software embedded in any such goods, excluding, however,
Excluded Equipment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor law. Any reference to any provision
of ERISA shall also be deemed to be a reference to any successor provision or
provisions thereof.
"Euro-Dollar Business Day" means any Domestic Business Day on which
dealings in Dollar deposits are carried out in the London interbank market.
"Euro-Dollar Loan" means a Revolving Loan which bears or is to bear
interest at a rate based upon the Adjusted London Interbank Offered Rate, and to
be made as a Euro-Dollar Loan pursuant to the applicable Notice of Borrowing.
"Euro-Dollar Reserve Percentage" has the meaning set forth in SECTION
2.05(c).
"Event of Default" has the meaning set forth in SECTION 6.01.
"Excess Borrowing Availability" means, at any time, the amount (if any)
by which the aggregate amount of the Borrowing Base exceeds the then outstanding
Working Capital Obligations.
"Excluded Equipment" means (i) any equipment subject to a Purchase
Money Lien as to which the purchase money creditor holding such Lien prohibits
other Liens thereon without its prior consent, unless and until either (A) such
creditor grants such consent or (B) the Debt secured by such Lien has been fully
paid and satisfied; and (ii) any equipment with respect to which the rights of
possession and use of any Borrower are created pursuant to a lease which
14
does not create a security interest, unless and until such time (if any) as such
Borrower acquires title to such equipment from the lessor or the lessor abandons
its rights and claims thereto.
"Executive Office" shall mean the chief executive office address of
each Borrower designated as such in the Collateral Information Certificates.
"Factored Accounts" means all accounts of any Borrower actually
purchased by a Permitted Factor in connection with a factoring program approved
by the Required Lenders, which factoring program, among other things, shall not
provide for any loans or advances to be made to any of the Borrowers on account
of accounts to be purchased by such Permitted Factor or any Lien on accounts or
related assets not purchased or identified for purchase by such Factor.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the next higher 1/100th of 1%) 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 on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day, provided that (i) if the day for which such rate is to
be determined is not a Domestic Business Day, the Federal Funds Rate for such
day shall be such rate on such transactions on the next preceding Domestic
Business Day as so published on the next succeeding Domestic Business Day, and
(ii) if such rate is not so published for any day, the Federal Funds Rate for
such day shall be the average rate charged to the Agent on such day on such
transactions, as determined in good faith by the Agent.
"Fiscal Month" means any fiscal month of the Parent.
"Fiscal Quarter" means any fiscal quarter of the Parent.
"Fiscal Year" means any fiscal year of the Parent.
"Foreign Pledged Stock" means all capital stock of the Direct Foreign
Subsidiaries pledged pursuant to the Foreign Stock Pledge Agreement.
"Foreign Stock Pledge Agreement" means, collectively, (i) the Foreign
Stock Pledge Agreement, substantially in the form of EXHIBIT T, to be executed
by the Parent (and, pursuant to SECTION 5.15, any other Borrower creating or
acquiring a Direct Foreign Subsidiary), and (ii) and if requested by the
Collateral Agent, any pledge or other agreement which may required pursuant to
applicable law in the jurisdiction in which a Direct Foreign Subsidiary is
located, in each case to be executed and delivered by the Parent and each other
Borrower which owns any Direct Foreign Subsidiaries, pledging to the Collateral
Agent pursuant thereto, for the ratable benefit of the Lenders, 65% of the
capital stock of all Direct Foreign Subsidiaries, to secure the payment of all
of the Obligations, as any of the foregoing may be amended or supplemented from
time to time.
"Foreign Subsidiary" means any Subsidiary which is not a Domestic
Subsidiary.
"GAAP" means generally accepted accounting principles in the United
States of America applied on a basis consistent with those which, in accordance
with SECTION 1.02, are
15
to be used in making the calculations for purposes of determining compliance
with the terms of this Agreement.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to secure, purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation (whether arising by virtue
of partnership arrangements, by agreement to keep-well, to purchase assets,
goods, securities or services, to provide collateral security, to take-or-pay,
or to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of such Debt or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part), provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Hazardous Materials" includes, without limitation, (a) solid or
hazardous waste, as defined in the Resource Conservation and Recovery Act of
1980, 42 U.S.C. ss. 6901 et seq. and its implementing regulations and
amendments, or in any applicable state or local law or regulation, (b)
"hazardous substance", "pollutant", or "contaminant" as defined in CERCLA, or in
any applicable state or local law or regulation, (c) gasoline, or any other
petroleum product or by-product, including, crude oil or any fraction thereof,
(d) toxic substances, as defined in the Toxic Substances Control Act of 1976, or
in any applicable state or local law or regulation and (e) insecticides,
fungicides, or rodenticides, as defined in the Federal Insecticide, Fungicide,
and Rodenticide Act of 1975, or in any applicable state or local law or
regulation, as each such Act, statute or regulation may be amended from time to
time.
"Intangibles Collateral" shall mean all general intangibles of each
Borrower, whether now existing or hereafter acquired or arising, including,
without limitation, all copyrights, royalties, tax refunds, rights to tax
refunds, trademarks, trade names, service marks, patent and proprietary rights,
blueprints, drawings, designs, trade secrets, plans, diagrams, schematics and
assembly and display materials relating thereto, all customer lists, all books
and records and all computer software and programs, and all goodwill of each
Borrower associated therewith.
"Intercreditor Agreement" means an Intercreditor Agreement, in form and
substance satisfactory to the Lenders, by and among the Lenders, the holders of
the Senior Subordinated Notes and Wachovia, with respect to the first priority
liens in the Collateral in favor of the Collateral Agent for the ratable benefit
of the Lenders, and the second priority liens on the Collateral in favor of the
Collateral Agent for the ratable benefit of the holders of the Senior
Subordinated Notes, and setting forth the relative rights and priorities of such
parties in the Collateral and matters related thereto.
"Interest Period" means, with respect to each Euro-Dollar Borrowing,
the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the first, second, or third month thereafter,
as the Borrowers may elect in the applicable Notice of Borrowing; provided that:
16
(a) any Interest Period (subject to paragraph (c) below) which
would otherwise end on a day which is not a Euro-Dollar Business Day shall
be extended to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in which case
such Interest Period shall end on the next preceding Euro-Dollar Business
Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall, subject to paragraph (c) below, end on the last Euro-Dollar Business
Day of the appropriate subsequent calendar month; and
(c) no Interest Period may be selected which begins before the
Revolving Loan Termination Date and would otherwise end after the Revolving
Loan Termination Date.
"Interest Rate Basis" means the Base Rate or the Adjusted London
Interbank Offered Rate, as appropriate.
"Interest Rate Protection Agreement" means an interest rate hedging or
protection agreement entered into by and between any of the Borrowers and any of
the Lenders, together with all exhibits, schedules, extensions, renewals,
amendments, substitutions and replacements thereto and thereof.
"In-Transit Inventory" means Inventory Collateral which is in transit
to any Borrower or its customer or its customer's agent, provided that (i) such
Borrower has title to such Inventory Collateral, and (ii) such Inventory
Collateral is insured.
"Inventory Collateral" shall mean all inventory of each Borrower,
whether now owned or hereafter acquired, wherever located, including, without
limitation, all goods of such Borrower held for sale or lease or furnished or to
be furnished under contracts of service, all goods held for display or
demonstration, goods on lease or consignment, spare parts, repair parts,
returned and repossessed goods, software embedded in such goods, all raw
materials, work-in-process, finished goods and supplies used or consumed in such
Borrower's business, together with all documents, documents of title, dock
warrants, dock receipts, warehouse receipts, bills of lading or orders for the
delivery of all, or any portion, of the foregoing; provided, however, that
"Inventory Collateral" shall not include goods which are placed by the owner
thereof on consignment with a Borrower in compliance with SECTION 2-326 of the
Uniform Commercial Code of the applicable jurisdiction.
"Investment" means any investment in any Person, whether by means of
purchase or acquisition of obligations or securities of such Person (including,
without limitation, interest rate protection, foreign currency or other hedging
arrangements to be held by such Person as an investment), capital contribution
to such Person, loan or advance to such Person, making of a time deposit with
such Person, Guarantee or assumption of any obligation of such Person or
otherwise.
17
"Lender" means each bank or other financial institution listed on the
signature pages hereof as having a Commitment, and its successors and assigns
permitted by SECTION 10.08.
"Lending Office" means, as to each Lender, its office located at its
address set forth on the signature pages hereof (or identified on the signature
pages hereof as its Lending Office) or such other office as such Lender may
hereafter designate as its Lending Office by notice to the Borrowers and the
Agent.
"Letter(s) of Credit" shall mean a commercial or standby letter of
credit issued by Wachovia for the account of any Borrower pursuant to ARTICLE 2.
"Letter of Credit Application Agreement" shall mean, with respect to a
Letter of Credit, such form of application therefor (whether in a single or
several documents) as Wachovia may employ in the ordinary course of business for
its own account, whether or not providing for collateral security, with such
modifications thereto as may by agreed upon by Wachovia and a Borrower and are
not materially adverse to the interests of the Lenders; provided, however, that
in the event of any conflict between the terms of any Letter of Credit
Application Agreement and this Agreement, the terms of this Agreement shall
control.
"Letter of Credit Fee" shall have the meaning ascribed to it in SECTION
2.21.
"Letter of Credit Obligations" shall mean, at any particular time, the
sum of (a) the Reimbursement Obligations at such time, (b) the aggregate maximum
amount available for drawing under the Letters of Credit at such time and (c)
the aggregate maximum amount available for drawing under Letters of Credit the
issuance of which has been authorized by Wachovia but which have not yet been
issued.
"Licensed Inventory" means Inventory Collateral of any Borrower which
is subject to any license or other agreement that limits or restricts such
Borrower's or the Collateral Agent's right to sell or otherwise dispose of such
inventory.
"Lien" means, with respect to any asset, any mortgage, deed to secure
debt, deed of trust, lien, pledge, charge, security interest, security title,
preferential arrangement which has the practical effect of constituting a
security interest, encumbrance, or servitude of any kind in respect of such
asset to secure or assure payment of a Debt or a Guarantee, whether by
consensual agreement or by operation of statute or other law, or by any
agreement, contingent or otherwise, to provide any of the foregoing. For the
purposes of this Agreement, the Borrowers or any Subsidiary 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 a Base Rate Loan, Euro-Dollar Loan, Revolving Loan,
Settlement Loan or Term Loan, and "Loans" means Base Rate Loans, Euro-Dollar
Loans, Revolving Loans, Settlement Loans or Term Loans, or any or all of them,
as the context shall require.
"London Interbank Offered Rate" has the meaning set forth in SECTION
2.05(c).
18
"Margin Stock" means "margin stock" as defined in Regulations T, U or
X.
"Material Adverse Effect" means, with respect to any event, act,
condition or occurrence of whatever nature (including any adverse determination,
or claim or contest by any Borrower demanding the same, in any litigation,
arbitration, or governmental investigation or proceeding), whether singly or in
conjunction with any other event or events, act or acts, condition or
conditions, occurrence or occurrences, whether or not related, a material
adverse change in, or a material adverse effect upon, any of (a) the financial
condition, operations, business, properties or prospects of any Borrower, or any
Subsidiary, (b) the rights and remedies of the Collateral Agent or the Lenders
under the Credit Documents, the Collateral Agent's security interest and Lien
against the Collateral, or the ability of any of the Borrowers or any Person
obligated under a Guarantee of the Obligations to perform its obligations with
respect to the Obligations or under the Credit Documents to which it is a party
(including, without limitation, the repudiation, revocation or any attempt to do
the same by any Borrower or Person obligated under a Guarantee of the
Obligations or any other Credit Document), as applicable, or (c) the legality,
validity or enforceability of any Credit Document.
"Material Contract" means (i) the License Agreement between the Parent
and Disney Enterprises, Inc. dated December 4, 2000, and (ii) any contract,
lease, instrument, guaranty or license, or other arrangement (other than any of
the Credit Documents), whether written or oral, to which any Borrower or any of
the Subsidiaries is a party as to which the breach, nonperformance, cancellation
or failure to renew by any party thereto could have a Material Adverse Effect.
"Minimum Principal Reduction Amount" means, for each quarterly period
ending on a Quarterly Payment Date, the minimum principal payment required to be
made on the Term Loans on such Quarterly Payment Date, which shall be: (i) on
the Quarterly Payment Date in March, 2002, $250,000; and (ii) on each Quarterly
Payment Date thereafter, $500,000.
"Moody's" means Moody's Investor Service, Inc.
"Mortgages" means any one, or more, or all, as the context shall
require, of (i) the Mortgage, Security Agreement and Fixture Financing Statement
dated September 22, 1999, from Churchill Weavers, Inc., to Wachovia Bank, N.A.,
as collateral agent for itself and other lenders identified in said mortgage,
recorded in Book 586, Page 332, Madison County, Kentucky, Records, as amended by
the Mortgage Amendment; and (ii) any Mortgage required by SECTION 5.15 (which
shall be similar to the Mortgage described in clause (i) above, subject to
modification as appropriate to take into account the law of the state in which
the Real Property covered thereby is located), in each case together with all
future amendments and supplements thereto.
"Mortgage Amendment" means an amendment, of even date herewith, to the
Mortgage described in clause (i) of the definition of Mortgage, which is
satisfactory to the Lenders, which amendment shall, among other things, refer to
this Agreement and the refinancing of the Refinanced Agreements pursuant hereto,
secure the Obligations hereunder, and continue the Liens and security interests
granted pursuant to the Mortgage without interruption.
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"Multiemployer Plan" shall have the meaning set forth in SECTION
4001(a)(3) of ERISA.
"Net Cash Proceeds" shall mean, in each case as set forth in a
statement in reasonable detail delivered by the respective Borrower to the Agent
and each Lender:
(i) all net amounts paid to or for the account of any Borrower by
a Permitted Factor with respect to Factored Accounts, and, with respect to
the disposition of any other assets by any Borrower or Subsidiary permitted
by SECTION 5.05 or SECTION 5.32, the excess, if any, of (1) the cash
proceeds received in connection with such disposition over (2) the sum of
(A) the principal amount of any Debt (other than the Obligations) which is
secured by such asset and which is required to be repaid in connection with
the disposition thereof, plus (B) the reasonable out-of-pocket expenses
incurred by such Borrower or such Subsidiary, as the case may be, in
connection with such disposition, plus (C) so long as no Event of Default
is in existence, provision for taxes, including income taxes, attributable
to the disposition of such asset;
(ii) with respect to any cash proceeds received by any Borrower or
a Subsidiary in respect of the issuance of any Capital Stock or Redeemable
Preferred Stock or the incurrence of any Debt for money borrowed (except
Debt secured by Purchase Money Liens), all such cash proceeds, after
deducting therefrom all reasonable and customary costs and expenses
incurred by such Borrower or Subsidiary directly in connection with the
issuance of such Capital Stock or Redeemable Preferred Stock or the
incurrence of such Debt for money borrowed.
"Net Casualty/Insurance Proceeds", when used with respect to any
Condemnation Awards or insurance proceeds allocable to the Collateral or in
respect of business interruption insurance, means the gross proceeds from any
Casualty or Condemnation or business interruption remaining after payment of all
expenses (including attorneys' fees) incurred in the collection of such gross
proceeds.
"Net Income" means, as applied to any Person for any relevant fiscal
period, the aggregate amount of net income of such Person, after taxes, for such
period, as determined in accordance with GAAP.
"Notes" means each of the Revolving Loan Notes and the Term Loan Notes,
or any or all of them, as the context shall require, together with all
amendments, consolidations, modifications, renewals, and supplements thereto.
"Notice of Borrowing" has the meaning set forth in SECTION 2.02(a).
"Obligations" means all Debts, indebtedness, liabilities, covenants,
duties and other obligations of the Borrowers: (i) to the Agent, the Collateral
Agent or the Lenders included or arising from time to time under this Agreement
or any other Credit Document, whether evidenced by any note or other writing,
whether arising from the extension of credit, opening of a letter of credit,
acceptance or loan guaranty, including, without limitation, principal, interest,
Yield-Maintenance Amount, fees, costs, attorney's fees and indemnification
amounts and any and all extensions or renewals thereof in whole or in part,
direct or indirect, absolute or
20
contingent, due or to become due, primary or secondary, or joint or
several; (ii) to the Agent or Wachovia, with respect to all Letter of
Credit Obligations and all other obligations arising in connection with
the issuance of any Letter of Credit; (iii) to any Lender or Affiliate
thereof arising under any Interest Rate Protection Agreement with any
such Lender or Affiliate, including, without limitation, any premature
termination or breakage or other costs with respect thereto; (iv) to
any Lender and its Affiliates, arising in connection with any banking
or related transactions, services or functions provided to any Borrower
in connection with the conduct of such Borrower's business (excluding
extensions of credit giving rise to any Debt for Money Borrowed not
related to this Agreement or any of the other Credit Documents).
"Officer's Certificate" has the meaning set forth in SECTION 9.01(f).
"Original Security Agreement" means, collectively, each of the
"Security Agreements", as defined in the Refinanced Agreements, which were
executed and delivered by the Borrowers and their predecessors in interest
pursuant to the Refinanced Agreements and the "Intercreditor Agreement", as
defined in the Refinanced Agreements.
"Original Stock Pledge Agreement" means the "Pledge Agreement", as
defined in the Refinanced Agreements, which was executed and delivered by the
Parent pursuant to the Refinanced Agreements and the "Intercreditor Agreement",
as defined in the Refinanced Agreements.
"Overadvance Loan" has the meaning set forth in SECTION 2.01(d).
"Parent" means Crown Crafts, Inc., a Georgia corporation, and its
successors and permitted assigns.
"Participant" has the meaning set forth in SECTION 10.08(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Encumbrances" means, (i) as to the Collateral granted
pursuant to SECTION 3.01, the encumbrances set forth on SCHEDULE 3.01, and (ii)
as to each parcel of the Real Properties, the encumbrances expressly permitted
by the Mortgage with respect to such parcel of the Real Properties.
"Permitted Factor" means any factor approved in writing by the Lenders
and subject to an Assignment of Factoring Credit Balances.
"Person" means an individual, a corporation, a limited liability
company, a partnership, an unincorporated association, a trust or any other
entity or organization, including, but not limited to, a government or political
subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards under
SECTION 412 of the Code and is either (i) maintained by a member of the
Controlled Group for employees of any member of the Controlled Group or (ii)
maintained pursuant to a collective bargaining agreement
21
or any other arrangement under which more than one employer makes contributions
and to which a member of the Controlled Group is then making or accruing an
obligation to make contributions or has within the preceding 5 plan years made
contributions.
"Prime Rate" refers to that interest rate so denominated and set by
Wachovia from time to time as an interest rate basis for borrowings. The Prime
Rate is but one of several interest rate bases used by Wachovia. Wachovia lends
at interest rates above and below the Prime Rate.
"Purchase Money Lien" means any Lien (including a negative pledge
arrangement) granted by any Borrower or any Subsidiary from time to time to
vendors or financiers of equipment to secure not less than 75% of the payment of
the purchase price thereof so long as (i) such Liens extend only to the specific
equipment so purchased, (ii) secure only such deferred payment obligation and
related interest, fees and charges and no other Debt, and (iii) are promptly
released upon the payment in full of such purchase price and related interest,
fees and charges.
"Quarterly Payment Date" means each March 31, June 30, September 30 and
December 31, commencing with September 30, 2001.
"Real Properties" means the real property owned by the Borrowers and
described in the Mortgages.
"Real Property Documentation" shall mean the following as to each
parcel of the Real Properties, in each case in form and substance satisfactory
to the Required Lenders in their reasonable judgment:
(i) an owner's/lessee's affidavit for each parcel or tract of such
Real Property;
(ii) mortgagee title insurance binders and policies for each tract
or parcel of such Real Property;
(iii) a certificate as to the insurance required by the related
Mortgage, to the extent not furnished pursuant to SECTION 5.08;
(iv) an indemnification agreement regarding hazardous materials for
such Real Property;
(v) as to any Mortgage required by SECTION 5.15, a current survey
of each parcel or tract of such Real Property;
(vi) as to any Mortgage required by SECTION 5.15, such consents,
acknowledgments, intercreditor or attornment and subordination agreements
as the Collateral Agent may require from any Third Parties with respect to
any portion of such Real Property;
(vii) as to any Mortgage required by SECTION 5.15, a report of a
licensed engineer detailing an environmental inspection of such Real
Property; and
22
(viii) as to any Mortgage required by SECTION 5.15, an appraisal of
such Real Property, prepared by an appraiser satisfactory to the Collateral
Agent and engaged by and on behalf of the Collateral Agent and the Lenders.
"Redeemable Preferred Stock" of any Person means any preferred stock
issued by such Person which is at any time prior to the Term Loan Maturity Date
either (i) mandatorily redeemable (by sinking fund or similar payments or
otherwise) or (ii) redeemable at the option of the holder thereof.
"Refinanced Agreements" means, collectively, (i) the Credit Agreement
between the Parent and Wachovia, dated as of August 9, 1999, as amended by
Amendment No. 1 to Revolving Credit Agreement dated as of February 23, 2000,
Amendment No. 2 to Revolving Credit Agreement dated as of March 13, 2000,
Amendment No. 3 to Revolving Credit Agreement dated as of June 4, 2000,
Amendment No. 4 to Revolving Credit Agreement dated as of August 31, 2000,
Amendment No. 5 to Revolving Credit Agreement dated as of April 3, 2001; and
Amendment No. 6 to Revolving Credit Agreement dated as of June 29, 2001 (ii) the
Credit Agreement between the Parent and Bank of America, N.A., dated as of
August 9, 1999, as amended by Amendment No. 1 to Revolving Credit Agreement
dated as of February 23, 2000, Amendment No. 2 to Revolving Credit Agreement
dated as of March 13, 2000, Amendment No. 3 to Revolving Credit Agreement dated
as of June 4, 2000, Amendment No. 4 to Revolving Credit Agreement dated as of
August 31, 2000, Amendment No. 5 to Revolving Credit Agreement dated as of April
3, 2001 and Amendment No. 6 to Revolving Credit Agreement dated as of June 29,
2001; and (iii) the Note Purchase and Private Shelf Facility between the Parent
and The Prudential Insurance Company of America dated as of October 12, 1995, as
amended by Amendment to 1995 Note Agreement dated as of February 29, 2000,
Amendment to 1995 Note Agreement dated as of March 13, 2000, Amendment to 1995
Note Agreement dated as of June 4, 2000, Amendment No. 5 of 1995 Note Agreement
dated as of August 31, 2000, Amendment No. 6 of 1995 Note Agreement dated as of
April 3, 2001 and Amendment No. 7 of 1995 Note Agreement dated as of June 29,
2001.
"Refunding Loan" means a new Syndicated Loan made on the day on which
(i) an outstanding Syndicated Loan is maturing as a refinancing thereof, or (ii)
a Base Rate Borrowing is being converted to a Euro-Dollar Borrowing, if and to
the extent that the proceeds thereof are used entirely for the purpose of
refinancing such maturing Loan or Loan being converted, excluding any difference
between the amount of such maturing Loan or Loan being converted and any greater
amount being borrowed on such day and actually either being made available to
the Borrowers pursuant to SECTION 2.02(c) or remitted to the Agent as provided
in SECTION 2.11, in each case as contemplated in SECTION 2.02(d).
"Register" has the meaning set forth in SECTION 10.08(c).
"Regulation T" means Regulation T of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
23
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Reimbursement Obligations" means the reimbursement or repayment
obligations of the relevant Borrower to Wachovia pursuant to SECTION 2.18 with
respect to Letters of Credit.
"Related Fund" means, with respect to any Lender that is a fund that
invests in bank loans, any other fund that invests in bank loans and is advised
or managed by the same investment advisor as such Lender.
"Required Lenders" means at any time Lenders holding Commitment
Percentages equal to at least (x) so long as there are 3 or fewer Lenders, 100%,
(y) otherwise, 66 2/3's% of the aggregate amount of the Commitments or, if the
Commitments are no longer in effect, Lenders holding at least (1) so long as
there are 3 or fewer Lenders, 100%, (2) otherwise, 66 2/3's%, of the aggregate
outstanding principal amount of the Working Capital Obligations and the Term
Loans; provided, however, that such calculation shall be made without including
the Commitment of or principal amount of Notes held by any Lender which is in
default with respect to its obligations to the Agent, any Borrower or any
Lender. As of the Closing Date, the Lenders have the following Commitment
Percentages: (i) Wachovia, 45.767%; (ii) Bank of America, N.A., 19.821% and
(iii) The Prudential Insurance Company of America, 34.412%.
"Restricted Payment" means (i) any dividend or other distribution on
any shares of the Parent's Capital Stock or Redeemable Preferred Stock (except
dividends to the existing holders thereof payable solely in shares of its
Capital Stock or Redeemable Preferred Stock), or (ii) any payment on account of
the purchase, redemption, retirement, defeasance, or other acquisition of or
sinking fund for (a) any shares of the Parent's Capital Stock or Redeemable
Preferred Stock (except shares acquired upon the conversion thereof into other
shares of its Capital Stock or Redeemable Preferred Stock), or (b) any option,
capital appreciation rights, stock appreciation rights, warrant or other right
to acquire shares of the Parent's Capital Stock or Redeemable Preferred Stock,
or (iii) any payment prior to the scheduled maturity of any Subordinated Debt or
other Debt (other than the Obligations) of the Parent or any Borrower.
"Revolving Loan" means the revolving loans (and Settlement Loans) to be
made by all of the Lenders in accordance with SECTION 2.01(a).
"Revolving Loan Commitment" means, (i) as of the Closing Date, the
commitment of each Lender party hereto as of the Closing Date to make available
its portion of the Revolving Loans up to the amount of the Revolving Loan
Commitment set forth opposite its name on the signature pages hereof; and (ii)
as to any Lender which enters into any Assignment and Acceptance as permitted by
SECTION 10.08 (whether as transferor Lender or as Assignee thereunder), the
amount of such Lender's Revolving Loan Commitment after giving effect to
24
such Assignment and Acceptance, in each case as such amount may be reduced from
time to time pursuant to SECTIONS 2.07 and 2.08.
"Revolving Loan Notes" means the promissory notes of the Borrowers
substantially in the form of EXHIBIT A-1, evidencing the obligation of the
Borrowers to repay Revolving Loans, together with all amendments,
consolidations, modifications, renewals and supplements thereto.
"Revolving Loan Termination Date" means the earliest to occur of: (i)
[June 30], 2004, (ii) the date the Revolving Loan Commitments are terminated
pursuant to SECTION 6.01 following the occurrence of an Event of Default, or
(iii) the date the Borrowers terminate the Revolving Loan Commitments entirely
pursuant to SECTION 2.07.
"Scheduled Principal Reduction Amount" means, for each Annual Period,
the aggregate amount of principal payments required to be made on the Term Loans
for such Annual Period, subject to deferment of the Deferred Principal Amount,
if any, for such Annual Period pursuant to SECTION 2.01(c), which Scheduled
Principal Reduction Amount shall be: (i) for the Annual Period ending on June
30, 2002, $2,000,000; and (ii) for each Annual Period thereafter, $3,000,000.
"Security Agreement" means the Amended and Restated Security Agreement
of even date herewith executed and delivered by the Borrowers, as amended or
supplemented from time to time, which is an amendment and restatement of the
Original Security Agreement.
"Security Documents" means this Agreement, the Blocked Account
Agreements, the Domestic Stock Pledge Agreement, the Foreign Stock Pledge
Agreement, the Security Agreement, the Mortgages, and the Waiver Agreements.
"Senior Debt/EBITDA Ratio" means the ratio of Consolidated Senior Debt
to Consolidated EBITDA.
"Senior Officer" means any of the following officers of Parent,
regardless of actual title: Chief Executive Officer; Chief Operating Officer;
and Chief Financial Officer.
"Senior Subordinated Notes" means the Notes issued pursuant to the
Senior Subordinated Notes Purchase Agreement.
"Senior Subordinated Notes Purchase Agreement" means the Subordinated
Note and Warrant Purchase Agreement dated as of even date herewith by and among
the Parent, as issuer of the Senior Subordinated Notes and the warrants
described therein, and Wachovia, Bank of America, N.A. and The Prudential
Insurance Company of America, as the purchasers.
"Settlement Date" has the meaning set forth in SECTION 2.01(b)(i).
"Settlement Loan" means a Loan made by Wachovia pursuant to SECTION
2.01(b), which must be a Base Rate Loan.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw-Hill,
Inc.
25
"Stockholders' Equity" means, at any time, the shareholders'
equity of the Parent and the Subsidiaries, as set forth or reflected on the
most recent consolidated balance sheet of the Parent and the Subsidiaries
prepared in accordance with GAAP, but excluding any Redeemable Preferred Stock
of the Parent or any of the Subsidiaries. Shareholders' equity generally would
include, but not be limited to (i) the par or stated value of all outstanding
Capital Stock, (ii) capital surplus, (iii) retained earnings, and (iv) various
deductions such as (A) purchases of treasury stock, (B) valuation allowances,
(C) receivables due from an employee stock ownership plan, (D) employee stock
ownership plan debt guarantees, and (E) translation adjustments for foreign
currency transactions.
"Subordinated Debt" means any Debt, including, without
limitation, all Debt evidenced by the Senior Subordinated Notes, which is
unsecured or, in the case of the Senior Subordinated Notes, secured by a Lien
second in priority to the Lien of the Collateral Agent against the Collateral,
of any Borrower or any Subsidiary to any Person which, by written agreement,
has been subordinated in right of payment and claim (and Lien, as to the Senior
Subordinated Notes), to the rights and claims (and Lien, as to the Senior
Subordinated Notes) of the Collateral Agent, the Lenders and Wachovia in
respect of the Obligations, on terms and conditions reasonably satisfactory to
the Required Lenders (which shall include the obligation to notify the Agent of
any default with respect to such Subordinated Debt).
"Subsidiary" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by the Parent.
"Syndicated Loans" means the Revolving Loan, other than
Settlement Loans.
"Taxes" has the meaning set forth in SECTION 2.11(c).
"Term Loan" means the term loans to be made by all of the
Lenders in accordance with SECTION 2.01(c).
"Term Loan Commitment" means the commitment of each Lender to
make its portion of the Term Loan, in the amount of the Term Loan Commitment
set forth opposite its name on the signature pages hereof, the aggregate of all
such Term Loan Commitments as of the Closing Date being $14,000,000.
"Term Loan Notes" means the promissory notes of the
Borrowers, substantially in the form of EXHIBIT A-2, evidencing the obligation
of the Borrowers to repay the Term Loans, together with all amendments,
consolidations, modifications, renewals and supplements thereto.
"Term Loan Maturity Date" means the earliest to occur of (i)
[June 30], 2006, (ii) the date the Term Loan is declared to be immediately due
and payable pursuant to SECTION 6.01 following the occurrence of an Event of
Default and (iii) the date the Term Loan is prepaid in full.
26
"Third Party" means any landlord, warehousemen, servicer,
processor, bailee and other third parties which may, from time to time, be in
the possession or control of, any Collateral or any property on which any
Collateral is or may be located.
"Third Party Claims" means claims of Third Parties against
any Borrower for rent, storage, maintenance, repair, processing, servicing or
bailment in respect of any Collateral or any property on which any Collateral
is or may be located.
"Trade Styles" has the meaning set forth in SECTION 4.30.
"Transferee" has the meaning set forth in SECTION 10.08(d).
"UCC" shall mean the Uniform Commercial Code Secured
Transactions of Georgia (O.C.G.A. Art. 11-9) (or, if the law of a different
state is selected in any Security Document as the governing law for purposes of
such Security Document, the Uniform Commercial Code Secured Transactions of
such other state as to such Security Document) as in effect on the date hereof.
"Unfunded Vested Liabilities" means, with respect to any Plan
at any time, the amount (if any) by which (i) the present value of all vested
nonforfeitable benefits under such Plan exceeds (ii) the fair market value of
all Plan assets allocable to such benefits, all determined as of the then most
recent valuation date for such Plan, but only to the extent that such excess
represents a potential liability of a member of the Controlled Group to the
PBGC or the Plan under Title IV of ERISA.
"Unused Revolving Loan Commitment" means at any date, (a)
with respect to all Lenders, an amount equal to the Aggregate Revolving Loan
Commitments less the Working Capital Obligations and (b) with respect to any
Lender, an amount equal to the aggregate Unused Revolving Loan Commitments
determined in clause (a) above multiplied by such Lender's Commitment
Percentage.
"Wachovia" means Wachovia Bank, N.A., a national banking
association, and its successors.
"Wachovia Letter of Credit" means any letter of credit issued
or to be issued by Wachovia.
"Waiver Agreement" means a Waiver and Agreement substantially
in the form of EXHIBIT J, with any changes as may be acceptable to the Required
Lenders in their sole discretion, executed and delivered by any Third Party
waiving or subordinating its Third Party Claims, and making certain other
agreements in regard to the Collateral, all on terms satisfactory to the
Collateral Agent in all respects.
"Wholly Owned Subsidiary" means any Subsidiary all of the
shares of capital stock or other ownership interests of which (except
directors' qualifying shares) are at the time directly or indirectly owned by
the Parent.
27
"Working Capital Obligations" means the sum at any time of
(i) the Aggregate Revolving Loan Amount Outstanding and (ii) the Letter of
Credit Obligations.
SECTION 1.02. Accounting Terms and Determinations. Unless
otherwise specified herein, all terms of an accounting character used herein
shall be interpreted, all accounting determinations hereunder shall be made,
and all financial statements required to be delivered hereunder shall be
prepared, in accordance with GAAP, applied on a basis consistent (except for
changes concurred in by the Certified Public Accountants or otherwise required
by a change in GAAP) with the most recent audited consolidated financial
statements of the Parent and the Subsidiaries delivered to the Lenders unless
with respect to any such change concurred in by the Certified Public
Accountants or required by GAAP, in determining compliance with any of the
provisions of this Agreement or any of the other Credit Documents: (i) the
Parent shall have objected to determining such compliance on such basis at the
time of delivery of such financial statements, or (ii) the Required Lenders
shall so object in writing within 30 days after the delivery of such financial
statements, in either of which events such calculations shall be made on a
basis consistent with those used in the preparation of the latest financial
statements as to which such objection shall not have been made (which, if
objection is made in respect of the first financial statements delivered under
SECTION 5.01 hereof, means the financial statements referred to in SECTION
4.04). The Parent shall notify the Lenders promptly upon its learning thereof
of any such change concurred in by the Certified Public Accountants or
otherwise required by a change in GAAP.
SECTION 1.03. References. Unless otherwise indicated,
references in this Agreement to "articles", "exhibits", "schedules", "sections"
and other subdivisions are references to articles, exhibits, schedules,
sections and other subdivisions hereof.
SECTION 1.04. Use of Defined Terms. All terms defined in
this Agreement shall have the same defined meanings when used in any of the
other Credit Documents, unless otherwise defined therein or unless the context
shall require otherwise. The terms "accounts", "chattel paper", "deposit
accounts", "equipment" "fixtures", "general intangibles", "instruments",
"inventory", "investment property", and "letter-of-credit-rights" as and when
used herein and in the other Credit Documents, shall have the same meanings
given such terms under the UCC.
SECTION 1.05. Terminology. The terms "herein," "hereof"
and "hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular section, paragraph or subdivision. Any pronoun
used shall be deemed to cover all genders. In the computation of periods of
time from a specified date to a later specified date, the word "from" means
"from and including" and the words "to" and "until" each means "to but
excluding." Unless and to the extent otherwise expressly provided herein, the
term "pro rata" when applied to a Lender means such Lender's Commitment
Percentage. The section titles, table of contents and list of exhibits appear
as a matter of convenience only and shall not affect the interpretation of this
Agreement. All references to statutes and related regulations shall include any
amendments of same and any successor statutes and regulations. All references
to any of the Credit Documents shall include any and all amendment or
modifications thereto and any and all restatements, extensions or renewals
thereof. All references to any Person shall mean and include the successors and
permitted assigns of such Person. All references to "including" and
28
"include" shall be understood to mean "including, without limitation." All
references to the time of day shall mean the time of day on the day in question
in Atlanta, Georgia, unless otherwise expressly provided in this Agreement. A
Default or an Event of Default shall be deemed to exist at all times during the
period commencing on the date that such Default or Event of Default occurs to
the date on which such Default or Event of Default is waived in writing
pursuant to this Agreement or, in the case of a Default, is cured within any
period of cure expressly provided in this Agreement; and an Event of Default
shall "continue" to be "continuing" until such Event of Default has been waived
in writing by Agent. Whenever the phrase "to the best of any Borrower's
knowledge" or words of similar import relating to the knowledge or the
awareness of any Borrower are used herein, such phrase shall mean and refer to
(i) the actual knowledge of a [Senior Officer] of a Borrower or (ii) the
knowledge that a Senior Officer would have obtained if he had engaged in a good
faith and diligent performance of his duties, including the making of such
reasonable specific inquiries as may be necessary of the officers, employees or
agents of any Borrower or Subsidiary and a good faith attempt to ascertain the
existence or accuracy of the matter to which such phrase relates. All
calculations of money values shall be in Dollars, all Loans made hereunder
shall be funded in Dollars, and all amounts payable in respect of any of the
Obligations shall be paid in Dollars. Any Lien referred to in this Agreement or
any of the other Credit Documents as having been created in favor of the
Collateral Agent, any agreement entered into by the Agent or the Collateral
Agent pursuant to this Agreement or any of the other Credit Documents, any
payment made by or to or funds received by the Agent or the Collateral Agent
pursuant to or as contemplated by any of the Credit Documents, or any other act
taken or admitted to be taken by the Agent or the Collateral Agent shall,
unless otherwise expressly provided, be created, entered into, made or received
or taken or omitted, for the benefit or account of the Agent or the Collateral
Agent, as applicable, and the Lenders.
ARTICLE 2
THE CREDITS
SECTION 2.01. Commitments to Lend.
(a) Revolving Loans. Each Lender severally agrees, on
the terms and conditions set forth herein, to make Revolving Loans to the
Borrowers from time to time before the Revolving Loan Termination Date;
provided that, immediately after each such Revolving Loan is made,
(A) the sum of (1) the Revolving Loans
outstanding of each Lender plus (2) such Lender's
Commitment Percentage of the Letter of Credit
Obligations, will not exceed such Lender's Revolving
Loan Commitment, and
(B) the Working Capital Obligations,
will not exceed the lesser of (1) the amount of the
Aggregate Revolving Loan Commitments, and (2) the
aggregate amount of the Borrowing Base (subject,
however, to Overadvance Loans made pursuant to SECTION
2.01(d));
(C) Each Syndicated Borrowing under
this SECTION 2.01(a) or SECTION 2.01(c) shall be in an
aggregate principal amount of (x) for
29
Euro-Dollar Loans, $2,000,000 or any larger integral
multiple of $1,000,000, and (y) for Base Rate Loans,
$250,000 or any larger integral multiple of $100,000
(except that any Revolving Loan Borrowing may be in
the aggregate amount of the Unused Revolving Loan
Commitments or the amount of the Excess Borrowing
Availability, whichever is lesser) and shall be made
from the several Lenders ratably in proportion to
their respective Commitments. Within the foregoing
limits, the Borrowers may borrow under this SECTION,
repay or, to the extent permitted by SECTION 2.03,
prepay Revolving Loans and reborrow under this
SECTION at any time before the Revolving Loan
Termination Date.
(b) Settlement Loans.
(i) In order to facilitate the administration
of the Revolving Loans under this Agreement, the Lenders
agree (which agreement shall not be for the benefit of or
enforceable by any Borrower) that settlement among the
Lenders with respect to the Revolving Loans up to an
aggregate principal amount outstanding at any time of
$2,000,000 may take place on a periodic basis on Friday of
each week or on such other dates determined from time to time
by the Agent (each a "Settlement Date"), which may occur
before or after the occurrence or during the continuance of a
Default or Event of Default, provided that any such
Settlement Loan for which settlement is to be made must have
been advanced in accordance with subsection (ii). On each
Settlement Date, payment shall be made by or to each Lender
in the manner provided herein and in accordance with the
Settlement Report delivered by the Agent to the Lenders with
respect to such Settlement Date so that, as of each
Settlement Date, each Lender shall hold its Commitment
Percentage of all Revolving Loans then outstanding.
(ii) Between Settlement Dates, the Agent may
request Wachovia to advance, and Wachovia may, but shall in
no event be obligated to, advance to any Borrower out of
Wachovia's own funds the entire principal amount of any
Revolving Loan Borrowings that are Base Rate Loans requested
or deemed requested pursuant to this Agreement (any such
Revolving Loan funded exclusively by Wachovia being referred
to as a "Settlement Loan"). Each Settlement Loan shall
constitute a Revolving Loan hereunder and shall be subject to
all of the terms, conditions and security applicable to other
Revolving Loans, except that all payments thereon shall be
payable to Wachovia solely for its own account. The
obligation of any Borrower to repay such Settlement Loans to
Wachovia shall be evidenced by the records of Wachovia and
need not be evidenced by any promissory note. The Agent shall
not request Wachovia to make, and Wachovia shall not make,
any Settlement Loan if (a) the Agent shall have received
written notice from any Lender that one or more of the
applicable conditions precedent set forth in ARTICLE 9 hereof
will not be satisfied on the requested funding date for the
applicable Borrowing, (b) the requested Borrowing would
exceed the amount of Revolving Loans permitted to be made
under SECTION 2.01(a) or (c) the amount thereof is in excess
of $500,000 and any Default or Event of Default is in
existence. Wachovia shall not otherwise be
30
required to determine whether the applicable conditions
precedent set forth in ARTICLE 9 hereof have been satisfied
or the requested Borrowing would exceed the amount of
Revolving Loans permitted to be made under SECTION 2.01(a)
prior to making, in its sole discretion, any Settlement Loan.
On each Settlement Date, or, if earlier, upon demand by the
Agent for payment thereof, the then outstanding Settlement
Loans shall be immediately due and payable. Each Borrower
shall be deemed to have requested Revolving Loans to be made
on each Settlement Date in the amount of all outstanding
Settlement Loans and the proceeds of such Revolving Loans
shall be applied to the repayment of such Settlement Loans.
The Agent shall notify the Lenders of the outstanding balance
of Revolving Loans prior to 12:00 noon, Atlanta, Georgia
time, on such funding date. The proceeds of Settlement Loans
may be used solely for purposes for which Revolving Loans may
be used in accordance with SECTION 5.06 hereof. If any
amounts received by Wachovia in respect of any Settlement
Loans are later required to be returned or repaid by Wachovia
to any Borrower or their respective representatives or
successors-in-interest, whether by court order, settlement or
otherwise, each Lender shall, upon demand by Wachovia with
notice to Agent, pay to Agent for the account of Wachovia an
amount equal to such Lender's Commitment Percentage of all
such amounts required to be returned by Wachovia.
(c) Term Loans. On the Closing Date, on the terms and
conditions set forth herein, each Lender severally agrees, to lend (by
refinancing amounts outstanding under the Refinanced Agreements), a Term Loan
in the aggregate amount of its Term Loan Commitment. The Term Loans by the
Lenders shall be made on the Closing Date. On each Quarterly Payment Date, the
Borrowers shall pay to the Agent, for the ratable account of the Lenders, an
amount equal to the Minimum Principal Reduction Amount applicable to such
Quarterly Payment Date, together with all accrued but unpaid interest on the
Term Loans at the Cash Contract Rate. Within 90 days after the end of each
Annual Period, the Parent shall deliver to each of the Lenders a certificate in
the form of EXHIBIT R (a "Consolidated Excess Cash Flow Certificate"), showing
the calculation of Consolidated Excess Cash Flow for the Annual Period then
ended, and make a payment on account of the Term Loans to the Agent, for the
ratable account of the Lenders, in an amount equal to the lesser of:
(i) the sum of (A) Contingent Interest which
has accrued during the Annual Period just ended but not paid,
plus (B) the Scheduled Principal Reduction Amount for such
Annual Period; minus (C) the Minimum Principal Reduction
Amounts paid during such Annual Period; and
(ii) 100% of such Consolidated Excess Cash Flow
for such Annual Period.
If 100% of such Consolidated Excess Cash Flow is paid pursuant to clause (ii)
above, the amount of such payment shall be applied: (x) first to the
outstanding principal of the Term Loans, up to the sum of the amounts described
in (B), less (C) of clause (i) above, and (y) then any amount remaining after
payment of such amount on account of the Term Loans shall be applied to
Contingent Interest which has accrued during the Annual Period just ended but
not paid. In such
31
event, an amount (the "Deferred Principal Amount") equal to the sum of: (1) the
Scheduled Principal Reduction Amount for such Annual Period; minus (2) the
Minimum Principal Reduction Amounts paid during such Annual Period, minus (3)
the amount, if any, of Consolidated Excess Cash Flow applied to the outstanding
principal of the Term Loans pursuant to clause (x) of the immediately preceding
sentence for such Annual Period, shall be deferred and paid on the Term Loan
Maturity Date. The Term Loans may not be prepaid before the Term Loan Maturity
Date, except (x) as permitted by all of the Lenders in the exercise of their
sole discretion, subject to any compensation payments required by SECTION 8.05,
and (y) in connection with prepayments required by SECTION 2.10(c), subject to
any compensation payments required by SECTION 8.05.
On the Term Loan Maturity Date, a final payment shall be made with respect to
the Term Loans in an amount equal to the remaining outstanding principal amount
of the outstanding Term Loans (including the aggregate of all Deferred
Principal Amounts), together with all accrued but unpaid interest thereon at
the Cash Contract Rate, and all Contingent Interest which has accrued since the
Closing Date but not paid. Principal amounts of the Term Loans repaid or
prepaid may not be reborrowed and may not be voluntarily repaid or prepaid in
whole or in part from proceeds of a Revolving Loan or from proceeds of a
refinancing, or in contemplation of a refinancing, by a third party lender of
the Term Loans without the consent of all of the Lenders.
(d) Overadvance Loans. Notwithstanding the existence of
a Default or an Event of Default or any other provision of this Agreement to
the contrary, provided the Commitments have not been terminated pursuant to
SECTION 6.01 and the Agent has not been directed otherwise by any 2 Lenders,
the Agent may, from time to time, in the exercise of its sole discretion,
advance Revolving Loans on behalf of the Lenders and/or Settlement Loans in an
aggregate amount up to the lesser of (x) the Unused Revolving Loan Commitment,
and (y) an amount not greater than $500,000 in excess of the amount of the
Borrowing Base (each such Loan made under this paragraph (d) is herein referred
to as an "Overadvance Loan"), provided, however, that each Overadvance Loan
made pursuant to this SECTION 2.01(d) shall (1) become due and payable in full
on or before the date which is 10 Business Days after such Overadvance Loan is
made, and (2) not be made during any period longer than 10 Business Days after
the date on which such first Overadvance Loan was made in excess of the
Borrowing Base under this SECTION 2.01(d).
SECTION 2.02. Method of Borrowing Revolving Loans
(a) The Borrowers shall give the Agent notice (a "Notice
of Borrowing"), which shall be substantially in the form of EXHIBIT E, prior to
(x) as to Base Rate Loans, 11:00 A.M. (Atlanta, Georgia time) on the Domestic
Business Day of such Base Rate Borrowing, and (y) as to Euro-Dollar Loans,
11:00 A.M. (Atlanta, Georgia time), at least 3 Euro-Dollar Business Days before
each Euro-Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be
a Domestic Business Day in the case of a Base Rate Borrowing
or a Euro-Dollar Business Day in the case of a Euro-Dollar
Borrowing,
(ii) the aggregate amount of such Borrowing,
32
(iii) whether the Loans comprising such Borrowing
are to be Base Rate Loans or Euro-Dollar Loans, and
(iv) in the case of a Euro-Dollar Borrowing, the
duration of the Interest Period applicable thereto, subject
to the provisions of the definition of Interest Period.
(b) Upon receipt of a Notice of Borrowing, the Agent
shall promptly notify each Lender of the contents thereof and of such Lender's
ratable share of such Borrowing, unless it is advanced as a Settlement Loan
Borrowing, and such Notice of Borrowing, once received by the Agent, shall not
thereafter be revocable by the Borrowers.
