UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended April 1, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from ___________to___________
Commission File Number: 333-58059
Cluett American Corp.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 22-2397044
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
48 West 38th