(c) Not later than (a) as to Euro-Dollar Borrowings,
11:00 A.M. (Atlanta, Georgia time), and (b) as to Base Rate Borrowings, 2:00
P.M. (Atlanta, Georgia time) on the date of each Syndicated Borrowing, each
Lender shall (except as provided in paragraph (d) of this SECTION) make
available its ratable share of such Syndicated Borrowing, in federal or other
funds immediately available in Atlanta, Georgia, to the Agent at its address
determined pursuant to SECTION 10.01. Unless the Agent determines that any
applicable condition specified in ARTICLE 9 has not been satisfied, the Agent
will make the funds so received from the Lenders available to the Borrowers at
the Agent's aforesaid address. Unless the Agent receives notice from a Lender,
at the Agent's address referred to in or specified pursuant to SECTION 10.01,
no later than 4:00 P.M. (local time at such address) on the Domestic Business
Day before the date of a Syndicated Borrowing stating that such Lender will not
make a Syndicated Loan in connection with such Syndicated Borrowing, the Agent
shall be entitled to assume that such Lender will make a Syndicated Loan in
connection with such Syndicated Borrowing and, in reliance on such assumption,
the Agent may (but shall not be obligated to) make available such Lender's
ratable share of such Syndicated Borrowing to the Borrowers for the account of
such Lender. If the Agent makes such Lender's ratable share available to the
Borrowers and such Lender does not in fact make its ratable share of such
Syndicated Borrowing available on such date, the Agent shall be entitled to
recover such Lender's ratable share from such Lender or the Borrowers (and for
such purpose shall be entitled to charge such amount to any account of the
Borrowers maintained with the Agent), together with interest thereon for each
day during the period from the date of such Syndicated Borrowing until such sum
shall be paid in full at a rate per annum equal to the rate at which the Agent
determines that it obtained (or could have obtained) overnight federal funds to
cover such amount for each such day during such period, provided that (i) any
such payment by the Borrowers of such Lender's ratable share and interest
thereon shall be without prejudice to any rights that the Borrowers may have
against such Lender and (ii) until such Lender has paid its ratable share of
such Syndicated Borrowing, together with interest pursuant to the foregoing, it
will have no interest in or rights with respect to such Syndicated Borrowing
for any purpose hereunder. If the Agent does not exercise its option to advance
funds for the account of such Lender, it shall forthwith notify the Borrowers
of such decision.
(d) If any Lender makes a new Syndicated Loan hereunder
on a day on which any Borrower is to repay all or any part of an outstanding
Syndicated Loan from such Lender, such Lender shall apply the proceeds of its
new Syndicated Loan to make such repayment as a Refunding Loan and only an
amount equal to the difference (if any) between the amount being borrowed and
the amount of such Refunding Loan shall be made available by such Lender to the
33
Agent as provided in paragraph (c) of this SECTION, or remitted by such
Borrower to the Agent as provided in SECTION 2.11, as the case may be.
(e) Notwithstanding anything to the contrary contained
in this Agreement, the Lenders shall not be obligated to make any Euro-Dollar
Loans if there shall have occurred a Default or an Event of Default, which
Default or Event of Default shall not have been cured or waived, and all
Refunding Loans shall be made as Base Rate Loans (but shall bear interest at
the Default Rate, if applicable). Nothing in the preceding sentence shall
obligate, or be deemed to obligate, any of the Lenders to make any Loans at all
during the existence of an Event of Default, other than (i) Refunding Loans in
the event that the Obligations have not been accelerated pursuant to SECTION
6.01, and (ii) advances on any Settlement Date of a Lender's Commitment
Percentage of Settlement Loans or Overadvance Loans made prior to the
termination of the Commitments pursuant to SECTION 6.01.
(f) In the event that a Notice of Borrowing fails to
specify whether the Syndicated Loans comprising such Syndicated Borrowing are
to be Base Rate Loans or Euro-Dollar Loans, such Syndicated Loans shall be made
as Base Rate Loans. If the Borrowers are otherwise entitled under this
Agreement to repay any Syndicated Loans maturing at the end of an Interest
Period applicable thereto with the proceeds of a new Borrowing, and the
Borrowers fail to repay such Syndicated Loans using its own moneys and fails to
give a Notice of Borrowing in connection with such new Syndicated Borrowing, a
new Syndicated Borrowing shall be deemed to be made on the date such Syndicated
Loans mature in an amount equal to the principal amount of the Syndicated Loans
so maturing, and the Syndicated Loans comprising such new Syndicated Borrowing
shall be Base Rate Loans.
(g) Notwithstanding anything to the contrary contained
herein, there shall not be more than 6 Euro-Dollar Borrowings outstanding at
any given time.
SECTION 2.03. Notes.
(a) The Revolving Loans of each Lender shall be
evidenced by a single Revolving Loan Note payable to the order of such Lender
for the account of its Lending Office in an amount equal to the original
principal amount of such Lender's Revolving Loan Commitment. The Term Loans of
each Lender shall be evidenced by a single Term Loan Note payable to the order
of such Lender for the account of its Lending Office in an amount equal to the
original principal amount of such Lender's Term Loan Commitment.
(b) Upon receipt of each Lender's Notes pursuant to
SECTION 9.01, the Agent shall deliver such Notes to such Lender. Each Lender
will record either on its own books and records or on Schedules attached to its
Notes, at its option, and prior to any transfer of its Notes will transfer a
copy of the relevant portions of its books and records or endorse on such
schedules attached to its Notes appropriate notations to evidence the date,
amount and maturity of, and effective interest rate for, each Loan made by it,
and the date and amount of each payment of principal made by the Borrowers with
respect thereto. Such records, whether on the Lender's books and records or on
Schedules to the Notes will constitute prima facie evidence, in the absence of
manifest error, of the respective principal amounts owing and unpaid on such
Lender's Notes; provided that the failure of any Lender to make, or any error
in making, any such
34
recordation or endorsement shall not affect the obligation of the Borrowers
hereunder or under the Notes or the ability of any Lender to assign its Notes.
Each Lender is hereby irrevocably authorized by the Borrowers so to endorse its
Notes, in the event such option is elected by such Lender, and to attach to and
make a part of any Note a continuation of any such Schedule as and when
required.
(c) The Agent shall maintain on its books a control
account for the Borrowers in which shall be recorded (i) the date, amount,
effective interest rate and maturity of each Revolving Loan, Settlement Loan
and Term Loan made hereunder to the Borrowers, (ii) the amount of any
principal, interest or fees due or to become due from the Borrowers on the
Revolving Loans, the Settlement Loans and the Term Loans and (iii) the amount
of any sum received by the Agent hereunder in respect of any such principal,
interest or fees due on the Revolving Loans, Settlement Loans and Term Loans
and each Lender's Commitment Percentage thereof.
(d) The entries made in the accounts pursuant to
paragraph (c) above shall be prima facie evidence, in the absence of manifest
error, of the existence and amounts of the Obligations of the Borrowers therein
recorded and any payments thereon, and in case of discrepancy between such
accounts and the schedules to the Notes maintained by any Lender pursuant to
paragraph (b) or between such accounts and the books and records of the
Borrowers, in the absence of manifest error, the control account maintained by
the Agent pursuant to paragraph (c) above shall be controlling with respect to
Revolving Loans, Settlement Loans and Term Loans.
SECTION 2.04. Maturity of Revolving Loans.
(a) Each Loan included in any Euro-Dollar Borrowing will
mature, and the principal amount thereof will be due and payable, on the last
day of the Interest Period applicable to such Borrowing, subject to the advance
of a Refunding Loan, unless such Loan will be due and payable prior thereto by
reason of the provisions of this Agreement (including, without limitation,
SECTION 6.01).
(b) Notwithstanding the foregoing, the outstanding
principal amount of all Revolving Loans, if any, together with all accrued but
unpaid interest thereon, if any, shall be due and payable on the Revolving Loan
Termination Date.
SECTION 2.05. Interest Rates on Revolving Loans.
(a) "Applicable Margin" means, with respect to Revolving
Loans, (x) for any Base Rate Loan, 1.0%, and (y) for any Euro-Dollar Loan,
2.75%.
(b) Each Base Rate Loan shall bear interest on the
outstanding principal amount thereof, for each day from the date such Loan is
made until it becomes due, at a rate per annum equal to the Base Rate for such
day plus the Applicable Margin. Such interest shall be payable in arrears on
the last day of each month. Any overdue principal of and, to the extent
permitted by applicable law, overdue interest on any Base Rate Loan shall bear
interest, payable on demand, for each day until paid at a rate per annum equal
to the Default Rate.
35
(c) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for the Interest Period applicable
thereto, at a rate per annum equal to the sum of the Applicable Margin plus the
applicable Adjusted London Interbank Offered Rate for such Interest Period.
Such interest shall be payable for each Interest Period on the last day thereof
and, if such Interest Period is longer than 1 month, at monthly intervals on
the last day of each calendar month. Any overdue principal of and, to the
extent permitted by law, overdue interest on any Euro-Dollar Loan shall bear
interest, payable on demand, for each day until paid at a rate per annum equal
to the Default Rate.
The "Adjusted London Interbank Offered Rate" applicable to
any Interest Period means a rate per annum equal to the quotient obtained
(rounded upwards, if necessary, to the next higher 1/100th of 1%) by dividing
(i) the applicable London Interbank Offered Rate for such Interest Period by
(ii) 1.00 minus the Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any
Euro-Dollar Loan means for the Interest Period of such Euro-Dollar Loan, the
rate per annum determined on the basis of the offered rate for deposits in
Dollars of amounts equal or comparable to the principal amount of such
Euro-Dollar Loan offered for a term comparable to such Interest Period, which
rates appear on the Telerate Page 3750 effective as of 11:00 A.M., London time,
2 Euro-Dollar Business Days prior to the first day of such Interest Period,
provided that if no such offered rates appear on such page, the "London
Interbank Offered Rate" for such Interest Period will be the arithmetic average
(rounded upward, if necessary, to the next higher 1/100th of 1%) of rates
quoted by not less than 2 major banks in New York City, selected by the Agent,
at approximately 10:00 A.M., New York City time, 2 Euro-Dollar Business Days
prior to the first day of such Interest Period, for deposits in Dollars offered
by leading European banks for a period comparable to such Interest Period in an
amount comparable to the principal amount of such Euro-Dollar Loan.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement for a member bank of
the Federal Reserve System in respect of "eurocurrency liabilities" (or in
respect of any other category of liabilities which includes deposits by
reference to which the interest rate on Euro-Dollar Loans is determined or any
category of extensions of credit or other assets which includes loans by a
non-United States office of any Lender to United States residents). The
Adjusted London Interbank Offered Rate shall be adjusted automatically on and
as of the effective date of any change in the Euro-Dollar Reserve Percentage.
(d) The Agent shall determine each interest rate
applicable to the Loans hereunder. The Agent shall give prompt notice to the
Borrowers and the Lenders by telecopier of each rate of interest so determined,
and its determination thereof shall be conclusive in the absence of manifest
error.
(e) After the occurrence and during the continuance of a
Default or an Event of Default, the principal amount of the Loans (and, to the
extent permitted by applicable law, all accrued interest thereon) may, at the
election of the Required Lenders, bear interest at the Default Rate from the
date of such Default or Event of Default (which date with respect to
36
SECTION 5.20 shall be deemed to occur on the date such Default or Event of
Default occurred, not the date of delivery of the Compliance Certificate).
SECTION 2.06. Fees.
(a) The Borrowers shall pay to the Agent, for the
ratable account of each Lender, a commitment fee (the "Commitment Fee"),
calculated on the average daily amount of such Lender pro rata share of the
Unused Revolving Loan Commitment (without taking into account any Settlement
Loans), at a rate per annum equal to 0.50%, and payable in arrears on each
Quarterly Payment Date.
(b) The Borrowers shall pay to the Agent, for the
account and sole benefit of the Agent, an annual administration fee in the
amount of $25,000, payable on the Closing Date and on each anniversary thereof.
SECTION 2.07. Optional Termination or Reduction of
Revolving Loan Commitments. The Borrowers may, upon at least 3 Domestic
Business Days' prior written notice to the Agent, terminate the Commitments in
their entirety at any time, or upon at least 3 Domestic Business Days' prior
written notice to the Agent, proportionately reduce the Unused Revolving Loan
Commitments from time to time by an aggregate amount of at least $2,000,000 or
any larger integral multiple of $1,000,000, so long as such reduction shall not
cause the Aggregate Revolving Loan Commitments to be reduced below $1,000,000
(unless terminated in their entirety). If the Revolving Loan Commitments are
terminated in their entirety, all accrued fees (as provided under SECTION 2.06)
shall be due and payable on the effective date of such termination and the
Borrowers shall pledge in favor of the Collateral Agent cash collateral equal
to at least 110% of the outstanding Letter of Credit Obligations, if any.
SECTION 2.08. Mandatory Reduction and Termination of
Revolving Loan Commitments. The Commitments shall terminate on the Revolving
Loan Termination Date and any Revolving Loans then outstanding (together with
accrued interest thereon) shall be due and payable on such date and the
Borrowers shall pledge in favor of the Collateral Agent cash collateral equal
to at least 110% of the outstanding Letter of Credit Obligations, if any.
SECTION 2.09. Optional Prepayments of Revolving Loans.
(a) Upon notice to the Agent prior to 11:00 A.M.
(Atlanta, Georgia time) on the same Domestic Business Day, the Borrowers may
prepay any Loan which is a Base Rate Borrowing in whole at any time, or from
time to time in part in amounts aggregating at least $1,000,000, by paying the
principal amount to be prepaid together with accrued interest thereon to the
date of prepayment. Each such optional prepayment shall be applied to prepay
ratably the Base Rate Loans of the several Lenders included in such Base Rate
Borrowing.
(b) Euro-Dollar Loans may not be prepaid (whether as new
advances of Loans or Refunding Loans) before the end of the Interest Period
applicable to such Loans, except (i) as permitted by all of the Lenders in the
exercise of their sole discretion, subject to any compensation payments
required by SECTION 8.05, and (ii) in connection with prepayments required by
SECTION 2.10(c), subject to any compensation payments required by SECTION 8.05,
unless the amount of such prepayment is deposited with the Collateral Agent as
cash
37
collateral to secure the Obligations with the direction and authorization given
to the Collateral Agent to apply such cash collateral toward payment of such
Euro-Dollar Loan at the end of such Euro-Dollar Loan's Interest Period.
(c) Upon receipt of a notice of prepayment pursuant to
this SECTION 2.09, the Agent shall promptly notify each Lender of the contents
thereof and of such Lender's ratable share of such prepayment (except with
respect to Settlement Loans, unless the Lenders have purchased interests
therein pursuant to SECTION 2.01(b)) and such notice, once received by the
Agent, shall not thereafter be revocable by the Borrowers.
(d) In the event that any Loan is prepaid on the same
day such Loan was advanced, interest hereunder on such Loan shall be due and
payable for that day.
SECTION 2.10. Mandatory Prepayments.
(a) On each date on which the Revolving Loan Commitments
are reduced pursuant to SECTION 2.07 or SECTION 2.08, the Borrowers shall repay
or prepay such principal amount of the outstanding Revolving Loans, if any
(together with interest accrued thereon and any amount due under SECTION
8.05(a)), as may be necessary so that after such payment the aggregate unpaid
amount of the Working Capital Obligations does not exceed the aggregate amount
of the Revolving Loan Commitments as then reduced.
(b) On each date on which the Working Capital
Obligations exceed the Borrowing Base plus the amount of any permitted
Overadvance Loans, the Borrowers shall immediately repay or prepay such
principal amount of the outstanding Revolving Loans, if any (together with
interest accrued thereon and any amount due under SECTION 8.05(a)), as may be
necessary so that after such payment the Working Capital Obligations do not
exceed the Borrowing Base. Each such payment or prepayment shall be applied
ratably to the Revolving Loans of the Lenders outstanding on the date of
payment or prepayment in the following order of priority: (i) first, to
Settlement Loans; (ii) secondly, to Base Rate Loans which are not Settlement
Loans; and, (iii) lastly, to Euro-Dollar Loans.
(c) Contemporaneously upon receipt of Net Cash Proceeds
(except during the existence of a Default or Event of Default, in which case
SECTION 2.11(e) shall govern the receipt of Net Cash Proceeds, among other
things), the Borrowers shall pay to the Agent an amount equal to: (i) 100% of
all net amounts paid to any Borrower by a Permitted Factor with respect to
Factored Accounts (to the extent not paid directly to the Collateral Agent
pursuant to the relevant Assignment of Factoring Credit Balances), and the sum
of (x) 100% of Net Cash Proceeds from the disposition of assets other than
Factored Accounts, except as provided in clause (y) below, plus (y) 100% of the
Net Cash Proceeds from the disposition of Equipment Collateral, to the extent
such Net Cash Proceeds are not used to replace such disposed Equipment
Collateral with new Equipment Collateral pursuant to SECTION 5.32; and (ii)
100% of the Net Cash Proceeds from the issuance of Capital Stock or Redeemable
Preferred Stock. Such prepayment (other than from amounts payable to any
Borrower by a Permitted Factor with respect to Factored Accounts) shall be
accompanied by a detailed calculation showing all deductions from gross
proceeds in order to arrive at Net Cash Proceeds, as well as amounts used or
reserved for the purchase of replacement Equipment Collateral, if applicable.
All such
38
prepayments made from amounts payable to any Borrower by a Permitted Factor
shall be applied to Revolving Loans which are Base Rate Loans, and then to
Euro-Dollar Loans. All such other prepayments shall be applied first, to the
Term Loans in the inverse order of maturities, then secondly, to Revolving
Loans which are Base Rate Loans, and lastly to Euro-Dollar Loans, in each case
together with any compensation payments required by SECTION 8.05.
Notwithstanding the foregoing, however, the consent of the Required Lenders
shall be required pursuant to SECTION 6.01(k) in respect of the issuance of any
Capital Stock or Redeemable Preferred Stock which otherwise would result in a
Default or Event of Default thereunder.
SECTION 2.11. General Provisions as to Payments.
(a) The Borrowers shall make each payment of principal
of, and interest on, the Loans and of fees hereunder, without any setoff,
counterclaim or any deduction whatsoever, not later than 11:00 A.M. (Atlanta,
Georgia time) on the date when due, in federal or other funds immediately
available in Atlanta, Georgia, to the Agent at its address referred to in
SECTION 10.01. All payments received by the Agent after 11:00 A.M. (Atlanta,
Georgia time) on any Business Day shall be deemed to be received on the
following Business Day. The Agent will promptly distribute to each Lender its
ratable share of each such payment received by the Agent for the account of the
Lenders.
(b) Whenever any payment of principal of, or interest
on, the Base Rate Loans or Term Loans or of fees hereunder shall be due on a
day which is not a Domestic Business Day, the date for payment thereof shall be
extended to the next succeeding Domestic Business Day. Whenever any payment of
principal of or interest on, the Euro-Dollar Loans shall be due on a day which
is not a Euro-Dollar Business Day, the date for payment thereof shall be
extended to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in which case the
date for payment thereof shall be the next preceding Euro-Dollar Business Day.
Notwithstanding the foregoing, all interest and principal on account of all
Revolving Loans shall be due and payable on the Revolving Loan Termination
Date, and all interest and principal on account of the Term Loans shall be due
and payable on the Term Loan Maturity Date.
(c) All payments of principal, interest and fees and all
other amounts to be made by the Borrowers with respect to the Obligations or
otherwise (including, without limitation, with respect to the Letter of Credit
Obligations) pursuant to this Agreement shall be paid without deduction for,
and free from, any tax, imposts, levies, duties, deductions, or withholdings of
any nature now or at anytime hereafter imposed by any governmental authority or
by any taxing authority thereof or therein excluding in the case of each
Lender, taxes imposed on or measured by its net income, and franchise taxes
imposed on it, by the jurisdiction under the laws of which such Lender is
organized or any political subdivision thereof and, in the case of each Lender,
taxes imposed on its income, and franchise taxes imposed on it, by the
jurisdiction of such Lender's applicable Lending Office or any political
subdivision thereof (all such non-excluded taxes, imposts, levies, duties,
deductions or withholdings of any nature being "Taxes"). In the event that the
Borrowers are required by applicable law to make any such withholding or
deduction of Taxes with respect to any of the Obligations, the Borrowers shall
pay such deduction or withholding to the applicable taxing authority, shall
promptly furnish to any Lender in respect of which such deduction or
withholding is made all receipts and other documents
39
evidencing such payment and shall pay to such Lender additional amounts as may
be necessary in order that the amount received by such Lender after the
required withholding or other payment shall equal the amount such Lender would
have received had no such withholding or other payment been made. If no
withholding or deduction of Taxes are payable in respect to any Obligations,
the Borrowers shall furnish any Lender, at such Lender's request, a certificate
from each applicable taxing authority or an opinion of counsel acceptable to
such Lender, in either case stating that such payments are exempt from or not
subject to withholding or deduction of Taxes. If the Borrowers fail to provide
such original or certified copy of a receipt evidencing payment of Taxes or
certificate(s) or opinion of counsel of exemption, the Borrowers hereby agree
to compensate such Lender for, and indemnify them with respect to, the tax
consequences of the Borrowers' failure to provide evidence of tax payments or
tax exemption. Before making any claim pursuant to this SECTION, such Lender
shall designate a different Lending Office if such designation will avoid the
need for giving such notice and will not, in the judgment of such Lender, be
otherwise disadvantageous to such Lender.
Each Lender which is not organized under the laws of the
United States or any state thereof agrees, as soon as practicable after receipt
by it of a request by the Borrowers to do so, to file all appropriate forms and
take other appropriate action to obtain a certificate or other appropriate
document from the appropriate governmental authority in the jurisdiction
imposing the relevant Taxes, establishing that it is entitled to receive
payments with respect to the Obligations and interest thereon under this
Agreement and the Notes without deduction and free from withholding of any
Taxes imposed by such jurisdiction; provided that if it is unable, for any
reason, to establish such exemption, or to file such forms and, in any event,
during such period of time as such request for exemption is pending, the
Borrowers shall nonetheless remain obligated under the terms of the immediately
preceding paragraph.
In the event any Lender receives a refund of any Taxes paid
by the Borrowers pursuant to this SECTION 2.11(c), it will pay to the Borrowers
the amount of such refund promptly upon receipt thereof; provided that if at
any time thereafter it is required to return such refund, the Borrowers shall
promptly repay to it the amount of such refund.
Without prejudice to the survival of any other agreement of
the Borrowers hereunder, the agreements and obligations of the Borrowers and
the Lenders contained in this SECTION 2.11(c) shall be applicable with respect
to any Participant, Assignee or other Transferee, and any calculations required
by such provisions (i) shall be made based upon the circumstances of such
Participant, Assignee or other Transferee, and (ii) constitute a continuing
agreement and shall survive the termination of this Agreement and the payment
in full or cancellation of the Notes.
(d) Prior to the existence of a Default or Event of
Default, all monies to be applied to the Obligations (except for proceeds
collected in the Collateral Reserve Account which are applied as provided in
SECTION 2.14) and except as otherwise expressly provided in this Agreement
(including, without limitation, in SECTION 2.10), shall be allocated among the
Agent and such of the Lenders as are entitled thereto (and, with respect to
monies allocated to the Lenders in accordance with their Commitment Percentage
unless otherwise provided herein) in the following order (in each case, until
all Obligations within each category itemized in this paragraph (d) below are
fully paid): (i) first, to the Agent to pay principal and accrued interest on
40
any portion of the Revolving Loans (including Settlement Loans and Overadvance
Loans) which Agent may have advanced on behalf of any Lenders and for which
Agent has not been reimbursed by such Lender or the Borrowers; (ii) second, to
the Agent for its own benefit and/or the benefit of the Lenders, as applicable,
in payment of principal of any Overadvance Loans; (iii) third, to Wachovia to
pay the principal and accrued interest on any portion of the Settlement Loans
outstanding; (iv) fourth, to the Agent for the benefit of the Lenders in payment
of principal of other Revolving Loans; (v) fifth, to the Agent first, and then
to the Lenders, to pay the amount of expenses that have not been reimbursed,
respectively, to the Agent or the Lenders by the Borrowers (or the other
Lenders, as applicable) in accordance with the terms of this Agreement,
together with any interest accrued thereon; (vi) sixth, to the Agent to pay any
amounts owed under indemnification obligations that have not been paid to Agent
by the Lenders or the Borrowers, together with interest accrued thereon; (vii)
seventh, to the Lenders for any amounts owed under indemnification obligations
that they have paid to the Agent and for any expenses that they have reimbursed
to the Agent; (viii) eighth, to the Agent to pay any fees due and payable to
Agent; (ix) ninth, to the payment of Fees payable to any outstanding Letter of
Credit Obligations then due and owing; (x) tenth, as cash collateral for any
outstanding Letter of Credit Obligations equal to 110% of the undrawn amount
thereof; (xi) eleventh, to payment of the Reimbursement Obligations; (xii)
twelfth, to the Lenders in payment of accrued interest then due and payable in
respect of any Obligations other than the Loans then outstanding; (xiii)
thirteenth, to payment of principal of (1) first, with respect to the Loans,
and (2) second, with respect to any obligations owing to any Lender with
respect to any Interest Rate Protection Agreements, and (xiv) lastly, to any
other Obligations then due and payable.
(e) During the existence of a Default or Event of
Default and at all times after the Obligations have become due and payable, all
monies to be applied to the Obligations, whether such monies represent
voluntary payments by the Borrowers, Net Cash Proceeds, or are received
pursuant to acceleration of the Loans or realized from any disposition of
Collateral in accordance with the Intercreditor Agreement, shall be allocated
among the Agent and such of the Lenders as are entitled thereto (and, with
respect to monies allocated to the Lenders in accordance with their Commitment
Percentage unless otherwise provided herein) in the following order (in each
case, until all Obligations within each category itemized in this paragraph (e)
below are fully paid): (i) first, to the Agent to pay principal and accrued
interest on any portion of the Revolving Loans (including Settlement Loans and
Overadvance Loans) which Agent may have advanced on behalf of any Lenders and
for which Agent has not been reimbursed by such Lender or the Borrowers; (ii)
second, to the Agent for its own benefit and/or the benefit of the Lenders, as
applicable, in payment of principal of any Overadvance Loans; (iii) third, to
Wachovia to pay the principal and accrued interest on any portion of the
Settlement Loans outstanding; (iv) fourth, to the Agent for the benefit of the
Lenders in payment of principal of other Revolving Loans, (v) fifth, to the
Agent first, and then to the Lenders, to pay the amount of expenses that have
not been reimbursed, respectively, to the Agent or the Lenders by the Borrowers
(or the other Lenders, as applicable) in accordance with the terms of this
Agreement, together with any interest accrued thereon; (vi) sixth, to the Agent
to pay any amounts owed under indemnification obligations that have not been
paid to Agent by the Lenders or the Borrowers, together with interest accrued
thereon; (vii) seventh, to the Lenders for any amounts owed under
indemnification obligations that they have paid to the Agent and for any
expenses that they have reimbursed to the Agent; (viii) eighth, to the Agent to
pay any fees due and payable to Agent; (viii) eighth, to the payment of Fees
payable to Letter of Credit Obligations; (ix) ninth, as cash
41
collateral for any Letter of Credit Obligations equal to 110% of the undrawn
amount thereof; (x) tenth, to payment of the Reimbursement Obligations; (xi)
eleventh, to the Lenders in payment of accrued interest then due and payable in
respect of the Loans and any other Obligations then outstanding; (xii) twelfth,
to payment of principal of (1) first, with respect to the Loans, and (2)
second, with respect to any obligations owing to any Lender with respect to any
Interest Rate Protection Agreements, and (xiii) lastly, to any other
Obligations then due and payable. The allocations set forth in this SECTION
2.11(e) are solely to determine the rights and priorities of Agent and Lenders
as among themselves and may be changed by Agent and Lenders without notice to
or the consent or approval of the Borrowers or any other Person.
SECTION 2.12. Computation of Interest and Fees. Interest
on Base Rate Loans based on the Base Rate, as well as the Cash Contract Rate
and Contingent Interest, shall be computed on the basis of a year of 360 days
and paid for the actual number of days elapsed (including the first day but
excluding the last day). Interest on Euro-Dollar Loans will be computed on the
basis of a year of 360 days and paid for the actual number of days elapsed,
calculated as to each Interest Period from and including the first day thereof
to but excluding the last day thereof. Commitment fees and any other fees
payable hereunder shall be computed on the basis of a year of 360 days and paid
for the actual number of days elapsed (including the first day but excluding
the last day).
SECTION 2.13. All Loans to Constitute One Obligation. The
Loans shall constitute one general Obligation of the Borrowers, on which each
Borrower is jointly and severally liable, and shall be secured by the Liens on
the Collateral in favor of the Collateral Agent; provided, however, that the
Agent and each of the Lenders shall be deemed to be a creditor of each Borrower
and the holder of a separate claim against each Borrower to the extent of all
Obligations jointly and severally owed by the Borrowers to the Agent or such
Lender.
SECTION 2.14. Blocked Account Agreements. (a) Within
thirty (30) days of Closing, the Borrowers shall deliver to the Collateral
Agent deposit control agreements in form acceptable to the Collateral Agent for
each of the depository accounts; provided, however, as to Churchill Weavers,
Inc., the Collateral Agent shall be provided with a Blocked Account Agreement
within 4 days of Closing with Churchill Weavers, Inc.'s depositary bank or
banks, requiring all balances therein in excess of (x) $100,000, as to Berea
National Bank, and (y) $1,000, as to Community Trust Bank, to be transmitted to
the Collateral Agent for deposit in a Collateral Reserve Account, with such
balances being transmitted on a weekly basis on each Friday and, with respect
to Berea National Bank, on any other day on which the aggregate amount of
balances in such account is equal to or in excess of $100,000. Each Borrower
receiving Net Cash Proceeds of dispositions of assets or of the issuance of
Capital Stock or Redeemable Preferred Stock or the incurrence of Debt for money
borrowed (except Debt secured by Purchase Money Liens), or Net
Casualty/Insurance Proceeds shall (or shall cause such other Person receiving
such cash proceeds to) remit all such cash proceeds to the Collateral Reserve
Account. In the event such items of payment are inadvertently received by any
of the Borrowers or any other Person, whether or not in accordance with the
terms of this Agreement, such Borrower or other Person shall be deemed to hold
the same in trust for the benefit of Collateral Agent and promptly forward them
to the Collateral Agent for deposit in the Collateral Reserve Account. Net Cash
Proceeds of dispositions of assets or of the issuance of Capital Stock or
Redeemable Preferred Stock or the incurrence of Debt for money borrowed (except
Debt secured
42
by Purchase Money Liens) and Net Casualty/Insurance Proceeds shall be held
subject to the provisions of SECTION 2.10(c), and any Net Cash Proceeds or Net
Casualty/Insurance Proceeds not required to be paid to the Agent for the
account of the Lenders pursuant to SECTION 2.10(c) shall be paid to the
Borrowers on the date such payment is made for the account of the Lenders.
During the existence of an Event of Default the Collateral Agent may at any
time in its sole discretion or if requested in writing by the Required Lenders,
direct Account Debtors to make payments on the Accounts Receivable Collateral,
or portions thereof, directly to the Collateral Agent, and the Account Debtors
are hereby authorized and directed to do so by each Borrower upon the
Collateral Agent's direction, and the funds so received shall be also deposited
in the Collateral Reserve Account, or, at the election of the Collateral Agent,
upon its receipt thereof, be applied directly to repayment of the Obligations
as set forth in SECTION 2.11(e).
(b) The Borrowers shall not open or maintain any deposit
account with any depositary institution (except with the Collateral Agent and
subject to the Liens created by this Agreement) unless the depository
institution for such account shall have entered into a Blocked Account
Agreement with the Collateral Agent, and the Borrower shall deliver to the
Collateral Agent in pledge all certificates of deposit issued by any such
depositary institution. As of the Closing Date, all deposit accounts maintained
by the Borrowers with any depositary institutions are listed on SCHEDULE 2.14.
In addition, the Borrowers shall promptly execute and deliver such lockbox
agreements, and make such related arrangements, as the Agent (acting at the
request of the Collateral Agent) may request at any time.
SECTION 2.15. Issuance of Letters of Credit. Subject to the
terms and conditions of this Agreement, and in reliance upon the representations
and warranties of the Borrowers herein set forth, Wachovia shall issue for the
account of Borrower, one or more Letters of Credit denominated in Dollars, in
accordance with this ARTICLE 2, from time to time during the period commencing
on the Closing Date and ending on the Domestic Business Day prior to the
Revolving Loan Termination Date.
SECTION 2.16. Conditions and Amounts of Letters of Credit.
Wachovia shall have no obligation to, and shall not, issue any Letter of
Credit at any time:
(a) if the aggregate maximum amount then available for
drawing under Letters of Credit, after giving effect to the issuance of the
requested Letter of Credit, shall exceed any limit imposed by law or regulation
upon Wachovia;
(b) if, after giving effect to the issuance of the
requested Letter of Credit, (i) the aggregate Letter of Credit Obligations plus
the undrawn amount of letters of credit issued or guaranteed by the Permitted
Factor would exceed $3,000,000 or (ii) all of the then outstanding Working
Capital Obligations would exceed the Borrowing Base;
(c) which has an expiration date less than 30 days prior
to the Revolving Loan Termination Date;
(d) unless the relevant Borrower shall have delivered to
Wachovia at such times and in such manner as Wachovia may prescribe, a Letter
of Credit Application Agreement and such other documents and materials as may
be required pursuant to the terms thereof all
43
satisfactory in form and substance to Wachovia and the terms of the proposed
Letter of Credit shall be satisfactory in form and substance to Wachovia;
(e) if, as of the date of issuance any order, judgment
or decree of any court, arbitrator or Authority shall purport by its terms to
enjoin or restrain Wachovia from issuing the Letter of Credit and any law, rule
or regulation applicable to Wachovia and any request or directive (whether or
not having the force of law) from any Authority with jurisdiction over Wachovia
shall prohibit or request that Wachovia refrain from the issuance of letters of
credit generally or the issuance of that Letter of Credit; and
(f) if, the Unused Revolving Loan Commitment shall be
less than the amount of the requested Letter of Credit.
SECTION 2.17. Requests for Issuance of Letters of Credit.
(a) Request for Issuance. At least two Domestic Business
Days before the effective date for any Letter of Credit, the relevant Borrower
shall give Wachovia a written notice, with a copy to each Lender, containing
the original signature of an authorized officer or employee of such Borrower
substantially in the form of EXHIBIT P-1. Such notice shall be irrevocable and
shall specify the original face amount of the Letter of Credit requested (which
original face amount shall not be less than $20,000), the effective date (which
day shall be a Domestic Business Day) of issuance of such requested Letter of
Credit, the date on which such requested Letter of Credit is to expire, the
amount of then outstanding Letter of Credit Obligations, the purpose for which
such Letter of Credit is to be issued, whether such Letter of Credit may be
drawn in single or partial draws and the person for whose benefit the requested
Letter of Credit is to be issued.
(b) Issuance; Notice of Issuance. If the original face
amount of the requested Letter of Credit is less than or equal to the Unused
Revolving Loan Commitment at such time and the applicable conditions set forth
in this Agreement are satisfied, Wachovia shall issue the requested Letter of
Credit. Wachovia shall give each Lender written or telex notice in
substantially the form of EXHIBIT P-2, or telephonic notice confirmed promptly
thereafter in writing, of the issuance of a Letter of Credit and at the request
of any Lender, shall deliver to such Lender a copy thereof.
(c) No Extension or Amendment. Wachovia shall not extend
or amend any Letter of Credit if the issuance of a new Letter of Credit having
the same terms as such Letter of Credit as so amended or extended would be
prohibited by SECTION 2.16 or SECTION 2.17.
SECTION 2.18. Letter of Credit Reimbursement Obligations;
Duties of the Issuing Lender.
(a) Reimbursement. Notwithstanding any provisions to the
contrary in any Letter of Credit Application Agreement:
(i) the Borrower shall reimburse Wachovia for
drawings under a Letter of Credit issued by it no later than
the earlier of (A) the time specified in
44
such Letter of Credit Application Agreement, or (B) 1
Domestic Business Day after the payment by Wachovia;
(ii) any Reimbursement Obligation with respect
to any Letter of Credit shall bear interest from the date of
the relevant drawing under the pertinent Letter of Credit
until the date of payment in full thereof at a rate per annum
equal to (A) prior to the date that is 3 Domestic Business
Days after the date of the related payment by Wachovia, the
Base Rate and (B) thereafter, the Default Rate; and
(iii) in order to implement the foregoing, upon
the occurrence of a draw under any Letter of Credit, unless
Wachovia is reimbursed in accordance with subsection (i)
above, the Borrower irrevocably authorizes the Agent to treat
such nonpayment as a Notice of Borrowing in the amount of
such Reimbursement Obligation and to make Revolving Loans to
Borrower in such amount regardless of whether the conditions
precedent to the making of Revolving Loans hereunder have
been met. Each Borrower further authorizes the Agent to
credit the proceeds of such Revolving Loan so as to
immediately eliminate the liability of the Borrower for
Reimbursement Obligations under such Letter of Credit.
(b) Duties of Wachovia. Any action taken or omitted to
be taken by Wachovia in connection with any Letter of Credit, if taken or
omitted in the absence of willful misconduct or gross negligence, shall not put
Wachovia under any resulting liability to any Lender, or assuming that Wachovia
has complied with the procedures specified in SECTION 2.17 and such Lender has
not given a notice contemplated by SECTION 2.19(a) that continues in full force
and effect, relieve that Lender of its obligations hereunder to Wachovia. In
determining whether to pay under any Letter of Credit, Wachovia shall have no
obligation relative to the Agent or the Lenders other than to confirm that any
documents required to have been delivered under such Letter of Credit appear to
comply on their face, with the requirements of such Letter of Credit.
SECTION 2.19. Letter of Credit Participations.
(a) Purchase of Participations. Immediately upon
issuance by Wachovia of any Letter of Credit in accordance with the procedures
set forth in SECTION 2.17, each Lender shall be deemed to have irrevocably and
unconditionally purchased and received from Wachovia, without recourse or
warranty, an undivided interest and participation, to the extent of such
Lender's Commitment Percentage of such Letter of Credit (or guaranty pertaining
thereto); provided, that a Letter of Credit shall not be entitled to the
benefits of this SECTION 2.19 if the Agent and Wachovia shall have received
written notice from any Lender on or before the Domestic Business Day
immediately prior to the date of Wachovia's issuance of such Letter of Credit
that one or more of the conditions contained in SECTION 2.17 or ARTICLE 4 is
not then satisfied, and, in the event the Agent and Wachovia receives such a
notice, it shall have no further obligation to, and shall not, issue any Letter
of Credit until such notice is withdrawn by that Lender or until the Required
Lenders have effectively waived such condition in accordance with the
provisions of this Agreement.
(b) Sharing of Letter of Credit Payments. In the event
that Wachovia makes any payment under any Letter of Credit for which the
applicable Borrower shall not have repaid such
45
amount to Wachovia pursuant to SECTION 2.20 or which cannot be paid by a
Revolving Loan pursuant to subsection (iii) of SECTION 2.18, Wachovia shall
notify the Agent and the Agent shall promptly notify each Lender of such
failure, and each Lender shall promptly and unconditionally pay to Wachovia
such Lender's Commitment Percentage of the amount of such payment in Dollars
and in same day funds. If the Agent so notifies such Lender prior to 10:00 A.M.
(Atlanta, Georgia time) on any Domestic Business Day, such Lender shall make
available to Wachovia its Commitment Percentage of the amount of such payment
on such Domestic Business Day in same day funds. If and to the extent such
Lender shall not have so made its Commitment Percentage of the amount of such
payment available to Wachovia, such Lender agrees to pay to Wachovia forthwith
on demand such amount together with interest thereon, for each day from the
date such payment was first due until the date such amount is paid to Wachovia
at the Federal Funds Rate for the first 3 days and thereafter at the Base Rate.
The failure of any Lender to make available to Wachovia its Commitment
Percentage of any such payment shall neither relieve nor increase the
obligation of any other Lender hereunder to make available to Wachovia its
Commitment Percentage of any payment on the date such payment is to be made.
(c) Sharing of Reimbursement Obligation Payments.
Whenever Wachovia receives a payment on account of a Reimbursement Obligation,
including any interest thereon, as to which Wachovia has received any payments
from the Lenders pursuant to this SECTION 2.19, it shall promptly pay to each
Lender which has funded its participating interest therein, in Dollars and in
the kind of funds so received, an amount equal to such Lender's Commitment
Percentage thereof. Each such payment shall be made by Wachovia on the Domestic
Business Day on which the funds are paid to such Person, if received prior to
10:00 am. (Atlanta, Georgia time) on such Domestic Business Day, and otherwise
on the next succeeding Domestic Business Day.
(d) Documentation. Upon the request of any Lender,
Wachovia shall furnish to such Lender copies of any Letter of Credit, Letter of
Credit Application Agreement and other documentation relating to Letters of
Credit issued pursuant to this Agreement.
(e) Obligations Irrevocable. The obligations of the
Lenders to make payments to Wachovia with respect to a Letter of Credit shall
be irrevocable, not subject to any qualification or exception whatsoever and
shall be made in accordance with, but not subject to, the terms and conditions
of this Agreement under all circumstances (assuming that Wachovia has issued
such Letter of Credit in accordance with SECTION 2.17 and such Lender has not
given a notice contemplated by SECTION 2.19(a) that continues in full force and
effect), including, without limitation, any of the following circumstances:
(i) any lack of validity or enforceability of
this Agreement or any of the other Credit Documents;
(ii) the existence of any claim, set-off,
defense or other right which the Borrower may have at any
time against a beneficiary named in a Letter of Credit or any
transferee of any Letter of Credit (or any Person for whom
any such transferee may be acting), Wachovia, any Lender or
any other Person, whether in
46
connection with this Agreement, any Letter of Credit, the
transactions contemplated herein or any unrelated
transactions;
(iii) any draft, certificate or any other
document presented under the Letter of Credit proves to be
forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any
respect;
(iv) the surrender or impairment of any security
for the performance or observance of any of the terms of any
of the Credit Documents;
(v) payment by Wachovia under any Letter of
Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(vi) payment by Wachovia under any Letter of
Credit against presentation of any draft or certificate that
does not comply with the terms of such Letter of Credit,
except payment resulting from the gross negligence or willful
misconduct of Wachovia or where the draft or certificate on
its face does not comply in any material respect with the
terms of such Letter of Credit; or
(vii) any other circumstances or happenings
whatsoever, whether or not similar to any of the foregoing,
except circumstances or happenings resulting from the gross
negligence or willful misconduct of Wachovia.
SECTION 2.20. Payment of Letter of Credit Reimbursement
Obligations.
(a) Payments to Wachovia Bank. The relevant Borrower
agrees to pay to Wachovia the amount of all Reimbursement Obligations, interest
and other amounts payable to Wachovia under or in connection with any Letter of
Credit issued for such Borrower's account immediately when due, irrespective
of:
(i) any lack of validity or enforceability of
this Agreement or any of the other Credit Documents;
(ii) the existence of any claim, set-off,
defense or other right which the Borrower may have at any
time against a beneficiary named in a Letter of Credit or any
transferee of any Letter of Credit (or any Person for whom
any such transferee may be acting), Wachovia, the Agent, any
Lender or any other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions;
(iii) any draft, certificate or any other
document presented under the Letter of Credit proves to be
forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any
respect;
(iv) the surrender or impairment of any security
for the performance or observance of any of the terms of any
of the Credit Documents;
47
(v) payment by Wachovia under any Letter of
Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(vi) payment by Wachovia under any Letter of
Credit against presentation of any draft or certificate that
does not comply with the terms of such Letter of Credit,
except payment resulting from the gross negligence or willful
misconduct of Wachovia or where the draft or certificate on
its face does not comply in any material respect with the
terms of such Letter of Credit; or
(vii) any other circumstances or happenings
whatsoever, whether or not similar to any of the foregoing,
except circumstances or happenings resulting from the gross
negligence or willful misconduct of Wachovia.
(b) Recovery or Avoidance of Payments. In the event any
payment by or on behalf of the relevant Borrower received by Wachovia with
respect to a Letter of Credit and distributed by Wachovia to the Lenders on
account of their participations is thereafter set aside, avoided or recovered
from Wachovia in connection with any receivership, liquidation or bankruptcy
proceeding, each Lender that received such distribution shall, upon demand by
Wachovia, contribute such Lender's Commitment Percentage of the amount set
aside, avoided or recovered together with interest at the rate required to be
paid by Wachovia upon the amount required to be repaid by it.
SECTION 2.21. Compensation for Letters of Credit and
Reporting Requirements.
(a) Letter of Credit Fees. Each Borrower shall pay to
the Agent with respect to each Letter of Credit issued hereunder a letter of
credit fee ("Letter of Credit Fee") equal to 2.75% per annum of the face amount
of such Letter of Credit, payable on the Domestic Business Day on which such
Letter of Credit is issued. Letter of Credit Fees payable hereunder shall be
computed on the basis of a year of 360 days and paid for the actual number of
days elapsed (including the first day but excluding the last day). The Agent
shall promptly remit such Letter of Credit Fees, when paid, to the Lenders in
accordance with their Commitment Percentage thereof.
(b) Wachovia Charges. Each Borrower shall pay to
Wachovia, solely for its own account, the standard charges assessed by Wachovia
in connection with the issuance, administration, amendment and payment or
cancellation of Letters of Credit issued hereunder, which charges shall be
those typically charged by Wachovia to its customers generally having credit
and other characteristics similar to the relevant Borrower, as determined in
good faith by Wachovia.
SECTION 2.22. Indemnification and Exoneration with
respect to Letters of Credit.
(a) Indemnification. In addition to amounts payable as
elsewhere provided in this Article 2, the Borrowers shall protect, indemnify,
pay and save Wachovia, the Agent and each Lender harmless from and against any
and all claims, demands, liabilities, damages, losses,
48
costs, charges and expenses (including reasonable attorneys' fees) which
Wachovia, the Agent or any Lender may incur or be subject to as a consequence
of the issuance of any Letter of Credit for a Borrower's account other than as
a result of its gross negligence or willful misconduct, as determined by a
court of competent jurisdiction.
(b) Assumption of Risk by the Borrowers. As between the
Borrowers, Wachovia, the Agent and the Lenders, the Borrowers assume all risks
of the acts and omissions of, or misuse of the Letters of Credit issued for
such Borrower's account by, the respective beneficiaries of such Letters of
Credit. In furtherance and not in limitation of the foregoing, Wachovia, the
Agent and the Lenders shall not be responsible for (i) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted by
any party in connection with the application for and issuance of the Letters of
Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged, (ii) the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign a Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason, (iii) failure of the beneficiary of a Letter of
Credit to comply duly with conditions required in order to draw upon such
Letter of Credit, (iv) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher, for errors in interpretation of
technical terms, (vi) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any Letter of Credit or of
the proceeds thereof, (vii) the misapplication by the beneficiary of a Letter
of Credit of the proceeds of any drawing under such Letter of Credit; and
(viii) any consequences arising from causes beyond the control of Wachovia, the
Agent and the Lenders.
(c) Exoneration. In furtherance and extension and not in
limitation of the specific provisions hereinabove set forth, any action taken
or omitted by Wachovia under or in connection with the Letters of Credit or any
related certificates if taken or omitted in good faith and with reasonable
care, shall not put Wachovia or any Lender under any resulting liability to the
Borrowers or relieve the Borrowers of any of their obligations hereunder to any
such Person.
ARTICLE 3
COLLATERAL
SECTION 3.01. Security Agreement. As security for the
payment of all Obligations, pursuant to the Security Agreement, each Borrower
is granting to Collateral Agent, for the ratable benefit of the Lenders, a
continuing, general lien upon and security interest and security title in and
to the following described property, wherever located, whether now existing or
hereafter acquired or arising, namely: (a) the Accounts Receivable Collateral
and all amounts payable to any Borrower by a Permitted Factor with respect to
Factored Accounts; (b) the Inventory Collateral; (c) the Equipment Collateral;
(d) the Intangibles Collateral; (e) the Balances Collateral; and (f) all
products and/or proceeds of any and all of the foregoing, including, without
limitation, insurance proceeds.
SECTION 3.02. Further Assurances. The Borrowers shall
duly execute and/or deliver (or cause to be duly executed and/or delivered) to
the Collateral Agent any instrument, agreement, invoice, document, document of
title, dock warrant, dock receipt,
49
warehouse receipt, bill of lading, order, financing statement, assignment,
waiver, consent, acknowledgment, control agreement or other writing which may
be reasonably necessary to the Collateral Agent to carry out the terms of this
Agreement and any of the other Credit Documents and to perfect its security
interest or intended security interest in and facilitate the collection of the
Collateral, the proceeds thereof, and any other property at any time
constituting security or intended to constitute security to the Collateral
Agent. The Borrowers shall perform or cause to be performed such acts as the
Collateral Agent may request to establish and maintain for the Collateral Agent
a valid and perfected security interest in and security title to the
Collateral, free and clear of any Liens other than Permitted Encumbrances. Each
of the Borrowers authorizes the Collateral Agent to file financing statements
consistent with this Agreement in such filing offices as it shall select, and
acknowledges that such financing statement may describe the Collateral as "all
personal property" of such Borrower. Each Borrower agrees that: (i) no item of
Accounts Receivable Collateral consisting of non-electronic chattel paper has
or will be created without including thereon a legend acceptable to the
Collateral Agent indicating that the Collateral Agent has a security interest
therein, and (ii) at the request of the Collateral Agent, it will take such
steps as are required to establish "control" in favor of the Collateral Agent
under the UCC in any electronic chattel paper.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Each of the Borrowers represents and warrants to the Agent
and the Lenders that:
SECTION 4.01. Corporate Existence and Power. Each of the
Borrowers and each Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation,
is duly qualified to transact business in every jurisdiction where, by the
nature of its business, such qualification is necessary (as set forth on
SCHEDULE 4.01), and has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted, except where any such failure to qualify or have all required
governmental licenses, authorizations, consents and approvals does not have and
would not reasonably be expected to cause a Material Adverse Effect and would
not impede any rights of the Collateral Agent with respect to the Collateral.
SECTION 4.02. Corporate and Governmental Authorization;
No Contravention. The execution, delivery and performance by the Borrowers of
this Agreement, the Notes and the other Credit Documents (i) are within each
Borrower's corporate powers, (ii) have been duly authorized by all necessary
corporate action, and have been executed on behalf of the Borrowers by duly
authorized officers, (iii) require no action by or in respect of or filing
with, any governmental body, agency or official, (iv) do not contravene, or
constitute a default under, any provision of applicable law or regulation or of
the Articles of incorporation or by-laws of the Borrowers or of any agreement,
judgment, injunction, order, decree or other instrument binding upon the
Borrowers or any of the Subsidiaries, and (v) do not result in the creation or
imposition of any Lien on any asset of the Borrowers (except in favor of the
Collateral Agent) or any of the Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement constitutes
a valid and binding agreement of the Borrowers enforceable in accordance with
its terms, and the Notes and
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the other Credit Documents, when executed and delivered in accordance with this
Agreement, will constitute valid and binding obligations of the Borrowers
enforceable in accordance with their respective terms, provided that the
enforceability hereof and thereof is subject in each case to general principles
of equity and to bankruptcy, insolvency and similar laws affecting the
enforcement of creditors' rights generally.
SECTION 4.04. Financial Information.
(a) The (i) (x) draft audited consolidated financial
statements (including the balance sheet and statements of income, shareholders'
equity and cash flows) of the Parent and its Consolidated Subsidiaries, and (y)
unaudited consolidating financial statements (including the balance sheet and
statements of income, shareholders' equity and cash flows) of the Parent and
all Subsidiaries, in each case for the Fiscal Year ending on April 1, 2001,
copies of which have been delivered to each of the Lenders, and (ii) unaudited
(x) consolidated financial statements (including the balance sheet and
statements of income, shareholders' equity and cash flows) of the Parent and
its Consolidated Subsidiaries, and (z) an opening balance sheet taking into
account the restructuring of the Parent and its Consolidated Subsidiaries and
the sale of its adult bedding line of business to its former management, and
the sources and uses statement described in SECTION 9.01(s), copies of which
have been delivered to each of the Lenders, fairly present, in conformity with
GAAP, the consolidated financial position of the Parent and its Consolidated
Subsidiaries or the consolidating financial position of the Parent and the
Subsidiaries, as the case may be, as of such dates and their consolidated or
consolidating results of operations and cash flows for such periods stated, and
accurately reflect the sources and uses described in such sources and uses
statement.
(b) Since April 1, 2001, there has been no event, act,
condition or occurrence having a Material Adverse Effect.
SECTION 4.05. Litigation. Except as disclosed in SCHEDULE
4.05, there is no action, suit or proceeding pending, or to the knowledge of
the Borrowers threatened, against or affecting the Borrowers or any of the
Subsidiaries before any court or arbitrator or any governmental body, agency or
official which could have a Material Adverse Effect.
SECTION 4.06. Compliance with ERISA.
(a) The Borrowers and each member of the Controlled
Group have fulfilled their obligations under the minimum funding standards of
ERISA and the Code with respect to each Plan and are in compliance in all
material respects with the presently applicable provisions of ERISA and the
Code, and have not incurred any liability to the PBGC or a Plan under Title IV
of ERISA.
(b) Neither the Borrowers nor any member of the
Controlled Group is or ever has been obligated to contribute to any
Multiemployer Plan.
SECTION 4.07. Compliance with Laws; Payment of Taxes. The
Borrowers and the Subsidiaries are in material compliance with all applicable
laws, regulations and similar requirements of governmental authorities
(including, without limitation, the Fair Labor Standards Act of 1938, as
amended), except as set forth in SECTION 4.13 or where such compliance is
51
being contested in good faith through appropriate proceedings, and except where
any such failure to comply (other than with respect to the Fair Labor Standards
Act of 1938, as amended) does not have and would not reasonably be expected to
cause a Material Adverse Effect and would not impede any rights of the
Collateral Agent with respect to the Collateral and the Borrowers have adopted
and continue to follow a compliance program satisfactory to assure the accuracy
of the foregoing statement. There have been filed on behalf of the Borrowers
and the Subsidiaries all federal, state and local income, excise, property and
other tax returns which are required to be filed by them and all taxes due
pursuant to such returns or pursuant to any assessment received by or on behalf
of the Borrowers or any Subsidiary have been paid. The charges, accruals and
reserves on the books of the Borrowers and the Subsidiaries in respect of taxes
or other governmental charges are, in the opinion of the Borrowers, adequate.
United States income tax returns of the Borrowers and the Subsidiaries have
been examined and closed through the Fiscal Year ended on or about March 31,
1997.
SECTION 4.08. Investment Company Act. Neither the
Borrowers nor any of the Subsidiaries is an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
SECTION 4.09. Public Utility Holding Company Act. Neither
the Borrowers nor any of the Subsidiaries is a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended.
SECTION 4.10. Ownership of Property; Liens. Each of the
Borrowers and the Subsidiaries has title to its properties sufficient for the
conduct of its business, and none of such property is subject to any Lien
except as permitted in SECTION 5.18.
SECTION 4.11. No Default. Neither the Borrowers nor any
of the Subsidiaries is in default under or with respect to any agreement,
instrument or undertaking to which it is a party or by which it or any of its
property is bound which could have or cause a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
SECTION 4.12. Full Disclosure. All information heretofore
furnished by the Borrowers to the Agent or any Lender for purposes of or in
connection with this Agreement or any transaction contemplated hereby is, and
all such information hereafter furnished by the Borrowers to the Agent or any
Lender will be, true, accurate and complete in every material respect or based
on reasonable estimates on the date as of which such information is stated or
certified. To the best knowledge of the executive officers of the Borrowers,
the Borrowers have disclosed to the Lenders in writing any and all facts which
could have or cause a Material Adverse Effect.
SECTION 4.13. Environmental Matters. Except as disclosed
in SCHEDULE 4.13:
(a) Neither the Borrowers nor any Subsidiary is subject
to any Environmental Liability which could have or cause a Material Adverse
Effect and neither the Borrowers nor any
52
Subsidiary has been designated as a potentially responsible party under CERCLA
or under any state statute similar to CERCLA. None of the Real Properties or
any other real property owned, leased or operated by a Borrower or any
Subsidiary (collectively, the "Aggregate Real Properties") has been identified
on any current or proposed (i) National Priorities List under 40 C.F.R. ss.
300, (ii) CERCLIS list or (iii) any list arising from a state statute similar
to CERCLA.
(b) No Hazardous Materials have been or are being used,
produced, manufactured, processed, treated, recycled, generated, stored,
disposed of, managed or otherwise handled at, or shipped or transported to or
from the Aggregate Real Properties or are otherwise present at, on, in or under
the Aggregate Real Properties, or, to the best of the knowledge of the
Borrowers, at or from any adjacent site or facility, except for Hazardous
Materials, such as cleaning solvents, pesticides and other materials used,
produced, manufactured, processed, treated, recycled, generated, stored,
disposed of, managed, or otherwise handled in minimal amounts in the ordinary
course of business in substantial compliance with all applicable Environmental
Requirements.
(c) The Borrowers and each of the Subsidiaries have
procured all Environmental Authorizations necessary for the conduct of its
business, and is in substantial compliance with all Environmental Requirements
in connection with the operation of the Aggregate Real Properties and the
Borrowers' and each of the Subsidiary's respective businesses.
SECTION 4.14. Capital Stock. All Capital Stock,
Redeemable Preferred Stock, debentures, bonds, notes and all other securities
of the Borrowers and the Subsidiaries presently issued and outstanding are
validly and properly issued in accordance with all applicable laws, including,
but not limited to, the "Blue Sky" laws of all applicable states and the
federal securities laws, or for which the applicable statute of limitations has
expired. The issued shares of Capital Stock and Redeemable Preferred Stock of
the Parent's Wholly Owned Subsidiaries are owned by the Parent free and clear
of any Lien or adverse claim. At least a majority of the issued shares of
capital stock of each of the Parent's other Subsidiaries (other than Wholly
Owned Subsidiaries) is owned by the Parent, free and clear of any Lien or
adverse claim.
SECTION 4.15. Margin Stock. Neither the Borrowers nor any
of the Subsidiaries is engaged principally, or as one of its important
activities, in the business of purchasing or carrying any Margin Stock, and no
part of the proceeds of any Loan will be used to purchase or carry any Margin
Stock or to extend credit to others for the purpose of purchasing or carrying
any Margin Stock, or be used for any purpose which violates, or which is
inconsistent with, the provisions of Regulation T, U or X.
SECTION 4.16. Insolvency. After giving effect to the
execution and delivery of the Credit Documents and the incurrence of the
Obligations under this Agreement: (i) the Borrowers will not (x) be
"insolvent," within the meaning of such term as used in O.C.G.A. ss. 18-2-22 or
as defined in ss. 101 of the Bankruptcy Code, or SECTION 2 of either the "UFTA"
or the "UFCA", or as defined or used in any "Other Applicable Law" (as those
terms are defined below), or (y) be unable to pay its debts generally as such
debts become due within the meaning of SECTION 548 of the Bankruptcy Code,
SECTION 4 of the UFTA or SECTION 6 of the UFCA, or (z) have an unreasonably
small capital to engage in any business or transaction, whether current or
contemplated, within the meaning of SECTION 548 of the Bankruptcy Code,
53
SECTION 4 of the UFTA or SECTION 5 of the UFCA; and (ii) the Obligations of the
Borrowers under the Credit Documents will not be rendered avoidable under any
Other Applicable Law. For purposes of this SECTION 4.16, "UFTA" means the
Uniform Fraudulent Transfer Act, "UFCA" means the Uniform Fraudulent Conveyance
Act, and "Other Applicable Law" means any other applicable law pertaining to
fraudulent transfers or acts voidable by creditors, in each case as such law may
be amended from time to time.
SECTION 4.17. Insurance. The Parent and each of the
Subsidiaries have (either in the name of such Borrower or in such Subsidiary's
own name), with financially sound and reputable insurance companies and with a
Best's Rating of at least "A", insurance in at least such amounts and against
at least such risks (including on all its property, and business interruption,
public liability and worker's compensation) as are usually insured against in
the same general area by companies of established repute engaged in the same or
similar business and as required by the Security Documents.
SECTION 4.18. Purchase of Collateral. Within the 12
months period preceding the Closing Date, none of the Borrowers has purchased
any of the Collateral in a bulk transfer or in a transaction which was outside
the ordinary course of the business of such Borrower's seller.
SECTION 4.19. Possession of Permits. Each Borrower and
each Subsidiary possess all franchises, certificates, licenses, permits and
other authorizations from governmental political subdivisions or regulatory
authorities, and all patents, trademarks, service marks, trade names,
copyrights, licenses and other rights, free from burdensome restrictions, that
are necessary for the ownership, maintenance and operation of any of its
properties and assets, and no Borrower or Subsidiary is in violation of any
thereof except where any such failure to possess any of the foregoing does not
have and would not reasonably be expected to cause a Material Adverse Effect
and would not impede any rights of the Collateral Agent with respect to the
Collateral.
SECTION 4.20. Labor Disputes. Except as disclosed in
SCHEDULE 4.20, (i) there is no collective bargaining agreement or other labor
contract covering employees of the Borrowers or any Subsidiary, (ii) no such
collective bargaining agreement or other labor contract is scheduled to expire
during the term of this Agreement, (iii) no union or other labor organization
is seeking to organize, or to be recognized as, a collective bargaining unit of
employees of any of the Borrowers or any Subsidiary or for any similar purpose
and (iv) there is no pending, or to the Borrower's knowledge, threatened,
strike, work stoppage, material unfair labor practice claim, or other material
labor dispute against or affecting any Borrower or any Subsidiary or their
respective employees.
SECTION 4.21. Surety Obligations. Except as shown on
SCHEDULE 4.21, none of the Borrowers nor any of their Subsidiaries is obligated
as surety or indemnitor under any surety or similar bond or other contract
issued or entered into to assure payment, performance or completion of
performance of any undertaking or obligation of any Person.
SECTION 4.22. Restrictions. None of the Borrowers nor any
of their Subsidiaries is a party or subject to any contract, agreement, or
charter or other corporate
54
restriction, which materially and adversely affects its business or the use or
ownership of any of its assets. Except as set forth on SCHEDULE 4.22, none of
the Borrowers nor any of their Subsidiaries is a party or subject to any
contract or agreement which restricts its right or ability to incur Debt, none
of which prohibit the execution of or compliance with this Agreement or the
other Credit Documents by the Borrowers or any of their Subsidiaries, as
applicable.
SECTION 4.23. Leases. SCHEDULE 4.23 is a complete listing
of all material capitalized and operating leases of the Borrowers and their
Subsidiaries on the date hereof. Each of the Borrowers and their Subsidiaries
is in compliance in all material respects with all of the terms of each of its
respective capitalized and operating leases.
SECTION 4.24. Trade Relations. There exists no present
condition or state of facts or circumstances which would materially adversely
affect the Borrowers or any of their Subsidiaries or prevent the Borrowers or
any of their Subsidiaries from conducting its business after the consummation
of the transactions contemplated by this Agreement in substantially the same
manner in which they have heretofore been conducted, and, to the best of each
Borrower's knowledge, there exists no actual or threatened termination,
cancellation or limitation of, or any modification or change in, the business
relationship between the Borrower or any of their Subsidiaries and any customer
or any group of customers whose purchases individually or in the aggregate are
material to the business of the Borrowers or any of their Subsidiaries, or with
any material supplier.
SECTION 4.25. Capital Structure. As of the date hereof,
SCHEDULE 4.25 states (i) the correct name of each of the Subsidiaries of Parent
and each Borrower, its jurisdiction of incorporation and the percentage of its
Capital Stock and Redeemable Preferred Stock owned by the Parent and each
Borrower, (ii) the name of each of the Parent's and the Borrowers' Affiliates
and the nature of such affiliation, (iii) the number, nature and holder of all
Capital Stock and Redeemable Preferred Stock of each Borrower and each
Subsidiary of such Borrower, and (iv) the number of authorized, issued and
treasury shares of each Borrower and each Subsidiary of such Borrower. The
Borrowers have good title to all of the shares they purport to own of the
Capital Stock and Redeemable Preferred Stock of each of its Subsidiaries, free
and clear in each case of any Lien other than Permitted Encumbrances. All such
shares have been duly issued and are fully paid and non-assessable.
SECTION 4.26. Federal Taxpayer Identification Number. The
Borrowers' federal taxpayer identification numbers are as indicated on the
respective Collateral Information Certificates.
SECTION 4.27. Bona Fide Accounts. Each item of the
Accounts Receivable Collateral and each Factored Account arises or will arise
under a contract between a Borrower and the respective Account Debtor, or from
the bona fide sale or delivery of goods to or performance of services for the
Account Debtor.
SECTION 4.28. Good Title to Collateral. The Borrowers
have good title to the Collateral free and clear of all Liens, other than any
Permitted Encumbrances, and no assertable financing statement covering the
Collateral is on file in any public office other than any evidencing Permitted
Encumbrances.
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SECTION 4.29. Right to Assign and Grant Security
Interest. The Borrowers have full right, power and authority to make the
assignment pursuant to this Agreement of the Accounts Receivable Collateral and
to grant a security interest in all of the Collateral.
SECTION 4.30. Trade Styles. Except as may be set forth on
the Collateral Information Certificates, the Borrowers use no trade names or
trade styles (herein, "Trade Styles") in their business operations and warrant
that the same shall continue, except for any additional Trade Styles after the
date hereof with respect to which the Borrowers have given the Collateral Agent
at least 30 days prior written notice thereof. In any event, to the extent
that, now or hereafter, the Borrowers use any Trade Styles, the Borrowers
hereby represent and warrant in favor of the Collateral Agent that: (i) all of
the accounts receivable and proceeds with respect thereto arising out of sales
under the Trade Styles shall be the property of, and belong to, the Borrowers
and shall constitute Accounts Receivable Collateral; (ii) each of the Trade
Styles is a trade name and trade style (and not an independent corporation or
other legal entity) by which the Borrowers identifies and sells certain of
their products or services and under which they may conduct a portion of their
business; (iii) all accounts receivable, proceeds thereof, and returned
merchandise which arise from the sale of products invoiced under the names of
any of the Trade Styles shall be owned solely by the Borrowers and shall be
subject to the terms of this Agreement as they relate to Accounts Receivable
Collateral; and (iv) each Borrower hereby appoints the Collateral Agent as its
attorney-in-fact to file such certificates disclosing such Borrower's use of
the Trade Styles and to take such other actions on its behalf as are necessary
to comply with the statutes of any states relating to the use of fictitious or
assumed business names, to the extent that such Borrower fails to do so.
SECTION 4.31. Account Debtor Capacity and Solvency. Each
Account Debtor hereunder (a) had the capacity to contract at the time any
contract or other document giving rise to the account was executed and (b) such
Account Debtor was not and is not "insolvent" as that term is defined in
SECTION 4.16.
SECTION 4.32. Proceedings with Respect to Accounts. There
are no proceedings or actions which are threatened or pending against any
Account Debtor which are reasonably likely to have a material adverse change in
such Account Debtor's financial condition or the collectibility of such
account.
SECTION 4.33. Location of Collateral. As of the date
hereof, the Collateral consisting of goods of the Borrowers is situated only at
one or more of the Collateral Locations.
SECTION 4.34. Material Contracts. SCHEDULE 4.34 sets
forth a complete listing of all Material Contracts. Each Borrower and its
Subsidiaries is in compliance in all material respects with all terms and
provisions of each Material Contract.
SECTION 4.35. Survival of Representations and Warranties.
The Borrowers covenant, warrant and represent to the Agent and each Lender that
all representations and warranties of the Borrowers and their Subsidiaries
contained in this Agreement or any of the other Credit Documents shall be true
at the time of the execution of this Agreement and the other
56
Credit Documents, and shall survive the execution, delivery and acceptance
thereof by Agent and the parties thereto and the closing of the transactions
described therein or related thereto.
SECTION 4.36. Force Majeure. None of the Borrowers'
business is suffering from effects of fire, accident, strike, drought, storm,
earthquake, embargo, tornado, hurricane, act of God, acts of a public enemy or
other casualty that would have a Material Adverse Effect.
SECTION 4.37. Senior Subordinated Notes. The Obligations,
as and when incurred, shall be senior in right of payment to all of the
principal of, interest on, and all other amounts payable in respect of, the
Senior Subordinated Notes, the Liens of the Collateral Agent securing the
Obligations shall be senior and prior to the Liens securing the Senior
Subordinated Notes pursuant to the Intercreditor Agreement, and the Obligations
shall be entitled to the benefit of the subordination provisions set forth in
the Senior Subordinated Notes Purchase Agreement.
ARTICLE 5
COVENANTS
The Borrowers agree that, so long as any Lender has any
Commitment hereunder or any amount payable hereunder or any of the Obligations
remains unpaid:
SECTION 5.01. Information. The Borrowers will deliver to
each of the Lenders:
(a) within 30 days after the Closing Date, the audited
consolidated financial statements (including the balance sheet and statements
of income, shareholders' equity and cash flows) of the Parent and its
Consolidated Subsidiaries for the Fiscal Year ending on April 1, 2001, and as
soon as available and in any event within 90 days after the end of each
subsequent Fiscal Year, (i) audited consolidated financial statements
(including the balance sheet and statements of income, shareholders' equity and
cash flows) of the Parent and its Consolidated Subsidiaries, and (ii) unaudited
consolidating financial statements (including the balance sheet and statements
of income, shareholders' equity and cash flows) of the Parent and all
Subsidiaries, in each case as of the end of such Fiscal Year, setting forth in
each case in comparative form the figures for the previous fiscal year, with
the audited such statements being certified by the Certified Public
Accountants, and with such certification to be free of exceptions and
qualifications not acceptable to the Required Lenders;
(b) as soon as available, and in any event within 40
days after the end of each Fiscal Month for the first 24 Fiscal Months after
the Closing Date, and 30 days after the end of each Fiscal Month thereafter,
and within 45 days after the end of each Fiscal Quarter, (i) consolidated
financial statements (including the balance sheet and statements of income,
shareholders' equity and cash flows) of the Parent and its Consolidated
Subsidiaries, and (ii) consolidating financial statements (including the
balance sheet and statements of income, shareholders' equity and cash flows) of
the Parent and all Subsidiaries, in each case as of the end of such Fiscal
Month and Fiscal Quarter, as the case may be, and for the portion of the Fiscal
Year ending on such date, setting forth in each case in comparative form the
figures for the corresponding Fiscal Month and Fiscal Quarter and the
corresponding portion of the previous
57
Fiscal Year, all certified (subject to normal year-end adjustments) as to
fairness of presentation, GAAP and consistency by a Senior Officer;
(c) simultaneously with the delivery of each set of
financial statements referred to in paragraphs (a) and (b) above, a
certificate, substantially in the form of EXHIBIT G (a "Compliance
Certificate"), of the Senior Officer (i) setting forth in reasonable detail the
calculations required to establish whether the Parent was in compliance with
the requirements of SECTION 5.20 on the date of such financial statements and
(ii) stating whether any Default exists on the date of such certificate and, if
any Default then exists, setting forth the details thereof and the action which
the Parent or any Borrower is taking or proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of
annual financial statements referred to in paragraph (a) above, (i) a statement
of the Certified Public Accountants to the effect that (A) such accountants
acknowledge and agree that the Agent and the Lenders may rely upon such
financial statement in the administration of this Agreement, and (B) nothing
has come to their attention to cause them to believe that any Default existed
on the date of such financial statements, and (ii) a copy of any management
letter furnished to the Parent by the Certified Public Accountants;
(e) as soon as available and in no event later than the
end of the Fiscal Year of each Borrower, projections of the Borrowers and their
Subsidiaries for the forthcoming Fiscal Year, and set forth Fiscal Quarter by
Fiscal Quarter, together with all material assumptions made in connection
therewith;
(f) promptly, but in any event within 5 Domestic
Business Days after any Borrower becomes aware of the occurrence of any
Default, a certificate of the Senior Officer setting forth the details thereof
and the action which the Borrowers are taking or propose to take with respect
thereto;
(g) promptly upon the mailing thereof to the
shareholders of the Parent generally, copies of all financial statements,
reports and proxy statements so mailed;
(h) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any registration
statements on Form S-8 or its equivalent) and annual, quarterly or monthly
reports which the Parent shall have filed with the Securities and Exchange
Commission;
(i) if and when any member of the Controlled Group (i)
gives or is required to give notice to the PBGC of any "reportable event" (as
defined in SECTION 4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan under Title IV of ERISA, or
knows that the plan administrator of any Plan has given or is required to give
notice of any such reportable event, a copy of the notice of such reportable
event given or required to be given to the PBGC; (ii) receives notice of
complete or partial withdrawal liability under Title IV of ERISA, a copy of
such notice; or (iii) receives notice from the PBGC under Title IV of ERISA of
an intent to terminate or appoint a trustee to administer any Plan, a copy of
such notice;
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(j) as soon as practicable, but in any event on or before 30
days after each Fiscal Month for the first 24 Fiscal Months after the Closing
Date, and 20 days after each Fiscal Month thereafter, a duly executed Borrowing
Base Certificate (and to the Agent any accompanying documentation required by
the Agent), with respect to satisfaction of the requirement that the Working
Capital Obligations shall not exceed the Borrowing Base, as of the last day of
the reporting period, in the form of EXHIBIT F or such other form as the Agent
may deliver for such purpose to the Borrowers from time to time hereafter, the
statements in which, in each instance, shall be certified as to truth and
accuracy by the Senior Officer, and on each Thursday, such monthly Borrowing
Base Certificate shall be updated, using good faith estimates, where necessary,
and such weekly updates shall be certified as to truth and accuracy, to the
extent estimates were not necessary, as well as to the good faith determination
where estimates are made, by the Senior Officer;
(k) written notice of the following:
(i) promptly after each Borrower's learning
thereof, of (A) the commencement of any litigation affecting
such Borrower or any of its Subsidiaries or any of its
respective assets, whether or not the claim is considered by
Borrower to be covered by insurance, and (B) the institution
of any administrative proceeding which in either case of
clause (A) or (B), if decided adversely, would have a Material
Adverse Effect;
(ii) at least 30 days prior thereto, of the
opening of any new office or place of business of any Borrower
or any of its Subsidiaries or the closing of any existing
office or place of business of any Borrower or any of its
Subsidiaries;
(iii) promptly after such Borrower's learning
thereof, of any labor dispute to which such Borrower or any of
its Subsidiaries may become a party, or any strikes or
walkouts relating to any of its plants or other facilities,
which in either case will have a Material Adverse Effect, and
the expiration of any labor contract to which it is a party or
by which it is bound;
(iv) promptly after the occurrence thereof, of
any default by any obligor under any note or other evidence of
indebtedness payable to any Borrower or any of its
Subsidiaries exceeding $250,000;
(v) promptly after the rendition thereof, of any
judgment in an amount exceeding $250,000 rendered against any
Borrower or any of its Subsidiaries; and
(vi) promptly after any Borrowers' learning
thereof, knowledge of any and all Environmental Liabilities,
pending, threatened or anticipated Environmental Proceedings,
Environmental Notices, Environmental Judgments and Orders, and
Environmental Releases at, on, in, under or in any way
affecting the Aggregate Real Properties or any adjacent
property, and all facts, events, or conditions that could lead
to any of the foregoing; and
(vii) promptly after any Borrower's learning
thereof, of any default by such Borrower or any of its
Subsidiaries under the Senior Subordinated Notes
59
Purchase Agreement or of any material default under any note,
indenture, loan agreement, mortgage, lease, deed, guaranty or
other similar agreement relating to any Debt of any Borrower
or any of its Subsidiaries exceeding $250,000; and
(viii) promptly upon the execution thereof, of any
amendment to the Senior Subordinated Notes Purchase Agreement,
or other agreement governing or pertaining to such
Subordinated Debt, entered into by any Borrower as permitted
by SECTION 5.21(d), and such Borrower shall send the Agent a
copy thereof promptly thereafter;
(l) from time to time such additional information regarding
the financial position or business (including, without limitation, tax returns
and bank statements) of the Borrowers and the Subsidiaries as the Agent, at the
request of any Lender, may reasonably request.
SECTION 5.02. Inspection of Property, Books and Records;
Field Audits
(a) The Borrowers will (i) keep, and cause each Subsidiary to
keep, proper books of record and account in which full, true and correct entries
in conformity with GAAP shall be made of all dealings and transactions in
relation to its business and activities; and (ii) permit, and cause each
Subsidiary to permit, the Agent or representatives of the Agent and any Lender
(at the Borrowers' expense if a Default or Event of Default is in existence or
at the Agent's or such Lender's respective expense, as the case may be, prior to
the occurrence of a Default or Event of Default) to visit and inspect any of
their respective properties, verify information with any Person, to examine and
make abstracts from any of their respective books and records and to discuss
their respective affairs, finances and accounts with their respective officers,
employees and the Certified Public Accountants, the Borrowers agreeing to
cooperate and assist in such visits and inspections, in each case prior to the
occurrence of a Default, at such reasonable times and as often as may reasonably
be requested, and after the occurrence of a Default, at any time and without
prior notice.
(b) In addition to the rights granted the Agent and the
Lenders pursuant to SECTION 5.02(a), the Collateral Agent (or any person or
persons designated by it) shall, in its sole discretion, have the right to call
at any place of business of the Borrowers at any time and without prior notice,
and, without hindrance or delay, examine, inspect, and audit all or any portion
of the Collateral and to examine, inspect, audit and check and make copies of
and extracts from the Borrowers' books, records, journals, orders, receipts and
any correspondence and other data relating to the Collateral, to the Borrowers'
business or to any other transactions between the parties hereto.
(c) The Collateral Agent shall have the right, on its own or
at the direction of the Required Lenders, to conduct field audits of the
Collateral, and at the expense of the Borrowers; provided that so long as no
Default or Event of Default exists, no more than 1 such field audit shall be
conducted in any Fiscal Quarter.
SECTION 5.03. Maintenance of Existence and Management.The
Borrowers shall, and shall cause each Subsidiary to maintain, (i) their
corporate existence and carry on their business in substantially the same manner
and in substantially the same fields as such business is
60
now carried on and maintained, except as permitted by SECTIONS 5.04 and 5.05,
(ii) their respective corporate charters, by-laws, partnership agreements,
operating agreements and other similar documents and agreements relating to
their legal existence and organization, and not permit any amendment or other
modification thereto except for any amendment or modification that would not
affect the Obligations or result in a Material Adverse Effect, and (iii)
maintain executive management having sufficient skill and experience in the
Borrowers' and the Subsidiaries' industry to manage the Borrowers and the
Subsidiaries competently and efficiently.
SECTION 5.04. Dissolution. The Parent shall not suffer or
permit dissolution or liquidation either in whole or in part or redeem or retire
any shares of its own stock or that of any Borrower or Subsidiary, except
through corporate reorganization to the extent permitted by SECTION 5.05.
SECTION 5.05. Consolidations, Mergers and Sales of Assets.
(a) The Borrowers will not, nor will they permit any
Subsidiary to, merge or consolidate, or permit any of its Subsidiaries to merge
or consolidate, with any Person, except for a merger or consolidation between
Subsidiaries of the Borrowers or involving only a Borrower and one or more of
its Subsidiaries in which such Borrower is the surviving entity.
(b) The Borrowers will not, nor will they permit any
Subsidiary to sell, lease or otherwise transfer all or any part of their assets
(including, without limitation, any sale and leaseback arrangement, but
excluding sales of inventory in the ordinary course of business) to, any other
Person, or discontinue or eliminate any business line or segment, provided that
the foregoing limitation on the sale, lease or other transfer of assets and on
the discontinuation or elimination of a business line or segment shall not
prohibit, subject to SECTION 2.10(c):
(i) the sales of Factored Accounts to a
Permitted Factor; and
(ii) dispositions of Equipment Collateral subject
to the provisions of SECTION 5.32.
SECTION 5.06. Use of Proceeds. On the Closing Date, the
entire amount of the Term Loans, together with Revolving Loans in the aggregate
amount of $12,000,000, will be used to refinance in part amounts outstanding
under the Refinanced Agreements, and the security interest and liens under the
Original Security Agreement, the Original Stock Pledge Agreement and the
Mortgages shall be continued without interruption to secure the Obligations
pursuant to the Domestic Stock Pledge Agreement, the Security Agreement and the
Mortgages. No portion of the proceeds of the Loans will be used by the Borrowers
or any Subsidiary (i) in connection with, whether directly or indirectly, any
tender offer for, or other acquisition of, stock of any corporation with a view
towards obtaining control of such other corporation, unless such tender offer or
other acquisition is to be made on a negotiated basis with the approval of the
Board of Directors of the Person to be acquired, and the provisions of SECTION
5.17 would not be violated, (ii) directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of purchasing or carrying any Margin
Stock, or (iii) for any purpose in violation of any applicable law or
regulation.
61
SECTION 5.07. Compliance with Laws; Payment of Taxes. The
Borrowers will, and will cause each of the Subsidiaries and each member of the
Controlled Group to, comply with applicable laws (including but not limited to
ERISA and the Fair Labor Standards Act of 1938, as amended), regulations and
similar requirements of governmental authorities (including but not limited to
PBGC), except where the necessity of such compliance is being contested in good
faith through appropriate proceedings diligently pursued and except where
failure to comply would not have and would not reasonably be expected to cause a
Material Adverse Effect. The Borrowers will, and will cause each of the
Subsidiaries to, pay promptly when due all taxes, assessments, governmental
charges, claims for labor, supplies, rent and other obligations which, if
unpaid, might become a lien against the property of the Borrowers or any
Subsidiary, except liabilities being contested in good faith and against which,
if requested by the Agent, the Borrowers or such Subsidiary will set up reserves
in accordance with GAAP.
SECTION 5.08. Insurance; Net Casualty/Insurance Proceeds.
(a) The Borrowers will maintain, and will cause each of the
Subsidiaries to maintain (either in the name of the Borrowers or in such
Subsidiary's own name), with financially sound and reputable insurance companies
acceptable to the Agent and with a Best's Rating of at least "A", insurance on
all of their property in at least such amounts and against at least such risks
(including on all their property, public liability and worker's compensation,
and business interruption insurance) as are usually insured against in the same
general area by companies of established repute engaged in the same or similar
business and as required by the Security Documents. The Borrowers shall deliver
the originals or copies (which copies shall be certified if requested by the
Agent) of such policies to the Agent with satisfactory lender's loss payable
endorsements naming the Collateral Agent, as agent for the Lenders, as sole loss
payee, assignee and additional insured, as its interests may appear. Each policy
of insurance or endorsement shall contain a clause (i) not permitting
cancellation by a Borrower without the prior written consent of the Collateral
Agent, (ii) requiring the insurer to give not less than 30 days prior written
notice to the Collateral Agent in the event of cancellation or non-renewal by
the insurance company of the policy for any reason whatsoever. In addition, the
Borrower will exercise commercially reasonable efforts to obtain, within 90 days
of the Closing Date, a further endorsement to each such policy specifying that
the interest of the Collateral Agent shall not be impaired or invalidated by any
act or neglect of the Borrowers or the owner of the property or by the
occupation of the premises for purposes more hazardous than are permitted by
said policy. Upon the date of this Agreement, and from time to time thereafter
upon the Collateral Agent's request, the Borrowers shall provide the Collateral
Agent with a statement from each insurance company providing the foregoing
coverage, acknowledging in favor of the Collateral Agent the continued
effectiveness of the foregoing insurance clauses. If the Borrowers fail to
provide and pay for such insurance, the Collateral Agent may, at its option, but
shall not be required to, procure the same and charge the Borrowers therefor as
a part of the Obligations.
(b) Net Casualty/Insurance Proceeds must be applied to either
(i) the payment of the Obligations, or (ii) the repair and/or restoration of the
Collateral. If either an Event of Default has occurred, or the cost to repair or
restore the Collateral or of loss due to business interruption exceeds $250,000,
then, in such event, the Agent, at the direction of the Required Lenders, shall
determine, in their sole discretion, the manner in which Net Casualty/Insurance
Proceeds are to be applied. If no Event of Default has occurred and the cost to
repair or restore
62
the Collateral or of loss due to business interruption is $250,000 or less, the
relevant Borrower shall determine the manner in which Net Casualty/Insurance
Proceeds are to be applied.
SECTION 5.09. Change in Fiscal Year. The Parent will not
change its Fiscal Year, or the fiscal year of any Borrower or any Subsidiary,
without the consent of the Required Lenders.
SECTION 5.10. Maintenance of Property. The Borrowers
shall, and shall cause each Subsidiary to, maintain all of its properties and
assets in reasonably good condition, repair and working order, ordinary wear and
tear excepted. The Borrowers and Subsidiaries shall maintain all Equipment
Collateral in good operating condition and repair, reasonable wear and tear
excepted and all necessary replacements of and repairs thereto shall be made so
that the value and operating efficiency of the Equipment Collateral shall be
maintained and preserved, reasonable wear and tear excepted. Without the prior
written consent of the Collateral Agent, none of the Equipment Collateral may be
affixed to any real property such that it is characterized as a fixture under
applicable law.
SECTION 5.11. Material Contracts. Each Borrower shall
comply with and enforce, and cause each Subsidiary to comply with and enforce,
all material terms and conditions of any Material Contract to which it is a
party. No Borrower may, without the Agent's and the Required Lenders' prior
written consent, (i) enter into, or permit any Subsidiary to enter into, any
amendment or modification to any Material Contract of a material nature, or (ii)
permit any Material Contract to be cancelled or terminated prior to its stated
maturity. Each Borrower shall promptly notify the Agent and deliver to the Agent
any notice received by such Borrower with respect to any event which constitutes
a default by such Borrower or Subsidiary under any Material Contract to which
such Borrower or such Subsidiary is a party or by which any of the assets of
such Borrower or Subsidiary may be bound.
SECTION 5.12. Environmental Matters. The Borrowers and the
Subsidiaries will not, and will not permit any Third Party to, use, produce,
manufacture, process, treat, recycle, generate, store, dispose of, manage at, or
otherwise handle, or ship or transport to or from the Aggregate Real Properties
any Hazardous Materials except for Hazardous Materials such as cleaning
solvents, pesticides and other similar materials used, produced, manufactured,
processed, treated, recycled, generated, stored, disposed, managed, or otherwise
handled in minimal amounts in the ordinary course of business in compliance with
all applicable Environmental Requirements.
SECTION 5.13. Environmental Release. Each Borrower agrees
that upon the occurrence of an Environmental Release at or on any of the
Aggregate Real Properties it will act immediately to investigate the extent of,
and to take appropriate remedial action to eliminate, such Environmental
Release, whether or not ordered or otherwise directed to do so by any
Environmental Authority.
SECTION 5.14. Transactions with Affiliates. Other than
transactions or arrangements existing on the Closing Date and described on
SCHEDULE 5.14, neither the Borrowers nor any of the Subsidiaries shall enter
into, or be a party to, any transaction involving $500,000 or more with any
Affiliate of the Borrowers or such Subsidiaries (which Affiliate is not
63
one of the Borrowers or a Wholly Owned Subsidiary), except as permitted by law
and in the ordinary course of business and pursuant to reasonable terms which
are fully disclosed to the Agent and the Lenders and are no less favorable to
such Borrower or such Subsidiary than would be obtained in a comparable arm's
length transaction with a Person which is not an Affiliate. All obligations
(consisting of Debt or otherwise) owed by any Affiliate to any Borrower shall by
its terms be subordinated in full to the payment of the Obligations.
SECTION 5.15. No Additional Subsidiaries. Neither the
Borrowers nor any of their Subsidiaries shall hereafter create or acquire any
Subsidiary or divest itself of any material assets by transferring them to any
Subsidiary. In the event that, with the Required Lenders' prior written consent,
a Borrower acquires or creates any Subsidiary which is a Domestic Subsidiary,
then, promptly (and in any event within 10 Domestic Business Days) upon the
acquisition or creation thereof, such Borrower shall cause such Subsidiary to
execute and deliver to the Agent: (i) a joinder agreement with respect this
Credit Agreement, the Contribution Agreement and the Consent and Agreement of
the Borrowers at the end of the Intercreditor Agreement, (ii) Notes payable to
the Banks, (iii) if it owns any capital stock of another Domestic Subsidiary, a
joinder agreement with respect to the Domestic Stock Pledge Agreement, together
with blank stock powers and the stock certificates, (iv) if it owns any capital
stock of a Direct Foreign Subsidiary, a joinder agreement with respect to the
Foreign Stock Pledge Agreement, together with blank stock powers and the stock
certificates (or otherwise make arrangements satisfactory to the Agent for the
registration or other perfection of its security interest), (v) if it owns any
Real Property and if requested by the Required Lenders, a Mortgage thereon and
such other Real Property Documentation with respect thereto as is requested by
the Required Lenders (provided, that such Mortgage and other Real Property
Documentation must be furnished as soon as reasonably practicable, but need not
be furnished within the aforesaid 10 Domestic Business Days period), (vi) such
UCC-1 financing statements as the Agent may reasonably request and (vii)
evidence of corporate authority therefor and opinions of counsel with respect
thereto, all satisfactory to the Agent in all respects, in the case of such
Security Documents, granting to the Collateral Agent a first priority perfected
Lien in all of the assets of such Domestic Subsidiary subject only to Permitted
Encumbrances.
SECTION 5.16. Restricted Payments. The Parent will not
declare or make any Restricted Payment during any Fiscal Year.
SECTION 5.17. Investments. The Borrowers shall not, and
shall not permit any of the Subsidiaries to, make Investments in any Person
except:
(i) deposits required by government agencies,
public utilities or insurance companies;
(ii) Investments by any Borrower to or in any
Subsidiary existing on the Closing Date;
(iii) Investments in (1) direct obligations of the
United States Government maturing within one year, (2)
certificates of deposit issued by a commercial bank whose
credit is satisfactory to the Agent, (3) commercial paper
rated "A1" or the equivalent thereof by S&P or "P1" or the
equivalent thereof by
64
Moody's and in either case maturing within 6 months after the
date of acquisition, and/or (4) tender bonds the payment of
the principal of and interest on which is fully supported by a
letter of credit issued by a United States bank whose
long-term certificates of deposit are rated at least "AA" or
the equivalent thereof by S&P and "Aa" or the equivalent
thereof by Moody's;
(iv) Investments as a result of Interest Rate
Protection Agreements not entered into for speculative
purposes and not exceeding the aggregate amount of $1,000,000
(valued at the termination value thereof computed in
accordance with a method approved by the International Swap
Dealers Association and agreed to by the parties in the
applicable Interest Rate Protection Agreement, if any, and in
any case net of any benefits of the Borrowers) outstanding
with respect thereto;
(v) other Investments existing on the Closing
Date;
provided, however, that immediately after giving effect to the
making of any Investment permitted by this SECTION 5.17, no Default or Event of
Default shall have occurred and be continuing.
SECTION 5.18. Permitted Liens. The Borrowers will not, and
will not permit any Subsidiary to, create, assume or suffer to exist any Lien,
directly or indirectly, on any asset now owned or hereafter acquired by it,
except, with respect to the Collateral, the Permitted Encumbrances, and with
respect to assets other than Collateral, other Liens set forth below:
(a) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement and disclosed in the Collateral
Information Certificates;
(b) any Lien existing on any specific fixed asset of any
corporation at the time such corporation becomes a Subsidiary and not created in
contemplation of such event;
(c) any Lien on any specific fixed asset securing Debt
incurred or assumed for the purpose of financing all or at least 75% of the cost
of acquiring or constructing such asset, provided that such Lien attaches to
such asset concurrently with or within 18 months after the acquisition or
completion of construction thereof;
(d) any Lien on any specific fixed asset of any corporation
existing at the time such corporation is merged or consolidated with or into the
Borrowers or a Subsidiary and not created in contemplation of such event;
(e) any Lien existing on any specific fixed asset prior to the
acquisition thereof by the Borrowers or a Subsidiary and not created in
contemplation of such acquisition;
(f) Purchase Money Liens, securing Debt, not to exceed
$250,000 in the aggregate outstanding at any time; provided that in granting any
such Purchase Money Liens, the Borrowers shall use their best efforts to obtain
from the holder of any such Purchase Money Lien a consent, if necessary, such
that the equipment covered by such Purchase Money Lien will not constitute
Excluded Equipment under clause (i) of the definition of "Excluded Equipment";
65
(g) Liens incidental to the conduct of its business or the
ownership of its assets which (i) do not secure Debt and (ii) do not in the
aggregate materially detract from the value of its assets or materially impair
the use thereof in the operation of its business;
(h) any Lien on Margin Stock;
provided, however, that immediately after giving effect to the
creation, assumption, existence or incurrence of any Liens permitted by this
SECTION 5.18, no Default or Event of Default shall have occurred and be
continuing.
SECTION 5.19. Restrictions on Ability of Borrower and
Subsidiaries to Pay Dividends. The Borrowers shall not, and shall not permit any
Subsidiary to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any contractual encumbrance or restriction on the
ability of any Subsidiary to (i) pay any dividends or make any other
distributions on its Capital Stock or Redeemable Preferred Stock or any other
interest or (ii) make or repay any loans or advances to the Borrowers.
SECTION 5.20. Financial Covenants.
(a) Minimum EBITDA. Consolidated EBITDA shall not be less
than: (i) for the Fiscal Quarter ending September 30, 2001, $1,825,000; (ii) on
a cumulative basis for the Fiscal Quarter ending December 30, 2001 and the
immediately preceding Fiscal Quarter, $3,500,000; (iii) on a cumulative basis
for the Fiscal Quarter ending March 31, 2002 and the 2 immediately preceding
Fiscal Quarters, $5,550,000; and (iv) at the end of each Fiscal Quarter
thereafter, for such Fiscal Quarter and the 3 immediately preceding Fiscal
Quarters, the amount set forth below corresponding to such Fiscal Quarter:
FISCAL QUARTER ENDING MINIMUM EBITDA
June 30, 2002 $7,375,000
September 29, 2002 $7,900,000
December 29, 2002 $8,300,000
March 30, 2003 and each Fiscal Quarter $8,725,000
thereafter
(b) Debt/EBITDA Ratio. The Debt/EBITDA Ratio will not exceed,
at the end of each Fiscal Quarter set forth below, calculated as to Debt as of
such Fiscal Quarter and calculated as to Consolidated EBITDA for such Fiscal
Quarter and the 3 immediately preceding Fiscal Quarters (except that for the
Fiscal Quarter ending March 31, 2002, such calculation shall be for such Fiscal
Quarter and the 2 immediately preceding Fiscal Quarters), the ratio set forth
below corresponding to such Fiscal Quarter:
66
FISCAL QUARTER ENDING MAXIMUM DEBT/EBITDA RATIO
March 31, 2002 7.75 to 1.0
June 30, 2002 5.65 to 1.0
September 29, 2002 5.25 to 1.0
December 29, 2002 4.75 to 1.0
March 30, 2003 and June 29, 4.50 to 1.0
2003
September 28, 2003 4.25 to 1.0
December 28, 2003 4.00 to 1.0
March 28, 2004 3.75 to 1.0
June 27, 2004 and September 3.50 to 1.0
26, 2004
December 26, 2004 through 3.25 to 1.0
December 25, 2005
April 2, 2006 3.00 to 1.0
(c) Senior Debt/EBITDA Ratio. The Senior Debt/EBITDA Ratio
will not exceed, at the end of each Fiscal Quarter set forth below, calculated
as to Senior Debt as of such Fiscal Quarter and calculated as to Consolidated
EBITDA for such Fiscal Quarter and the 3 immediately preceding Fiscal Quarters
(except that for the Fiscal Quarter ending March 31, 2002, such calculation
shall be for such Fiscal Quarter and the 2 immediately preceding Fiscal
Quarters), the ratio set forth below corresponding to such Fiscal Quarter:
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FISCAL QUARTER ENDING MAXIMUM SENIOR
DEBT/EBITDA RATIO
March 31, 2002 4.80 to 1.0
June 30, 2002 3.50 to 1.0
September 29, 2002 3.25 to 1.0
December 29, 2002 3.00 to 1.0
March 30, 2003 2.75 to 1.0
June 29, 2003 and September 2.50 to 1.0
28, 2003
December 28, 2003 2.25 to 1.0
March 28, 2004 through 2.00 to 1.0
September 26, 2004
December 26, 2004 1.75 to 1.0
March 27, 2005 and thereafter 1.50 to 1.00
(d) EBITDA/Cash Interest Ratio. The EBITDA/Cash Interest Ratio
will not be less than, at the end of each Fiscal Quarter set forth below, for
such Fiscal Quarter and the 3 immediately preceding Fiscal Quarters (except that
for the Fiscal Quarter ending March 31, 2002, such calculation shall be for such
Fiscal Quarter and the 2 immediately preceding Fiscal Quarters), the amount set
forth below corresponding to such Fiscal Quarter:
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FISCAL QUARTER ENDING MINIMUM EBITDA/CASH
INTEREST RATIO
March 31, 2002 1.60 to 1.0
June 30, 2002 1.65 to 1.0
September 29, 2002 1.80 to 1.0
December 29, 2002 2.00 to 1.0
March 30, 2003 2.20 to 1.0
June 29, 2003 through 2.25 to 1.0
December 28, 2003
March 28, 2004 through 2.50 to 1.0
December 26, 2004
March 27, 2005 through 2.75 to 1.0
December 25, 2005
April 2, 2006 3.00 to 1.00
(e) Minimum Stockholders' Equity. As of the end of each Fiscal
Quarter, Stockholders' Equity will not be less than the sum of (i) Stockholders'
Equity as of the Closing Date (after giving effect to the sale of its adult
bedding line of business to its former management) plus (ii) 75% of the
cumulative (since the Closing Date) Reported Net Income (excluding any Fiscal
Quarter during which Reported Net Income is less than $0.00) of the Parent and
the Subsidiaries.
(f) Capital Expenditures. No Borrower shall, nor shall it
permit any Subsidiary to, make any expenditures (including obligations incurred
under any lease) in any Fiscal Year that are required to be capitalized under
GAAP in the aggregate for any Borrower and the Subsidiaries, on a consolidated
basis, exceeding $500,000.
(g) Operating Leases. No Borrower shall, nor shall it permit
any Subsidiary to, enter into or remain or become liable upon any lease (other
than intercompany leases between the Borrower and its Subsidiaries) which would
be characterized as an operating lease under GAAP if the aggregate amount of all
consolidated rents paid by the Borrower and its Subsidiaries under all such
leases would exceed $3,000,000 in the first Fiscal Year following the Closing
Date, with such amount increasing each Fiscal Year thereafter by an additional
5% of the amount in effect at the end of the preceding Fiscal Year.
SECTION 5.21. Permitted Debt. No Borrower shall, nor shall
it permit any Subsidiary to, create, assume or incur any Debt, except as follows
(the amounts set forth below are in the aggregate for the Borrowers and all
Subsidiaries).
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(a) Debt owing by any Borrower to any other Borrower that is
subordinated to the payment of the Obligations and the Senior Subordinated
Notes;
(b) Debt to the Agent, the Collateral Agent and the Lenders
under this Agreement and to Wachovia under any document or agreement pertaining
to any Letter of Credit;
(c) Debt to Persons other than that described in the foregoing
clause(b) existing on the date of this Agreement and described in SCHEDULE 5.21;
(d) [Reserved];
(e) Debt consisting of accrued pension fund and other employee
benefit plan obligations and liabilities;
(f) Debt consisting of deferred taxes;
(g) Debt resulting from endorsements of negotiable instruments
received in the ordinary course of business;
(h) Debt secured by Purchase Money Liens permitted hereby
SECTION 5.18(f);
(i) contingent obligations with respect to documentary letters
of credit which have been issued but not drawn upon;
(j) Debt as a result of Interest Rate Protection Agreements as
the same are permitted under SECTION 5.17;
(k) Debt arising out of the refinancing, extension, renewal or
refunding of any Debt permitted by any of the foregoing paragraphs of this
SECTION so long as (i) the maturity of such refinanced Debt is not earlier than
the maturity of such original Debt, and (ii) the interest, fees and other
amounts payable with respect to such refinanced Debt are no greater than any
interest, fees or other amounts payable with respect to the original Debt); and
(l) Debt arising in connection with factoring arrangements
with The CIT Group/Commercial Services, Inc. described in SECTION 9.01(l), to be
paid off and released pursuant to the payoff letter described therein;
provided, however, that immediately after giving effect to the creation,
assumption, existence or incurrence of any Debt permitted by this SECTION 5.21,
no Default or Event of Default shall have occurred and be continuing.
SECTION 5.22. Limitation on Issuance and Sale of Capital
Stock and Redeemable Preferred Stock of Subsidiaries. The Borrowers shall not,
nor permit any Subsidiary to, permit any Wholly Owned Subsidiary to issue any
Capital Stock or Redeemable Preferred Stock other than to a Borrower or one of
its Wholly Owned Subsidiaries or permit any Person other than a Borrower or one
of its Wholly Owned Subsidiaries to own any Capital Stock or Redeemable
Preferred Stock of a Wholly Owned Subsidiary (other than directors' qualifying
shares); or sell any of the Capital Stock or Redeemable Preferred Stock of a
Subsidiary of a
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Borrower, or permit any Subsidiary of a Borrower to sell any of the Capital
Stock or Redeemable Preferred Stock of any other Subsidiary.
SECTION 5.23. Change of Principal Place of Business or
Location of Collateral. None of the Borrowers shall change its state of
organization, registered legal name, principal place of business or Executive
Office, or open new Collateral Locations or warehouses, or transfer existing
Collateral Locations or warehouses, or locate the Collateral at any location
other than a Collateral Location, or maintain records with respect to
Collateral, to or at any locations other than those at which the same are
presently kept or maintained as set forth on the Collateral Information
Certificates without the Collateral Agent's prior written consent after at least
30 days prior written notice to the Collateral Agent; provided, however, that
the Parent has notified the Lenders that on or about December 31, 2001, each of
the Parent and Hamco, Inc. will relocate its principal place of business and
Executive Office (with no change to its state of organization or registered
legal name) to Gonzales, Ascension Parish, Louisiana, and consent hereby is
granted with respect thereto, subject to the execution of appropriate UCC-1
financing statements requested by the Collateral Agent with respect thereto.
SECTION 5.24. Physical Inventories. The Borrowers shall
conduct a physical inventory no less frequently than annually and shall provide
to the Agent a report of such physical inventory promptly thereafter, together
with such supporting information as the Agent shall reasonably request.
SECTION 5.25. No Adverse Change to Senior Subordinated
Notes, et. al. The Parent agrees not to alter or amend the Senior Subordinated
Notes or the Senior Subordinated Notes Purchase Agreement in a manner that
conflicts with the intent of the Intercreditor Agreement or is adverse to the
interests of the Lenders, including without limitation any modification that (a)
adds or amends any covenant so that it is more restrictive than the covenants
contained in this Agreement, (b) increases the rate of interest, Yield
Maintenance Amount or any fees charged on the Senior Subordinated Notes, (c)
increases the principal amount of the Senior Subordinated Notes, (d) provides
for an earlier date for the payment of principal or interest on the Senior
Subordinated Notes or shortens the average life of the Senior Subordinated
Notes, or (e) provides for additional collateral, in each case without the prior
written consent of the Required Lenders.
SECTION 5.26. Preservation of Intangibles Collateral. The
Borrowers shall take all reasonably necessary and appropriate measures, taking
into account the value and usefulness of the relevant Intangibles Collateral and
the cost of such measures, to obtain, maintain, protect and preserve the
Intangibles Collateral including, without limitation, registration thereof with
the appropriate state or federal governmental agency or department.
SECTION 5.27. Records Respecting Collateral. All records
of the Borrowers with respect to the Collateral will be kept at their respective
Executive Offices and will not be removed from such address without the prior
written consent of Agent.
SECTION 5.28. Reports Respecting Collateral. The Borrowers
shall, as soon as practicable, but in any event on or before 30 days after each
Fiscal Month for the first 24 Fiscal Months after the Closing Date, and 20 days
after each Fiscal Month thereafter, furnish or
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cause to be furnished to the Agent a status report, certified by a duly
authorized officer of Borrowers, showing: (i) the aggregate dollar value of the
items comprising the Factored Accounts and the Accounts Receivable Collateral
and the age of each individual item thereof as of the last day of the preceding
Fiscal Month (segregating such items in such manner and to such degree as the
Agent may request, including, without limitation, by Account Debtor name,
address, invoice number, due date and invoice date); (ii) the aggregate dollar
value of the items of Accounts Receivable Collateral subject to "bill and hold"
arrangements (segregating such items in such manner and to such degree as the
Agent may request); (iii) the aggregate dollar value of the items comprising the
accounts payable of the Borrowers and the age of each individual item thereof as
of the last day of the preceding Fiscal Month (segregating such items in such
manner and to such degree as the Agent may request); (iv) the type, age, dollar
value and location of the Inventory Collateral as at the end of the preceding
Fiscal Month, valued at the lower of its FIFO cost or market value; and (v) the
aggregate dollar value of all returns, repossessions or discounts with respect
to Inventory Collateral in excess of $250,000, and specifying for each such
return, repossession or discount, the Account Debtor, the reason for any such
return, repossession or discount and the location of any returned or repossessed
Inventory. Additionally, the Agent may, at any time in its sole discretion,
require the Borrowers to permit the Agent in its own name or any designee of the
Agent in its own name to verify the individual account balances of or any other
matter relating to the individual Account Debtors immediately upon its request
therefor by mail, telephone, telegraph or otherwise. The Borrowers shall
cooperate fully with the Agent in an effort to facilitate and promptly conclude
any such verification process. In any event, with the above described status
report for the month of December of each year and upon request from the Agent,
made at any time hereafter, the Borrowers shall furnish the Agent with a then
current customer and Account Debtor name and address list, together with (if
requested by the Agent) updates of Equipment Collateral lists and appraisals of
the Equipment Collateral and/or the Inventory Collateral. During any period
during which the Borrowers may not borrow Revolving Loans under SECTION 2.01(a)
or (b), or a Default or Event of Default exists, then, upon the Agent's request
therefor, the Borrowers shall deliver to the Agent copies of proof of delivery
and the original copy of all documents, including, without limitation, repayment
histories and present status reports relating to all accounts listed on any
Borrowing Base Certificate and such other matters and information relating to
the status of the Accounts of the Borrowers as the Agent shall reasonably
request.
SECTION 5.29. Collateral Location Waivers. With respect to
each of the Collateral Locations, the Borrowers will obtain such waivers of
lien, estoppel certificates or subordination agreements as the Collateral Agent
may reasonably require to insure the priority of its security interest in that
portion of the Collateral situated at such locations, such waivers to be
obtained within (i) 30 days after the Closing Date, for Collateral Locations as
to which the dollar value of the Collateral at such Collateral Location is in
excess of $1,600,000, and (ii) 60 days after the Closing Date, for all other
Collateral Locations.
SECTION 5.30. Mexican Foreign Stock Pledge. Within 60 days
after the Closing Date, the Parent shall (i) execute and deliver to the
Collateral Agent such pledge or other agreement, and effect such registration or
take such other action, as may be required pursuant to applicable Mexican law to
enable the Collateral Agent to enforce in Mexico the pledge of stock in Burgundy
Interamericana, S.A. de C.V. described in the Foreign Stock Pledge Agreement,
(ii) deliver to the Collateral Agent a favorable opinion acceptable to the
Required Lenders regarding
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such enforceability from Mexican counsel acceptable to the Required Lenders and
(iii) deliver in pledge the original stock certificates evidencing such shares,
together with executed blank stock powers related thereto.
SECTION 5.31. Payment of Taxes On and Use of Collateral.
The Borrowers shall timely pay all taxes and other charges against the
Collateral, and the Borrowers will not use the Collateral illegally.
SECTION 5.32. Dispositions of Equipment Collateral. The
Borrowers will not sell, lease, exchange, arrange for a sale and leaseback, or
otherwise dispose of any of the Equipment Collateral without the prior written
consent of the Collateral Agent (acting at the direction of the Required
Lenders); provided, however, that, with notice to, but without the necessity of
consent of, the Collateral Agent, from time to time hereafter, in the ordinary
course of Borrowers' business for so long as no Default or Event of Default
exists, the Borrowers may (i) sell such portions of its Equipment Collateral
which in the aggregate during any 12 month period, has a market value or a book
value, whichever is more, of $500,000 or less, provided that the proceeds are
remitted to the Agent and applied as mandatory prepayment of the Term Loan under
SECTION 2.10(c), and (ii), sell, exchange or otherwise dispose of portions of
its Equipment Collateral which are obsolete, worn-out or unsuitable for
continued use by the Borrowers if such Equipment Collateral is replaced promptly
upon its disposition with equipment constituting Equipment Collateral having a
market value equal to or greater than the Equipment Collateral so disposed of
and in which the Collateral Agent shall obtain and have a first priority
security interest pursuant hereto subject only to Permitted Encumbrances.
SECTION 5.33. Changes to Federal Taxpayer Identification
Number. No Borrower may change its federal taxpayer identification number
without 30 days' prior written notice to the Collateral Agent.
SECTION 5.34. Changes in Credit Collection Policy and
Practices; Discounts and Allowances. The Borrower has furnished to each of the
Lenders a copy of its credit collection policy and practices in effect on the
Closing Date, and shall not make any material change in such credit collection
policy and practices without the prior written consent of the Agent (acting at
the direction of the Required Lenders). Upon the granting of any discounts,
allowances or credits by a Borrower in excess of $250,000, or not in the
ordinary course of business and which in either case are not shown on the face
of the invoice for the account involved, such Borrower shall promptly report
such discounts, allowances or credits, as the case may be, to the Agent and in
no event later than the time of its submission to the Agent of the next status
report as required by SECTION 5.28. In the event any amounts due and owing in
excess of $250,000 are in dispute between any Borrower and any Account Debtor,
such Borrower shall provide the Agent with a report thereon, explaining in
detail the reason for the dispute, all claims related thereto and the amount in
controversy. During the existence of an Event of Default, and without affecting
the Borrowers' liability with respect to the Obligations, the Agent, in the
exercise of its sole discretion, may settle disputes and otherwise deal with the
Account Debtors and the Borrowers shall reimburse the Agent as a part of the
Obligations any out-of-pocket expenses incurred by the Agent in connection
therewith.
SECTION 5.35. Taxes Owing with Respect to Accounts
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Each Borrower shall notify the Agent if any Account of such
Borrower includes any such tax due to any governmental taxing authority. If an
account of any Borrower includes a charge for any tax payable to any
governmental taxing authority, the Agent is authorized, in its sole discretion,
to pay the amount thereof to the proper taxing authority for the account of such
Borrower.
SECTION 5.36. Post-Closing Matters
On or before: (i) July 27, the Borrowers shall furnish to the
Agent, in sufficient counterparts for delivery of a counterpart to each Lender
and retention of one counterpart by the Agent, a favorable opinion letter
satisfactory to the Agent and the Lenders of Cleary, Gottlieb, Steen & Hamilton,
New York counsel for the Borrowers, dated as of the Closing Date, as to
enforceability of the Credit Agreement, the Notes and the other Credit Documents
(other than the Security Agreement and the Mortgages) under the laws of the
State of New York; and (ii) 30 days after the Closing Date, the Borrowers shall
deliver to the Agent a duly executed consent of Aladdin Manufacturing
Corporation, consenting to the assignment described in item (a) of Exhibit A to
the Assignment Agreement described in Section 9.01(j). In addition, the Agent is
obtaining and will furnish to the Lenders a favorable opinion letter of Stites &
Harbison, Kentucky counsel for the Lenders, dated as of the Closing Date, as to
enforceability and the sufficiency of the form of the Mortgage and the Mortgage
Amendment under the laws of the Commonwealth of Kentucky.
ARTICLE 6
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the
following events ("Events of Default") shall have occurred and be continuing:
(a) any Borrower shall fail to pay when due any principal of
any Loan or any Reimbursement Obligations with respect to any Letter of Credit,
or shall fail to pay any interest on any Loan within 3 Domestic Business Days
after such interest shall become due, or shall fail to pay any fee or other
Obligations within 3 Domestic Business Days after such fee or other Obligation
becomes due; or
(b) any Borrower shall fail to observe or perform any covenant
contained in:
(i) SECTIONS 5.01(f), 5.02(a)(ii), 5.02(b),
5.03(i) and (ii), 5.04 through 5.06, inclusive, 5.15 through
5.22, inclusive and 5.28, and 5.32;
(ii) SECTION 5.01(a) through (d), inclusive, and
such failure shall not have been cured within 10 Business Days
after the earlier to occur of (1) written notice thereof has
been given to the Borrowers by the Agent or (2) any of the
Borrowers otherwise becomes aware of any such failure; and
(iii) for the first Fiscal Year after the Closing
Date only, SECTION 5.28 and such failure shall not have been
cured within 5 Business Days after the earlier to occur of (1)
written notice thereof has been given to the Borrowers by
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the Agent or (2) any of the Borrowers otherwise becomes aware
of any such failure, or
(c) any Borrower shall fail to observe or perform any covenant
or agreement contained or incorporated by reference in this Agreement (other
than those covered by paragraph (a) or (b) above) or any Credit Document and
such failure shall not have been cured within 30 days after the earlier to occur
of (i) written notice thereof has been given to the Borrowers by the Agent or
(ii) any of the Borrowers otherwise becomes aware of any such failure; or
(d) any representation, warranty, certification or statement
made by any Borrower in ARTICLE 4 of this Agreement or in any certificate,
financial statement or other document delivered pursuant to this Agreement or
any other Credit Document shall prove to have been incorrect or misleading in
any material respect when made (or deemed made); or
(e) any Borrower shall fail to make any payment in respect of
Debt outstanding (other than the Notes) or under any document or agreement
pertaining to any Letter of Credit when due or within any applicable grace
period; or
(f) any event or condition shall occur which results in the
acceleration of the maturity of Debt outstanding of any Borrower or any
Subsidiary in an aggregate principal amount of $250,000 or more (including,
without limitation, any required mandatory prepayment or "put" of such Debt to
any Borrower or any Subsidiary) or enables (or, with the giving of notice or
lapse of time or both, would enable) the holders of such Debt or commitment or
any Person acting on such holders' behalf to accelerate the maturity thereof or
terminate any such commitment prior to its normal expiration (including, without
limitation, any required mandatory prepayment or "put" of such Debt to any
Borrower or any Subsidiary); or
(g) any Borrower or any Subsidiary shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally, or shall admit in writing its
inability, to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing; or
(h) an involuntary case or other proceeding shall be commenced
against any Borrower or any Subsidiary seeking liquidation, reorganization or
other relief with respect to it or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 60 days; or an order for
relief shall be entered against any Borrower or any Subsidiary under the federal
bankruptcy laws as now or hereafter in effect; or
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(i) any Borrower, any Subsidiary or any member of the
Controlled Group shall fail to pay when due any material amount which it shall
have become liable to pay to the PBGC or to a Plan under Title IV of ERISA; or
notice of intent to terminate a Plan or Plans shall be filed under Title IV of
ERISA by any Borrower, any Subsidiary, any member of the Controlled Group, any
plan administrator or any combination of the foregoing; or the PBGC shall
institute proceedings under Title IV of ERISA to terminate or to cause a trustee
to be appointed to administer any such Plan or Plans or a proceeding shall be
instituted by a fiduciary of any such Plan or Plans to enforce SECTION 515 or
4219(c)(5) of ERISA and such proceeding shall not have been dismissed within 30
days thereafter; or a condition shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any such Plan or Plans must be
terminated; or
(j) (i) one or more judgments or orders of any court or other
judicial body for the payment of money in an aggregate amount in excess of
$250,000 (in excess of amounts covered by insurance) shall be rendered after the
Closing Date against any Borrower or any Subsidiary and such judgment or order
shall either continue unsatisfied and unstayed for a period of 30 days or give
rise to a Lien on any Collateral at any time; or (ii) a warrant or writ of
attachment or execution or similar process shall be issued against any property
of any Borrower or any Subsidiary which exceeds, individually or together with
all other such warrants, writs and processes since the Closing Date, $250,000
(in excess of amounts covered by insurance) and such warrant, writ or process
shall not be discharged, vacated, stayed or bonded for a period of 30 days;
provided, however, that in the event a bond has been issued in favor of the
claimant or other Person obtaining such attachment or writ, the issuer of such
bond shall execute a waiver or subordination agreement in form and substance
satisfactory to the Agent pursuant to which the issuer of such bond subordinates
its right of reimbursement, contribution or subrogation to the Obligations and
waives or subordinates any Lien it may have on the assets of any Borrower or any
Subsidiary; or
(k) (i) except as a result of the exercise of any of the
"Warrants", as defined in the Senior Subordinated Notes Purchase Agreement, the
beneficial ownership or acquisition in any transaction or series of related
transactions of 50% or more of the combined voting power of all then issued and
outstanding Voting Stock of the Parent by any Person (together with any of its
Affiliates) holding 10% or more of the combined voting power of the issued and
outstanding Voting Stock of the Parent as of the Closing Date, acting alone or
in concert with one or more Persons, or (ii) any Person or two or more Persons
acting in concert shall have acquired beneficial ownership (within the meaning
of Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of 20% or more of the outstanding shares of the voting
stock of the Parent; or (iii) as of any date a majority of the Board of
Directors of the Parent consists of individuals who were not either (A)
directors of the Parent as of the corresponding date of the previous year, (B)
selected or nominated to become directors by the Board of Directors of the
Parent of which a majority consisted of individuals described in clause (A), or
(C) selected or nominated to become directors by the Board of Directors of the
Parent of which a majority consisted of individuals described in clause (A) and
individuals described in clause (B), or (iv) the Parent or any of its
Subsidiaries shall merge or consolidate with or into, or convey, transfer, lease
or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to, any Person except that (x) any Subsidiary of the Parent
may merge or consolidate
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with or into, or dispose of assets to the Parent or any other Wholly-Owned
Subsidiary of the Parent or (y) the Parent or any Subsidiary may merge with any
other Person so long as the Parent or such Subsidiary is the surviving entity;
or
(l) (i) the loss of a material part of the business from any
customer of any of the Borrowers which, during the Fiscal Year ended prior to
such loss thereof, accounted for 15% or more of the aggregate sales of the
Borrowers, or (ii) the termination of the license from Disney Enterprises, Inc.,
or (iii) the termination of any license agreement with any other licensor, if
the license or licenses utilized under such license agreement was or were
necessary for sales which, during the Fiscal Year ended prior to such
termination, accounted for 15% or more of the aggregate sales of the Borrowers;
or
(m) if, on any day, any Borrower could not truthfully make the
representations and warranties contained in SECTION 4.16; or
(n) there shall have occurred material uninsured damage to, or
loss, theft or destruction of, any material part of the Collateral; or
(o) any strike, lockout, labor dispute, embargo, condemnation,
act of God or public enemy, or other casualty or injunction, court order, or
order or act of a governmental authority which causes, for more than thirty (30)
consecutive days beyond the coverage period of any applicable business
interruption insurance, the cessation or substantial curtailment of revenue
producing activities at any facility of any Borrower or any Subsidiaries if any
such event or circumstance could reasonably be expected to have a Material
Adverse Effect; or
(p) if E. Randall Chestnut, as chief executive officer of the
Parent, or Nanci Freeman, as President and Chief Executive Officer of Crown
Crafts Infant Products, Inc., shall cease for any reason (including death or
disability), respectively, to hold such offices, and a replacement of either
individual in their respective offices, which replacement must be reasonably
satisfactory to the Required Lenders, is not appointed within 90 days of the
absence of such individuals from their respective offices;
(q) if the Collateral Agent ceases to hold a perfected Lien on
the Collateral, except as described in the Credit Documents, or any Person shall
take any action to discontinue or to assert the invalidity or unenforceability
of such security interest or the assignment under the Assignment Agreement
described in Section 9.01(j) shall cease to be valid;
then, and in every such event, the Agent will, if requested by the
Required Lenders: (i) by notice to the Borrowers terminate the Commitments and
they shall thereupon terminate and terminate Wachovia's obligations to issue
Letters of Credit hereunder; (ii) by notice to the Borrowers declare the Notes
(together with accrued interest thereon), and all other amounts payable
hereunder and under the other Credit Documents, to be, and the same shall
thereupon become immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrowers, together with interest at the Default Rate accruing on the principal
amount thereof from and after the date of such Event of Default; provided that
if any Event of Default specified in paragraph (g) or (h) above occurs with
respect to the Borrowers, without any notice to the Borrowers or any other act
by the Agent or the
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Lenders, the Commitments shall thereupon terminate and the Notes (together with
accrued interest thereon) and all other amounts payable hereunder and under the
other Credit Documents shall automatically and without notice become immediately
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrowers, together with interest
thereon at the Default Rate accruing on the principal amount thereof from and
after the date of such Event of Default; or (iii) exercise any rights, powers or
remedies under this Agreement and the other Credit Documents. In addition, upon
the occurrence of an Event of Default, to the extent of any existing Letter of
Credit Obligations, the Borrower shall pay to the Collateral Agent 110% of the
amount thereof, which amount shall be set aside the amounts so advanced as a
collateral reserve for payment of the Reimbursement Obligations relating to
Letters of Credit which are subsequently funded. After all Letters of Credit
have been cancelled and all Reimbursement Obligations have been satisfied, and
Wachovia has been reimbursed all amounts funded by it with respect thereto, any
balance remaining in said collateral reserve may be applied to other amounts
owed by the Borrowers hereunder, and, if none, shall be remitted to the relevant
Borrower. Notwithstanding the foregoing, the Collateral Agent shall have
available to it all other remedies at law or equity, and shall exercise any one
or all of them at the request of the Required Lenders. In no event may any
Lender or Lenders exercise any rights, remedies or powers with respect to the
Obligations, this Credit Agreement and the other Credit Documents without the
consent of the Agent and the Required Lenders.
SECTION 6.02. Notice of Default. The Agent shall give
notice to the Borrowers of any Default promptly upon being requested to do so by
any Lender and shall thereupon notify all the Lenders thereof.
SECTION 6.03. Remedies with Respect to Collateral.
(a) Upon the occurrence of an Event of Default, and subject to
the provisions of the Intercreditor Agreement, the Collateral Agent or any
representative of Collateral Agent shall have the rights and remedies of a
secured party under the UCC in effect on the date thereof (regardless of whether
the same has been enacted in the jurisdiction where the rights or remedies are
asserted), including, without limitation, the right to require the Borrowers to
assemble the Collateral, at the Borrowers' expense, and make it available to the
Collateral Agent at a place designated by the Collateral Agent which is
reasonably convenient to both parties, and enter any premises where any of the
Collateral shall be located and to keep and store the Collateral on said
premises until sold (and if said premises be the property of any Borrower or any
of its Subsidiaries, such Borrower agrees not to charge the Collateral Agent for
storage thereof), to take possession of any of the Collateral or the proceeds
thereof, to sell or otherwise dispose of the same, and the Collateral Agent
shall have the right to conduct such sales on the premises of the Borrowers,
without charge therefor, and such sales may be adjourned from time to time in
accordance with applicable law. The Collateral Agent may sell, lease or dispose
of Collateral for cash, credit, or any combination thereof, and shall have the
right to appoint a receiver of the Account's Receivable Collateral and the
Inventory Collateral or any part thereof, and the right to apply the proceeds
therefrom as set forth in SECTION 6.03(b) below. The Collateral Agent shall give
the Borrowers written notice of the time and place of any public sale of the
Collateral or the time after which any other intended disposition thereof is to
be made. The requirement of sending reasonable notice shall be met if such
notice is given to the Borrowers at least 10 days
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before such disposition. Expenses of retaking, verifying, restoring, holding,
insuring, collecting, preserving, liquidating, protecting, preparing for sale or
selling, or otherwise disposing of or the like with respect to the Collateral
shall include, in any event, reasonable attorneys' fees and other legally
recoverable collection expenses, all of which shall constitute a part of the
Obligations.
(b) Subject to the provisions of the Intercreditor Agreement,
Proceeds of any of the Collateral and payments by the Borrowers during the
existence of an Event of Default received by the Collateral Agent or any Lender
shall be applied, by the Collateral Agent in accordance with the provisions of
SECTION 2.11(e), and, after all of the Obligations have been paid in full and no
Letters of Credit or Interest Rate Protection Agreement or liability with
respect thereto remains outstanding, then, such excess proceeds shall be payable
to the Borrowers or any other Person as required by applicable law. In the event
that the proceeds of the Collateral are not sufficient to pay the Obligations in
full, the Borrowers shall remain liable for any deficiency.
(c) The Borrowers hereby waive all rights which the Borrowers
have or may have under and by virtue of O.C.G.A. CH. 44-14, including, without
limitation, the right of the Borrowers to notice and to a judicial hearing prior
to seizure of any Collateral by the Collateral Agent.
(d) Unless and except to the extent expressly provided for to
the contrary herein, the rights of the Collateral Agent specified herein shall
be in addition to, and not in limitation of, the Collateral Agent's or Lender's
rights under the UCC, or any other statute or rule of law or equity, or under
any other provision of any of the Credit Documents, or under the provisions of
any other document, instrument or other writing executed by the Borrowers or any
third party in favor of Collateral Agent, all of which may be exercised
successively or concurrently.
(e) The Collateral Agent is hereby granted a license or other
right to use, without charge, Borrower's labels, patents, copyrights, rights of
use of any name, trade secrets, tradenames, trademarks and advertising matter,
or any property of a similar nature, as it pertains to the Collateral, in
advertising for sale and selling any Collateral, and the Borrowers' rights under
all licenses and all franchise agreements shall inure to the Collateral Agent's
benefit.
(f) Neither the Collateral Agent nor any Lender shall be
liable or responsible in any way for the safekeeping of any of the Collateral or
for any loss or damage thereto (except the Collateral Agent for reasonable care
in the custody thereof while any Collateral is in the Collateral Agent's actual
possession) or for any diminution in the value thereof, or for any act or
default of any warehouseman, carrier, forwarding agency, or other person
whomsoever, but the same shall be at the Borrowers' sole risk.
(g) Neither the Collateral Agent nor any Lender shall be under
any obligation to marshal any assets in favor of any of the Borrowers or any
other Person or against or in payment of any or all of the Obligations.
SECTION 6.04. Power of Attorney. Each Borrower irrevocably
designates and appoints the Collateral Agent its true and lawful attorney,
during the existence of an Event of Default, either in the name of the
Collateral Agent or in the name of such Borrower to ask for,
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demand, sue for, collect, compromise, compound, receive, receipt for and give
acquittances for any and all sums owing or which may become due upon any items
of the Inventory Collateral or the Accounts Receivable Collateral and, in
connection therewith, to take any and all actions as the Collateral Agent may
deem necessary or desirable in order to realize upon the Inventory Collateral
and the Accounts Receivable Collateral, including, without limitation, power to
endorse in the name of such Borrower, any checks, drafts, notes or other
instruments received in payment of or on account of the Inventory Collateral or
the Accounts Receivable Collateral, but the Collateral Agent shall not be under
any duty to exercise any such authority or power or in any way be responsible
for the collection of the Inventory Collateral or the Accounts Receivable
Collateral.
ARTICLE 7
THE AGENT AND THE LENDERS
SECTION 7.01. Appointment; Powers and Immunities.
(a) Each Lender (and Wachovia, with respect to the Letter of
Credit Obligations) hereby irrevocably appoints and authorizes the Agent
(including its successors by merger) to act as its agent hereunder and under the
other Credit Documents with such powers as are specifically delegated to the
Agent by the terms hereof and thereof, together with such other powers as are
reasonably incidental thereto. The Agent: (i) shall have no duties or
responsibilities except as expressly set forth in this Agreement and the other
Credit Documents, and shall not by reason of this Agreement or any other Credit
Document be a trustee for any Lender; (ii) shall not be responsible to the
Lenders for any recitals, statements, representations or warranties contained in
this Agreement or any other Credit Document, or in any certificate or other
document referred to or provided for in, or received by any Lender under this
Agreement or any other Credit Document, or for the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Credit
Document or any other document referred to or provided for herein or therein or
for any failure by any Borrower to perform any of its obligations hereunder or
thereunder; (iii) shall not be required to initiate or conduct any litigation or
collection proceedings hereunder or under any other Credit Document except to
the extent requested by the Required Lenders, and then only on terms and
conditions which do not, in the reasonable judgment of the Agent, subject the
Agent to any undue risk; and (iv) shall not be responsible for any action taken
or omitted to be taken by it hereunder or under any other Credit Document or any
other document or instrument referred to or provided for herein or therein or in
connection herewith or therewith, except for its own gross negligence or willful
misconduct. The Agent may employ agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The provisions of this
ARTICLE 7 are solely for the benefit of the Agent and the Lenders, and no
Borrower shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this Agreement
and under the other Credit Documents, the Agent shall act solely as agent of the
Lenders and does not assume and shall not be deemed to have assumed any
obligation towards or relationship of agency or trust with or for the Borrowers.
The duties of the Agent shall be ministerial and administrative in nature, and
the Agent shall not have by reason of this Agreement or any other Credit
Document a fiduciary relationship in respect of any Lender. The Agent shall
remit to the Lenders, as soon as
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reasonably practical following receipt thereof, all payments and other amounts
received by it hereunder for the account of the Lenders.
(b) Unless and until its authority to do so is revoked in
writing by the Required Lenders, the Agent alone shall be authorized to
determine whether any accounts or inventory of any Borrower constitute Eligible
Accounts or Eligible Inventory, or whether to impose or release any reserve, and
to exercise its own credit judgment in connection therewith, which
determinations and judgments, if exercised in good faith, shall exonerate Agent
from any liability to any Lender or any other Person for any errors in judgment.
(c) The Agent (or the Collateral Agent, as the case may be)
shall have the sole and exclusive right and authority to (i) act as the
disbursing and collecting agent for the Lenders with respect to all payments and
collections arising in connection with this Agreement and the other Credit
Documents; (ii) execute and deliver each Credit Document (other than this Credit
Agreement) on behalf of the Lenders and accept delivery of each such agreement
delivered by any Borrower or any other Person;(iii) act as collateral agent for
the Lenders for purposes of the perfection of all security interests and Liens
created by this Agreement or the Security Documents with respect to all material
items of the Collateral and, subject to the direction of the Required Lenders,
for all other purposes stated therein; (iv) subject to the direction of the
Required Lenders, manage, supervise or otherwise deal with the Collateral; and
(v) except as may be otherwise specifically restricted by the terms of this
Agreement and subject to the direction of the Required Lenders, exercise all
remedies given to the Agent, the Collateral Agent or Lenders with respect to any
of the Collateral under the Credit Documents relating thereto, or under
applicable law or otherwise. As to any matters not expressly provided for
otherwise by this Agreement or any other Credit Document, the Agent and the
Collateral Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder and thereunder in accordance with instructions
signed by the Required Lenders, and such instructions of the Required Lenders to
the Agent or the Collateral Agent in any action taken or failure to act pursuant
thereto shall be binding on all of the Lenders.
SECTION 7.02. Reliance by Agent. The Agent shall be
entitled to rely upon any certification, notice or other communication
(including any thereof by telephone, telecopier, telegram or cable) believed by
it to be genuine and correct and to have been signed or sent by or on behalf of
the proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants or other experts selected by the Agent.
SECTION 7.03. Defaults. The Agent shall not be deemed to
have knowledge of the occurrence of a Default or an Event of Default (other than
the nonpayment of any of the Obligations) unless the Agent has received written
notice from a Lender or any Borrower specifying such Default or Event of Default
and stating that such notice is a "Notice of Default," each of the Lenders
hereby agreeing to promptly notify in writing the Agent of any Default to which
such Lender obtains knowledge. In the event that the Agent receives such a
notice of the occurrence of a Default or an Event of Default, the Agent shall
give prompt notice thereof to the Lenders. The Agent shall give each Lender
prompt notice of each nonpayment of any of the Obligations whether or not it has
received any notice of the occurrence of such nonpayment.
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SECTION 7.04. Rights of Agent and its Affiliates as a
Lender. With respect to the Loans made by the Agent and any Affiliate of the
Agent or the Collateral Agent, Wachovia in its capacity as a Lender hereunder
and any Affiliate of the Agent or such Affiliate in its capacity as a Lender
hereunder shall have the same rights and powers hereunder as any other Lender
and may exercise the same as though Wachovia were not acting as the Agent, and
the term "Lender" or "Lenders" shall, unless the context otherwise indicates,
include Wachovia in its individual capacity and any Affiliate of the Agent in
its individual capacity. The Agent and any Affiliate of the Agent may (without
having to account therefor to any Lender) accept deposits from, lend money to
and generally engage in any kind of banking, trust or other business with the
Borrowers (and any of the Borrowers' Affiliates) as if Wachovia were not acting
as the Agent, and the Agent and any Affiliate of the Agent may accept fees and
other consideration from the Borrowers (in addition to any agency fees and
arrangement fees heretofore agreed to between the Borrowers and the Agent) for
services in connection with this Agreement or any other Credit Document or
otherwise without having to account for the same to the Lenders and Agent shall
not be subject to any liability by reason of its acting or refraining to act
pursuant to any request of the Required Lenders except as a result of its own
willful misconduct or gross negligence.
SECTION 7.05. Indemnification. Each Lender severally
agrees to indemnify the Agent and hold the Agent harmless from, to the extent
the Agent shall not have been reimbursed by the Borrowers, ratably in accordance
with its Commitment, for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits (including, without limitation, counsel
fees and disbursements), and costs and expenses (but not fees) Agent may be
required to bear with respect to any lockbox or collateral collection account
arrangement, or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in any way relating to or
arising out of this Agreement or any other Credit Document or any other
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (excluding the normal out-of-pocket
administrative costs and expenses incident to the performance of its agency
duties hereunder) or the enforcement of any of the terms hereof or thereof or
any such other documents; provided that no Lender shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the Agent. If any indemnity furnished to the Agent for any purpose
shall, in the opinion of the Agent, be insufficient or become impaired, the
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is furnished.
SECTION 7.06. Payee of Note Treated as Owner. The Agent
may deem and treat each Person in whose name a Loan is registered as the owner
thereof for all purposes hereof unless and until a written notice of the
assignment or transfer thereof shall have been filed with the Agent and the
provisions of SECTION 10.08(c) have been satisfied. Any requests, authority or
consent of any Person who at the time of making such request or giving such
authority or consent is the holder of any Note shall be conclusive and binding
on any subsequent holder, transferee or assignee of that Note or of any Note or
Notes issued in exchange therefor or replacement thereof.
SECTION 7.07. Nonreliance on Agent and Other Lenders. Each
Lender agrees that it has, independently and without reliance on the Agent or
any other Lender, and
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based on such documents and information as it has deemed appropriate, made its
own credit analysis of the Borrowers and decision to enter into this Agreement
and that it will, independently and without reliance upon the Agent or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own analysis and decisions in taking or not
taking action under this Agreement or any of the other Credit Documents. Except
as expressly provided in SECTION 7.03, the Agent shall not be required to keep
itself (or any Lender) informed as to the performance or observance by the
Borrowers of this Agreement or any of the other Credit Documents or any other
document referred to or provided for herein or therein or to inspect the
properties or books of the Borrowers or any other Person. Except for notices,
reports and other documents and information expressly required to be furnished
to the Lenders by the Agent hereunder or under the other Credit Documents, the
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the affairs, financial condition or
business of the Borrowers or any other Person (or any of their Affiliates) which
may come into the possession of the Agent.
SECTION 7.08. Failure to Act. Except for action expressly
required of the Agent hereunder or under the other Credit Documents, the Agent
shall in all cases be fully justified in failing or refusing to act hereunder
and thereunder unless it shall receive further assurances to its satisfaction by
the Lenders of their indemnification obligations under SECTION 7.05 against any
and all liability and expense which may be incurred by the Agent by reason of
taking, continuing to take, or failing to take any such action. In any event, if
the Agent requests in writing the authorization or direction of the Required
Lenders (or all Lenders if required) and the Lenders do not timely respond to
such request in writing, the Agent may act or refrain from acting with respect
to the matters set forth in such request by the Agent without liability to any
of the Lenders with respect to such matters.
SECTION 7.09. Resignation of Agent. Subject to the
appointment and acceptance of a successor Agent as provided below, the Agent may
resign at any time by giving notice thereof to the Lenders and the Borrowers.
Upon any such resignation the Required Lenders shall have the right to appoint a
successor Agent, subject to the consent of the Borrowers, if no Event of Default
is in existence, which consent shall not be unreasonably withheld or delayed. If
no successor Agent shall have been so appointed by the Required Lenders and
shall have accepted such appointment within 30 days after the retiring Agent's
notice of resignation, then the retiring Agent may, on behalf of the Lenders,
appoint a successor Agent. Any successor Agent shall be a Lender hereunder or
other bank or financial institution which has a combined capital and surplus of
at least $500,000,000. Upon the acceptance of any appointment as Agent hereunder
by a successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation hereunder as Agent, the
provisions of this ARTICLE 7 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 hereunder.
SECTION 7.10. Joinder of Lenders. The rights, remedies,
powers and privileges conferred upon the Agent hereunder and under the other
Credit Documents may be
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exercised by the Agent without the necessity of the joinder of any other parties
unless otherwise required by applicable law.
SECTION 7.11. Agreements Regarding Collateral. Each Lender
shall have an interest, in accordance with its Commitment Percentage, in the
security interests and Liens in and to the Collateral and any other assets
granted and assigned to the Collateral Agent under the Credit Documents. The
Lenders hereby irrevocably authorize the Collateral Agent, at its option and in
its discretion, to release any Lien upon any Collateral (i) as authorized by
this Agreement or any of the other Credit Documents, (ii) upon the termination
of the Commitments and payment or satisfaction of all of the Obligations, or
(iii) constituting Equipment Collateral sold or disposed of in accordance with
the terms of this Agreement if the Borrowers certify to the Collateral Agent
that the disposition is made in compliance with the terms of this Agreement (and
the Collateral Agent may rely conclusively on any such certificate, without
further inquiry). Except as expressly authorized or required by this Agreement
or applicable law, the Collateral Agent shall not execute any release or
termination of any Lien upon any of the Collateral without the prior written
authorization of all Lenders. The Collateral Agent shall have no obligation
whatsoever to any of the Lenders to assure that any of the Collateral exists or
is owned by any Borrower or is cared for, protected or insured or has been
encumbered, or that the Collateral Agent's Liens have been properly or
sufficiently or lawfully created, perfected, protected or enforced or entitled
to any particular priority or to exercise at all or in any manner or under any
duty of care, disclosure or fidelity, other than gross negligence or willful
misconduct, or to continue exercising, any of the rights or powers granted or
available to the Collateral Agent pursuant to this Agreement or any of the other
Credit Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission or event related thereto, the Collateral Agent
may act in any manner it may deem appropriate, in its discretion, given the
Collateral Agent's own interests in the Collateral in its capacity as one of the
Lenders.
SECTION 7.12. Agent Field Audits. The Agent shall
promptly, upon receipt thereof, forward to each Lender copies of the results of
any field audits by the Agent with respect to the Borrowers. The Agent shall
have no liability to any Lender for any errors in or omissions from any field
audit or other examination of the Borrowers or the Collateral, unless such error
or omission was the direct result of the Agent's willful misconduct.
SECTION 7.13. Designation of Co-Agent. It is the purpose
of this Agreement that there shall be no violation of any applicable law denying
or restricting the right of financial institutions to transact business as an
agent in any jurisdiction. It is recognized that, in case of litigation under
any of the Credit Documents, or in case the Agent or the Collateral Agent deems
that by reason of present or future laws of any jurisdiction the Agent or the
Collateral Agent might be prohibited from exercising any of the powers, rights
or remedies granted to the Agent, the Collateral Agent or the Lenders hereunder
or under any of the Credit Documents or from holding title to or a Lien upon any
Collateral or from taking any other action which may be necessary hereunder or
under any of the Credit Documents, the Agent or the Collateral Agent may appoint
an additional Person or Persons as a separate agent, collateral agent or
co-agent or co-collateral agent which is not so prohibited from taking any of
such actions or exercising any of such powers, rights or remedies. If the Agent
or the Collateral Agent shall appoint an additional Person as a separate agent,
collateral agent or co-agent or co-collateral agent as provided above, each and
every remedy, power, right, claim, demand or cause
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of action intended by this Agreement and any of the Credit Documents and every
remedy, power, right, claim, demand or cause of action intended by this
Agreement and any of the Credit Documents to be exercised by or vested in or
conveyed to the Agent or the Collateral Agent, as applicable, with respect
thereto shall be exercisable by and vested in such separate agent, collateral
agent or co-agent or co-collateral agent, but only to the extent necessary to
enable such separate agent, collateral agent or co-agent or co-collateral agent
to exercise such powers, rights and remedies, and every covenant and obligation
necessary to the exercise thereof by such separate agent, collateral agent or
co-agent or co-collateral agent shall run to and be enforceable by any of them.
Should any instrument from the Lenders be required by the separate agent,
collateral agent or co-agent or co-collateral agent so appointed by the Agent or
the Collateral Agent in order more fully and certainly to vest in and confirm to
him or it such rights, powers, duties and obligations, any and all of such
instruments shall, on request, be executed, acknowledged and delivered by the
Lenders whether or not a Default or Event of Default then exists. In case any
separate agent, collateral agent or co-agent or co-collateral agent, or a
successor thereto, shall die, become incapable of acting, resign or be removed,
all the estates, properties, rights, power, duties and obligations of such
separate agent, collateral agent or co-agent or co-collateral agent, so far as
permitted by applicable law, shall vest in and be exercised by the Agent or the
Collateral Agent until the appointment of a new agent or collateral agent or
successor to such separate agent or collateral agent or co-agent or
co-collateral agent.
SECTION 7.14. Replacement of Certain Lenders. If a Lender
("Affected Lender") shall have (i) failed to fund its Commitment Percentage of
any Loan requested by the Borrowers which such Lender is obligated to fund under
the terms of this Agreement and which such failure has not been cured, (ii)
requested compensation from the Borrowers under SECTION 8.05 to recover
increased costs incurred by such Lender (or its parent or holding company) which
are not being incurred generally by the other Lenders (or their respective
parent or holding company), or (iii) delivered (or its respective parents' or
holding companies shall have delivered) a notice pursuant to ARTICLE 8 claiming
that such Lender (or its affiliate) is unable to extend Euro-Dollar Loans to the
Borrowers for reasons not generally applicable to the other Lenders, then, in
any such case and in addition to any other rights and remedies that the Agent,
any other Lender or the Borrowers may have against such Affected Lender, the
Borrowers or the Agent may make written demand on such Affected Lender (with a
copy to the Agent in the case of a demand by the Borrowers and a copy to the
Borrowers in the case of a demand by the Agent) for the Affected Lender to
assign, and such Affected Lender shall assign pursuant to one or more duly
executed Assignment and Acceptances within five (5) Business Days after the date
of such demand, to one or more Lenders willing to accept such assignment or
assignments, or to one or more Assignees approved by the Agent, all of such
Affected Lender's rights and obligations under this Agreement (including its
Commitments and all Obligations owing to it) in accordance with SECTION 10.08;
provided, however, the Agent shall have no duty to locate an Assignee for the
purposes of accepting such assignment. The Agent is hereby irrevocably
authorized to execute one or more Assignment and Acceptances as attorney-in-fact
for any Affected Lender which fails or refuses to execute and deliver the same
within five (5) Business Days after the date of such demand. The Affected Lender
shall be entitled to receive, in case and concurrently with execution and
delivery of each such Assignment and Acceptance, all amounts owed to the
Affected Lender hereunder or under any other Credit Document, including the
aggregate outstanding principal amount of the Obligations owed to such Lender,
together with accrued interest thereon through the date of such assignment. Upon
the replacement of any
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Affected Lender pursuant to this SECTION 7.14, such Affected Lender shall cease
to have any participation in, entitlement to, or other right to share in the
Liens of the Collateral Agent in any Collateral and such Affected Lender shall
have no further liability to the Agent, any Lender or any other Person under any
of the Credit Documents (except with respect to events or transactions which
occur prior to the replacement of such Affected Lender), including any
commitment to make Loans or purchase any participations in the Wachovia Letters
of Credit.
ARTICLE 8
CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair. If on or prior to the first day of any Interest Period:
(a) the Agent determines that deposits in Dollars (in the
applicable amounts) are not being offered in the relevant market for such
Interest Period, or
(b) the Required Lenders advise the Agent that the London
Interbank Offered Rate, as determined by the Agent will not adequately and
fairly reflect the cost to such Lenders of funding the relevant type of
Euro-Dollar Loans for such Interest Period,
the Agent shall forthwith give notice thereof to the Borrowers
and the Lenders, whereupon until the Agent notifies the Borrowers that the
circumstances giving rise to such suspension no longer exist, the obligations of
the Lenders to make the type of Euro-Dollar Loans specified in such notice shall
be suspended. Unless the Borrowers notify the Agent at least 2 Domestic Business
Days before the date of any Borrowing of such type of Euro-Dollar Loans for
which a Notice of Borrowing has previously been given that it elects not to
borrow on such date, such Borrowing shall instead be made as a Base Rate
Borrowing.
SECTION 8.02. Illegality. If, after the date hereof, the
adoption of any applicable law, rule or regulation, or any change therein or any
existing or future law, rule or regulation, 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 (any
such agency being referred to as an "Authority" and any such event being
referred to as a "Change of Law"), or compliance by any Lender (or its Lending
Office) with any request or directive (whether or not having the force of law)
of any Authority shall make it unlawful or impossible for any Lender (or its
Lending Office) to make, maintain or fund its Euro-Dollar Loans or issue any
Letters of Credit and such Lender shall so notify the Agent, the Agent shall
forthwith give notice thereof to the other Lenders and the Borrowers, whereupon
until such Lender notifies the Borrowers and the Agent that the circumstances
giving rise to such suspension no longer exist, the obligation of such Lender to
make Euro-Dollar Loans or issue Letters of Credit shall be suspended. Before
giving any notice to the Agent pursuant to this SECTION, such Lender shall
designate a different Lending Office if such designation will avoid the need for
giving such notice and will not, in the judgment of such Lender, be otherwise
disadvantageous to such Lender. If such Lender shall determine that it may not
lawfully continue to maintain and fund any of its outstanding Euro-Dollar Loans
to maturity and or issue Letters of Credit and shall so specify in such notice,
the Borrowers shall immediately prepay in full the then outstanding principal
amount of each Euro-Dollar Loan of such Lender and pledge
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to the Agent cash collateral equal to 110% of the outstanding Letter of Credit
Obligations, together with accrued interest thereon and any amount due such
Lender pursuant to SECTION 8.05(a). Concurrently with prepaying each such
Euro-Dollar Loan the Borrowers shall borrow a Base Rate Loan in an equal
principal amount from such Lender (on which interest and principal shall be
payable contemporaneously with the related Euro-Dollar Loans of the other
Lenders), and such Lender shall make such a Base Rate Loan.
SECTION 8.03. Increased Cost and Reduced Return.
(a) If after the date hereof, a Change of Law or compliance by
any Lender (or its Lending Office) with any request or directive (whether or not
having the force of law) of any Authority:
(i) shall impose, modify or deem applicable any
reserve, special deposit or similar requirement (including,
without limitation, any such requirement imposed by the Board
of Governors of the Federal Reserve System, but excluding with
respect to any Euro-Dollar Loan any such requirement included
in an applicable Euro-Dollar Reserve Percentage) against
assets of, deposits with or for the account of, or credit or
letter of credit extended by, any Lender (or its Lending
Office); or
(ii) shall impose on any Lender (or its Lending
Office) or on the United States market for certificates of
deposit or the London interbank market any other condition
affecting its Euro-Dollar Loans, Letters of Credit, its Notes
or its obligation to make Euro-Dollar Loans;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Lending Office) of making or maintaining any Loan or Letter of Credit,
or to reduce the amount of any sum received or receivable by such Lender (or its
Lending Office) under this Agreement or under its Notes with respect thereto, by
an amount reasonably deemed by such Lender to be material, then, within 30 days
after demand by such Lender (with a copy to the Agent), the Borrowers shall pay
to such Lender such additional amount or amounts as will compensate such Lender
for such increased cost or reduction.
(b) If any Lender shall have determined in good faith that
after the date hereof the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof, or compliance by any Lender (or its
Lending Office) with any request or directive regarding capital adequacy
(whether or not having the force of law) of any Authority, has or would have the
effect of reducing the rate of return on such Lender's capital (or the capital
of any corporation controlling such Lender) as a consequence of its obligations
(whether with respect to Loans or the Letters of Credit) hereunder to a level
below that which such Lender (or any corporation controlling such Lender) could
have achieved but for such adoption, change or compliance (taking into
consideration such Lender's policies with respect to capital adequacy) by an
amount reasonably deemed by such Lender to be material, then from time to time,
within 30 days after demand by such Lender, the Borrowers shall pay to such
Lender such additional amount or amounts as will compensate such Lender for such
reduction.
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(c) Each Lender will promptly notify the Borrowers and the
Agent of any event of which it has knowledge, occurring after the date hereof,
which will entitle such Lender to compensation pursuant to this SECTION and will
designate a different Lending Office if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the judgment of
such Lender, be otherwise disadvantageous to such Lender. A certificate of any
Lender claiming compensation under this SECTION and setting forth the additional
amount or amounts to be paid to it hereunder shall be conclusive in the absence
of manifest error. In determining such amount, such Lender may use any
reasonable averaging and attribution methods.
(d) The provisions of this SECTION 8.03 shall be applicable
with respect to any Participant, Assignee or other Transferee, and any
calculations required by such provisions shall be made based upon the
circumstances of such Participant, Assignee or other Transferee.
SECTION 8.04. Base Rate Loans or Other Euro-Dollar Loans
Substituted for Affected Euro-Dollar Loans. If (i) the obligation of any Lender
to make or maintain any type of Euro-Dollar Loans has been suspended pursuant to
SECTION 8.02 or (ii) any Lender has demanded compensation under SECTION 8.03,
and the Borrowers shall, by at least 5 Euro-Dollar Business Days' prior notice
to such Lender through the Agent, have elected that the provisions of this
SECTION shall apply to such Lender, then, unless and until such Lender notifies
the Borrowers that the circumstances giving rise to such suspension or demand
for compensation no longer apply:
(a) all Loans which would otherwise be made by such Lender as
Euro-Dollar Loans shall be made instead as Base Rate Loans (in all cases
interest and principal on such Loans shall be payable contemporaneously with the
related Euro-Dollar Loans of the other Lenders), and
(b) after each of its Euro-Dollar Loans has been repaid, all
payments of principal which would otherwise be applied to repay such Euro-Dollar
Loans shall be applied to repay its Base Rate Loans instead.
SECTION 8.05. Compensation. Upon the request of any Lender
(except as to payments of Yield-Maintenance Amount on the Term Loans as
contemplated in the proviso in subsection (a) below, as to which no request
shall be necessary), delivered to the Borrowers and the Agent, the Borrowers
shall pay to such Lender such amount or amounts as shall compensate such Lender
for any loss, cost or expense incurred by such Lender as a result of:
(a) any payment or prepayment (pursuant to SECTION 2.09, 2.10,
2.11, 6.01, 8.02 or otherwise, other than a payment on the Term Loans pursuant
to SECTION 2.01(c)) of a Euro-Dollar Loan on a date other than the last day of
an Interest Period for such Loan or of the Term Loans; provided, that the
Yield-Maintenance Amount shall be payable (i) in connection with any payment of
principal following a declaration that all principal of the Term Loans is
immediately due and payable pursuant to SECTION 6.01, (ii) following the
commencement of any case under the Bankruptcy Code in which any Borrower is the
debtor and (iii) where mutually agreed by the Borrowers and the Lenders; or
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(b) if the Lenders permit prepayment of a Euro-Dollar Loan on
any day other than the last day of the Interest Period with respect thereto, or
any prepayment of the Term Loans, any failure by the Borrowers to prepay such
Euro-Dollar Loan or Term Loan on the date for such prepayment specified in the
relevant notice of prepayment; or
(c) any failure by the Borrowers to borrow a Euro-Dollar Loan
on the date for the Euro-Dollar Borrowing of which such Euro-Dollar Loan is a
part specified in the applicable Notice of Borrowing delivered pursuant to
SECTION 2.02;
such compensation to include, without limitation: (1) with respect to
Euro-Dollar Loans, an amount equal to the excess, if any, of (x) the amount of
interest which would have accrued on the amount so paid or prepaid or not
prepaid or borrowed for the period from the date of such payment, prepayment or
failure to prepay or borrow to the last day of the then current Interest Period
for such Euro-Dollar Loan (or, in the case of a failure to prepay or borrow, the
Interest Period for such Euro-Dollar Loan which would have commenced on the date
of such failure to prepay or borrow) at the applicable rate of interest for such
Euro-Dollar Loan provided for herein over (y) the amount of interest (as
reasonably determined by such Lender) such Lender would have paid on deposits in
Dollars of comparable amounts having terms comparable to such period placed with
it by leading banks in the London interbank market (if such Euro-Dollar Loan is
a Euro-Dollar Loan); and (2) with respect to the Term Loans, the
Yield-Maintenance Amount.
ARTICLE 9
CONDITIONS TO BORROWINGS AND ISSUANCE OF LETTERS OF CREDIT
SECTION 9.01. Conditions to Initial Borrowing and Issuance
of Any Letter of Credit. The obligation of each Lender to make a Loan or
Wachovia to issue a Letter of Credit on the occasion of the initial Borrowing or
issuance of a Letter of Credit is subject to the satisfaction of the conditions
set forth in SECTION 9.02 and receipt by the Agent of the following (as to the
documents described in paragraphs (a), (c), (d) and (e) below, in sufficient
number of counterparts for delivery of a counterpart to each Lender and
retention of one counterpart by the Agent):
(a) from each of the parties hereto of either (i) a duly
executed counterpart of this Agreement signed by such party or (ii) a facsimile
transmission of such executed counterpart, with the original to be sent to the
Agent by overnight courier;
(b) a duly executed Revolving Loan Note for the account of
each Lender and a duly executed Term Loan Note for the account of each Lender,
in each case complying with the provisions of SECTION 2.03;
(c) an opinion letter of Rogers & Hardin LLP, counsel for the
Borrowers, dated as of the Closing Date, substantially in the form of EXHIBIT B
and covering such additional matters relating to the transactions contemplated
hereby as the Agent or any Lender may reasonably request;
(d) an opinion of Jones, Day, Reavis & Pogue, special counsel
for the Agent, dated as of the Closing Date, substantially in the form of
EXHIBIT C and covering such
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additional matters relating to the transactions contemplated hereby as the Agent
may reasonably request;
(e) a certificate (the "Closing Certificate") substantially in
the form of EXHIBIT H, dated as of the Closing Date, signed by an executive
officer of the Borrowers, to the effect that (i) no Default has occurred and is
continuing on the date of the first Borrowing under this Agreement, and (ii) the
representations and warranties of the Borrowers contained in ARTICLE 4 are true
on and as of the date of the first Borrowing hereunder;
(f) all documents which the Agent or any Lender may reasonably
request relating to the existence of the Borrowers, the corporate authority for
and the validity of this Agreement and the Notes, and any other matters relevant
hereto, all in form and substance satisfactory to the Agent, including, without
limitation, a certificate of each of the Borrowers substantially in the form of
EXHIBIT I (the "Officer's Certificate"), signed by the Secretary or an Assistant
Secretary of such Borrower, certifying as to the names, true signatures and
incumbency of the officer or officers of such Borrower authorized to execute and
deliver the Credit Documents, and certified copies of the following items: (i)
such Borrower's Certificate of Incorporation, (ii) such Borrower's Bylaws, (iii)
a certificate of good standing or valid existence of the Secretary of State of
the state of the jurisdiction of its incorporation and of each state in which it
is qualified to do business as a foreign corporation, and (iv) the action taken
by the Board of Directors of each of the Borrowers authorizing such Borrower's
execution, delivery and performance of this Agreement, the Notes and the other
Credit Documents to which such Borrower is a party;
(g) an initial Borrowing Base Certificate showing, after
giving effect to any Revolving Loan Borrowings on the Closing Date or issuance
of Letters of Credit, that the Borrowing Base is at least $1,000,000 in excess
of the Aggregate Revolving Loan Amount Outstanding plus the Letter of Credit
Obligations;
(h) duly executed counterparts of each of the Contribution
Agreement, the Domestic Stock Pledge Agreement and the Foreign Stock Pledge
Agreement, together with the blank stock powers and certificates pertaining
thereto (or other evidence of registration or perfection of the security
interests of the Collateral Agent), each Waiver Agreement requested by the
Collateral Agent, and the Collateral Information Certificates, together with
acknowledgment copies of duly recorded UCC-3 amendments to existing UCC-1
financing statements filed in connection with the Original Security Agreement,
and any new UCC-1 financing statements requested by the Lenders, in each case in
form and content satisfactory to the Collateral Agent in all respects,
pertaining to the Collateral evidencing recordation thereof in all filing
offices deemed necessary by the Collateral Agent, the Blocked Account Agreements
and the Intercreditor Agreement;
(i) duly executed counterparts of the Mortgage Amendment,
together with such UCC-3 amendments pertaining thereto as the Collateral Agent
may reasonably request;
(j) duly executed counterparts of an Assignment Agreement of
even date herewith, pursuant to which the Parent absolutely assigns to the
Collateral Agent, for the ratable benefit of the Lenders, its right, title and
interest in and to certain assets described therein in
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exchange for cancellation of part of the indebtedness outstanding on the Closing
Date under the Refinanced Agreements;
(k) [reserved];
(l) receipt of a payoff letter from The CIT Group/Commercial
Services, Inc. ("CIT") with respect to Debt arising in connection with factoring
arrangements, satisfactory to the Agent to the effect that upon payment of the
payoff amount specified therein as to all Debt arising in connection with such
factoring arrangements, no loans or advances shall be made thereafter under such
factoring arrangements, and that termination statements and other releases as
are necessary to satisfy, terminate and release all Liens obtained thereunder or
in connection therewith, other than with respect to Factored Accounts, will be
delivered to the Agent upon receipt by CIT of such payoff amount;
(m) duly executed counterparts of the Intercreditor Agreement
and the Consent and Agreement of the Borrowers at the end thereof,
(n) to the extent reasonably available, receipt of lien
searches reasonably acceptable to the Agent, showing no Liens other than (i)
Permitted Encumbrances, and (ii) Liens in favor of The CIT Group/Commercial
Services, Inc. to be terminated pursuant to paragraph (l) above;
(o) evidence of insurance as required by this Agreement;
(p) delivery to the Agent of a Telephone Instruction Letter in
substantially the form of EXHIBIT K, and establishment of the lockboxes and the
Collateral Reserve Accounts pursuant to SECTION 3.02;
(q) payment of all fees owed to the Agents and the Lenders
hereunder;
(r) a Notice of Borrowing;
(s) a sources and uses of funds statement, along with an
authorization and direction from the Borrowers with respect to any Loans
advanced on the Closing Date;
(t) the Lenders' satisfaction with the management team and
board of directors of the Parent and the duration of term limits for the board
of directors;
(u) the Lenders' satisfaction with the terms and provisions of
a $960,000, 24 month trust account for the benefit of the directors and officers
pertaining to the restructuring of the Parent;
(v) releases of the Borrowers from the Calvin Klein license
and from any other vendor related to the adult bedding line of business, except
as otherwise agreed by the Lenders; and
(w) simultaneously with the closing of the transactions
contemplated herein, sale of the adult bedding business pursuant to the terms
and conditions contained in the term sheet
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dated April 13, 2001 among the Parent and the Lenders pertaining thereto,
including, without limitation, (i) the approval of the board of directors of the
Parent regarding such sale, (ii) the receipt of a copy of the fairness opinion
regarding such sale, and (iii) the payment to the Lenders of $8,500,000, less
transaction expenses approved by the Lenders, not to exceed $3,000,000, from the
proceeds of such sale for application to obligations under the Refinanced
Agreements.
SECTION 9.02. Conditions to All Borrowings and Issuances
of Letters of Credit. The obligation of each Lender to make a Loan, or Wachovia
to issue a Letter of Credit, on the occasion of each Borrowing or issuance of a
Letter of Credit is subject to the satisfaction of the following conditions:
(a) except for Refunding Loans made as Base Rate Loans,
immediately before and after such Borrowing or issuance of a Letter of Credit,
no Default shall have occurred and be continuing;
(b) the representations and warranties of the Borrowers
contained in ARTICLE 4 shall be true on and as of the date of such Borrowing or
issuance of a Letter of Credit; and
(c) immediately after such Borrowing or issuance of a Letter
of Credit, the conditions set forth in clauses (A) and (B) of SECTION 2.01(a)
shall have been satisfied.
Each Syndicated Loan Borrowing, each Settlement Loan Borrowing
and issuance of a Letter of Credit hereunder shall be deemed to be a
representation and warranty by the Borrowers on the date of such Borrowing or
issuance of a Letter of Credit as to the truth and accuracy of the facts
specified in paragraphs (a), (b) and (c) of this SECTION.
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including telecopier
or similar writing) and shall be given to such party at its address or
telecopier number set forth on the signature pages hereof or such other address
or telecopier number as such party may hereafter specify for the purpose by
notice to each other party. Each such notice, request or other communication
shall be effective (i) if given by telecopier, when such telecopy is transmitted
to the telecopier number specified in this SECTION and the confirmation is
received, (ii) if given by mail, 72 hours after such communication is deposited
in the mail with first class postage prepaid, addressed as aforesaid or (iii) if
given by any other means, when delivered at the address specified in this
SECTION; provided that notices to the Agent under ARTICLE 2 or ARTICLE 8 shall
not be effective until received.
SECTION 10.02. No Waivers. The failure of a Borrower to
satisfy, or the waiver by the Agent and the Lenders of, any condition set forth
in ARTICLE 9 shall not constitute a waiver of any such condition with respect to
any subsequent advance of a Loan, unless such waiver is expressly agreed to in
writing as required by SECTION 10.06. No failure or delay by the Agent or any
Lender in exercising any right, power or privilege hereunder or under any Note
or other Credit Document shall operate as a waiver thereof nor shall any single
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or partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 10.03. Expenses; Documentary Taxes. The Borrowers
shall pay (a) all out-of-pocket expenses (including, without limitation, all
reasonable attorney and paralegal fees and expenses of the Agent or the
Collateral Agent, recording costs, recording or intangible taxes and title
insurance, if any) of the Agent and the Lenders incurred in connection with this
Agreement and the other Credit Documents, including, without limitation, (i) all
costs, fees and taxes pertaining to the obtaining, preparation or filing of all
equipment appraisals, inventory appraisals, Lien Searches, UCC-1 financing
statements (including, without limitation, any release thereof), the Mortgages,
the Real Property Documentation, (ii) all fees and disbursements of special
counsel for the Lenders and the Agent, (iii) all costs and fees incurred in
connection with the preparation, negotiation, administration and execution and
delivery of this Agreement and the other Credit Documents, and any waiver or
consent hereunder or thereunder or any amendment hereof or thereof or any
Default or alleged Default hereunder or thereunder, (iv) sums paid or incurred
to pay for any amount or to take any action required of the Borrowers hereunder
or under this Agreement that any Borrower fails to pay or take; (v) costs and
expenses of preserving and protecting the Collateral and of field audits
conducted by the Collateral Agent pursuant to Section 5.02(c); and (b) during
the existence of an Event of Default, costs and expenses (including reasonable
attorney and paralegal fees and expenses) paid or incurred to obtain payment of
the Obligations, enforce the Lien in the Collateral, sell or otherwise realize
upon the Collateral, and otherwise enforce the provisions hereof or of any
Credit Document or to defend any claim made or threatened against the Agent or
any of the Lenders arising out of the transactions contemplated hereby
(including, without limitation, preparations for and consultations concerning
any such matters). The foregoing shall not be construed to limit any other
provisions hereof, or of any Credit Document regarding costs and expenses to be
paid by the Borrowers. In the event any Borrower becomes a debtor under the
Bankruptcy Code, the Collateral Agent's and each Lender's secured claim in such
case shall include interest on the Obligations and all fees, costs and charges
provided for herein (including, without limitation, reasonable attorneys' fees
actually incurred), all to the extent allowed by the Bankruptcy Code. The
Borrowers shall indemnify the Agent, the Collateral Agent and each Lender
against any transfer taxes, documentary taxes, assessments or charges made by
any Authority by reason of the execution and delivery of this Agreement or the
other Credit Documents.
SECTION 10.04. Indemnification. The Borrowers shall
indemnify the Agent, the Collateral Agent, the Lenders and each Affiliate
thereof and their respective directors, officers, employees and agents from, and
hold each of them harmless against, any and all losses, liabilities, claims or
damages to which any of them may become subject, insofar as such losses,
liabilities, claims or damages arise out of or result from any actual or
proposed use by the Borrowers of the proceeds of any extension of credit by any
Lender hereunder or breach by the Borrowers of this Agreement or any other
Credit Document or from any investigation, litigation (including, without
limitation, any actions taken by the Agent, the Collateral Agent or any of the
Lenders to enforce this Agreement or any of the other Credit Documents) or other
proceeding (including, without limitation, any threatened investigation or
proceeding) relating to the foregoing, and the Borrowers shall reimburse the
Agent, the Collateral Agent and each Lender, and each Affiliate thereof and
their respective directors, officers, employees and agents, upon
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demand for any expenses (including, without limitation, reasonable legal fees)
incurred in connection with any such investigation or proceeding; but excluding
any such losses, liabilities, claims, damages or expenses incurred by reason of
the gross negligence or willful misconduct of the Person (or agent thereof) to
be indemnified.
SECTION 10.05. Setoff; Sharing of Setoffs.
(a) Each of the Borrowers hereby grants to the Agent, the
Collateral Agent and each Lender, and to Wachovia as to the Settlement Loans and
the Letter of Credit Obligations, to secure all Obligations owing to them from
the Borrowers, a lien upon all deposits or deposit accounts, of any kind, or any
interest in any deposits or deposit accounts thereof, now or hereafter pledged,
mortgaged, transferred or assigned to the Agent, the Collateral Agent or any
such Lender or otherwise in the possession or control of the Agent or any such
Lender for any purpose for the account or benefit of the Borrowers and including
any balance of any deposit account or of any credit of the Borrowers with the
Agent, the Collateral Agent or any such Lender, whether now existing or
hereafter established, hereby authorizing the Agent and each Lender at any time
or times with or without prior notice to apply such balances or any part thereof
to such of the Obligations owing by the Borrowers to the Lenders, Wachovia
and/or the Agent or the Collateral Agent then past due and in such amounts as
they may elect, and whether or not the Collateral or other collateral, if any,
or the responsibility of other Persons primarily, secondarily or otherwise
liable may be deemed adequate. Each of the Agent and the Collateral Agent
appoints, authorizes and directs each Lender to act as a collateral sub-agent
for the Agent and the Lenders with respect to any Balances Collateral held by
such Lender from time to time. For the purposes of this paragraph, all
remittances and property shall be deemed to be in the possession of the Agent,
the Collateral Agent Wachovia or any such Lender as soon as the same may be put
in transit to it by mail or carrier or by other bailee.
(b) Each Lender and Wachovia agrees that if it shall, by
exercising any right of setoff (with the consent or direction of the Required
Lenders) or counterclaim or resort to collateral security or otherwise, receive
payment of a proportion of the aggregate amount of the principal and interest
owing with respect to the Loans held by it, or the Letter of Credit Obligations
which is greater than the proportion received by any other Lender in respect of
the aggregate amount of all principal and interest owing with respect to the
Loans held by such other Lender or Wachovia with respect to the Letter of Credit
Obligations, the Lender or Wachovia receiving such proportionately greater
payment shall purchase such participations in the Loans held by the other
Lenders owing to such other Lenders and the Letter of Credit Obligations, and
such other adjustments shall be made, as may be required so that all such
payments of principal and interest with respect to the Loans held by the Lenders
owing to such other Lenders and the Letter of Credit Obligations shall be shared
by the Lenders and Wachovia in accordance with their Commitment Percentage;
provided that (i) nothing in this SECTION shall impair the right of any Lender
to exercise any right of setoff or counterclaim it may have and to apply the
amount subject to such exercise to the payment of indebtedness of the Borrowers
other than its indebtedness under the Loans or the Letter of Credit Obligations,
and (ii) if all or any portion of such payment received by the purchasing Lender
is thereafter recovered from such purchasing Lender, such purchase from each
other Lender or Wachovia shall be rescinded and such other Lender or Wachovia
shall repay to the purchasing Lender or Wachovia the purchase price of such
participation to the extent of such recovery together with an amount equal to
such other
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Lender's or Wachovia's ratable share (according to the proportion of (x) the
amount of such other Lender's or Wachovia's required repayment to (y) the total
amount so recovered from the purchasing Lender or Wachovia) of any interest or
other amount paid or payable by the purchasing Lender or Wachovia in respect of
the total amount so recovered. Each of the Borrowers agrees, to the fullest
extent it may effectively do so under applicable law, that any holder of a
participation in a Loan, or risk participant with respect to the Letter of
Credit Obligations, whether or not acquired pursuant to the foregoing
arrangements, may exercise rights of setoff or counterclaim and other rights
with respect to such participation as fully as if such holder of a participation
were a direct creditor of the Borrowers in the amount of such participation.
SECTION 10.06. Amendments and Waivers.
(a) Any provision of this Agreement, the Notes or any other
Credit Documents may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by the Borrowers and the Required Lenders
(and, if the rights or duties of the Agent are affected thereby, by the Agent);
provided that, no such amendment or waiver shall, unless signed by all Lenders,
(i) increase the Commitment of any Lender or subject any Lender to any
additional obligation, (ii) reduce the principal of or rate of interest on any
Loan or any fees (other than fees payable to the Agent) hereunder, (iii)
postpone the date fixed for any payment of principal of or interest on any Loan
or any fees hereunder (including under SECTION 2.08), (iv) reduce the amount of
principal, interest or fees due on any date fixed for the payment thereof, (v)
change the percentage of the Commitments or of the aggregate unpaid principal
amount of the Notes, or the percentage of Lenders, which shall be required for
the Lenders or any of them to take any action under this SECTION or any other
provision of this Agreement, (vi) change the manner of application of any
payments made under this Agreement or the Notes, or the provisions with respect
to pro rata treatment among Lenders (including, without limitation, as to
sharing of payments and expenses), (vii) except as expressly provided in this
Agreement or any of the other Credit Documents, release or substitute, or agree
to subordination of, all or any substantial part of the Collateral held as
security for the Loans, (viii) release any Guarantee given to support payment of
the Loans, (ix) change the definitions of "Borrowing Base," "Eligible Accounts,"
"Eligible Inventory," or "Required Lenders," (x) change the provisions of any of
ARTICLE 7 or SECTIONS 10.04 or 10.20, (xi) change the joint and several nature
of the obligations of the Borrowers, or the several nature of the obligations of
the Lenders under their respective Commitments, or (xii) change the dollar
amounts set forth in clause (ii)(a) and (iii) of the definition of Obligations;
and provided further that, no provision of this Agreement relating to Settlement
Loans and Letter of Credit Obligations may be amended without the prior written
consent of Wachovia.
(b) The Borrowers will not solicit, request or negotiate for
or with respect to any proposed waiver or amendment of any of the provisions of
this Agreement except through the Agent, or unless each Lender shall be informed
thereof by the Borrowers and shall be afforded an opportunity of considering the
same and shall be supplied by the Borrowers with sufficient information to
enable it to make an informed decision with respect thereto. Executed or true
and correct copies of any waiver or consent effected pursuant to the provisions
of this Agreement shall be delivered by the Borrowers to the Agent (for
distribution to each Lender) forthwith following the date on which the same
shall have been executed and delivered by the requisite
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percentage of Lenders. The Borrowers will not, directly or indirectly, pay or
cause to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, to any Lender (in its capacity as such) as
consideration for or as an inducement to the entering into by such Lender of any
waiver or amendment of any of the terms and provisions of this Agreement unless
such remuneration is concurrently paid, on the same terms, ratably to all such
Lenders.
SECTION 10.07. No Margin Stock Collateral. Each of the
Lenders represents to the Agent and each of the other Lenders that it in good
faith is not, directly or indirectly (by negative pledge or otherwise), relying
upon any Margin Stock as collateral in the extension or maintenance of the
credit provided for in this Agreement.
SECTION 10.08. Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns; provided that the Borrowers may not assign or otherwise transfer any of
its rights under this Agreement.
(b) Any Lender may at any time sell to one or more Persons,
provided that any such Person is a commercial bank or other financial
institution, or a Related Fund or an Affiliate thereof (each a "Participant")
participating interests in any Loan owing to such Lender, any Note held by such
Lender, any Commitment hereunder or any other interest of such Lender hereunder;
provided, however, that a Lender must sell the same proportion of its
Commitments, Revolving Loans and Term Loans, and if a Lender is selling a
participation in only a portion of its Commitment or any other interest of such
Lender hereunder, the participation being sold (determined as of the effective
date of the sale of the participation) shall be in an amount not less than
$2,500,000. In the event of any such sale by a Lender of a participating
interest to a Participant, such Lender's obligations under this Agreement shall
remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Note for
all purposes under this Agreement, and the Borrowers and the Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement. In no event shall a Lender
that sells a participation be obligated to the Participant to take or refrain
from taking any action hereunder except that such Lender may agree that it will
not (except as provided below), without the consent of the Participant, agree to
(i) the postponement of any date fixed for the payment of principal of or
interest on the related loan or loans, (ii) the reduction of the amount of any
principal, interest or fees due on any date fixed for the payment thereof with
respect to the related loan or loans, (iii) the change of the principal of the
related loan or loans, (iv) any decrease in the rate at which either interest is
payable thereon or (if the Participant is entitled to any part thereof) fee is
payable hereunder from the rate at which the Participant is entitled to receive
interest or fee (as the case may be) in respect of such participation, (v) the
release or substitution of all or any substantial part of the collateral (if
any) held as security for the Loans, or (vi) the release of any Guarantee given
to support payment of the Loans. The Borrowers agree that each Participant shall
be entitled to the benefits of ARTICLE 8 with respect to its participation in
Loans outstanding from time to time.
96
(c) Any Lender may at any time assign to one or more
commercial banks or other financial institutions organized under laws of the
United States of America or any state and having total assets in excess of
$2,500,000,000 or a Related Fund or Affiliate of any such bank or financial
institution (each an "Assignee") all or a proportionate part of its rights and
obligations under this Agreement, the Notes and the other Credit Documents;
provided, however, that a Lender must sell the same proportion of its
Commitments, Revolving Loans and Term Loans, and such Assignee shall assume all
such rights and obligations, pursuant to an Assignment and Acceptance, executed
by such Assignee, such transferor Lender and the Agent (and, in the case of an
Assignee that is not then a Lender, subject to clause (iii) below, by the
Borrowers); provided that (i) no interest may be sold by a Lender pursuant to
this paragraph (c) unless the Assignee shall agree to assume ratably equivalent
portions of the transferor Lender's Commitment, (ii) if a Lender is assigning
only a portion of its Commitment, then, the amount of the Commitment being
assigned (determined as of the effective date of the assignment) shall be in an
amount not less than $2,500,000, (iii) no interest may be sold by a Lender
pursuant to this paragraph (c) to any Assignee that is not then a Lender (or an
Affiliate or Related Fund of a Lender) without the prior written consent of the
Agent (which consent shall be evidence by the Agent's execution of the
Assignment and Acceptance), and, unless a Default or Event of Default is in
existence, the Borrower (whose consent shall not be unreasonably withheld or
delayed), and (iv) a Lender may not have more than 3 Assignees that are not then
Lenders (or an Affiliate or Related Fund thereof) at any one time. Upon (A)
execution of the Assignment and Acceptance by such transferor Lender, such
Assignee, the Agent and (if applicable) the Borrowers, (B) delivery of an
executed copy of the Assignment and Acceptance to the Borrowers and the Agent,
(C) payment by such Assignee to such transferor Lender of an amount equal to the
purchase price agreed between such transferor Lender and such Assignee, (D)
payment of a processing and recordation fee of $4,000 to the Agent, and (E)
recordation of such assignment on the Register, as defined and provided below,
such Assignee shall for all purposes be a Lender party to this Agreement and
shall have all the rights and obligations of a Lender under this Agreement to
the same extent as if it were an original party hereto with a Commitment as set
forth in such instrument of assumption, and the transferor Lender shall be
released from its obligations hereunder to a corresponding extent, and no
further consent or action by the Borrowers, the Lenders or the Agent shall be
required. The Borrowers hereby designate the Agent to serve as the Borrowers'
agent, solely for purposes of this SECTION 10.08(c), to maintain a register (the
"Register") on which it will record the Commitments from time to time of each of
the Lenders, the Loans made by each of the Lender and each repayment in respect
of the principal amount of the Loans of each Lender. Failure to make any such
recordation, or any error in such recordation shall not affect the Borrowers'
obligations in respect of such Loans. With respect to any Lenders, the transfer
of any Commitment of such Lenders and the rights to the principal of, and
interest on, any Loan shall not be effective until such transfer is recorded on
the Register maintained by the Agent with respect to ownership of such
Commitment and Loans and prior to such recordation all amounts owing to the
transferor with respect to such Commitment and Loans shall remain owing to the
transferor. The registration of assignment or transfer of all or part of any
Commitment and Loans shall be recorded by the Agent on the Register only upon
the acceptance by the Agent of a properly executed and delivered Assignment and
Acceptance pursuant to this SECTION 10.08(c). Coincident with the delivery of
such an Assignment and Acceptance to the Agent for acceptance and registration
of assignment or transfer of all or part of a Commitment and/or Loan, or as soon
thereafter as practicable, the assigning or transferor
97
Lender shall surrender the Note evidencing such Commitment and/or Loan, and
thereupon one or more new Notes in the aggregate principal amount so assigned
shall be issued to the new Lender and, if applicable, a new Note shall be issued
to the assigning or transferor Lender in the remaining aggregate principal
amount of its Commitment and/or Loan not so assigned. The Borrower agrees to
indemnify the Agent from and against any and all losses, claims, damages and
liabilities of whatsoever nature which may be imposed on, asserted against or
incurred by the Agent in performing its duties under this SECTION 10.08(c); but
excluding any such losses, claims, damages and liabilities incurred by reason of
the gross negligence or willful misconduct of the Agent. Each Lender agrees to
indemnify the Borrowers and the Agent from and against any and all losses,
claims, damages and liabilities of whatsoever nature which may be imposed on,
asserted against or incurred by the Borrowers or the Agent by reason of the
inaccuracy of any information which is furnished by such Lender concerning such
Lender or its Lending Office or the amount assigned pursuant to an Assignment
and Acceptance Agreement.
(d) Subject to the provisions of SECTION 10.09, the Borrowers
authorize each Lender to disclose to any Participant, Assignee or other
transferee (each a "Transferee") and any prospective Transferee any and all
financial information in such Lender's possession concerning the Borrowers which
has been delivered to such Lender by the Borrowers pursuant to this Agreement or
which has been delivered to such Lender by the Borrowers in connection with such
Lender's credit evaluation prior to entering into this Agreement.
(e) No Transferee shall be entitled to receive any greater
payment under SECTION 2.11 or 8.03 than the transferor Lender would have been
entitled to receive with respect to the rights transferred, unless such transfer
is made with the Borrowers' prior written consent or by reason of the provisions
of SECTION 2.11, 8.02 or 8.03 requiring such Lender to designate a different
Lending Office under certain circumstances or at a time when the circumstances
giving rise to such greater payment did not exist.
(f) Anything in this SECTION 10.08 to the contrary
notwithstanding, any Lender may assign and pledge all or any portion of the
Loans and/or obligations owing to it to any Federal Reserve Bank or the United
States Treasury as collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and any Operating Circular issued by
such Federal Reserve Bank, provided that any payment in respect of such assigned
Loans and/or obligations made by the Borrowers to the assigning and/or pledging
Lender in accordance with the terms of this Agreement shall satisfy the
Borrowers' obligations hereunder in respect of such assigned Loans and/or
obligations to the extent of such payment. No such assignment shall release the
assigning and/or pledging Lender from its obligations hereunder.
SECTION 10.09. Confidentiality. Each Lender agrees to
exercise commercially reasonable efforts to keep any information delivered or
made available by the Borrowers to it pursuant to SECTION 4.04 or 5.01, or any
other information which is clearly indicated to be confidential information,
confidential from anyone other than persons employed or retained by such Lender
who are or are expected to become engaged in evaluating, approving, structuring
or administering the Loans; provided that nothing herein shall prevent any
Lender from disclosing such information (i) to any other Lender, (ii) upon the
order of any court or administrative agency, (iii) upon the request or demand of
any regulatory agency or authority having jurisdiction over such Lender, (iv)
which has been publicly disclosed, (v) to the extent
98
reasonably required in connection with any litigation to which the Agent, any
Lender or their respective Affiliates may be a party, (vi) to the extent
reasonably required in connection with the exercise of any remedy hereunder,
(vii) to such Lender's legal counsel and independent auditors and (viii) to any
actual or proposed Participant, Assignee or other Transferee of all or part of
its rights hereunder which has agreed in writing to be bound by the provisions
of this SECTION 10.09; provided that should disclosure of any such confidential
information be required by virtue of clause (ii) of the immediately preceding
sentence, to the extent permitted by law, any relevant Lender shall promptly
notify the Borrowers of same so as to allow the Borrowers to seek a protective
order or to take any other appropriate action; provided, further, that, no
Lender shall be required to delay compliance with any directive to disclose any
such information so as to allow the Borrowers to effect any such action.
SECTION 10.10. Representation by Lenders. Each Lender
hereby represents that it is a commercial Lender or financial institution which
makes loans in the ordinary course of its business and that it will make its
Loans hereunder for its own account in the ordinary course of such business;
provided that, subject to SECTION 10.08, the disposition of the Note or Notes
held by that Lender shall at all times be within its exclusive control.
SECTION 10.11. Obligations Several. The obligations of each
Lender hereunder are several, and no Lender shall be responsible for the
obligations or commitment of any other Lender hereunder. Nothing contained in
this Agreement and no action taken by the Lenders pursuant hereto shall be
deemed to constitute the Lenders to be a partnership, an association, a joint
venture or any other kind of entity. The amounts payable at any time hereunder
to each Lender shall be a separate and independent debt, and each Lender shall
be entitled to protect and enforce its rights arising out of this Agreement or
any other Credit Document and it shall not be necessary for any other Lender to
be joined as an additional party in any proceeding for such purpose.
SECTION 10.12. New York Law. This Agreement and each Note
shall be construed in accordance with and governed by the law of the State of
New York.
SECTION 10.13. Severability. In case any one or more of the
provisions contained in this Agreement, the Notes or any of the other Credit
Documents should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or impaired thereby and
shall be enforced to the greatest extent permitted by law.
SECTION 10.14. Interest.
(a) In no event shall the amount of interest, and all charges,
amounts or fees contracted for, charged or collected pursuant to this Agreement,
the Notes or the other Credit Documents and deemed to be interest under
applicable law (collectively, "Interest") exceed the highest rate of interest
allowed by applicable law (the "Maximum Rate"), and in the event any such
payment is inadvertently received by any Lender, then the excess sum (the
"Excess") shall be credited as a payment of principal, unless the Borrowers
shall notify such Lender in writing that it elects to have the Excess returned
forthwith. It is the express intent hereof that the Borrowers not pay and the
Lenders not receive, directly or indirectly in any manner whatsoever,
99
interest in excess of that which may legally be paid by the Borrowers under
applicable law. The right to accelerate maturity of any of the Loans does not
include the right to accelerate any interest that has not otherwise accrued on
the date of such acceleration, and the Agent and the Lenders do not intend to
collect any unearned interest in the event of any such acceleration. All monies
paid to the Agent or the Lenders hereunder or under any of the Notes or the
other Credit Documents, whether at maturity or by prepayment, shall be subject
to rebate of unearned interest as and to the extent required by applicable law.
By the execution of this Agreement, each of the Borrowers covenants, to the
fullest extent permitted by law, that (i) the credit or return of any Excess
shall constitute the acceptance by the Borrowers of such Excess, and (ii) the
Borrowers shall not seek or pursue any other remedy, legal or equitable, against
the Agent or any Lender, based in whole or in part upon contracting for charging
or receiving any Interest in excess of the Maximum Rate. For the purpose of
determining whether or not any Excess has been contracted for, charged or
received by the Agent or any Lender, all interest at any time contracted for,
charged or received from the Borrowers in connection with this Agreement, the
Notes or any of the other Credit Documents shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread in equal parts
throughout the full term of the Commitments. The Borrowers, the Agent and each
Lender shall, to the maximum extent permitted under applicable law, (i)
characterize any non-principal payment as an expense, fee or premium rather than
as Interest and (ii) exclude voluntary prepayments and the effects thereof. The
provisions of this SECTION shall be deemed to be incorporated into each Note and
each of the other Credit Documents (whether or not any provision of this SECTION
is referred to therein). All such Credit Documents and communications relating
to any Interest owed by the Borrowers and all figures set forth therein shall,
for the sole purpose of computing the extent of obligations hereunder and under
the Notes and the other Credit Documents be automatically recomputed by the
Borrowers, and by any court considering the same, to give effect to the
adjustments or credits required by this SECTION.
(b) Pursuant to O.C.G.A. ss.7-4-2, the Borrowers, the Agent
and the Lenders hereby agree that the only charges imposed or to be imposed by
the Agent or the Lenders upon the Borrowers for the use of money in connection
with the Loans is and will be the interest required to be paid under the
provisions of SECTION 2.05 of this Agreement and the related provisions of the
Notes, and that the fees payable pursuant to SECTION 2.06 are and shall be
deemed to be compensation for services and are not and shall not be deemed to be
interest or any other charge for the use, forbearance or detention of money.
SECTION 10.15. Interpretation. No provision of this
Agreement or any of the other Credit Documents shall be construed against or
interpreted to the disadvantage of any party hereto by any court or other
governmental or judicial authority by reason of such party having or being
deemed to have structured or dictated such provision.
SECTION 10.16. WAIVER OF JURY TRIAL; CONSENT TO
JURISDICTION. EACH OF THE BORROWERS (A) AND EACH OF THE BANKS AND THE AGENT
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF THIS AGREEMENT, ANY OF THE
OTHER CREDIT DOCUMENTS, OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, (B) SUBMITS TO THE NONEXCLUSIVE PERSONAL JURISDICTION IN THE STATE OF
100
NEW YORK, THE COURTS THEREOF AND THE UNITED STATES DISTRICT COURTS SITTING
THEREIN, FOR THE ENFORCEMENT OF THIS AGREEMENT, THE NOTES AND THE OTHER CREDIT
DOCUMENTS, (C) WAIVES ANY AND ALL PERSONAL RIGHTS UNDER THE LAW OF ANY
JURISDICTION TO OBJECT ON ANY BASIS (INCLUDING, WITHOUT LIMITATION,
INCONVENIENCE OF FORUM) TO JURISDICTION OR VENUE WITHIN THE STATE OF NEW YORK
FOR THE PURPOSE OF LITIGATION TO ENFORCE THIS AGREEMENT, THE NOTES OR THE OTHER
CREDIT DOCUMENTS, AND (D) AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN
THE MANNER PRESCRIBED IN SECTION 10.01 FOR THE GIVING OF NOTICE TO THE
BORROWERS. NOTHING HEREIN CONTAINED, HOWEVER, SHALL PREVENT THE AGENT FROM
BRINGING ANY ACTION OR EXERCISING ANY RIGHTS AGAINST ANY SECURITY AND AGAINST
THE BORROWERS PERSONALLY, AND AGAINST ANY ASSETS OF THE BORROWERS, WITHIN ANY
OTHER STATE OR JURISDICTION.
SECTION 10.17. Counterparts. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
SECTION 10.18. Source of Funds -- ERISA. Each of the
Lenders hereby severally (and not jointly) represents to the Borrowers that no
part of the funds to be used by such Lender to fund the Loans hereunder from
time to time constitutes (i) assets allocated to any separate account maintained
by such Lender in which any employee benefit plan (or its related trust) has any
interest nor (ii) any other assets of any employee benefit plan. As used in this
SECTION, the terms "employee benefit plan" and "separate account" shall have the
respective meanings assigned to such terms in SECTION 3 of ERISA.
SECTION 10.19. Credit Inquiries. Each Borrower hereby
authorizes and permits the Agent and each Lender, at its discretion and without
any obligation to do so, to respond to credit inquiries from third parties
concerning any Borrower or any of its Subsidiaries.
SECTION 10.20. Consequential Damages. NONE OF THE BANKS NOR
THE AGENT SHALL BE RESPONSIBLE OR LIABLE TO THE BORROWERS OR ANY OTHER PERSON OR
ENTITY FOR ANY PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED
AS A RESULT OF THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
SECTION 10.21. Entire Agreement. This Agreement, together
with the other Credit Documents, constitute the entire agreement among the
parties hereto with respect to the subject matter hereof, and supersede and
replace any agreement, written or oral, existing between or among the parties
hereto in respect of such subject matter.
SECTION 10.22. Continuing Agreement. This Agreement,
together with all other Credit Documents, shall continue in full force and
effect, notwithstanding the termination of any one, or more or all of the
Commitments or the payment in full of one, or more of all of the Obligations,
unless and until all Commitments have been terminated and all Obligations
101
(including, without limitation, any Letter of Credit Obligations in the nature
of contingent obligations) have been fully paid and satisfied, each in
accordance with the terms and conditions hereof and of the other Credit
Documents.
[Signatures are contained on the following pages.]
102
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, under seal, by their respective authorized
officers as of the day and year first above written.
CROWN CRAFTS, INC.,
By: /s/ E. Randall Chestnut (SEAL)
---------------------------------
Name: E. Randall Chestnut
Title: Executive Vice President
Crown Crafts, Inc.
1600 RiverEdge Parkway
Suite 200
Atlanta, Georgia 30328
Attention: Randall Chestnut
Telecopier No. 770-644-6337
Confirmation No. 770-644-6263
CHURCHILL WEAVERS, INC.,
HAMCO, INC.
CROWN CRAFTS INFANT PRODUCTS, INC.
By: /s/ E. Randall Chestnut (SEAL)
---------------------------------
Name: E. Randall Chestnut
Title: Vice President
Churchill Weavers, Inc.
Hamco, Inc.
Crown Crafts Infant Products, Inc.
1600 RiverEdge Parkway
Suite 200
Atlanta, Georgia 30328
Attention: Randall Chestnut
Telecopier No. 770-644-6337
Confirmation No. 770-644-6263
103
COMMITMENTS WACHOVIA BANK, N.A.,
as Agent and as a Lender (SEAL)
Revolving Loan
Commitment:
$8,695,730
By: /s/ R.E.S Bowen
---------------------------------------
Title Vice President
Term Loan Lending Office
Commitment: Wachovia Bank, N.A.
$6,407,380 191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Leveraged Finance
Telecopier number: 404-332-6920
Confirmation number: 404-332-1383
BANK OF AMERICA, N.A.,
as a Lender (SEAL)
Revolving Loans:
$3,765,990
Term Loans: By: /s/ John F. Register
$2,774,940 ---------------------------------------
Title Principal
Lending Office
Bank of America, N.A.
Independence Center
100 North Tryon Street
15th Floor, NCI 001-15-06
Charlotte, North Carolina 28255
Attention: Wayne Gero
Telecopier number: 704-409-0050
Confirmation number: 704-409-7891
with a copy to:
Bank of America, N.A.
101 North Tryon Street
NCI 007-22-26
Charlotte, North Carolina 28255
Attention: John F. Register
Telecopier number: 704-386-7515
Confirmation number: 704-386-5390
104
TOTAL COMMITMENTS: THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA,
as a Lender (SEAL)
Revolving Loans:
$6,538,280
Term Loans: By: /s/ Paul G. Price
$4,817,680 ---------------------------------------
Title Vice President
Lending Office
The Prudential Insurance Company of America
c/o Prudential Capital Group
Corporate and Project Workouts
100 Mulberry Street, Gateway Center 4
Newark, New Jersey 07102
Attention: Paul Procyk
Telecopier number: 973-802-2333
Confirmation number: 973-367-3279
TOTAL REVOLVING LOANS: $19,000,000
TOTAL TERM LOANS: $14,000,000
105
EXHIBIT A-1
REVOLVING LOAN NOTE
Atlanta, Georgia
July 23, 2001
For value received, each of CROWN CRAFTS, INC., CHURCHILL
WEAVERS, INC., HAMCO, INC. and CROWN CRAFTS INFANT PRODUCTS, INC. (collectively,
the "Borrowers"), jointly and severally, promises to pay to the order of
_____________________________________________________________ (the "Lender"),
for the account of its Lending Office, the principal sum of
__________________________ AND NO/100 DOLLARS ($ ), or such lesser amount as
shall equal the unpaid principal amount of each Revolving Loan made by the
Lender to the Borrowers pursuant to the Credit Agreement referred to below, on
the dates and in the amounts provided in the Credit Agreement. The Borrowers
promise to pay interest on the unpaid principal amount of this Revolving Loan
Note on the dates and at the rate or rates provided for in the Credit Agreement.
Interest on any overdue principal of, and, to the extent permitted by law,
overdue interest on, the principal amount hereof shall bear interest at the
Default Rate, as provided for in the Credit Agreement. All such payments of
principal and interest shall be made in lawful money of the United States in
federal or other immediately available funds at the office of Wachovia Bank,
N.A., 191 Peachtree Street, N.E., Atlanta, Georgia 30303-1757, or such other
address as may be specified from time to time pursuant to the Credit Agreement.
All Loans made by the Lender, the respective maturities
thereof, the interest rates from time to time applicable thereto, and all
repayments of the principal thereof shall be recorded by the Lender and, prior
to any transfer hereof, endorsed by the Lender on the schedule attached hereto,
or on a continuation of such schedule attached to and made a part hereof;
provided that the failure of the Lender to make any such recordation or
endorsement shall not affect the obligations of the Borrowers hereunder or under
the Credit Agreement.
This Revolving Loan Note is one of the Revolving Loan Notes
referred to in the Credit Agreement of even date herewith among the Borrowers,
the Lenders party thereto from time to time and Wachovia Bank, N.A., as Agent
(as the same may be amended and modified from time to time, the "Credit
Agreement"). Terms defined in the Credit Agreement are used herein with the same
meanings. Reference is made to the Credit Agreement for provisions for the
optional and mandatory prepayment and the repayment hereof and the acceleration
of the maturity hereof, as well as the obligation of the Borrowers to pay all
costs of collection, including reasonable attorneys fees, in the event this
Revolving Loan Note is collected by law or through an attorney at law.
The Borrowers hereby waive presentment, demand, protest,
notice of demand and nonpayment and any other notice required by law relative
hereto, except to the extent as otherwise may be expressly provided for in the
Credit Agreement.
106
IN WITNESS WHEREOF, the Borrowers have caused this Revolving
Loan Note to be duly executed, under seal, by its duly authorized officer as of
the day and year first above written.
CROWN CRAFTS, INC. CHURCHILL WEAVERS, INC.
HAMCO, INC.
CROWN CRAFTS INFANT PRODUCTS, INC.
By: (SEAL)
--------------------------
Name: By: (SEAL)
Title: ------------------------
Name:
Title:
107
Revolving Loan Note (cont'd)
REVOLVING LOANS AND PAYMENTS OF PRINCIPAL
Base Rate or
Euro-Dollar Amount of Amount of Notation
Date Loan Loan Principal Maturity Date Made By
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108
EXHIBIT A-2
TERM LOAN NOTE
Atlanta, Georgia
July 23, 2001
For value received, each of CROWN CRAFTS, INC., CHURCHILL WEAVERS,
INC., HAMCO, INC. and CROWN CRAFTS INFANT PRODUCTS, INC. (collectively, the
"Borrowers"), jointly and severally, promises to pay to the order of
____________________________ (the "Lender"), for the account of its Lending
Office, the principal sum of [______________________________] AND NO/100 DOLLARS
($[_______________]), or such lesser amount as shall equal the unpaid principal
amount of the Term Loan made by the Lender to the Borrowers pursuant to the
Credit Agreement referred to below. The Borrowers promise to pay interest on the
unpaid principal amount of this Note on the dates and at the rate or rates
provided for in the Credit Agreement. Interest on any overdue principal of. and,
to the extent permitted by law, overdue interest on, the principal amount hereof
shall bear interest at the Default Rate, as provided for in the Credit
Agreement. All such payments of principal and interest shall be made in lawful
money of the United States in federal or other immediately available funds at
the office of Wachovia Bank, N.A., 191 Peachtree Street, N.E., Atlanta, Georgia
30303-1757, or such other address as may be specified from time to time pursuant
to the Credit Agreement.
All repayments of the principal on the Term Loan shall be recorded by
the Lender and, prior to any transfer hereof, endorsed by the Lender on the
schedules attached hereto, or on a continuation of such schedules attached to
and made a part hereof; provided that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrowers
hereunder or under the Credit Agreement.
This Term Loan Note is one of the Term Loan Notes referred to in the
Credit Agreement dated as of even date herewith among the Borrowers, the Lenders
party thereto from time to time and Wachovia Bank, N.A., as Agent (as the same
may be amended and modified from time to time, the "Credit Agreement"). Terms
defined in the Credit Agreement are used herein with the same meanings.
Reference is made to the Credit Agreement for provisions for the optional and
mandatory prepayment and the repayment hereof and the acceleration of the
maturity hereof, as well as the obligation of the Borrowers to pay all costs of
collection, including reasonable attorneys fees, in the event this Term Loan
Note is collected by law or through an attorney at law.
The Borrowers hereby waive presentment, demand, protest, notice of
demand and nonpayment and any other notice required by law relative hereto,
except to the extent as otherwise may be expressly provided for in the Credit
Agreement.
IN WITNESS WHEREOF, each of the Borrowers has caused this Note to be
duly executed, under seal, by its duly authorized officer as of the day and year
first above written.
109
CROWN CRAFTS, INC. CHURCHILL WEAVERS, INC.
HAMCO, INC.
CROWN CRAFTS INFANT PRODUCTS, INC.
By: (SEAL)
--------------------------
Name: By: (SEAL)
Title: ------------------------
Name:
Title:
110
Term Loan Note (cont'd)
PAYMENTS OF PRINCIPAL(1)
- ----------------------------------------------------------------------------------------
Amount of Notation
Date Principal Paid Made By
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(1) Include Term Advances
111
EXHIBIT B
[SUBJECT TO REVISION TO COMPORT WITH
FIRM PRACTICE]
OPINION OF
COUNSEL FOR THE BORROWERS
[DATED AS PROVIDED IN
SECTION 9.01 OF THE CREDIT
AGREEMENT]
To the Lenders and the Agent
Referred to Below
c/o Wachovia Bank, N.A.,
as Agent
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attn: Leveraged Finance
Dear Sirs:
We have acted as counsel for Crown Crafts, Inc., Churchill Weavers,
Inc., Hamco, Inc. and Crown Crafts Infant Products, Inc. (collectively, the
"Borrowers") in connection with the Credit Agreement (the "Credit Agreement")
dated as of July 23, 2001 among the Borrowers, the lenders listed on the
signature pages thereof and Wachovia Bank, N.A., as Agent. Terms defined in the
Credit Agreement are used herein as therein defined.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments and have conducted such other
investigations of fact and law as we have deemed necessary or advisable for
purposes of this opinion. We have assumed for purposes of our opinions set forth
below that the execution and delivery of the Credit Agreement by each Lender and
by the Agent have been duly authorized by each Lender and by the Agent.
Upon the basis of the foregoing, we are of the opinion that:
1. Each Borrower is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation set forth above and has all corporate powers required to carry on
its business as now conducted.
112
2. The execution, delivery and performance by the Borrowers of
the Credit Agreement and the Notes, and the Domestic Stock Pledge Agreement, the
Foreign Stock Pledge Agreement, the Consent and Agreement of the Borrowers at
the end of the Intercreditor Agreement (the "Other Credit Documents") executed
by each Borrower (i) are within such Borrower's corporate powers, (ii) have been
duly authorized by all necessary corporate action, (iii) require no action by or
in respect of, or filing with, any governmental body, agency or official, (iv)
do not contravene, or constitute a default under, any provision of applicable
law or regulation or of the certificate of incorporation or by-laws of such
Borrower or of any agreement, judgment, injunction, order, decree or other
instrument which to our knowledge is binding upon the Borrowers and (v) to our
knowledge, except as provided in the Credit Agreement and the Other Credit
Documents, do not result in the creation or imposition of any Lien on any asset
of the Borrowers or any of the Subsidiaries.
3. Assuming that the law of the State of New York is
substantially the same as the law of Georgia, each of the Credit Agreement, the
Notes, and the Other Credit Documents constitutes a valid and binding agreement
of the Borrowers, enforceable against the Borrowers in accordance with its
terms, and if on the date hereof the Mortgage Amendment had been duly and
properly completed, delivered, recorded (including payment of any applicable
filing fees and intangible recording taxes) and indexed in the real estate
records in the counties and states where the Real Properties are located, the
Mortgages would constitute valid and binding obligations of the Borrowers,
enforceable in accordance with their respective terms, except in each of the
foregoing cases as such enforceability may be limited by: (i) bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and (ii) general principles of equity.
4. To our knowledge, there is no action, suit or proceeding
pending, or threatened, against or affecting any of the Borrowers before any
court or arbitrator or any governmental body, agency or official in which there
is a reasonable possibility of an adverse decision which could materially
adversely affect the business, consolidated financial position or consolidated
results of operations of the Borrowers and the Subsidiaries, considered as a
whole, or which in any manner questions the validity or enforceability of the
Credit Agreement, any Note or any Other Credit Document.
5. None of the Borrowers is an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
6. None of the Borrowers is a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company", as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended.
7. The choice of New York law to govern the Credit Agreement, the
Notes and the Other Credit Documents (other than the Security Agreement and the
Mortgages) in which such choice is stipulated is a valid and effective choice of
law under the laws of the State of Georgia, and adherence to existing judicial
precedents generally would require a court sitting in the State of Georgia to
abide by such choice of law, unless a fundamental policy of the State of Georgia
would be violated. We are not aware of any provision of the Credit Agreement,
the Notes or the Other Credit Documents which would violate a fundamental policy
of the State of Georgia.
113
We are qualified to practice in the State of Georgia and do not purport
to be experts on any laws other than the laws of the United States and the State
of Georgia and the Business Corporation Code of the State of Delaware and this
opinion is rendered only with respect to such laws. We have made no independent
investigation of the laws of any other jurisdiction.
This opinion is delivered to you in connection with the transaction
referenced above and may only be relied upon by you, any Assignee, Participant
or other Transferee under the Credit Agreement, and Jones, Day, Reavis & Pogue
without our prior written consent.
Very truly yours,
114
EXHIBIT C
OPINION OF SPECIAL COUNSEL
FOR THE AGENT
[DATED AS PROVIDED IN
SECTION 9.01 OF THE CREDIT
AGREEMENT]
To the Lenders and the Agent
Referred to Below
c/o Wachovia Bank, N.A.,
as Agent
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attn: Leveraged Finance
Dear Sirs:
We have participated in the preparation of the Credit Agreement (the
"Credit Agreement") dated as of July 23, 2001 by and among Crown Crafts, Inc.,
Churchill Weavers, Inc., Hamco, Inc. and Crown Crafts Infant Products, Inc.
(collectively, the "Borrowers"), the lenders listed on the signature pages
thereof (the "Lenders") and Wachovia Bank, N.A., as Agent (the "Agent"), and
have acted as special counsel for the Agent for the purpose of rendering this
opinion pursuant to SECTION 9.01(c) of the Credit Agreement. Terms defined in
the Credit Agreement are used herein as therein defined.
This opinion letter is limited by, and is in accordance with, the
January 1, 1992 edition of the Interpretive Standards applicable to Legal
Opinions to Third Parties in Corporate Transactions adopted by the Legal Opinion
Committee of the Corporate and Banking Law Section of the State Bar of Georgia
which Interpretive Standards are incorporated herein by this reference.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments and have conducted such other
investigations of fact and law as we have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, and assuming the due authorization,
execution and delivery of the Credit Agreement, each of the Notes and the
Domestic Stock Pledge Agreement, the Foreign Stock Pledge Agreement, the Consent
and Agreement of the Borrowers at the end of the Intercreditor Agreement (the
"Other Credit Documents") by or on behalf of the Borrowers, we are of the
opinion that the Credit Agreement, the Other Credit Documents and each Note
constitutes a valid and binding agreement of the Borrowers, in each case
enforceable in
115
accordance with its terms except as: (i) the enforceability thereof may be
affected by bankruptcy, insolvency, reorganization, fraudulent conveyance,
voidable preference, moratorium or similar laws applicable to creditors' rights
or the collection of debtors' obligations generally; (ii) rights of acceleration
and the availability of equitable remedies may be limited by equitable
principles of general applicability; and (iii) the enforceability of certain of
the remedial, waiver and other provisions of the Credit Agreement, the Other
Credit Documents and the Notes may be further limited by the laws of the State
of Georgia; provided that such additional laws do not, in our opinion,
substantially interfere with the practical realization of the benefits expressed
in the Credit Agreement, the Other Credit Documents and the Notes, except for
the economic consequences of any procedural delay which may result from such
laws.
In giving the foregoing opinion, we express no opinion as to the effect
(if any) of any law of any jurisdiction except the State of Georgia. We express
no opinion as to the effect of the compliance or noncompliance of the Agent or
any of the Lenders with any state or federal laws or regulations applicable to
the Agent or any of the Lenders by reason of the legal or regulatory status or
the nature of the business of the Agent or any of the Lenders.
This opinion is delivered to you in connection with the transaction
referenced above and may only be relied upon by you and any Assignee,
Participant or other Transferee under the Credit Agreement without our prior
written consent.
Very truly yours,
116
EXHIBIT D
ASSIGNMENT AND ACCEPTANCE
Dated____________ ___, 200_
Reference is made to the Credit Agreement dated as of July 23, 2001
(together with all amendments and modifications thereto, the "Credit Agreement")
among Crown Crafts, Inc., Churchill Weavers, Inc., Hamco, Inc. and Crown Crafts
Infant Products, Inc. (collectively or individually, as the context shall
require, the "Borrowers"), the Lenders (as defined in the Credit Agreement) and
Wachovia Bank, N.A., as Agent (the "Agent"). Terms defined in the Credit
Agreement are used herein with the same meaning.
____________________________________ (the "Assignor") and
_________________________________________ (the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, a ___% interest in and
to all of the Assignor's rights and obligations under the Credit Agreement as of
the Effective Date (as defined below) (including, without limitation, a ___%
interest (which on the Effective Date hereof is $[_____]) in the Assignor's
Revolving Loan Commitment and a ___% interest (which on the Effective Date
hereof is $[__________________]) in the Revolving Loans and Term Loans (which on
the Effective Date hereof is $[_________________]) [AND Settlement Loans] (which
on the Effective Date hereof is $[_____________]) owing to the Assignor.
2. The Assignor (i) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit Agreement or any other instrument or document furnished pursuant
thereto, other than that it is the legal and beneficial owner of the interest
being assigned by it hereunder, that such interest is free and clear of any
adverse claim and that as of the date hereof its Revolving Loan Commitment
(without giving effect to assignments thereof which have not yet become
effective) is $[_____________________] and the aggregate outstanding principal
amount owing to it of (x) Revolving Loans is $[_______________], (y) Term Loans
[AND (Z) SETTLEMENT LOANS IS $[_____________________]] (in each case without
giving effect to assignments thereof which have not yet become effective), (ii)
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of the Borrowers or the performance or observance by
the Borrowers of any of their obligations under the Credit Agreement or any
other instrument or document furnished pursuant thereto; and (iii) attaches the
Note[S] referred to in paragraph 1 above and requests that the Agent exchange
such Note[s] for new Notes as follows, each payable to the order of the
Assignee: __________________________________________ [AND NEW NOTES AS FOLLOWS,
EACH PAYABLE TO THE ORDER OF THE ASSIGNOR:
__________________________________________]
3. The Assignee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements referred to
in SECTION 4.04(a) thereof (or any
117
more recent financial statements of the Parent]delivered pursuant to SECTION
5.01(a) or (b) thereof) and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (ii) agrees that it will, independently and
without reliance upon the Agent, the Assignor or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Credit Agreement; (iii) confirms that it is a bank or financial institution;
(iv) appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under the Credit Agreement as are delegated
to the Agent by the terms thereof, together with such powers as are reasonably
incidental thereto; (v) agrees that it will perform in accordance with their
terms all of the obligations which by the terms of the Credit Agreement are
required to be performed by it as a Lender; (vi) specifies as its Lending Office
(and address for notices) the office set forth beneath its name on the signature
pages hereof and (vii) represents and warrants that the execution, delivery and
performance of this Assignment and Acceptance are within its corporate powers
and have been duly authorized by all necessary corporate action.
4. The Effective Date for this Assignment and Acceptance shall be
_____________, 200__ (the "Effective Date").
Following the execution of this Assignment and Acceptance, it will be
delivered to the Agent for execution and acceptance by the Agent [AND TO THE
BORROWERS FOR EXECUTION BY THE BORROWERS, IF REQUIRED].
5. Upon such execution and acceptance by the Agent [AND EXECUTION
BY THE BORROWERS] {IF THE ASSIGNEE IS NOT A LENDER PRIOR TO THE EFFECTIVE DATE},
from and after the Effective Date, (i) the Assignee shall be a party to the
Credit Agreement and, to the extent rights and obligations have been transferred
to it by this Assignment and Acceptance, have the rights and obligations of a
Lender thereunder and (ii) the Assignor shall, to the extent its rights and
obligations have been transferred to the Assignee by this Assignment and
Acceptance, relinquish its rights (other than under SECTION 8.03 of the Credit
Agreement) and be released from its obligations under the Credit Agreement.
6. Upon such execution and acceptance by the Agent and execution
by the Borrowers, if the Assignee is not a Lender prior to the Effective Date,
from and after the Effective Date, the Agent shall make all payments in respect
of the interest assigned hereby to the Assignee. The Assignor and Assignee shall
make all appropriate adjustments in payments for periods prior to such
acceptance by the Agent directly between themselves.
118
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York.
[NAME OF ASSIGNOR]
By:
---------------------------------
Title:
By:
---------------------------------
Title:
Lending Office:
[ADDRESS]
WACHOVIA BANK, N.A.
As Agent
By:
---------------------------------
Title:
[CROWN CRAFTS, INC. CHURCHILL WEAVERS, INC.
HAMCO, INC.
CROWN CRAFTS INFANT PRODUCTS, INC.
By: (SEAL)
--------------------------
Name: By: (SEAL)
Title: ------------------------
Name:
Title:]
119
EXHIBIT E
NOTICE OF BORROWING
_______________, _____
Wachovia Bank, N.A., as Agent
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Leveraged Finance
Re: Credit Agreement (as amended and modified from time to time,
the "Credit Agreement") dated as of July 23, 2001 by and among
Crown Crafts, Inc., Churchill Weavers, Inc., Hamco, Inc. and
Crown Crafts Infant Products, Inc. (collectively or
individually, as the context shall require, the "Borrowers"),
the Lenders from time to time parties thereto, and Wachovia
Bank, N.A., as Agent.
Gentlemen:
Unless otherwise defined herein, capitalized terms used herein shall
have the meanings attributable thereto in the Credit Agreement.
This Notice of Borrowing is delivered to you pursuant to SECTION 2.02
of the Credit Agreement.
The Borrowers hereby request a [EURO-DOLLAR BORROWING] [BASE RATE
BORROWING] in the aggregate principal amount of $[____________] to be made on
[_____________________], and for interest to accrue thereon at the rate
established by the Credit Agreement for [EURO-DOLLAR LOANS] [BASE RATE LOANS].
The duration of the Interest Period with respect thereto shall be [1 MONTH] [2
MONTHS] [3 MONTHS].
120
The amount available to be borrowed under SECTION 2.01 of the Credit
Agreement, net of amounts to be paid with the proceeds of this Borrowing, is as
follows:
(a) Aggregate Revolving Loan
Commitments $__________
(b) Borrowing Base per most recent Borrowing
Base Certificate $__________
(c) Principal amount outstanding under Revolving
Loans $__________
(d) Aggregate outstanding principal amount of
Letter of Credit Obligations $__________
(e) Amount available to be borrowed (lesser of: (a)
and sum of (b), less (c) less (d) $__________
The Borrowers have caused this Notice of Borrowing to be
executed and delivered by their duly authorized officers this ____ day of
______________, ______.
CROWN CRAFTS, INC. CHURCHILL WEAVERS, INC.
HAMCO, INC.
CROWN CRAFTS INFANT PRODUCTS, INC.
By: (SEAL)
--------------------------
Name: By: (SEAL)
Title: ------------------------
Name:
Title:
121
EXHIBIT F
[RESERVED]
122
EXHIBIT G
COMPLIANCE CERTIFICATE
Reference is made to the Credit Agreement dated as of July 23, 2001 (as
modified and supplemented and in effect from time to time, the "Credit
Agreement") by and among Crown Crafts, Inc., Churchill Weavers, Inc., Hamco,
Inc. and Crown Crafts Infant Products, Inc. (collectively or individually, as
the context shall require, the "Borrowers"), the Lenders from time to time
parties thereto, and Wachovia Bank, N.A., as Agent. Capitalized terms used
herein shall have the meanings ascribed thereto in the Credit Agreement.
Pursuant to SECTION 5.01(c) of the Credit Agreement, ________________,
the duly authorized ______________ of the Borrowers, hereby certifies to the
Agent and the Lenders that, as of the date hereof, (i) the information contained
in the Compliance Certificate attached hereto is true, accurate and complete in
all material respects and (ii) no Default is in existence.
CROWN CRAFTS, INC. CHURCHILL WEAVERS, INC.
HAMCO, INC.
CROWN CRAFTS INFANT PRODUCTS, INC.
BY: (SEAL)
--------------------------
NAME: BY: (SEAL)
TITLE: ------------------------
NAME:
TITLE:
123
CROWN CRAFTS, INC.
COMPLIANCE CHECKLIST
1. Minimum EBITDA (Section 5.21(a))
Consolidated EBITDA shall not be less than: (i) for the Fiscal Quarter
ending September 30, 2001, $1,825,000; (ii) on a cumulative basis for
the Fiscal Quarter ending December 30, 2001 and the immediately
preceding Fiscal Quarter, $3,500,000; (iii) on a cumulative basis for
the Fiscal Quarter ending March 31, 2002 and the 2 immediately
preceding Fiscal Quarters, $5,550,000; and (iv) at the end of each
Fiscal Quarter thereafter, for such Fiscal Quarter and the 3
immediately preceding Fiscal Quarters, the amount set forth below
corresponding to such Fiscal Quarter:
--------------------------------------------------------
FISCAL QUARTER ENDING MINIMUM EBITDA
--------------------------------------------------------
June 30, 2002 $7,375,000
--------------------------------------------------------
September 29, 2002 $7,900,000
--------------------------------------------------------
December 29, 2002 $8,300,000
--------------------------------------------------------
March 30, 2003 and each Fiscal
Quarter thereafter $8,725,000
--------------------------------------------------------
(a) Consolidated EBITDA Schedule 1 $___________
Minimum Consolidated EBITDA [$1,825,000]
[$3,500,000]
[$5,550,000]
[$7,373,000]
[$7,900,000]
[$8,300,000]
[$8,725,000]
2. Debt/EBITDA Ratio (Section 5.21(b))
The Debt/EBITDA Ratio will not exceed, at the end of each Fiscal
Quarter set forth below, calculated as to Debt as of such Fiscal
Quarter and calculated as to Consolidated EBITDA for such Fiscal
Quarter and the 3 immediately preceding Fiscal Quarters (except that
for the Fiscal Quarter ending March 31, 2002, such calculation shall be
for such Fiscal Quarter and the 2 immediately preceding Fiscal
Quarters), the ratio set forth below corresponding to such Fiscal
Quarter:
124
-------------------------------------------------------------------
FISCAL QUARTER ENDING MAXIMUM DEBT/EBITDA
RATIO
-------------------------------------------------------------------
March 31, 2002 7.75 to 1.0
-------------------------------------------------------------------
June 30, 2002 5.65 to 1.0
-------------------------------------------------------------------
September 29, 2002 5.25 to 1.0
-------------------------------------------------------------------
December 29, 2002 4.75 to 1.0
-------------------------------------------------------------------
March 30, 2003 and June 29, 2003 4.50 to 1.0
-------------------------------------------------------------------
September 28, 2003 4.25 to 1.0
-------------------------------------------------------------------
December 28, 2003 4.00 to 1.0
-------------------------------------------------------------------
March 28, 2004 3.75 to 1.0
-------------------------------------------------------------------
June 27, 2004 and September 26, 2004 3.50 to 1.0
-------------------------------------------------------------------
December 26, 2004 through
December 25, 2005 3.25 to 1.0
-------------------------------------------------------------------
April 2, 2006 3.00 to 1.0
-------------------------------------------------------------------
(a) Consolidated Debt Schedule 2 $___________
(b) Consolidated EBITDA Schedule 1 $___________
(c) actual ratio of (a) to (b) ___ to 1.00
Limitation: (c) may not exceed [7.75 to 1.0]
[5.65 to 1.0]
[5.25 to 1.0]
[4.75 to 1.0]
[4.50 to 1.0]
[4.25 to 1.0]
[4.00 to 1.0]
[3.75 to 1.0]
[3.50 to 1.0]
[3.25 to 1.0]
[3.00 to 1.0]
125
3. Senior Debt/EBITDA Ratio (Section 5.21(c))
The Senior Debt/EBITDA Ratio will not exceed, at the end of each Fiscal
Quarter set forth below, calculated as to Senior Debt as of such Fiscal
Quarter and calculated as to Consolidated EBITDA for such Fiscal
Quarter and the 3 immediately preceding Fiscal Quarters (except that
for the Fiscal Quarter ending March 31, 2002, such calculation shall be
for such Fiscal Quarter and the 2 immediately preceding Fiscal
Quarters), the ratio set forth below corresponding to such Fiscal
Quarter:
------------------------------------------------------
FISCAL QUARTER ENDING MAXIMUM SENIOR
DEBT/EBITDA RATIO
------------------------------------------------------
March 31, 2002 4.80 to 1.0
------------------------------------------------------
June 30, 2002 3.50 to 1.0
------------------------------------------------------
September 29, 2002 3.25 to 1.0
------------------------------------------------------
December 29, 2002 3.00 to 1.0
------------------------------------------------------
March 30, 2003 2.75 to 1.0
------------------------------------------------------
June 29, 2003 and
September 28, 2003 2.50 to 1.0
------------------------------------------------------
December 28, 2003 2.25 to 1.0
------------------------------------------------------
March 28, 2004 through 2.00 to 1.0
September 26, 2004
------------------------------------------------------
December 26, 2004 1.75 to 1.0
------------------------------------------------------
March 27, 2005 and thereafter 1.50 to 1.00
------------------------------------------------------
(a) Consolidated Senior Debt Schedule 2 $___________
(b) Consolidated EBITDA Schedule 1 $___________
(c) actual ratio of (a) to (b) ___ to 1.00
Limitation: (c) may not exceed [4.80 to 1.0]
[3.50 to 1.0]
[3.25 to 1.0]
[3.00 to 1.0]
[2.75 to 1.0]
[2.50 to 1.0]
[2.25 to 1.0]
[2.00 to 1.0]
[1.75 to 1.0]
[1.50 to 1.0]
126
4. EBITDA/Cash Interest Ratio (Section 5.21(d))
The EBITDA/Cash Interest Ratio will not be less than, at the end of
each Fiscal Quarter set forth below, for such Fiscal Quarter and the 3
immediately preceding Fiscal Quarters (except that for the Fiscal
Quarter ending March 31, 2002, such calculation shall be for such
Fiscal Quarter and the 2 immediately preceding Fiscal Quarters), the
amount set forth below corresponding to such Fiscal Quarter:
-------------------------------------------------------------
FISCAL QUARTER ENDING MINIMUM EBITDA/CASH
INTEREST RATIO
-------------------------------------------------------------
March 31, 2002 1.60 to 1.0
-------------------------------------------------------------
June 30, 2002 1.65 to 1.0
-------------------------------------------------------------
September 29, 2002 1.80 to 1.0
-------------------------------------------------------------
December 29, 2002 2.00 to 1.0
-------------------------------------------------------------
March 30, 2003 2.20 to 1.0
-------------------------------------------------------------
June 29, 2003 through December 28, 2003 2.25 to 1.0
-------------------------------------------------------------
March 28, 2004 through December 26, 2004 2.50 to 1.0
-------------------------------------------------------------
March 27, 2005 through December 25, 2005 2.75 to 1.0
-------------------------------------------------------------
April 2, 2006 3.00 to 1.00
-------------------------------------------------------------
(a) Consolidated EBITDA Schedule 1 $___________
(b) Cash Interest Schedule 3 $___________
(c) actual ratio of (a) to (b) ___ to 1.00
Limitation: (c) may not exceed [4.80 to 1.0]
[3.50 to 1.0]
[3.25 to 1.0]
[3.00 to 1.0]
[2.75 to 1.0]
[2.50 to 1.0]
[2.25 to 1.0]
[2.00 to 1.0]
[1.75 to 1.0]
[1.50 to 1.0]
127
5. Minimum Stockholders' Equity (Section 5.21(e))
As of the end of each Fiscal Quarter, Stockholders' Equity will not be
less than the sum of (i) Stockholders' Equity as of the Closing Date
(after giving effect to the sale of its adult bedding line of business
to its former management) plus (ii) 75% of the cumulative (since the
Closing Date) Reported Net Income (excluding any Fiscal Quarter during
which Reported Net Income is less than $0.00) of the Parent and the
Subsidiaries.
(a) Stockholders' Equity $___________
(b) Cumulative positive Reported Net Income since
the Closing Date $___________
(c) 75% of (b) $___________
(d) sum of (c) and $___________(2) $___________
Limitation: (a) must not be less than (d)
6. Capital Expenditures (Section 5.21(f))
No Borrower shall, nor shall it permit any Subsidiary to, make any
expenditures (including obligations incurred under any lease) in any
Fiscal Year that are required to be capitalized under GAAP in the
aggregate for any Borrower and the Subsidiaries, on a consolidated
basis, exceeding $500,000.
(a) aggregate Capital Expenditures made to date in current
Fiscal Year $____________
Limitation: (a) may not exceed $500,000
- --------------------
(2) Insert amount of Stockholders' Equity as of the Closing Date
128
7. Operating Leases (Section 5.21(g))
No Borrower shall, nor shall it permit any Subsidiary to, enter into or
remain or become liable upon any lease (other than intercompany leases
between the Borrower and its Subsidiaries) which would be characterized
as an operating lease under GAAP if the aggregate amount of all
consolidated rents paid by the Borrower and its Subsidiaries under all
such leases would exceed $3,000,000 in the first Fiscal Year following
the Closing Date, with such amount increasing each Fiscal Year
thereafter by an additional 5% of the amount in effect at the end of
the preceding Fiscal Year.
(a) aggregate amount of consolidated rents payable in current
Fiscal Year $___________
Limitation: (a) may not exceed [$3,000,000](3)
- -------------
(3) Increase after the first Fiscal Year by an additional 5% of the amount in
effect at the end of the preceding Fiscal Year
129
EXHIBIT H
CLOSING CERTIFICATE
Reference is made to the Credit Agreement (the "Credit Agreement")
dated as of July 23, 2001 among Crown Crafts, Inc., Churchill Weavers, Inc.,
Hamco, Inc. and Crown Crafts Infant Products, Inc. (collectively, the
"Borrowers"), the Lenders listed therein, and Wachovia Bank, N.A., as Agent.
Capitalized terms used herein have the meanings ascribed thereto in the Credit
Agreement.
Pursuant to SECTION 5.01(c) of the Credit Agreement,
[______________________], the duly authorized [_______________] of each of the
Borrowers, hereby certifies to the Agent and the Lenders that (i) no Default has
occurred and is continuing as of the date hereof, and (ii) the representations
and warranties contained in ARTICLE 4 of the Credit Agreement are true on and as
of the date hereof.
Certified as of this July 23, 2001.
CROWN CRAFTS, INC. CHURCHILL WEAVERS, INC.
HAMCO, INC.
CROWN CRAFTS INFANT PRODUCTS, INC.
BY: (SEAL)
--------------------------
NAME: BY: (SEAL)
TITLE: ------------------------
NAME:
TITLE:
134
EXHIBIT I
[NAME OF BORROWER](5)
OFFICER'S CERTIFICATE
The undersigned, ________________________________, ___________
___________________, Secretary of ____________________________ ___________, a
_____________________________ corporation (the "Certifying Borrower"), hereby
certifies that [S]he has been duly elected, qualified and is acting in such
capacity and that, as such, [S]he is familiar with the facts herein certified
and is duly authorized to certify the same, and hereby further certifies, in
connection with the Credit Agreement dated as of July 23, 2001 (the "Credit
Agreement") among the Certifying Borrower, the other Borrowers parties thereto,
Wachovia Bank, N.A. as Agent and as a Lender, and certain other Lenders listed
on the signature pages thereof, that:
1. Attached hereto as EXHIBIT A is a complete and correct copy of
the Certificate of Incorporation of the Borrower as in full force and effect on
the date hereof as certified by the Secretary of State of the State of
___________ , the Borrower's state of incorporation.
2. Attached hereto as EXHIBIT B is a complete and correct copy of
the Bylaws of the Borrower as in full force and effect on the date hereof.
3. Attached hereto as EXHIBIT C is a complete and correct copy of
the resolutions duly adopted by the Board of Directors of the Borrower on
________________, 2001 approving, and authorizing the execution and delivery
of, the Credit Agreement, the Notes and the other Credit Documents (as such
terms are defined in the Credit Agreement) to which the Borrower is a party.
Such resolutions have not been repealed or amended and are in full force and
effect, and no other resolutions or consents have been adopted by the Board of
Directors of the Borrower in connection therewith.
4. _____________________ , who is __________________ of the
Borrower signed the Credit Agreement, the Notes and the other Credit Documents
to which the Borrower is a party, was duly elected, qualified and acting as such
at the time [S]he signed the Credit Agreement, the Notes and other Credit
Documents to which the Borrower is a party, and [HIS/HER] signature appearing on
the Credit Agreement, the Notes and the other Credit Documents to which the
Borrower is a party is [HIS/HER] genuine signature.
IN WITNESS WHEREOF, the undersigned has hereunto set [HIS/HER] hand as of July
23, 2001.
------------------------
- ------------------
(5) A separate Officer's Certificate is required for each Borrower
135
EXHIBIT J
WAIVER AND AGREEMENT
WHEREAS, ____________________________________________________ is the
lessor, warehouse owner or processor (hereinafter "Obligor") and
_____________________ , is the tenant or customer (hereinafter "Customer")
pursuant to a lease, warehouse or processing agreement dated
____________________, (hereinafter the "Agreement") covering the real property
described therein or goods warehoused or stored with the Obligor pursuant
thereto at the location described therein (hereinafter the "Property); and
WHEREAS, WACHOVIA BANK, N.A. is collateral agent (the "Collateral
Agent") for itself and other lenders (the "Lenders") which have extended credit
facilities (together with any modifications, supplements, renewals and
amendments, hereinafter the "Loans") to be secured by a security interest in all
of the personal property, goods, inventory and equipment owned by the Customer
now and hereafter acquired (hereinafter "personal property") which is now or
about to be located on the Property.
NOW, THEREFORE, so long as the Loans remain outstanding or any
commitment with respect thereto remains in force and in consideration of the
mutual covenants and agreements herein contained, Obligor and Collateral Agent
hereby covenant and agree as follows:
1. Obligor waives any lien, interest, claim, right or title in
the personal property, which Obligor now has or may hereafter acquire, either by
statute, agreement or otherwise, and agrees that the personal property shall not
become part of the Property regardless of the manner in which the personal
property may be attached or affixed to the Property provided that the Property
is not materially damaged or altered thereby.
2. During the term of the Agreement, and any lawful holdover,
Obligor agrees it will not prevent Collateral Agent or its designee from
entering upon the Property at all reasonable times to inspect or remove the
personal property and Collateral Agent agrees to promptly and fully repair any
resulting damage to the Property. So long as the Loans are outstanding or any
commitment with respect thereto remains in force, upon written request and
notification by Obligor to Collateral Agent of the termination of the Agreement,
Collateral Agent may cause the personal property to be removed from the
Property, within a period of time not to exceed 60 days after Collateral Agent's
receipt of notice from Obligor, and, if Collateral Agent decides to have the
personal property removed, Collateral Agent agrees to cause any resulting damage
to the Property to be fully and promptly repaired.
3. In the event Obligor terminates the Agreement as a result of
default by Customer, Obligor agrees to give Collateral Agent written notice of
such termination at the same time such notice is given to Customer. Obligor also
agrees that Collateral Agent may cause the personal property to be removed from
the property under the same terms specified in paragraph 2 above.
4. Collateral Agent may extend the amounts, times or manner of
payment of any obligations of Customer to Collateral Agent or otherwise amend,
modify, supplement or waive
136
any of the terms and conditions or any agreement respecting same, all without
the consent of, or notice to Obligor.
5. All requests, notices or services provided for or permitted to
be given or made pursuant to this waiver and agreement shall be deemed to have
been properly given or made by depositing same in the United States Mail,
postage prepaid and registered or certified, returned receipt requested, and
addressed to the addresses set forth below, or to such other addresses as may
from time to time be specified in writing by either party to the other:
If to Obligor:
-------------------------------
-------------------------------
-------------------------------
If to Collateral Agent:
Wachovia Bank, N.A.
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attn: Leveraged Finance
All requests, notices or services shall be effective upon being
deposited in the United States Mail, however the time period in which any
response to any notice or service must be made shall commence from the date of
receipt of the request, notice or service by the addressee.
6. This waiver and agreement is binding upon and inures to the
benefit of Obligor and Collateral Agent, for the ratable benefit of the Lenders,
and their respective successors and assigns, and to no other person or entity
and shall become effective on the date it is fully executed and acknowledged by
both Obligor and Collateral Agent.
IN WITNESS WHEREOF, Obligor and Collateral Agent have caused this
instrument to be executed by their duly authorized officers and representatives
as of the dates shown below:
OBLIGOR:
Executed by Obligor on
the ___ day of _________ -------------------------------------
-------------------------------------
By:
---------------------------------
Title:
------------------------------
COLLATERAL AGENT:
Executed by Collateral Agent on WACHOVIA BANK, N.A.
the ___ day of _________
By:
---------------------------------
Title:
------------------------------
137
EXHIBIT K
TELEPHONE INSTRUCTION LETTER
[____________________]
Wachovia Bank, N.A.
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attention: Leveraged Finance
Ladies and Gentlemen:
Please refer to that certain Credit Agreement of even date herewith
between you, the Lenders parties thereto and us ("Credit Agreement").
From any Loans under the Credit Agreement which you make to us, we
hereby authorize and direct you to make disbursements from time to time for our
account to our bank account number [________________] maintained with Wachovia
Bank, N.A., upon receipt of telephone instructions from any of the following
persons or their respective designees:
Name Title
---- -----
----------------------------------- -----------------------------------
----------------------------------- -----------------------------------
----------------------------------- -----------------------------------
You shall have no liability to us whatsoever, except for gross
negligence or willful misconduct, for acting upon any such telephone instruction
which you, in good faith, believe was given by any of the above designated
persons or their respective designees and you shall have no duty to inquire as
to the propriety of any disbursement.
You shall have the right to accept the telephone instructions of any of
the above designated persons or their respective designees unless and until
actual receipt by you from us of written notice of termination of the authority
of any such designated persons. We may change persons designated to give you
telephone instructions only by delivering to you written notice of such change.
138
Unless and until you advise us to the contrary, each telephone
instruction from the above-named persons or their respective designees shall be
followed by a written confirmation of the request for disbursement in such form
as you make available from time to time to use for such purpose.
Very truly yours,
CROWN CRAFTS, INC. CHURCHILL WEAVERS, INC.
HAMCO, INC.
CROWN CRAFTS INFANT PRODUCTS, INC.
BY: (SEAL)
--------------------------
NAME: BY: (SEAL)
TITLE: ------------------------
NAME:
TITLE:
139
EXHIBIT L
FORM OF CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "Agreement") is entered into as of
July 23, 2001 by and among Crown Crafts, Inc. (the "Parent"), Churchill Weavers,
Inc., Hamco, Inc. and Crown Crafts Infant Products, Inc. (each a "Subsidiary",
and collectively, the "Subsidiaries"). The Parent and each of the Subsidiaries
are sometimes hereinafter referred to individually as a "Contributing Party" and
collectively as the "Contributing Parties").
W I T N E S S E T H :
WHEREAS, pursuant to that certain Credit Agreement dated as of even
date herewith, among the Parent and the Subsidiaries (collectively, the
"Borrowers"), WACHOVIA BANK, N.A., as Agent for itself and the other Banks which
are party thereto from time to time (such agreement, as the same may from time
to time be amended, modified, restated or extended, being hereinafter referred
to as the "Credit Agreement"; unless otherwise provided herein, capitalized
terms used in this Agreement have the meanings set forth in the Credit
Agreement), the Banks have agreed to extend financial accommodations to the
Borrowers;
WHEREAS, the Borrowers are jointly and severally liable for all
Obligations under the Credit Agreement; and
WHEREAS, each Subsidiary is a wholly-owned direct or indirect
subsidiary of the Parent will derive direct and indirect economic benefit from
the effectiveness and existence of the Credit Agreement and the Loans made to
each Borrower;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, and to induce each Lender to extend credit under the
Credit Agreement, it is agreed as follows:
To the extent that any Subsidiary shall, under the Credit Agreement or
any other Credit Documents, make a payment (a "Subsidiary Payment") of a portion
of the Obligations in excess of the then outstanding principal amounts of Loans
actually made directly to it and for its use under the Credit Agreement, plus
interest thereon, then such Subsidiary shall be entitled to contribution and
indemnification from, and be reimbursed by, each of the other Contributing
Parties in an amount, for each such Contributing Party, equal to a fraction of
such Subsidiary Payment, the numerator of which fraction is such Contributing
Party's Allocable Amount and the denominator of which is the sum of the
Allocable Amounts of all of the Contributing Parties.
As of any date of determination, the "Allocable Amount" of each
Contributing Party shall be equal to the maximum amount of liability which could
be asserted against such Contributing Party hereunder with respect to the
applicable Subsidiary Payment without (i) rendering such Contributing Party
"insolvent" within the meaning of Section 101(31) of the Federal Bankruptcy Code
(the "Bankruptcy Code") or Section 2 of either the Uniform Fraudulent Transfer
Act (the "UFTA") or the Uniform Fraudulent Conveyance Act (the "UFCA"), (ii)
leaving such
140
Contributing Party with unreasonably small capital, within the meaning of
Section 548 of the Bankruptcy Code or Section 4 of the UFTA or Section 5 of the
UFCA, or (iii) leaving such Contributing Party unable to pay its debts as they
become due within the meaning of Section 548 of the Bankruptcy Code or Section 4
of the UFTA or Section 6 of the UFCA.
This Agreement is intended only to define the relative rights of the
Contributing Parties, and nothing set forth in this Agreement is intended to or
shall impair the obligations of the Borrowers, jointly and severally, to pay any
amounts, as and when the same shall become due and payable in accordance with
the terms of the Credit Agreement.
The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets in favor of each Subsidiary to
which such contribution and indemnification is owing.
This Agreement shall become effective upon its execution by each of the
Contributing Parties and shall continue in full force and effect and may not be
terminated or otherwise revoked by any Contributing Party until all of the
Obligations under and as defined in the Agreement shall have been indefeasibly
paid in full (in lawful money of the United States of America) and discharged
and the Agreement and financing arrangements evidenced and governed by the
Credit Agreement shall have been terminated, and until such time, no amounts
shall be payable hereunder by any party hereto, the rights of each party to
amounts payable hereunder being expressly subordinated to payment of the
Obligations. Each Contributing Party agrees that if, notwithstanding the
foregoing, such Contributing Party shall have any right under applicable law to
terminate or revoke this Agreement, and such Contributing Party shall attempt to
exercise such right, then such termination or revocation shall not be effective
until a written notice of such revocation or termination, specifically referring
hereto and signed by such Contributing Party, is actually received by each of
the other Contributing Parties and by the Agent at the notice address set forth
in the Credit Agreement. Such notice shall not affect the right or power of any
Contributing Party to enforce rights arising prior to receipt of such written
notice by each of the other Contributing Parties and the Agent. If any Lender
grants additional loans to any Borrower or takes other action giving rise to
additional Obligations after any Contributing Party has exercised any right to
terminate or revoke this Agreement but before the Agent receives such written
notice, the rights of each other Contributing Party to contribution and
indemnification hereunder in connection with any Subsidiary Payments made with
respect to such loans or Obligations shall be the same as if such termination or
revocation had not occurred.
141
IN WITNESS WHEREOF, each Contributing Party has executed and delivered
this Agreement, under seal, as of the date first above written.
CROWN CRAFTS, INC. CHURCHILL WEAVERS, INC.
HAMCO, INC.
CROWN CRAFTS INFANT PRODUCTS, INC.
BY: (SEAL)
--------------------------
NAME: BY: (SEAL)
TITLE: ------------------------
NAME:
TITLE:
142
EXHIBIT M
COLLATERAL INFORMATION CERTIFICATE
(TO BE EXECUTED BY EACH BORROWER)
THIS COLLATERAL INFORMATION CERTIFICATE (this "Certificate") is
executed and delivered on July 23, 2001, by CROWN CRAFTS, INC., a Georgia
corporation ("CROWN CRAFTS"), CHURCHILL WEAVERS, INC., a Kentucky corporation
("CHURCHILL"), HAMCO, INC., a Louisiana corporation ("HAMCO"), and CROWN CRAFTS
INFANT PRODUCTS, INC., a Delaware corporation ("INFANT," together with Crown
Crafts, Churchill, and Hamco, jointly and severally, the "Borrowers" and each a
"Borrower"), to WACHOVIA BANK, N.A., as agent (the "Agent") for itself and for
the other lenders (the "Lenders") under that certain Credit Agreement dated as
of July 23, 2001, by and among the Borrowers, the Agent, and the Lenders (as the
same may be amended or supplemented from time to time, the "Credit Agreement").
Terms used, but not defined, herein shall have the meanings given such terms in
the Credit Agreement.
Each of the Borrowers agrees that this Certificate is one of the Loan
Documents referred to in the Credit Agreement. Each of the Borrowers, jointly
and severally with each of the other Borrowers, represents and warrants to the
Agent, for and on behalf of each of the Lenders, that the information contained
in this Certificate and the Schedules attached hereto is true and accurate as of
the date hereof. This representation and warranty shall survive the date of, and
any loan or advance made under the Credit Agreement.
All information required to be disclosed with respect to (a) CROWN
CRAFT will be disclosed on the corresponding schedule denominated with a "-A";
(b) CHURCHILL will be disclosed on the corresponding schedule denominated with a
"-B"; (c) HAMCO will be disclosed on the corresponding schedule denominated with
a "-C"; and (d) INFANT will be disclosed on the corresponding schedule
denominated with a "-D."
A plain numeric reference to a schedule shall be deemed to be a
reference to all schedules beginning with such number (e.g., a reference to
"Schedule 2" includes all of Schedules 2-A, 2-B, 2-C, and 2-D); provided that, a
plain numeric reference to a particular schedule with respect to a particular
Borrower shall be deemed to refer automatically to such Borrower's corresponding
schedule (as shown above). For example, a reference to "Schedule 2" with respect
to CHURCHILL shall be deemed to be an automatic reference to Schedule 2-B.
As used in this Certificate, the following terms have the following
meanings:
"Investment Property" has the meaning given such term in O.C.G. ss.
11-9-102 (as in effect on and after July 1, 2001, and as thereafter amended from
time to time) and includes, without limitation, securities entitlements,
certificated and uncertificated securities, commodity contracts, and commodity
accounts.
"Licensed Copyright" means, as to any Person, each copyright licensed
by such Person from some other Person(s); provided that the term "Licensed
Copyright" shall not include any software licensed by such Person to the extent
such software is fungible and reasonably available for purchase by the
Administrative Agent for less than $500 per licensed user.
143
"Licensed Mark" means, as to any Person, each Mark licensed by such
Person from some other Person(s).
"Licensed Patent" means, as to any Person, each patent licensed by such
Person from some other Person(s).
"Mark" means any tradename, servicemark, trademark, or trade dress.
"Owned Copyright" means, as to any Person, each copyright of which such
Person, by itself or in common with some other Person(s), is the copyright
holder.
"Owned Mark" means, as to any Person, each Mark owned by such Person,
by itself or in common with some other Person(s).
"Owned Patent" means, as to any Person, each patent owned by such
Person, by itself or in common with some other Person(s).
"Person" means any person or entity.
1. ORGANIZATIONAL INFORMATION. Schedules 1-A, 1-B, 1-C,
and 1-D (attached hereto and made a part hereof) accurately set forth as to each
of CROWN CRAFTS, CHURCHILL, HAMCO, and INFANT, respectively, each Borrower's
full legal name, state of organization, Federal tax identification number, any
fictitious or assumed names (e.g., "d/b/a" names) used by it within the last
five years, and any other names under which it, or any Person to which it is
successor in interest (either by merger, acquisition, or consolidation), has
conducted business in the last five years, in each case listing the
jurisdiction(s) where such names are/were used.
2. REAL PROPERTY. Schedules 2-A, 2-B, 2-C, and 2-D
(attached hereto and made a part hereof) accurately set forth as to each of
CROWN CRAFT, CHURCHILL, HAMCO, and INFANT, respectively, the street address,
city, state, zip code, and county of each parcel of real estate owned by, or
leased or licensed to, each Borrower, along with a brief description of the
activities conducted on such parcel and the types of personal property kept,
maintained, warehoused, or stored on such parcel. To the extent applicable,
copies of each written lease or license (or a thorough description of any oral
lease or license) relating to any of the foregoing parcels are attached to the
particular Schedule 2 on which such parcel is shown. Each Borrower's chief
executive office is clearly shown on its corresponding Schedule 2. Each location
at which a Borrower keeps any of its books and records relating to its accounts
receivable is clearly shown on its corresponding Schedule 2. None of the
Borrowers keeps any of such books and records at any location other than at
those indicated on its corresponding Schedule 2. None of the Borrowers keeps,
maintains, warehouses, or stores any of its personal property at any location
other than shown on its corresponding Schedule 2 or Schedule 8.
3. MARKS. Schedules 3-A, 3-B, 3-C, and 3-D (attached
hereto and made a part hereof) accurately set forth as to each of CROWN CRAFTS,
CHURCHILL, HAMCO, and INFANT, respectively, each Borrower's Owned Marks, along
with any applicable registration numbers and the jurisdictions and offices in
which such Owned Marks are registered. A copy of the trademark registration for
each Owned Mark is attached to the particular Schedule 3 on which such Owned
Mark is shown. Schedules 3-A, 3-B, 3-C, and 3-D also accurately set forth as to
each of CROWN CRAFT, CHURCHILL, HAMCO, and INFANT, respectively, each Borrower's
Licensed Marks and the names and addresses of their corresponding licensors. A
copy of the applicable license agreement or other document for each Licensed
Mark is attached
144
to the particular Schedule 3 on which such Licensed Mark is shown. All of the
Marks which are material to the operation of the Borrowers' business as
currently conducted are shown in Schedule 3. None of the Borrowers' Owned Marks
is currently licensed to any other Person, and none of the Borrowers' Licensed
Marks is currently sublicensed to any other Person.
4. COPYRIGHTS. Schedules 4-A, 4-B, 4-C, and 4-D
(attached hereto and made a part hereof) accurately set forth as to each of
CROWN CRAFTS, CHURCHILL, HAMCO, and INFANT, respectively, each Borrower's Owned
Copyrights, along with any applicable registration numbers and the jurisdictions
and offices in which such Owned Copyrights were registered. A copy of the
copyright registration for each Owned Copyright is attached to the particular
Schedule 4 on which such Owned Copyright is shown. Schedules 4-A, 4-B, 4-C, and
4-D also accurately set forth as to each of CROWN CRAFTS, CHURCHILL, HAMCO, and
INFANT, respectively, each Borrower's Licensed Copyrights and the names and
addresses of their corresponding licensors. A copy of the applicable license
agreement or other document for each Licensed Copyright is attached to the
particular Schedule 4 on which such Licensed Copyright is shown. All of the
Borrowers' copyrights which are material to the operation of the Borrowers'
business as currently conducted are shown on Schedule 4. None of the Borrowers'
Owned Copyrights is currently licensed to any other Person, and none of the
Borrowers' Licensed Copyrights is currently sublicensed to any other Person.
5. PATENTS. Schedules 5-A, 5-B, 5-C, and 5-D (attached
hereto and made a part hereof) accurately set forth as to each of CROWN CRAFTS,
CHURCHILL, HAMCO, and INFANT, respectively, each Borrower's Owned Patents, along
with any applicable registration numbers and the jurisdictions and offices in
which such Owned Patents are registered. A copy of the letters patent or similar
registration certificate for each Owned Patent is attached to the particular
Schedule 5 on which such Owned Patent is shown. Schedules 5-A, 5-B, 5-C, and 5-D
also accurately set forth as to each of CROWN CRAFTS, CHURCHILL, HAMCO, and
INFANT, respectively, each Borrower's Licensed Patents and the names and
addresses of their corresponding licensors. A copy of each license agreement or
other document for each Licensed Patent is attached to the particular Schedule 5
on which such Licensed Patent is shown. All of the patents which are material to
the operation of the Borrowers' business as currently conducted are shown on
Schedule 5. None of the Borrowers' Owned Patents is currently licensed to any
other Person, and none of the Borrowers' Licensed Patents is currently
sublicensed to any other Person.
6. DEPOSIT ACCOUNTS. Schedules 6-A, 6-B, 6-C, and 6-D
(attached hereto and made a part hereof) accurately set forth as to each of
CROWN CRAFTS, CHURCHILL, HAMCO, and INFANT, respectively, each deposit account
of each such Borrower, along with the name and address of the depository
institution at which such account is maintained and the account number for such
account. The Borrowers have or maintain no deposit accounts other than those
listed.
7. INVESTMENT PROPERTY, INSTRUMENTS, AND CHATTEL PAPER.
Schedules 7-A, 7-B, 7-C, and 7-D (attached hereto and made a part hereof)
accurately set forth as to each of CROWN CRAFTS, CHURCHILL, HAMCO, and INFANT,
respectively, (i) each item of Investment Property owned by the Borrowers
(including, where applicable, the account number and the name and address of
each securities intermediary and commodity intermediary where such investment
property may be maintained), and, to the extent applicable, copies of all
agreements and certificates evidencing such items are attached to the particular
Schedule 7 on which such
145
Investment Property is shown; (ii) all promissory notes, evidences of
indebtedness, and other instruments in favor of the Borrowers (excluding checks
and other drafts received in the ordinary course of the Borrowers' business for
immediate collection), and, to the extent applicable, copies of all of the same
are attached to the particular Schedule 7 on which such item is shown; and (iii)
all leases of equipment by a Borrower to any other Person, security agreements
in favor of a Borrower or to which a Borrower is the secured party, and other
chattel paper owned by a Borrower, and, to the extent applicable, copies of all
of the same are attached to the particular Schedule 7 on which such item is
shown.
8. BAILEES, WAREHOUSEMEN, AND OTHERS. Schedules 8-A,
8-B, 8-C, and 8-D (attached hereto and made a part hereof) accurately set forth
as to each of CROWN CRAFTS, CHURCHILL, HAMCO, and INFANT, respectively, a list
of the names and addresses of each bailee, warehouseman, inventory processor or
other third party having possession of any of the Borrowers' property (other
than repairmen and/or common carriers which may have possession of any of such
property in the ordinary course of the Borrowers' business and not, for example,
as a lienor) and documents of title relating to such property, along with a
brief description of the nature of such Person's possession and the type of
goods possessed. Copies of such documents of title are attached to the
particular Schedule 8 on which such document of title is shown.
9. PERMITS AND LICENSES. Schedules 9-A, 9-B, 9-C, and
9-D (attached hereto and made a part hereof) accurately set forth as to each of
CROWN CRAFTS, CHURCHILL, HAMCO, and INFANT, respectively, a list of each
governmental franchise, permit, or license which is material to the operation of
Borrowers' business as currently conducted, the jurisdiction and office or
agency which issued or granted such franchise, permit, or license, and a brief
description regarding the subject matter to which such permit pertains. A copy
of each such franchise, permit, or license is attached to the particular
Schedule 9 on which such franchise, permit, or license is shown. All franchises,
permits, and licenses which are material to the operation of the Borrowers'
business as currently conducted are shown on Schedule 9.
10. COMMERCIAL TORT CLAIMS. Schedules 10-A, 10-B, 10-C,
and 10-D (attached hereto and made a part hereof) accurately set forth as to
each of CROWN CRAFTS, CHURCHILL, HAMCO, and INFANT, respectively, a list of all
claims which the Borrowers have or may have in tort, whether or not formal
proceedings have been instituted, including the name or names of actual or
potential defendants, a brief description of the cause or potential cause of
action, and, where applicable, the name and address of the court in which formal
proceedings have been brought, the case number, and the current style of such
proceedings.
11. MATERIAL AGREEMENTS. Schedules 11-A, 11-B, 11-C, and
11-D (attached hereto and made a part hereof) accurately set forth as to each of
CROWN CRAFTS, CHURCHILL, HAMCO, and INFANT, respectively, a list of all
contracts, leases, instruments, guaranties or licenses, or other arrangements
(other than any of the Loan Documents), whether written or oral, to which a
Borrower is a party and as to which the breach, nonperformance, cancellation or
failure to renew by any party thereto could have a material adverse effect on
any Borrower, along with the effective date of such agreements, the name and
address of all other parties to such contracts, and a brief description of the
subject matter of such contracts.
12. LETTER OF CREDIT RIGHTS. Schedules 12-A, 12-B, 12-C,
and 12-D (attached hereto and made a part hereof) accurately set forth as to
each of CROWN CRAFTS, CHURCHILL, HAMCO, and INFANT, respectively, a list of each
letter of credit with respect to
146
which a Borrower has a right to payment, along with the name and address of the
issuer of the letter of credit, the Person on whose behalf such letter of credit
was issued, and the maximum amount available for drawing under such letter of
credit.
WITNESS the signature and seal of each of the Borrowers as of the date
first written above.
CROWN CRAFTS, INC.:
By: (SEAL)
-------------------------------
Name:
Title:
CHURCHILL WEAVERS, INC.:
By: (SEAL)
-------------------------------
Name:
Title:
HAMCO, INC.:
By: (SEAL)
-------------------------------
Name:
Title:
CROWN CRAFTS INFANT PRODUCTS, INC.:
By: (SEAL)
-------------------------------
Name:
Title:
147
EXHIBIT N
AMENDED AND RESTATED
STOCK PLEDGE AGREEMENT
THIS AMENDED AND RESTATED STOCK PLEDGE AGREEMENT (this "Agreement")
dated as of July 23, 2001, by and among CROWN CRAFTS, INC., a Georgia
corporation (the "Company"), and any Domestic Subsidiary of the Company which
becomes a Pledgor Subsidiary pursuant to Section 24 hereof and Section 5.15 of
the Credit Agreement referred to below (each a "Pledgor Subsidiary"; the Company
and the Pledgor Subsidiaries being collectively referred to as the "Pledgors"
and individually as a "Pledgor") and WACHOVIA BANK, N.A., a national banking
association (in its individual capacity, "Wachovia") organized under the laws of
the United States of America, as collateral agent (in such capacity, together
with its successors and assigns, the "Collateral Agent") for itself, and for
Lenders from time to time under the Credit Agreement.
WITNESSETH:
WHEREAS, the Company, Churchill Weavers, Inc., Hamco, Inc., and Crown
Crafts Infant Products, Inc. (collectively, with the Company, the "Borrowers"),
the Lenders, and Wachovia, as Agent, have entered into that certain Credit
Agreement dated as of the date hereof (as amended, supplemented, restated or
otherwise modified from time to time in accordance with its terms, the "Credit
Agreement"; capitalized terms used herein without definition have the meanings
set forth in the Credit Agreement), pursuant to which the Lenders have agreed,
subject to the terms thereof, to make available to the Borrowers certain
financial accommodations;
WHEREAS, the Borrowers, the Lenders, the holders of the Senior
Subordinated Notes, and Wachovia, as Agent, and the Collateral Agent are parties
to that certain Intercreditor Agreement dated of even date herewith;
WHEREAS, this Agreement is an amendment and restatement of the original
Pledge Agreement dated August 9, 1995, as amended, executed by the Company
pursuant to the Refinanced Agreements, and it is the intent of the parties that
the Liens and security interests granted pursuant to such original Pledge
Agreement shall continue without interruption to secure the Obligations;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
Section 1. The Pledge. Each of the Pledgors hereby pledges,
hypothecates, assigns, transfers, sets over and delivers unto the Collateral
Agent, and grants to the Collateral Agent, for the ratable benefit of the
Lenders, a security interest in all of each Pledgor's right, title and interest
in, to and under the following (collectively, the "Pledged Collateral"): (a) all
of the shares of common stock, equity interests and other securities
(collectively, "Securities") of the
200
respective Domestic Subsidiaries held by such Pledgor as set forth on Exhibit A
attached hereto, as amended or supplemented from time to time (collectively, the
"Issuers"); (b) any additional Securities of any of the Issuers as may from time
to time be issued to the respective Pledgor or otherwise acquired by such
Pledgor; (c) any additional Securities of the Issuer as may hereafter at any
time be delivered to the Collateral Agent by or on behalf of the Pledgor; (d)
any cash or additional Securities or other property at any time and from time to
time receivable or otherwise distributable in respect of, in exchange for, or in
substitution of, any of the property referred to in any of the immediately
preceding clauses (a) through (c); and (e) any and all products and proceeds of
any of the foregoing, together with all other rights, titles, interests, powers,
privileges and preferences pertaining to said property.
Section 2. Obligations Secured. This Agreement is made, and the
security interest created hereby is granted to the Collateral Agent, to secure
the prompt performance and payment in full of the Obligations.
Section 3. Representations and Warranties. Each of the Pledgors,
jointly and severally, hereby represents and warrants to the Collateral Agent as
follows:
(a) Validly Issued, etc. All of the Securities of each Issuer have
been validly issued and are fully paid and nonassessable.
(b) Title and Liens. Each Pledgor is, and, except as permitted by
the Credit Agreement, will at all times continue to be, the legal and beneficial
owner of the applicable Pledged Collateral and none of the Pledged Collateral is
subject to any Lien (other than the Lien created by this Agreement and a junior
Lien for the benefit of the holders of the Senior Subordinated Notes, as
contemplated in the Credit Agreement).
(c) Name; Chief Executive Office; Taxpayer ID Number. The correct
corporate name of each Pledgor, the state of its organization, the chief
executive office and principal place of business of each Pledgor, the location
of each Pledgor's books and records relating to the respective Pledged
Collateral, and the Federal Identification number of each Pledgor is set forth
on Exhibit B attached hereto. None of the Pledgors has any offices or places of
business other than as set forth on Exhibit B.
(d) Authority, etc. Each of the Pledgors (i) has the power and
authority to pledge the Pledged Collateral in the manner hereby done or
contemplated and (ii) will defend its title or interest thereto or therein
against any and all Liens (other than the Lien created by this Agreement and a
junior Lien for the benefit of the holders of the Senior Subordinated Notes, as
contemplated in the Credit Agreement), however arising, of all persons.
(e) No Approval. No consent or approval of any Governmental
Authority or any securities exchange was or is necessary to the validity of the
pledges effected hereby.
(f) Outstanding Shares. The Securities pledged by each of the
Pledgors hereunder constitute all of the issued and outstanding Shares of the
respective Domestic Subsidiary owned by each of the Pledgors.
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Section 4. Covenants. Each of the Pledgors hereby unconditionally
covenants and agrees as follows:
(a) No Liens; No Sale of Pledged Collateral. None of the Pledgors
will create, assume, incur or permit or suffer to exist or to be created,
assumed or incurred, any Lien on any of the Securities (other than the Lien
created by this Agreement and a junior Lien for the benefit of the holders of
the Senior Subordinated Notes, as contemplated in the Credit Agreement), and
will not, except as permitted by the Credit Agreement, without the prior written
consent of the Collateral Agent (which consent shall not be unreasonably
withheld), sell, lease, assign, transfer or otherwise dispose of all or any
portion of the Securities (or any interest therein).
(b) Change of Locations, Name, Etc. Without giving the Collateral
Agent 30 days' prior written notice, none of the Pledgors will (i) change such
Pledgor's state of organization, registered legal name, chief executive office,
principal place of business, or the location of its books and records relating
to any of the Pledged Collateral or (ii) change such Pledgor's name, identity or
structure.
Section 5. Additional Shares.
(a) During the period this Agreement is in effect, without the
consent of the Collateral Agent, none of the Pledgors shall permit any of the
Issuers to issue any additional shares of capital stock or other equity
securities or interests, unless such additional shares have been delivered and
pledged to the Collateral Agent. Further, without the consent of the Collateral
Agent, none of the Pledgors shall permit any of the Issuers to amend or modify
its respective articles or certificate of incorporation in a manner which would
materially adversely affect the voting, liquidation, preference or other rights
of a holder of the Pledged Collateral.
(b) Each of the Pledgors agrees that, until this Agreement has
terminated in accordance with its terms, any additional Securities of any of the
Issuers at any time issued to any of the Pledgors or otherwise acquired by any
of the Pledgors shall be promptly delivered or otherwise transferred to the
Collateral Agent as additional Pledged Collateral and shall be subject to the
Lien of, and the terms and conditions of, this Agreement.
Section 6. Registration in Nominee Name, Denominations. The
Collateral Agent shall have the right (in its sole and absolute discretion) to
hold the Pledged Collateral in its own name as pledgee, the name of its nominee
(as Collateral Agent or as sub-agent) or the name of the applicable Pledgor,
endorsed or assigned in blank pursuant to a separate blank stock power or in
favor of the Collateral Agent or (where applicable) registered in the name of
the Collateral Agent in the relevant stock registry. Each of the Pledgors will
promptly give to the Collateral Agent copies of any notices or other
communications received by it with respect to Pledged Collateral registered in
the name of such Pledgor. The Collateral Agent shall at all times have the right
to exchange the certificates representing Pledged Collateral for certificates of
smaller or larger numbers of shares for any purpose consistent with this
Agreement.
Section 7. Voting Rights; Dividends, etc.
(a) So long as no Event of Default shall have occurred and be
continuing, with respect to any Securities:
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(i) each of the Pledgors shall be entitled to exercise
any and all voting and/or consensual rights and powers accruing to an owner of
the Pledged Collateral or any part thereof for any purpose not inconsistent with
the terms and conditions of this Agreement or any agreement giving rise to or
otherwise relating to any of the Obligations; provided, however, that none of
the Pledgors shall exercise, or refrain from exercising, any such right or power
if any such action would have a materially adverse effect on the value of such
Pledged Collateral in the reasonable judgment of the Collateral Agent;
(ii) each of the Pledgors shall be entitled to retain and
use any and all cash dividends, interest and principal paid on the Pledged
Collateral, but any and all stock and/or liquidating dividends, other
distributions in property, return of capital or other distributions made on or
in respect of Pledged Collateral, whether resulting from a subdivision,
combination or reclassification of outstanding Securities of any of the Issuers
which are pledged hereunder or received in exchange for the respective Pledged
Collateral or any part thereof or as a result of any merger, consolidation,
acquisition or other exchange of assets or on the liquidation, whether voluntary
or involuntary, of any of the Issuers, or otherwise, shall be and become part of
the Pledged Collateral pledged hereunder and, if received by any of the
Pledgors, shall forthwith be delivered to the Collateral Agent to be held as
collateral subject to the terms and conditions of this Agreement.
(b) The Collateral Agent agrees to execute and deliver to each of
the Pledgors, or cause to be executed and delivered to each of the Pledgors, as
appropriate, at the sole cost and expense of such Pledgor, all such proxies,
powers of attorney, dividend orders and other instruments as such Pledgor may
reasonably request for the purpose of enabling such Pledgor to exercise the
voting and/or consensual rights and powers which such Pledgor is entitled to
exercise pursuant to clause (a)(i) above and/or to receive the dividends which
such Pledgor is authorized to retain pursuant to subsection (a)(ii) above.
(c) Upon the occurrence and during the continuance of an Event of
Default, all rights of each the Pledgors to exercise the voting and/or
consensual rights and powers which such Pledgor is entitled to exercise pursuant
to subsection (a)(i) above and/or to receive the dividends, interest and
principal that such Pledgor is authorized to receive and retain pursuant to
subsection (a)(ii) above shall cease, and all such rights thereupon shall become
immediately vested in the Collateral Agent, which shall have, to the extent
permitted by law, the sole and exclusive right and authority (acting at the
direction of the Required Lenders) to exercise such voting and/or consensual
rights and powers which each of the Pledgors shall otherwise be entitled to
exercise pursuant to subsection (a)(i) above and/or to receive and retain the
dividends which each of the Pledgors shall otherwise be authorized to retain
pursuant to subsection (a)(ii) above. Any and all money and other property paid
over to or received by the Collateral Agent pursuant to the provisions of this
subsection (c) shall be retained by the Collateral Agent as additional
collateral hereunder and shall be applied in accordance with the provisions of
Section 10. If any of the Pledgors shall receive any dividends or other property
which it is not entitled to receive under this Section, such Pledgor shall hold
the same in trust for the Collateral Agent, without commingling the same with
other funds or property of or held by such Pledgor, and shall promptly deliver
the same to the Collateral Agent upon receipt by such Pledgor in the identical
form received, together with any necessary endorsements.
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Section 8. Event of Default Defined. For purposes of this
Agreement, "Event of Default" shall mean:
(a) any of the Pledgors shall fail to observe or perform any
covenant or agreement contained in Sections 4(a), 5, or 7(a)(ii) hereof;
(b) any of Pledgors shall fail to observe or perform any covenant
or agreement contained in this Agreement (other than those covered by the
immediately preceding subsection (a)) for a period of 30 days after written
notice thereof has been given to such Pledgor by the Collateral Agent; and
(c) an Event of Default under and as defined in the Credit
Agreement shall occur and be continuing.
Section 9. Remedies upon Default.
(a) In addition to any right or remedy that the Collateral Agent
may have under the Credit Agreement, the other Credit Documents or otherwise
under applicable law, if an Event of Default shall have occurred and be
continuing, the Collateral Agent may exercise any and all the rights and
remedies of a secured party under the Uniform Commercial Code as in effect in
any applicable jurisdiction (the "Code") and may otherwise sell, assign,
transfer, endorse and deliver the whole or, from time to time, any part of the
Pledged Collateral at a public or private sale or on any securities exchange,
for cash, on credit or for other property, for immediate or future delivery, and
for such price or prices and on such terms as the Collateral Agent (acting at
the direction of the Required Lenders, in their sole discretion) shall deem
appropriate. As further provided for in Section 14 hereof, the Collateral Agent
shall be authorized at any sale (if it deems it advisable to do so) to restrict
the prospective bidders or purchasers to Persons who will represent and agree
that they are purchasing the Pledged Collateral for their own account in
compliance with the Securities Laws (as such term is defined in Section 14
below) and upon consummation of any such sale the Collateral Agent shall have
the right to assign, transfer, endorse and deliver to the purchaser or
purchasers thereof the Pledged Collateral so sold. Each purchaser at any sale of
Pledged Collateral shall take and hold the property sold absolutely free from
any claim or right on the part of any of the Pledgors, and each of the Pledgors
hereby waives (to the fullest extent permitted by applicable law) all rights of
redemption, stay and/or appraisal which any of the Pledgors now has or may at
any time in the future have under any applicable law now existing or hereafter
enacted. Each of the Pledgors agrees that, to the extent notice of sale shall be
required by applicable law, at least ten days' prior written notice to the
applicable Pledgor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable notification,
but notice given in any other reasonable manner or at any other reasonable time
shall constitute reasonable notification. Such notice, in case of public sale,
shall state the time and place for such sale, and, in the case of sale on a
securities exchange, shall state the exchange on which such sale is to be made
and the day on which the respective Pledged Collateral, or portion thereof, will
first be offered for sale at such exchange. Any such public sale shall be held
at such time or times within ordinary business hours and at such place or places
as the Collateral Agent may fix and shall state in the notice or publication (if
any) of such sale. At any such sale, the applicable Pledged Collateral, or
portion thereof to be sold, may be sold in one lot as an entirety or in separate
parcels, as the Collateral
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Agent may determine (acting at the direction of the Required Lenders, in their
sole and absolute discretion). The Collateral Agent shall not be obligated to
make any sale of any of the Pledged Collateral if it shall determine not to do
so regardless of the fact that notice of sale of the Pledged Collateral may have
been given. The Collateral 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 sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned. In case the sale of all or any part of the Pledged Collateral is made
on credit or for future delivery, the Pledged Collateral so sold may be retained
by the Collateral Agent until the sale price is paid by the purchaser or
purchasers thereof, but the Collateral Agent shall not incur any liability to
any of the Pledgors in case any such purchaser or purchasers shall fail to take
up and pay for the Pledged Collateral so sold and, in case of any such failure,
such Pledged Collateral may be sold again upon like notice. At any public sale
made pursuant to this Agreement, the Collateral Agent or any Lender (in
accordance with [Section 2.10(e) of the Credit Agreement]), to the extent
permitted by applicable law, may bid for or purchase, free from any right of
redemption, stay and/or appraisal on the part of any of the Pledgors (all said
rights being also hereby waived and released to the extent permitted by
applicable law), any part of or all the Pledged Collateral offered for sale and
may make payment on account thereof by using any claim then due and payable to
the Collateral Agent from any of the Pledgors as a credit against the purchase
price, and the Collateral Agent may, upon compliance with the terms of sale and
to the extent permitted by applicable law, hold, retain and dispose of such
property without further accountability to any of the Pledgors therefor. For
purposes hereof, a written agreement to purchase all or any part of the Pledged
Collateral shall be treated as a sale thereof; the Collateral Agent shall be
free to carry out such sale pursuant to such agreement and none of the Pledgors
shall be entitled to the return of any Pledged Collateral subject thereto,
notwithstanding the fact that after the Collateral Agent shall have entered into
such an agreement all Events of Default may have been remedied or the
Obligations may have been paid in full as herein provided. Each of the Pledgors
hereby waives any right to require any marshaling of assets and any similar
right.
(b) In addition to exercising the power of sale herein conferred
upon it, the Collateral Agent (acting at the direction of the Required Lenders)
shall also have the option to proceed by suit or suits at law or in equity to
foreclose this Agreement and sell the Pledged Collateral or any portion thereof
pursuant to judgment or decree of a court or courts having competent
jurisdiction.
(c) In addition to the foregoing, the Collateral Agent (acting at
the direction of the Required Lenders) shall have all other rights, powers and
remedies which are available to it under any applicable laws.
(d) The rights and remedies of the Collateral Agent under this
Agreement are cumulative and not exclusive of any rights or remedies which it
would otherwise have.
Section 10. Application of Proceeds of Sale and Cash. Each of the
Pledgors agrees to pay to the Collateral Agent all Enforcement Costs (as defined
below) paid or incurred by the Collateral Agent. This agreement in this Section
10 shall survive the termination of this Agreement and the Lien on the Pledged
Collateral. All Enforcement Costs, together with interest thereon from the date
of any demand therefor until paid in full at a per annum rate of interest
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equal at all times to the Default Rate, shall be paid by the Company to the
Collateral Agent whenever demanded by the Collateral Agent.
Any proceeds of the collection of the sale or other disposition of the
Pledged Collateral will be applied by the Collateral Agent in accordance with
the terms of Section 2.11(e) of the Credit Agreement, subject to the
Intercreditor Agreement. If the sale or other disposition of the Pledged
Collateral fails to satisfy all of the Obligations, the Debtors shall remain
liable to the Collateral Agent and the Lenders for any deficiency. Subject to
the terms of the Intercreditor Agreement, any surplus from the sale or
disposition of the Pledged Collateral shall be paid to the respective Pledgor or
to any other party entitled thereto or shall otherwise be paid over in a manner
permitted by law after payment in full of all Obligations and the Enforcement
Costs related to any such payment.
As used herein, the term "Enforcement Costs" means all reasonable
expenses, charges, costs and fees whatsoever (including, without limitation,
reasonable attorneys' fees and expenses) of any nature whatsoever paid or
incurred by or on behalf of the Collateral Agent in connection with (a) the
collection or enforcement of any or all of the Obligations or this Agreement
(including, without limitation, reasonable attorneys fees incurred prior to the
institution of any suit or other proceeding), (b) the creation, perfection,
collection, maintenance, preservation, defense, protection, realization upon,
disposition, sale or enforcement of all or any part of the Pledged Collateral,
(c) the monitoring, inspection, administration, processing, servicing of any or
all of the Obligations and/or the Pledged Collateral, (d) the preparation of
this Agreement, the Security Documents, and the preparation and review of lien
and record searches, reports, certificates, and/or other documents or
information relating from time to time to the taking, perfection, inspection,
preservation, protection and/or release of a Lien on the Pledged Collateral, the
value of the Pledged Collateral, or otherwise relating to the Collateral Agent's
or any Lender's rights, powers and remedies under this Agreement or with respect
to the Pledged Collateral, and (e) all filing and/or recording taxes or fees and
all stamp and other similar taxes and fees payable or determined to be payable
in connection with the execution and delivery of this Agreement and any and all
liabilities with respect to or resulting from any delay in paying or omission to
pay such taxes or fees, the Pledgors hereby agreeing jointly and severally to
indemnify and save the Collateral Agent and the Lenders harmless from and
against such liabilities.
Section 11. Collateral Agent Appointed Attorney-in-Fact. From and after
the occurrence and during the existence of an Event of Default, each of the
Pledgors hereby constitutes and appoints the Collateral Agent as the
attorney-in-fact of each Pledgor with full power of substitution either in the
Collateral Agent's name or in the name of each of the Pledgors to do any of the
following with respect to any Securities and the related Pledged Collateral: (a)
to perform any obligation of any of the Pledgors hereunder in such Pledgor's
name or otherwise; (b) to ask for, demand, sue for, collect, receive, receipt
and give acquittance for any and all moneys due or to become due under and by
virtue of any Pledged Collateral; (c) to prepare, execute, file, record or
deliver notices, assignments, financing statements, continuation statements,
applications for registration or like papers to perfect, preserve or release the
Collateral Agent's security interest in the Pledged Collateral or any of the
documents, instruments, certificates and agreements described in Section 13(b);
(d) to verify facts concerning the Pledged Collateral in its own name or a
fictitious name; (e) to endorse checks,
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drafts, orders and other instruments for the payment of money payable to any of
the Pledgors, representing any interest or dividend or other distribution
payable in respect of the Pledged Collateral or any part thereof or on account
thereof and to give full discharge for the same; (f) to exercise all rights,
powers and remedies which any of the Pledgors would have, but for this
Agreement, under the Pledged Collateral; and (g) to carry out the provisions of
this Agreement and to take any action and execute any instrument which the
Collateral Agent may deem necessary or advisable to accomplish the purposes
hereof, and to do all acts and things and execute all documents in the name of
each of the Pledgors or otherwise, deemed by the Collateral Agent as necessary,
proper and convenient in connection with the preservation, perfection or
enforcement of its rights hereunder. Nothing herein contained shall be construed
as requiring or obligating the Collateral Agent to make any commitment or to
make any inquiry as to the nature or sufficiency of any payment received by it,
or to present or file any claim or notice, or to take any action with respect to
the Pledged Collateral or any part thereof or the moneys due or to become due in
respect thereof or any property covered thereby, and no action taken by the
Collateral Agent or omitted to be taken with respect to the Pledged Collateral
or any part thereof shall give rise to any defense, counterclaim or offset in
favor of the Pledgor or to any claim or action against the Collateral Agent. The
power of attorney granted herein is irrevocable and coupled with an interest.
Section 12. Reimbursement of Collateral Agent. Each of the Pledgors
agrees to pay upon demand to the Collateral Agent the amount of any and all
reasonable expenses, including the reasonable fees, disbursements and other
charges of its counsel and of any experts or agents, that the Collateral Agent
may incur in connection with (i) the administration of this Agreement, (ii) the
custody or preservation of, or any sale of, collection from, or other
realization upon, any of the Pledged Collateral, (iii) the exercise or
enforcement of any of the rights of the Collateral Agent hereunder, or (iv) the
failure by any of the Pledgors to perform or observe any of the provisions
hereof. Any such amounts payable as provided hereunder shall be additional
obligations secured hereby and by the other Security Documents.
Section 13. Further Assurances. Each of the Pledgors shall, at its sole
cost and expense, take all action that may be necessary or desirable in the
Collateral Agent's sole discretion or at the request of the Required Lenders, so
as at all times to maintain the validity, perfection, enforceability and
priority of the Collateral Agent's security interest in the Pledged Collateral,
or to enable the Collateral Agent to exercise or enforce its rights hereunder,
including without limitation (a) delivering to the Collateral Agent, endorsed or
accompanied by such instruments of assignment as the Collateral Agent may
specify, any and all chattel paper, instruments, letters of credit and all other
undertakings of guaranty and documents evidencing or forming a part of the
Pledged Collateral and (b) executing and delivering financing statements,
pledges, designations, notices and assignments, in each case in form and
substance satisfactory to the Collateral Agent, relating to the creation,
validity, perfection, priority or continuation of the security interest granted
hereunder. Subject to the foregoing, each of the Pledgors agrees to take, and
authorizes the Collateral Agent to take on such Pledgor's behalf, any or all of
the following actions with respect to any Pledged Collateral as the Collateral
Agent shall deem necessary to perfect the security interest and pledge created
hereby or to enable the Collateral Agent to enforce its rights and remedies
hereunder: (i) to register in the name of the Collateral Agent any Pledged
Collateral in certificated or uncertificated form; (ii) to endorse in the name
of the Collateral Agent any Pledged Collateral issued in certificated form; and
(iii) by book entry or
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otherwise, identify as belonging to the Collateral Agent a quantity of
securities that constitutes all or part of the Pledged Collateral registered in
the name of the Collateral Agent. Notwithstanding the foregoing each of the
Pledgors agrees that Pledged Collateral which is not in certificated form or is
otherwise in book-entry form shall be held for the account of the Collateral
Agent. Each of the Pledgors hereby authorizes the Collateral Agent to execute
and file in all necessary and appropriate jurisdictions (as determined by the
Collateral Agent) one or more financing or continuation statements (or any other
document or instrument referred to in the immediately preceding clause (b)) in
the name of the applicable Pledgor and to sign such Pledgor's name thereto. Each
of the Pledgors authorizes the Collateral Agent to file any such financing
statement, document or instrument without the signature of such Pledgor to the
extent permitted by applicable law. To the extent permitted by applicable law, a
carbon, photographic, xerographic or other reproduction of this Agreement or any
financing statement is sufficient as a financing statement. Any property
comprising part of the Pledged Collateral required to be delivered to the
Collateral Agent pursuant to this Agreement shall be accompanied by proper
instruments of assignment duly executed by each of the Pledgors and by such
other instruments or documents as the Collateral Agent may reasonably request.
Section 14. Securities Laws. In view of the position of the Pledgors in
relation to the Pledged Collateral, or because of other current or future
circumstances, a question may arise under the Securities Act of 1933, as now or
hereafter in effect, or any similar applicable law hereafter enacted analogous
in purpose or effect, whether foreign or domestic (such Act and any such similar
applicable law as from time to time in effect being called the "Securities
Laws") with respect to any disposition of the Pledged Collateral permitted
hereunder. Each of the Pledgors understands that compliance with the Securities
Laws might very strictly limit the course of conduct of the Collateral Agent if
the Collateral Agent were to attempt to dispose of all or any part of the
Pledged Collateral in accordance with the terms hereof, and might also limit the
extent to which or the manner in which any subsequent transferee of any Pledged
Collateral could dispose of the same. Similarly, there may be other legal
restrictions or limitations affecting the Collateral Agent in any attempt to
dispose of all or part of the Pledged Collateral in accordance with the terms
hereof under applicable Blue Sky or other state securities laws or similar
applicable law analogous in purpose or effect. The Pledgor recognizes that in
light of the foregoing restrictions and limitations the Collateral Agent may,
with respect to any sale of the Pledged Collateral, limit the purchasers to
those who will agree, among other things, to acquire such Pledged Collateral for
their own account, for investment, and not with a view to the distribution or
resale thereof. Each of the Pledgors acknowledges and agrees that in light of
the foregoing restrictions and limitations, the Collateral Agent, in its sole
and absolute discretion, may, in accordance with applicable law, (a) proceed to
make such a sale whether or not a registration statement for the purpose of
registering such Pledged Collateral or part thereof shall have been filed under
the Federal Securities Laws and (b) approach and negotiate with a single
potential purchaser to effect such sale. Each of the Pledgors acknowledges and
agrees that any such sale might result in prices and other terms less favorable
to the seller than if such sale were a public sale without such restrictions. In
the event of any such sale, the Collateral Agent shall incur no responsibility
or liability for selling all or any part of the Pledged Collateral in accordance
with the terms hereof at a price that the Collateral Agent (acting at the
direction of the Required Lenders, in their sole and absolute discretion), may
in good faith deem reasonable under the circumstances, notwithstanding the
possibility that a substantially higher price might have been realized if the
sale were deferred until after registration as aforesaid or if more than a
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single purchaser were approached. The provisions of this Section will apply
notwithstanding the existence of public or private market upon which the
quotations or sales prices may exceed substantially the price at which the
Collateral Agent sells.
Section 15. Indemnification. Each of the Pledgors agrees jointly and
severally to indemnify and hold the Collateral Agent and any corporation
controlling, controlled by, or under common control with, the Collateral Agent
and any officer, attorney, director, shareholder, agent or employee of the
Collateral Agent or any such corporation (each an "Indemnified Person"),
harmless from and against any claim, loss, damage, action, cause of action,
liability, cost and expense or suit of any kind or nature whatsoever
(collectively, "Losses"), brought against or incurred by an Indemnified Person,
in any manner arising out of or, directly or indirectly, related to or connected
with this Agreement, including without limitation, the exercise by the
Collateral Agent of any of its rights and remedies under this Agreement or any
other action taken by the Collateral Agent pursuant to the terms of this
Agreement; provided, however, the Pledgor shall not be liable to an Indemnified
Person for any Losses to the extent that such Losses result from the gross
negligence or willful misconduct of such Indemnified Person. Each Pledgor's
obligations under this section shall survive the termination of this Agreement
and the payment in full of the Obligations.
Section 16. Continuing Security Interest. This Agreement shall create a
continuing security interest in the Pledged Collateral and shall remain in full
force and effect until it terminates in accordance with its terms. Each of the
Pledgors and the Collateral Agent hereby agree that the security interest
created by this Agreement in the Pledged Collateral shall not terminate and
shall continue and remain in full force and effect notwithstanding the transfer
to any of the Pledgors or any person designated by it of all or any portion of
the Pledged Collateral.
Section 17. Security Interest Absolute. All rights of the Collateral
Agent hereunder, the grant of a security interest in the Collateral and all
obligations of each Pledgor hereunder, shall be absolute and unconditional
irrespective of (a) any lack of validity or enforceability of the Credit
Agreement, any other Credit Document, the Intercreditor Agreement, any agreement
with respect to any of the Obligations or any other agreement or instrument
relating to any of the foregoing, (b) any change in the time, manner or place of
the payment of, or in any other term of, all or any of the Obligations, or any
other amendment or waiver of or any consent to any departure from the Credit
Agreement, any other Credit Document, the Intercreditor Agreement, or any other
agreement or instrument relating to any of the foregoing, (c) any exchange,
release or nonperfection of any other collateral, or any release or amendment or
waiver of or consent to or departure from any guaranty, for all or any of the
Obligations, including, without limitation, the release of any one or more
Pledgors or other Persons from this Agreement or any other agreement securing
the payment and performance of the Obligations or other indebtedness of the
Pledgors or of any other Person to the Lenders, the Agent, the Collateral Agent,
or the holders of the Senior Subordinated Notes, or (d) any other circumstance
that might otherwise constitute a defense available to, or a discharge of, any
of the Pledgors in respect of the Obligations or in respect of this Agreement
(other than the indefeasible payment in full of all the Obligations).
Section 18. No Waiver. Neither the failure on the part of the
Collateral Agent to exercise, nor the delay on its part in exercising any right,
power or remedy hereunder, nor any course of dealing between the Collateral
Agent and any of the Pledgors shall operate as a waiver
209
thereof, nor shall any single or partial exercise of any such right, power, or
remedy hereunder preclude any other or the further exercise thereof or the
exercise of any other right, power or remedy.
Section 19. Notices. Notices, requests and other communications
required or permitted hereunder shall be given in accordance with the applicable
terms of the Credit Agreement.
Section 20. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Section 21. Amendments. No amendment or waiver of any provision of this
Agreement nor consent to any departure by any of the Pledgors herefrom shall in
any event be effective unless the same shall be in writing and signed by the
parties hereto, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
Section 22. Binding Agreement; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that none of the Pledgors shall be permitted to
assign this Agreement or any interest herein or in the Pledged Collateral, or
any part thereof, or any cash or property held by the Collateral Agent as
collateral under this Agreement.
Section 23. Termination. Upon indefeasible payment in full of all of
the Obligations, and termination of all Commitments under the Credit Agreement,
this Agreement shall terminate. Upon termination of this Agreement in accordance
with its terms the Collateral Agent agrees to take such actions as the Company
may reasonably request, and at the sole cost and expense of the Company, (a) to
return the Pledged Collateral to the applicable Pledgor, and (b) to evidence the
termination of this Agreement, including, without limitation, the filing of any
releases or any termination statements under the Uniform Commercial Code.
Section 24. Joint and Several Liability; Additional Pledgors; Release
of Pledgors. The obligations and liabilities of the Pledgors from time to time
party to this Agreement shall be joint and several. Section 5.15 of the Credit
Agreement provides that Domestic Subsidiaries which own or acquire a Domestic
Subsidiary and which are not Pledgors must become Pledgors hereunder by, among
other things, executing and delivering to the Agent a joinder with respect to
this Agreement. Any Domestic Subsidiary which executes and delivers to the Agent
a joinder with respect to this Agreement shall be a Pledgor for all purposes
hereunder and shall thereafter be jointly and severally liable with all other
Pledgors then party to this Agreement or thereafter joined hereto.
Section 25. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be prohibited
by or invalid under applicable law, such provisions shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provisions or the remaining provisions of this Agreement.
210
Section 26. Headings. Section headings used herein are for convenience
only and are not to affect the construction of or be taken into consideration in
interpreting this Agreement.
Section 27. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original and all of which
shall constitute but one agreement.
[Signatures on Next Page]
211
IN WITNESS WHEREOF, each of the Pledgors has executed and delivered
this Agreement under seal as of the date first written above.
CROWN CRAFTS, INC. (SEAL)
By:
-------------------------------------
Name:
Title:
Agreed to, accepted and acknowledged
as of the date first written above.
WACHOVIA BANK, N.A., as Collateral Agent
By:
-------------------------------------
Title:
212
EXHIBIT A
PLEDGED COLLATERAL
PLEDGOR: CROWN CRAFTS, INC.
Certificate
Nos. for
No. of Shares No. of Shares No. of Shares No. of Shares Pledged
Name of Subsidiary Class of Stock Authorized Issued Outstanding Pledged Shares
- ------------------ -------------- ---------- ------ ----------- ------- ------
Churchill Weavers, Inc. Common $100 par 2,000 306 306 306 16
Hamco, Inc. Common/no par 1,000 1,000 1,000 1,000 4
The Red Calliope (predecessor Common $0.001 par 10,000 100 100 100 27
of Crown Crafts Infant
Products, Inc., no replacement
certificates having been issued)
213
EXHIBIT B
PLEDGORS
Crown Crafts, Inc. a Georgia corporation
1600 RiverEdge Parkway
Suite 200
Atlanta, Georgia 30328
Federal Tax I.D. # 58-0678148
214
EXHIBIT O
[RESERVED]
215
EXHIBIT P-1
FORM OF LETTER OF CREDIT REQUEST
TO: Lenders listed in that certain Credit Agreement, dated as of July 23, 2001
(the "Credit Agreement"), among Crown Crafts, Inc. (the "Parent"), Churchill
Weavers, Inc., Hamco, Inc. and Crown Crafts Infant Products, Inc., the Lenders
listed therein and Wachovia Bank, N.A., as Agent ("Agent").
Pursuant to Section 2.17(a) of the Credit Agreement, the undersigned
authorized officer of the undersigned Borrower hereby requests [a] Letter[s] of
Credit as follows:
- -------------------------------------------------------------------------------------------
Letter of
Face Amount Date of Issuance Expiry Date Credit Purpose Beneficiary
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
The undersigned hereby certifies that the amount of the outstanding
Letter of Credit Obligations prior to giving effect to any Letter of Credit
requested hereby is equal to $[________].
Unless otherwise defined herein, terms defined in the Credit Agreement
shall have the same meaning in this notice.
Date: [ ________________ ].
[BORROWER]
By:
-----------------------------
Name:
Title:
216
EXHIBIT P-2
FORM OF NOTICE
IN RESPECT OF ISSUANCE OF LETTERS OF CREDIT
TO: Lenders listed in that certain Credit Agreement, dated as of July 23, 2001
(the "Credit Agreement"), among Crown Crafts, Inc. (the "Parent"), Churchill
Weavers, Inc., Hamco, Inc. and Crown Crafts Infant Products, Inc., the Lenders
listed therein and Wachovia Bank, N.A., as Agent ("Agent").
Pursuant to Section 2.17(b) of the Credit Agreement, the Agent hereby
certifies to the Lenders that it has issued the following Letters of Credit
pursuant to Article 2 of the Credit Agreement:
- -----------------------------------------------------------------------------------------
Letter of Date of Issuance Expiry Date Letter of Beneficiary
Credit No. Credit Purpose
and Face
Amount
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
A copy of each of the Letters of Credit listed above has been attached
hereto.
Unless otherwise defined herein, terms defined in the Credit Agreement
shall have the same meaning in this notice.
Date: [ _________________ ].
WACHOVIA BANK, N.A.
By:
------------------------------------
Name:
Title:
217
EXHIBIT Q
BLOCKED ACCOUNT AGREEMENT
THIS BLOCKED ACCOUNT AGREEMENT is made as of the ______ day of
[_________________________], by and among [_____________________] (the
"Obligor"), WACHOVIA BANK, N.A., as Collateral Agent (the "Collateral Agent")
and [_______________________________] (the "Bank").
WHEREAS, the Obligor is the borrower under or a guarantor with respect
to the borrower's obligations under that certain Credit Agreement (the "Credit
Agreement") dated as of July 23, 2001 by and among Crown Crafts, Inc. (the
"Parent"), Churchill Weavers, Inc., Hamco, Inc. and Crown Crafts Infant
Products, Inc., the Lenders named therein (the "Lenders") and Wachovia Bank,
N.A., in its capacity as the agent for the Lenders (the "Agent") wherein, among
other things, the Obligor has granted the Collateral Agent, for the benefit of
the Lenders, a security interest in its present and future accounts receivable,
general intangibles and all proceeds thereof and the Obligor has agreed that all
collections and proceeds of such accounts receivable and general intangibles
shall be remitted in kind to the Collateral Agent; and
WHEREAS, the Collateral Agent and the Obligor desires to use an account
of the Bank until a lockbox arrangement with the Collateral Agent can be
established; and
WHEREAS, the Bank is willing to provide said service for the Obligor
and the Collateral Agent commencing as of the date hereof;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. MAINTENANCE OF ACCOUNT. Customers of the Obligor have been, or
will be, to the extent consistent with the Obligor's past practice, instructed
to mail their remittances to the offices of the Obligor. The Obligor shall cause
all remittances received by it to be deposited into the Account (as defined
below) on the day received by the Obligor, unless received after 2:00 P.M., (at
the Bank's local time), in which case such deposits may be made on the next
Business Day. Until a Notice of Redirection substantially in the form of Exhibit
A hereto (a "Notice") is delivered by the Collateral Agent to the Bank,
available balances in the Account shall be transferred each business day by the
Bank from the Account via the automatic clearing house system or wire transfer
to [_______________], provided that available balances exceed $[_______________]
before being so transferred. Upon the delivery of a Notice by the Collateral
Agent to the Bank, the Bank shall transfer such funds only as provided in such
Notice. The Bank shall mail both a deposit advice for all deposits to the
Account on a daily basis and a statement of account, on a monthly basis, to the
Obligor and, upon request by the Collateral Agent, to the Collateral Agent. In
addition, the Bank shall indicate by telephone to the Collateral Agent on each
Bank business day by [2:30] P.M. (Atlanta, Georgia time) the amount of each
day's deposit total.
2. ACCOUNT ASSIGNED. The Obligor shall cause the Bank to change
its books and records to indicate that Account No. [__________] (the "Account")
opened by the Obligor has been and hereby is irrevocably and unconditionally
assigned to the Collateral Agent. The Obligor shall have no control whatsoever
over items deposited in the Account. The Account
218
shall be designated as the "[__________________] Collection Account for Wachovia
Bank, N.A., as Collateral Agent". The Bank will have exclusive and unrestricted
access to the Account.
3. RETURNED CHECKS. Checks deposited in the Account which are
returned unpaid because of "Insufficient Funds," "Uncollected Funds," etc., will
be redeposited by the Bank only once, and if a returned check exceeds $[1,000],
the Bank shall notify both the Collateral Agent and the Obligor thereof by
telephone. If redeposit is not warranted for reasons such as "account closed" or
"payment stopped" or if a check is returned a second time, the Bank shall notify
both the Collateral Agent and the Obligor thereof by telephone, and send such
returned check to the Obligor.
4. RECORD MAINTENANCE. All deposited checks will be microfilmed
(on front and back) by the Bank and retained for five years by the Bank prior to
destruction. Photocopies of filmed items will be provided to the Collateral
Agent or the Obligor on request, within the five-year period.
5. BANK CHARGES. All expenses for the maintenance of the Account
are the responsibility of the Obligor and shall not be charged against any
checks, remittances, or other forms of collections.
6. INDEMNITY. The Bank hereby agrees that it will treat all
remittances received in the Account in accordance with the terms of this
Agreement. The amount of any check previously credited to the Account and
subsequently returned unpaid for any of the reasons set forth in Section 3
hereof shall be debited to the Account. In addition, the Collateral Agent hereby
indemnifies the Bank for payment of Bank charges and fees described in Section 5
hereof, and any check, the amount of which was been previously transferred to
the Collateral Agent, but which is returned unpaid on account of any of the
reasons set forth in Section 5 hereof. The Obligor agrees to immediately
reimburse Collateral Agent for any payments made by the Collateral Agent to the
Bank pursuant to this Agreement, and hereby irrevocably authorizes the
Collateral Agent to charge the Obligor's account with the Collateral Agent for
the full amount of all such payments.
7. BANK LIABILITY. In acting under this agreement the Bank shall
not be liable to the Collateral Agent or the Obligor for any error of judgment,
or for any act done or step taken or omitted by it in good faith, except for the
Bank's gross negligence or willful misconduct.
8. TERM. This agreement shall continue in full force and effect
until termination by the Bank on 60 days' prior written notice to both other
parties. The Collateral Agent may terminate at any time which termination shall
be effective on receipt of written notice by the Bank. The Obligor shall have no
right to unilaterally terminate this Agreement.
9. MODIFICATION; CHOICE OF LAW. This Agreement may only be
modified by a writing signed by all of the parties hereto. This Agreement shall
be governed by the internal laws of the state of Georgia.
10. ADDRESSES. All notices, including phone notice, daily deposit
advices, monthly statements of account and copies of all checks and the
documents which are to be given or sent
219
to the Collateral Agent shall be sent to the following address, and, where
applicable, given at the following phone number:
a. Wachovia Bank, N.A.
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Leveraged Finance
Telephone: 404-332-5709
b. All notices to the Bank shall be sent to:
--------------------------------------------
--------------------------------------------
--------------------------------------------
Attention:
---------------------------------
Telephone: ___- ___ -____
c. All notices and items which are to be sent to the Obligor
shall be sent to:
--------------------------------------------
--------------------------------------------
--------------------------------------------
Attention:
---------------------------------
Telephone: ___- ___ -____
This Agreement shall become effective upon its receipt by the
Collateral Agent, properly executed by all of the parties hereto.
COLLATERAL AGENT:
WACHOVIA BANK, N.A., as Collateral Agent
By:
-------------------------------------
Title:
------------------------------
OBLIGOR:
[---------------------]
By:
-------------------------------------
Title:
------------------------------
BANK:
[---------------------]
By:
-------------------------------------
Title:
------------------------------
220
EXHIBIT A
[Letterhead of Collateral Agent]
Notice of Redirection
______________, 20____
- ----------------------------
- ----------------------------
- ----------------------------
Attention:
------------------
Re: [___________________] Collection Account for
Wachovia Bank, N.A., as Collateral Agent, Account
No._______________ (the "Account")
Ladies and Gentlemen:
Reference is made to that certain lockbox agreement dated as of
[_____________________] (the "Agreement") among you, us, as Collateral Agent,
and [__________________] as the Obligor pursuant to which we, for our benefit
and for the benefit of the Lenders (as defined in the Agreement), were given
exclusive interest and control of the Account. This notice is given in
accordance with the terms of the Agreement.
Effective immediately and continuing until we shall authorize you in
writing to do otherwise, we hereby direct you to transfer on a daily basis all
funds deposited into the Account with the following instructions:
[insert appropriate instructions]
Very truly yours,
WACHOVIA BANK, N.A., as Collateral Agent
By:
-----------------------------
Title:
-----------------------
221
EXHIBIT R
CONSOLIDATED EXCESS CASH FLOW CERTIFICATE
Reference is made to the Credit Agreement dated as of July 23, 2001 (as
modified and supplemented and in effect from time to time, the "Credit
Agreement") by and among Crown Crafts, Inc., Churchill Weavers, Inc., Hamco,
Inc. and Crown Crafts Infant Products, Inc. (collectively or individually, as
the context shall require, the "Borrowers"), the Lenders from time to time
parties thereto, and Wachovia Bank, N.A., as Agent. Capitalized terms used
herein shall have the meanings ascribed thereto in the Credit Agreement.
Pursuant to SECTION 2.01(c) of the Credit Agreement, ________________,
the duly authorized ____________________ of the Parent, hereby certifies to the
Agent and the Lenders that, as of the last day of the Annual Period ended
___________, 200__, the information contained in the Consolidated Excess Cash
Flow Certificate attached hereto is true, accurate and complete in all material
respects.
CROWN CRAFTS, INC.
By: (SEAL)
---------------------------
Name:
Title:
222
CROWN CRAFTS
CALCULATION OF CONSOLIDATED EXCESS CASH FLOW
FOR ANNUAL PERIOD ENDED __________, 200__
(a) Consolidated EBITDA Schedule 1 $___________
(b) Capital Expenditures $___________
(c) taxes paid $___________
(d) Consolidated Free Cash Flow (sum of (a), less (b), less (c)) $___________
(e) Consolidated Available Free Cash Flow (70% of (d) ) $___________
(f) Cash Interest paid Schedule 2 $___________
(g) aggregate of Minimum Principal Reduction Amounts paid $___________
(h) CONSOLIDATED EXCESS CASH FLOW
(sum of (e), less (f), less (g) $___________
223
Schedule 1
CONSOLIDATED EBITDA
(a) Consolidated Net Income for:
____ quarter ____ $___________
____ quarter ____ $___________
____ quarter ____ $___________
____ quarter ____ $___________
(b) depreciation and amortization expenses for:
____ quarter ____ $___________
____ quarter ____ $___________
____ quarter ____ $___________
____ quarter ____ $___________
(c) Consolidated Interest Expense for:
____ quarter ____ $___________
____ quarter ____ $___________
____ quarter ____ $___________
____ quarter ____ $___________
(d) income tax expense included in Consolidated Net
Income for:
____ quarter ____ $___________
____ quarter ____ $___________
____ quarter ____ $___________
____ quarter ____ $___________
224
Schedule 2
CASH INTEREST
(a) interest on Revolving Loans $_____________
(b) interest on Term Loans at Cash Contract Rate $_____________
(c) interest on Senior Subordinated Debt $_____________
(d) CASH INTEREST (sum of (a), plus (b), plus (c)) $_____________
225
EXHIBIT S
ASSIGNMENT OF FACTORING CREDIT BALANCES
[TO BE REVISED AS APPROPRIATE FOR A FACTOR OTHER THAN CIT]
THIS ASSIGNMENT OF FACTORING CREDIT BALANCES (this "Assignment
Agreement"), made this ___ day of __________, 2001 by and among, CROWN CRAFTS,
INC., HAMCO, INC. and CROWN CRAFTS INFANT PRODUCTS, INC. (collectively, the
"Company"), THE CIT GROUP/COMMERCIAL SERVICES, INC. (the "Factor"), and WACHOVIA
BANK, N.A., as collateral agent (the "Collateral Agent");
WITNESSETH:
WHEREAS, the Company entered into a factoring agreement with Barclays
American/Commercial, Inc., the predecessor in interest to the Factor, dated
January 26, 1982 (as amended, modified or supplemented, the "Factoring
Agreement"), pursuant to which the Factor purchases from the Company accounts
receivable arising out of the sale of goods and/or performance of services by
the Company as more fully set forth in the Factoring Agreement; and
WHEREAS, pursuant to that certain Credit Agreement dated as of July 23,
2001 by and among Crown Crafts, Inc., Churchill Weavers, Inc., Hamco, Inc. and
Crown Crafts Infant Products, Inc., the Lenders named therein and Wachovia Bank,
N.A., as Agent and collateral agent (the "Credit Agreement"; capitalized terms
used herein without definition have the meanings set forth in the Credit
Agreement) , the Company has agreed to provide the Collateral Agent, for the
benefit of the Lenders with certain collateral security from time to time to
secure indebtedness and other obligations owed by the Company to the Collateral
Agent and the Lenders;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other valuable consideration, receipt whereof is hereby
acknowledged, the parties hereto agree as follows:
1. As security for the Obligations, the Company hereby assigns,
transfers and sets over unto the Collateral Agent, for the benefit of the
Lenders, and hereby grants a security interest to the Collateral Agent, for the
benefit of the Lenders, in and to all its rights, title and interest in and to
monies due and to become due and payable to the Company from time to time under
the Factoring Agreement.
2. The Factor and the Company warrant and represent that a true
and correct copy of the Factoring Agreement, and all amendments thereto as of
the date of this Assignment Agreement, if any, are attached hereto as Exhibit A.
The Factor agrees not to amend the Factoring Agreement in any material respect
after the date hereof that would adversely affect the interest of the Collateral
Agent or the Lenders hereunder without the prior written consent of the
Collateral Agent. The Factor confirms that, to the best of its knowledge, no
assignment, notice
226
of assignment or notice of lien applicable to the monies therefor assigned to
the Collateral Agent under this Agreement has been filed with the Factor by any
person, firm or corporation. The Factor agrees that notwithstanding any contrary
provision in the Factoring Agreement, the Company may grant a security interest
to the Collateral Agent, for the benefit of the Lenders, in any accounts
receivable and any other property of the Company from time to time and that no
loans or advances shall be made by the Factor to the Company, under the
Factoring Agreement or otherwise.
3. The Factor shall remit directly to the Collateral Agent, at
______________________________________________, all monies to which the Company
is now or may hereafter be entitled pursuant to the terms of the Factoring
Agreement, as and when such monies become due and payable to the Company under
the Factoring Agreement, subject to (a) the Factor's setoff against any and all
fees and expenses owing by the Company to the Factor under the terms of the
Factoring Agreement, (b) the reserve, if any, which the Factor is entitled to
retain in accordance with the terms of the Factoring Agreement, and (c) the
Factor's other rights under the Factoring Agreement, and (d) an order of a court
of proper jurisdiction or unless otherwise required by the United States
Bankruptcy Code and Regulations, and (e) termination of this Assignment
Agreement.
The Company represents and warrants to the Factor that the assignment,
transfer and security interest made in this Assignment Agreement is validly
perfected in all respects pursuant to the Uniform Commercial Code or other
applicable law, and that the Collateral Agent alone (for the benefit of the
Lenders) is entitled to receive all amounts otherwise available to the Company
under the Factoring Agreement. The Company agrees to indemnify and to hold the
Factor harmless from any and all liability or expense which may be incurred by
Factor by reason of the Factor's recognition of this Assignment Agreement, the
security interest contained herein, and the making by the Factor of remittances
to the Collateral Agent as herein provided. This indemnity shall survive
termination of this Assignment Agreement.
4. The Factor agrees to send to the Collateral Agent a photocopy
of the monthly statement of the Company's account with the Factor covering
transactions under the Factoring Agreement after the close of each month
concurrently with the Factor's sending of such statement to the Company. The
Collateral Agent hereby acknowledges any such monthly statement and any of the
information contained therein are generated and created by the Factor solely for
the Factor's own use, and the Factor makes no representation or warranty
whatsoever as to the accuracy of any such information. To the extent that the
Collateral Agent relies on any such information contained in any such monthly
statement, the Collateral Agent does so at its own risk.
5. The Company hereby irrevocably authorizes and empowers the
Collateral Agent, from and after the giving of a Notice to the Factor, to ask,
demand, receive, receipt and give acquittance for any and all such monies hereby
assigned, to endorse any checks or other orders for the payment of monies
payable to the Company in payment thereof and in its settlements and compromises
and grant releases and otherwise take such other action in its own name or in
the name of the Company, or otherwise, which the Collateral Agent may deem
necessary or advisable in the premises. The Company agrees that it will, at the
request of the Collateral Agent, make, do and execute any such further acts,
agreements, assurances and other documents
227
or instruments as shall be reasonably required to enable the Collateral Agent to
collect all monies due or to become due and payable to the Company under the
Factoring Agreement, according to the intent and purpose of this Agreement. The
Company further agrees that the rights granted herein to the Collateral Agent by
the Company are in addition to the rights that are otherwise available to the
Collateral Agent and that this Agreement shall be binding upon the Company and
its successors and assigns and shall inure to the benefit of the Collateral
Agent and any collateral agent succeeding to the Collateral Agent's rights under
the Credit Agreement.
6. Any provision in this Agreement to the contrary
notwithstanding, any and all liens and security interest which the Collateral
Agent now has or may hereafter claim in and to any of the Factored Receivables
(as hereinafter defined) of the Company shall be and remain subordinate in
priority to any liens and security interest which the Factor now has or may
hereafter claim in and to any of the Factored Receivables. For the purposes of
this Agreement, the term "Factored Receivables" shall mean the following
property of the Company sold to and purchased by the Factor in accordance with
the terms of the Factoring Agreement:
[ALL PRESENT AND FUTURE ACCOUNTS RECEIVABLE OF THE COMPANY
ARISING FROM ITS SALES OF INVENTORY OR PERFORMANCE OF
SERVICES (INCLUDING THOSE UNDER ANY TRADE NAMES, THROUGH ANY
DIVISIONS AND THROUGH ANY SELLING AGENT), SOLD BY THE COMPANY
UNDER THE FACTORING AGREEMENT, AND ALL RELATED INSTRUMENTS,
DOCUMENTS, CHATTEL PAPER, CONTRACT RIGHTS (INCLUDING
RESCISSION, REPOSSESSION, RECLAMATION AND STOPPAGE IN
TRANSIT), THE MERCHANDISE REPRESENTED THEREBY (INCLUDING ALL
RETURNED OR REPOSSESSED GOODS), RESERVES ARISING UNDER THE
FACTORING AGREEMENT, AND ALL CASH AND NONCASH PROCEEDS OF THE
FOREGOING AND BOOKS AND RECORDS EVIDENCING OR PERTAINING TO
THE FOREGOING.] [REVISE AS APPROPRIATE.]
The Collateral Agent agrees that its subordination hereunder shall survive
termination of this Assignment Agreement, and shall remain in full force and
effect until all obligations of the Company to the Factor under the Factoring
Agreement have been satisfied in full. The Collateral Agent further agrees that
until all obligations of the Company to the Factor under the Factoring Agreement
have been satisfied in full, the Collateral Agent will not enforce its security
interest in any of the Factored Receivables, and the Collateral Agent will not
attach, levy upon, execute against, exercise any rights, assert any claim or
interest, take any action or institute any proceeding with respect thereto.
7. This Agreement shall continue in effect until the earlier to
occur of (i) the termination of the Factoring Agreement, and (ii) the
indefeasible payment of the Obligations and the expiration and termination of
any and all commitments or obligations of the Lenders to the Company, but any
such termination shall not affect the assignment to the Collateral Agent or the
Collateral Agent's right to receive monies due or to become due under the
Factoring Agreement and this Agreement until all obligations of the Company to
the Collateral Agent created prior to such termination are paid in full, subject
to the Factor's rights under the Factoring Agreement and this Agreement.
8. All notices required or permitted hereunder shall be in
writing and shall be sent by certified mail, return receipt requested, addressed
to the party to be notified as follows:
228
(a) If to the Company:
Crown Crafts, Inc.
1600 RiverEdge Parkway
Suite 200
Atlanta, Georgia 30328
(b) If to Collateral Agent:
Wachovia Bank, N.A.
191 Peachtree Street, N.E.
30th Floor
Atlanta, Georgia 30303
(c) If to Factor:
THE CIT GROUP/COMMERCIAL SERVICES, INC.
Two First Union Center
301 South Tryon Street
Charlotte, North Carolina 28202
Attention: Regional Manager
Fax No.: (704) 339-2247
9. No agreement shall be effective to change, modify or
discharge, in whole or in part, this Assignment Agreement unless such agreement
is in writing and signed by the Collateral Agent, the Factor and the Company.
This Assignment Agreement shall bind and benefit the parties hereto and their
respective successors and assigns, except that the Company may not assign any of
its rights under this Assignment Agreement without the prior written consent of
the Factor and the Collateral Agent. Other than the Lenders, there are no third
party beneficiaries to this Assignment Agreement.
10. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
229
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the date first above written.
CROWN CRAFTS, INC., as the Company
By:
--------------------------------------
Title:
-----------------------------------
HAMCO, INC., as the Company
By:
--------------------------------------
Title:
-----------------------------------
CROWN CRAFTS INFANT PRODUCTS, INC.,
as the Company
By:
--------------------------------------
Title:
-----------------------------------
THE CIT GROUP/COMMERCIAL SERVICES, INC.,
as the Factor
By:
--------------------------------------
Title:
-----------------------------------
WACHOVIA BANK, N.A., as Collateral Agent
By:
--------------------------------------
Title:
-----------------------------------
230
EXHIBIT A
[COPY OF FACTORING AGREEMENT]
231
EXHIBIT T
FOREIGN STOCK PLEDGE AGREEMENT
THIS FOREIGN STOCK PLEDGE AGREEMENT (this "Agreement") dated as of July
23, 2001 by and among CROWN CRAFTS, INC., a Georgia corporation (the "Company"),
and any Domestic Subsidiary of the Company which becomes a Pledgor Subsidiary
pursuant to Section 24 hereof and Section 5.15 (each a "Pledgor Subsidiary) of
the Credit Agreement referred to below; the Company and the Pledgor Subsidiaries
being collectively referred to as the "Pledgors" and individually as a
"Pledgor") and WACHOVIA BANK, N.A., a national banking association (in its
individual capacity, "Wachovia") organized under the laws of the United States
of America, as collateral agent (in such capacity, together with its successors
and assigns, the "Collateral Agent") for itself, and for Lenders from time to
time under the Credit Agreement.
WITNESSETH:
WHEREAS, the Company, Churchill Weavers, Inc., Hamco, Inc. and Crown
Crafts Infant Products, Inc (collectively, with the Company, the "Borrowers"),
the Lenders, and Wachovia, as Agent, have entered into that certain Credit
Agreement dated as of the date hereof (as amended, supplemented, restated or
otherwise modified from time to time in accordance with its terms, the "Credit
Agreement"; capitalized terms used herein without definition have the meanings
set forth in the Credit Agreement), pursuant to which the Lenders have agreed,
subject to the terms thereof, to make available to the Borrowers certain
financial accommodations.
WHEREAS, the Borrowers, the Lenders, the holders of the Senior
Subordinated Notes, and Wachovia, as Agent, and the Collateral Agent, are
parties to that certain Intercreditor Agreement dated of even date herewith;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
Section 1. The Pledge. Each of the Pledgors hereby pledges,
hypothecates, assigns, transfers, sets over and delivers unto the Collateral
Agent, and grants to the Collateral Agent, for the ratable benefit of the
Lenders, a security interest in all of each Pledgor's right, title and interest
in, to and under the following (collectively, the "Pledged Collateral"): (a) all
of the shares of common stock, equity interests and other securities
(collectively, "Securities") of the respective Direct Foreign Subsidiaries held
by such Pledgor as set forth on Exhibit A attached hereto (collectively, the
"Issuers"); provided, however, that the Securities pledged pursuant hereto shall
not include (i) Securities owned by any of the Pledgors in excess of Securities
evidencing 65% of the voting power of each class of capital stock owned by such
Pledgor or (ii) to the extent that applicable law requires that the applicable
Issuer issue directors' qualifying shares, such qualifying shares; (b) subject
to the provisions of Section 5(b) hereof, any additional Securities of any of
the Issuers as may from time to time be issued to the respective Pledgor or
otherwise acquired by such Pledgor; (c) any additional Securities of the Issuer
as may hereafter at any time be delivered to the Collateral Agent by or on
behalf of the Pledgor; (d) any cash or additional Securities or other property
at any time and from time to time receivable or
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otherwise distributable in respect of, in exchange for, or in substitution of,
any of the property referred to in any of the immediately preceding clauses (a)
through (c); and (e) any and all products and proceeds of any of the foregoing,
together with all other rights, titles, interests, powers, privileges and
preferences pertaining to said property.
Section 2. Obligations Secured. This Agreement is made, and the
security interest created hereby is granted to the Collateral Agent, to secure
the prompt performance and payment in full of the Obligations.
Section 3. Representations and Warranties. Each of the Pledgors,
jointly and severally, hereby represents and warrants to the Collateral Agent
as follows:
(a) Validly Issued, etc. All of the Securities of each Issuer have
been validly issued and are fully paid and nonassessable.
(b) Title and Liens. Each Pledgor is, and, except as permitted by
the Credit Agreement, will at all times continue to be, the legal and beneficial
owner of the applicable Pledged Collateral and none of the Pledged Collateral is
subject to any Lien (other than the Lien created by this Agreement and a junior
Lien for the benefit of the holders of the Senior Subordinated Notes, as
contemplated in the Credit Agreement).
(c) Name; Chief Executive Office; Taxpayer ID Number. The correct
corporate name of each Pledgor, the state of organization, chief executive
office and principal place of business of each Pledgor, the location of each
Pledgor's books and records relating to the respective Pledged Collateral, and
the Federal Identification number of each Pledgor is set forth on Exhibit B
attached hereto. None of the Pledgors has any offices or places of business
other than as set forth on Exhibit B.
(d) Authority, etc. Each of the Pledgors (i) has the power and
authority to pledge the Pledged Collateral in the manner hereby done or
contemplated and (ii) will defend its title or interest thereto or therein
against any and all Liens (other than the Lien created by this Agreement),
however arising, of all persons.
(e) No Approval. No consent or approval of any Governmental
Authority or any securities exchange was or is ________necessary to the validity
of the pledges effected hereby.
(f) Outstanding Shares. The Securities pledged by each of the
Pledgors hereunder constitute 65% of the issued and outstanding Shares of the
respective Direct Foreign Subsidiary owned by each of the Pledgors.
Section 4. Covenants. Each of the Pledgors hereby
unconditionally covenants and agrees as follows:
(a) No Liens; No Sale of Pledged Collateral. None of the Pledgors
will create, assume, incur or permit or suffer to exist or to be created,
assumed or incurred, any Lien on any of the Securities (other than the Lien
created by this Agreement and a junior Lien for the benefit of the holders of
the Senior Subordinated Notes, as contemplated in the Credit Agreement), and
will not, except as otherwise permitted by the Credit Agreement, without the
prior written
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consent of the Collateral Agent (which consent shall not be unreasonably
withheld), sell, lease, assign, transfer or otherwise dispose of all or any
portion of the Securities (or any interest therein).
(b) Change of Locations, Name, Etc. Without giving the Collateral
Agent 30 days prior written notice, none of the Pledgors will (i) change such
Pledgor's chief executive office, principal place of business, or the location
of its books and records relating to any of the Pledged Collateral or (ii)
change such Pledgor's name, identity or structure.
Section 5. Additional Shares.
(a) During the period this Agreement is in effect, without the
consent of the Collateral Agent, none of the Pledgors shall permit any of the
Issuers to issue any additional shares of capital stock or other equity
securities or interests, unless such additional shares have been delivered and
pledged to the Collateral Agent. Further, without the consent of the Collateral
Agent, none of the Pledgors shall permit any of the Issuers to amend or modify
its respective articles or certificate of incorporation (or other analogous
organizational document) in a manner which would materially adversely affect the
voting, liquidation, preference or other rights of a holder of the Pledged
Collateral.
(b) Each of the Pledgors agrees that, until this Agreement has
terminated in accordance with its terms, any additional Securities of any of the
Issuers at any time issued to any of the Pledgors or otherwise acquired by any
of the Pledgors shall be promptly delivered or otherwise transferred to the
Collateral Agent as additional Pledged Collateral and shall be subject to the
Lien of, and the terms and conditions of, this Agreement; provided that if
compliance with this Section 5(b) would result in more than 65% of the voting
power of any class of such capital stock of an Issuer being included in the
Pledged Collateral, the Pledgor shall pledge only such portion of such capital
stock as shall result in 65% of the voting power of such class of capital stock
owned by the Pledgor being included in the Pledged Collateral.
Section 6. Registration in Nominee Name, Denominations. The
Collateral Agent shall have the right (in its sole and absolute discretion) to
hold the Pledged Collateral in its own name as pledgee, the name of its nominee
(as Collateral Agent or as sub-agent) or the name of the applicable Pledgor,
endorsed or assigned in blank pursuant to a separate blank stock power or in
favor of the Collateral Agent or (where applicable) registered in the name of
the Collateral Agent in the relevant stock registry. Each of the Pledgors will
promptly give to the Collateral Agent copies of any notices or other
communications received by it with respect to Pledged Collateral registered in
the name of such Pledgor. The Collateral Agent shall at all times have the right
to exchange the certificates representing Pledged Collateral for certificates of
smaller or larger numbers of shares for any purpose consistent with this
Agreement.
Section 7. Voting Rights; Dividends, etc.
(a) So long as no Event of Default shall have occurred and be
continuing, with respect to any Securities:
(i) each of the Pledgors shall be entitled to exercise
any and all voting and/or consensual rights and powers accruing to an
owner of the Pledged Collateral or any part
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thereof for any purpose not inconsistent with the terms and conditions of this
Agreement or any agreement giving rise to or otherwise relating to any of the
Obligations; provided, however, that none of the Pledgors shall exercise, or
refrain from exercising, any such right or power if any such action would have a
materially adverse effect on the value of such Pledged Collateral in the
reasonable judgment of the Collateral Agent;
(ii) each of the Pledgors shall be entitled to retain and
use any and all cash dividends, interest and principal paid on the
Pledged Collateral, but any and all stock and/or liquidating dividends,
other distributions in property, return of capital or other
distributions made on or in respect of Pledged Collateral, whether
resulting from a subdivision, combination or reclassification of
outstanding Securities of any of the Issuers which are pledged
hereunder or received in exchange for the respective Pledged Collateral
or any part thereof or as a result of any merger, consolidation,
acquisition or other exchange of assets or on the liquidation, whether
voluntary or involuntary, of any of the Issuers, or otherwise, shall be
and become part of the Pledged Collateral pledged hereunder and, if
received by any of the Pledgors, shall forthwith be delivered to the
Collateral Agent to be held as collateral subject to the terms and
conditions of this Agreement.
(b) The Collateral Agent agrees to execute and deliver to each of
the Pledgors, or cause to be executed and delivered to each of the Pledgors, as
appropriate, at the sole cost and expense of such Pledgor, all such proxies,
powers of attorney, dividend orders and other instruments as such Pledgor may
reasonably request for the purpose of enabling such Pledgor to exercise the
voting and/or consensual rights and powers which such Pledgor is entitled to
exercise pursuant to clause (a)(i) above and/or to receive the dividends which
such Pledgor is authorized to retain pursuant to subsection (a)(ii) above.
(c) Upon the occurrence and during the continuance of an Event of
Default, all rights of each the Pledgors to exercise the voting and/or
consensual rights and powers which such Pledgor is entitled to exercise pursuant
to subsection (a)(i) above and/or to receive the dividends, interest and
principal that such Pledgor is authorized to receive and retain pursuant to
subsection (a)(ii) above shall cease, and all such rights thereupon shall become
immediately vested in the Collateral Agent, which shall have, to the extent
permitted by law, the sole and exclusive right and authority (acting at the
direction of the Required Lenders) to exercise such voting and/or consensual
rights and powers which each of the Pledgors shall otherwise be entitled to
exercise pursuant to subsection (a)(ii) above and/or to receive and retain the
dividends which each of the Pledgors shall otherwise be authorized to retain
pursuant to subsection (b) above. Any and all money and other property paid over
to or received by the Collateral Agent pursuant to the provisions of this
subsection (c) shall be retained by the Collateral Agent as additional
collateral hereunder and shall be applied in accordance with the provisions of
Section 10. If any of the Pledgors shall receive any dividends or other property
which it is not entitled to receive under this Section, such Pledgor shall hold
the same in trust for the Collateral Agent, without commingling the same with
other funds or property of or held by such Pledgor, and shall promptly deliver
the same to the Collateral Agent upon receipt by such Pledgor in the identical
form received, together with any necessary endorsements.
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Section 8. Event of Default Defined. For purposes of this
Agreement, "Event of Default" shall mean:
(a) any of the Pledgors shall fail to observe or perform any
covenant or agreement contained in Sections 4(a), 5, or 7(a)(ii) hereof;
(b) any of Pledgors shall fail to observe or perform any covenant
or agreement contained in this Agreement (other than those covered by the
immediately preceding subsection (a)) for a period of 30 days after written
notice thereof has been given to such Pledgor by the Collateral Agent; and
(c) an Event of Default under and as defined in the Credit
Agreement shall occur and be continuing.
Section 9. Remedies upon Default.
(a) In addition to any right or remedy that the Collateral Agent
may have under the Credit Agreement, the other Credit Documents or otherwise
under applicable law, if an Event of Default shall have occurred and be
continuing, the Collateral Agent may exercise any and all the rights and
remedies of a secured party under the Uniform Commercial Code as in effect in
any applicable jurisdiction (the "Code") and may otherwise sell, assign,
transfer, endorse and deliver the whole or, from time to time, any part of the
Pledged Collateral at a public or private sale or on any securities exchange,
for cash, on credit or for other property, for immediate or future delivery, and
for such price or prices and on such terms as the Collateral Agent (acting at
the direction of the Required Lenders, in their sole discretion) shall deem
appropriate. As further provided for in Section 14 hereof, the Collateral Agent
shall be authorized at any sale (if it deems it advisable to do so) to restrict
the prospective bidders or purchasers to Persons who will represent and agree
that they are purchasing the Pledged Collateral for their own account in
compliance with the Securities Laws (as such term is defined in Section 14
below) and upon consummation of any such sale the Collateral Agent shall have
the right to assign, transfer, endorse and deliver to the purchaser or
purchasers thereof the Pledged Collateral so sold. Each purchaser at any sale of
Pledged Collateral shall take and hold the property sold absolutely free from
any claim or right on the part of any of the Pledgors, and each of the Pledgors
hereby waives (to the fullest extent permitted by applicable law) all rights of
redemption, stay and/or appraisal which any of the Pledgors now has or may at
any time in the future have under any applicable law now existing or hereafter
enacted. Each of the Pledgors agrees that, to the extent notice of sale shall be
required by applicable law, at least ten days' prior written notice to the
applicable Pledgor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable notification,
but notice given in any other reasonable manner or at any other reasonable time
shall constitute reasonable notification. Such notice, in case of public sale,
shall state the time and place for such sale, and, in the case of sale on a
securities exchange, shall state the exchange on which such sale is to be made
and the day on which the respective Pledged Collateral, or portion thereof, will
first be offered for sale at such exchange. Any such public sale shall be held
at such time or times within ordinary business hours and at such place or places
as the Collateral Agent may fix and shall state in the notice or publication (if
any) of such sale. At any such sale, the applicable Pledged Collateral, or
portion thereof to be sold, may be sold in one lot as an entirety or in separate
parcels, as the Collateral
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Agent may determine (acting at the direction of the Required Lenders, in their
sole and absolute discretion). The Collateral Agent shall not be obligated to
make any sale of any of the Pledged Collateral if it shall determine not to do
so regardless of the fact that notice of sale of the Pledged Collateral may have
been given. The Collateral 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 sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned. In case the sale of all or any part of the Pledged Collateral is made
on credit or for future delivery, the Pledged Collateral so sold may be retained
by the Collateral Agent until the sale price is paid by the purchaser or
purchasers thereof, but the Collateral Agent shall not incur any liability to
any of the Pledgors in case any such purchaser or purchasers shall fail to take
up and pay for the Pledged Collateral so sold and, in case of any such failure,
such Pledged Collateral may be sold again upon like notice. At any public sale
made pursuant to this Agreement, the Collateral Agent or any Secured Party (in
accordance with Section 2.10(e) of the Credit Agreement), to the extent
permitted by applicable law, may bid for or purchase, free from any right of
redemption, stay and/or appraisal on the part of any of the Pledgors (all said
rights being also hereby waived and released to the extent permitted by
applicable law), any part of or all the Pledged Collateral offered for sale and
may make payment on account thereof by using any claim then due and payable to
the Collateral Agent from any of the Pledgors as a credit against the purchase
price, and the Collateral Agent may, upon compliance with the terms of sale and
to the extent permitted by applicable law, hold, retain and dispose of such
property without further accountability to any of the Pledgors therefor. For
purposes hereof, a written agreement to purchase all or any part of the Pledged
Collateral shall be treated as a sale thereof; the Collateral Agent shall be
free to carry out such sale pursuant to such agreement and none of the Pledgors
shall be entitled to the return of any Pledged Collateral subject thereto,
notwithstanding the fact that after the Collateral Agent shall have entered into
such an agreement all Events of Default may have been remedied or the
Obligations may have been paid in full as herein provided. Each of the Pledgors
hereby waives any right to require any marshaling of assets and any similar
right.
(b) In addition to exercising the power of sale herein conferred
upon it, the Collateral Agent shall also have the option to proceed by suit or
suits at law or in equity to foreclose this Agreement and sell the Pledged
Collateral or any portion thereof pursuant to judgment or decree of a court or
courts having competent jurisdiction.
(c) In addition to the foregoing, the Collateral Agent shall have
all other rights, powers and remedies which are available to it under any
applicable laws.
(d) The rights and remedies of the Collateral Agent under this
Agreement are cumulative and not exclusive of any rights or remedies which it
would otherwise have.
Section 10. Application of Proceeds of Sale and Cash. Each of the
Pledgors agrees to pay to the Collateral Agent all Enforcement Costs (as defined
below) paid or incurred by the Collateral Agent. This agreement in this
Section 10 shall survive the termination of this Agreement and the Lien on the
Pledged Collateral. All Enforcement Costs, together with interest thereon from
the date of any demand therefor until paid in full at a per annum rate of
interest equal at all times to the Default Rate, shall be paid by the Company to
the Collateral Agent whenever demanded by the Collateral Agent.
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Any proceeds of the collection of the sale or other disposition of the
Collateral will be applied by the Collateral Agent in accordance with the terms
of Section 2.11(e) of the Credit Agreement, subject to the Intercreditor
Agreement. If the sale or other disposition of the Collateral fails to satisfy
all of the Obligations, the Debtors shall remain liable to the Collateral Agent
and the Lenders for any deficiency. Subject to the terms of the Intercreditor
Agreement, any surplus from the sale or disposition of the Pledged Collateral
shall be paid to the respective Debtor or to any other party entitled thereto or
shall otherwise be paid over in a manner permitted by law after payment in full
of all Obligations and the Enforcement Costs related to any such payment.
As used herein, the term "Enforcement Costs" means all reasonable
expenses, charges, costs and fees whatsoever (including, without limitation,
reasonable attorneys' fees and expenses) of any nature whatsoever paid or
incurred by or on behalf of the Collateral Agent in connection with (a) the
collection or enforcement of any or all of the Obligations or this Agreement
(including, without limitation, reasonable attorneys fees incurred prior to the
institution of any suit or other proceeding), (b) the creation, perfection,
collection, maintenance, preservation, defense, protection, realization upon,
disposition, sale or enforcement of all or any part of the Collateral, (c) the
monitoring, inspection, administration, processing, servicing of any or all of
the Obligations and/or the Collateral, (d) the preparation of this Agreement,
the Security Documents, and the preparation and review of lien and record
searches, reports, certificates, and/or other documents or information relating
from time to time to the taking, perfection, inspection, preservation,
protection and/or release of a Lien on the Collateral, the value of the
Collateral, or otherwise relating to the Collateral Agent's or any Secured
Party's rights, powers and remedies under this Agreement or with respect to the
Collateral, and (e) all filing and/or recording taxes or fees and all stamp and
other similar taxes and fees payable or determined to be payable in connection
with the execution and delivery of this Agreement and any and all liabilities
with respect to or resulting from any delay in paying or omission to pay such
taxes or fees, the Pledgors hereby agreeing jointly and severally to indemnify
and save the Collateral Agent and the Lenders harmless from and against such
liabilities
Section 11. Collateral Agent Appointed Attorney-in-Fact. From and
after the occurrence and during the existence of an Event of Default, each of
the Pledgors hereby constitutes and appoints the Collateral Agent as the
attorney-in-fact of each Pledgor with full power of substitution either in the
Collateral Agent's name or in the name of each of the Pledgors to do any of the
following with respect to any Securities and the related Pledged Collateral: (a)
to perform any obligation of any of the Pledgors hereunder in such Pledgor's
name or otherwise; (b) to ask for, demand, sue for, collect, receive, receipt
and give acquittance for any and all moneys due or to become due under and by
virtue of any Pledged Collateral; (c) to prepare, execute, file, record or
deliver notices, assignments, financing statements, continuation statements,
applications for registration or like papers to perfect, preserve or release the
Collateral Agent's security interest in the Pledged Collateral or any of the
documents, instruments, certificates and agreements described in Section 13(b);
(d) to verify facts concerning the Pledged Collateral in its own name or a
fictitious name; (e) to endorse checks, drafts, orders and other instruments for
the payment of money payable to any of the Pledgors, representing any interest
or dividend or other distribution payable in respect of the Pledged Collateral
or any part thereof or on account thereof and to give full discharge for the
same; (f) to exercise all rights, powers and remedies which any of the Pledgors
would have, but for this
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Agreement, under the Pledged Collateral; and (g) to carry out the provisions of
this Agreement and to take any action and execute any instrument which the
Collateral Agent may deem necessary or advisable to accomplish the purposes
hereof, and to do all acts and things and execute all documents in the name of
each of the Pledgors or otherwise, deemed by the Collateral Agent as necessary,
proper and convenient in connection with the preservation, perfection or
enforcement of its rights hereunder. Nothing herein contained shall be construed
as requiring or obligating the Collateral Agent to make any commitment or to
make any inquiry as to the nature or sufficiency of any payment received by it,
or to present or file any claim or notice, or to take any action with respect to
the Pledged Collateral or any part thereof or the moneys due or to become due in
respect thereof or any property covered thereby, and no action taken by the
Collateral Agent or omitted to be taken with respect to the Pledged Collateral
or any part thereof shall give rise to any defense, counterclaim or offset in
favor of the Pledgor or to any claim or action against the Collateral Agent. The
power of attorney granted herein is irrevocable and coupled with an interest.
Section 12. Reimbursement of Collateral Agent. Each of the
Pledgors agrees to pay upon demand to the Collateral Agent the amount of any and
all reasonable expenses, including the reasonable fees, disbursements and other
charges of its counsel and of any experts or agents, that the Collateral Agent
may incur in connection with (i) the administration of this Agreement, (ii) the
custody or preservation of, or any sale of, collection from, or other
realization upon, any of the Pledged Collateral, (iii) the exercise or
enforcement of any of the rights of the Collateral Agent hereunder, or (iv) the
failure by any of the Pledgors to perform or observe any of the provisions
hereof. Any such amounts payable as provided hereunder shall be additional
obligations secured hereby and by the other Security Documents.
Section 13. Further Assurances. Each of the Pledgors shall, at
its sole cost and expense, take all action that may be necessary or desirable in
the Collateral Agent's sole discretion or at the request of the Required
Lenders, so as at all times to maintain the validity, perfection, enforceability
and priority of the Collateral Agent's security interest in the Pledged
Collateral, or to enable the Collateral Agent to exercise or enforce its rights
hereunder, including without limitation (a) delivering to the Collateral Agent,
endorsed or accompanied by such instruments of assignment as the Collateral
Agent may specify, any and all chattel paper, instruments, letters of credit and
all other undertakings of guaranty and documents evidencing or forming a part of
the Pledged Collateral and (b) executing and delivering financing statements,
pledges, designations, notices and assignments, in each case in form and
substance satisfactory to the Collateral Agent, relating to the creation,
validity, perfection, priority or continuation of the security interest granted
hereunder. Subject to the foregoing, each of the Pledgors agrees to take, and
authorizes the Collateral Agent to take on such Pledgor's behalf, any or all of
the following actions with respect to any Pledged Collateral as the Collateral
Agent shall deem necessary to perfect the security interest and pledge created
hereby or to enable the Collateral Agent to enforce its rights and remedies
hereunder: (i) to register in the name of the Collateral Agent any Pledged
Collateral in certificated or uncertificated form; (ii) to endorse in the name
of the Collateral Agent any Pledged Collateral issued in certificated form; and
(iii) by book entry or otherwise, identify as belonging to the Collateral Agent
a quantity of securities that constitutes all or part of the Pledged Collateral
registered in the name of the Collateral Agent. Notwithstanding the foregoing
each of the Pledgors agrees that Pledged Collateral which is not in certificated
form or is otherwise in book-entry form shall be held for the account of the
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Collateral Agent. Each of the Pledgors hereby authorizes the Collateral Agent
to execute and file in all necessary and appropriate jurisdictions (as
determined by the Collateral Agent) one or more financing or continuation
statements (or any other document or instrument referred to in the immediately
preceding clause (b)) in the name of the applicable Pledgor and to sign such
Pledgor's name thereto. Each of the Pledgors authorizes the Collateral Agent to
file any such financing statement, document or instrument without the signature
of such Pledgor to the extent permitted by applicable law. To the extent
permitted by applicable law, a carbon, photographic, xerographic or other
reproduction of this Agreement or any financing statement is sufficient as a
financing statement. Any property comprising part of the Pledged Collateral
required to be delivered to the Collateral Agent pursuant to this Agreement
shall be accompanied by proper instruments of assignment duly executed by each
of the Pledgors and by such other instruments or documents as the Collateral
Agent may reasonably request.
Section 14. Securities Laws. In view of the position of the
Pledgors in relation to the Pledged Collateral, or because of other current or
future circumstances, a question may arise under the Securities Act of 1933, as
now or hereafter in effect, or any similar applicable law hereafter enacted
analogous in purpose or effect, whether foreign or domestic (such Act and any
such similar applicable law as from time to time in effect being called the
"Securities Laws") with respect to any disposition of the Pledged Collateral
permitted hereunder. Each of the Pledgors understands that compliance with the
Securities Laws might very strictly limit the course of conduct of the
Collateral Agent if the Collateral Agent were to attempt to dispose of all or
any part of the Pledged Collateral in accordance with the terms hereof, and
might also limit the extent to which or the manner in which any subsequent
transferee of any Pledged Collateral could dispose of the same. Similarly, there
may be other legal restrictions or limitations affecting the Collateral Agent in
any attempt to dispose of all or part of the Pledged Collateral in accordance
with the terms hereof under applicable Blue Sky or other state securities laws
or similar applicable law analogous in purpose or effect. The Pledgor recognizes
that in light of the foregoing restrictions and limitations the Collateral Agent
may, with respect to any sale of the Pledged Collateral, limit the purchasers to
those who will agree, among other things, to acquire such Pledged Collateral for
their own account, for investment, and not with a view to the distribution or
resale thereof. Each of the Pledgors acknowledges and agrees that in light of
the foregoing restrictions and limitations, the Collateral Agent, in its sole
and absolute discretion, may, in accordance with applicable law, (a) proceed to
make such a sale whether or not a registration statement for the purpose of
registering such Pledged Collateral or part thereof shall have been filed under
the Federal Securities Laws and (b) approach and negotiate with a single
potential purchaser to effect such sale. Each of the Pledgors acknowledges and
agrees that any such sale might result in prices and other terms less favorable
to the seller than if such sale were a public sale without such restrictions. In
the event of any such sale, the Collateral Agent shall incur no responsibility
or liability for selling all or any part of the Pledged Collateral in accordance
with the terms hereof at a price that the Collateral Agent(acting at the
direction of the Required Lenders, in their sole and absolute discretion), may
in good faith deem reasonable under the circumstances, notwithstanding the
possibility that a substantially higher price might have been realized if the
sale were deferred until after registration as aforesaid or if more than a
single purchaser were approached. The provisions of this Section will apply
notwithstanding the existence of public or private market upon which the
quotations or sales prices may exceed substantially the price at which the
Collateral Agent sells.
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Section 15. Indemnification. Each of the Pledgors agrees to
indemnify and hold the Collateral Agent and any corporation controlling,
controlled by, or under common control with, the Collateral Agent and any
officer, attorney, director, shareholder, agent or employee of the Collateral
Agent or any such corporation (each an "Indemnified Person"), harmless from and
against any claim, loss, damage, action, cause of action, liability, cost and
expense or suit of any kind or nature whatsoever (collectively, "Losses"),
brought against or incurred by an Indemnified Person, in any manner arising out
of or, directly or indirectly, related to or connected with this Agreement,
including without limitation, the exercise by the Collateral Agent of any of its
rights and remedies under this Agreement or any other action taken by the
Collateral Agent pursuant to the terms of this Agreement; provided, however, the
Pledgor shall not be liable to an Indemnified Person for any Losses to the
extent that such Losses result from the gross negligence or willful misconduct
of such Indemnified Person. The Pledgor's obligations under this section shall
survive the termination of this Agreement and the payment in full of the
Obligations.
Section 16. Continuing Security Interest. This Agreement shall
create a continuing security interest in the Pledged Collateral and shall remain
in full force and effect until it terminates in accordance with its terms. Each
of the Pledgors and the Collateral Agent hereby agree that the security interest
created by this Agreement in the Pledged Collateral shall not terminate and
shall continue and remain in full force and effect notwithstanding the transfer
to any of the Pledgors or any person designated by it of all or any portion of
the Pledged Collateral.
Section 17. Security Interest Absolute. All rights of the
Collateral Agent hereunder, the grant of a security interest in the Collateral
and all obligations of each Pledgor hereunder, shall be absolute and
unconditional irrespective of (a) any lack of validity or enforceability of the
Credit Agreement, any other Credit Document, the Intercreditor Agreement, any
agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time, manner
or place of the payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any departure
from the Credit Agreement, any other Credit Document, the Intercreditor
Agreement, or any other agreement or instrument relating to any of the
foregoing, (c) any exchange, release or nonperfection of any other collateral,
or any release or amendment or waiver of or consent to or departure from any
guaranty, for all or any of the Obligations, including, without limitation, the
release of any one or more Pledgors or other Persons from this Agreement or any
other agreement securing the payment and performance of the Obligations or other
indebtedness of the Pledgors or of any other Person to the Lenders, the Agent,
the Collateral Agent, or the holders of the Senior Subordinated Notes, or (d)
any other circumstance that might otherwise constitute a defense available to,
or a discharge of, any of the Pledgors in respect of the Obligations or in
respect of this Agreement (other than the indefeasible payment in full of all
the Obligations).
Section 18. No Waiver. Neither the failure on the part of the
Collateral Agent to exercise, nor the delay on its part in exercising any right,
power or remedy hereunder, nor any course of dealing between the Collateral
Agent and any of the Pledgors shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power, or remedy hereunder
preclude any other or the further exercise thereof or the exercise of any other
right, power or remedy.
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Section 19. Notices. Notices, requests and other communications
required or permitted hereunder shall be given in accordance with the applicable
terms of the Credit Agreement.
Section 20. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Section 21. Amendments. No amendment or waiver of any provision
of this Agreement nor consent to any departure by any of the Pledgors herefrom
shall in any event be effective unless the same shall be in writing and signed
by the parties hereto, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
Section 22. Binding Agreement; Assignment. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that none of the Pledgors shall be
permitted to assign this Agreement or any interest herein or in the Pledged
Collateral, or any part thereof, or any cash or property held by the Collateral
Agent as collateral under this Agreement.
Section 23. Termination. Upon indefeasible payment in full of all
of the Bank Obligations, and termination of all Commitments under the Credit
Agreement, this Agreement shall terminate. Upon termination of this Agreement in
accordance with its terms the Collateral Agent agrees to take such actions as
the Company may reasonably request, and at the sole cost and expense of the
Company, (a) to return the Pledged Collateral to the applicable Pledgor, and (b)
to evidence the termination of this Agreement, including, without limitation,
the filing of any releases or any termination statements under the Uniform
Commercial Code.
Section 24. Joint and Several Liability; Additional Pledgors;
Release of Pledgors. The obligations and liabilities of the Pledgors from time
to time party to this Agreement shall be joint and several. Section 5.22 of the
Credit Agreement provides that Domestic Subsidiaries which own or acquire a
Significant Direct Foreign Subsidiary and which are not Pledgors must become
Pledgors by, among other things, executing and delivering to the Agent a
counterpart to this Agreement. Any Domestic Subsidiary which executes and
delivers to the Agent a counterpart of this Agreement shall be a Pledgor for all
purposes hereunder and shall thereafter be jointly and severally liable with all
other Pledgors then party to this Agreement or thereafter joined hereto.
Section 25. Severability. Whenever possible, each provision of
this Agreement shall be interpreted in such a manner as to be effective and
valid under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provisions shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Agreement.
Section 26. Headings. Section headings used herein are for
convenience only and are not to affect the construction of or be taken into
consideration in interpreting this Agreement.
242
Section 27. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original and all of
which shall constitute but one agreement.
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IN WITNESS WHEREOF, each of the Pledgors has executed and delivered
this Agreement under seal as of the date first written above.
CROWN CRAFTS, INC. (SEAL)
By:
--------------------------------
Name:
Title:
Agreed to, accepted and acknowledged
as of the date first written above.
WACHOVIA BANK, N.A., as Collateral Agent
By:
-------------------------------------
Title:
244
EXHIBIT A
PLEDGED COLLATERAL
PLEDGOR: CROWN CRAFTS, INC.
No. of No. of No. of No. of Certificate
Shares Shares Shares Shares Nos. for
Name of Subsidiary Class of Stock Authorized Issued Outstanding Pledged Pledged Shares
- ------------------ -------------- ---------- ------ ----------- ------- --------------
Burgundy Interamericana, Common 50,000 50,000 50,000 49,999 1, 2, 3 and 4
S.A. de C.V.
245
EXHIBIT B
PLEDGORS
Crown Crafts, Inc., a Georgia corporation
1600 RiverEdge Parkway
Suite 200
Atlanta, Georgia 30328
Federal Tax I.D. # 58-0678148
246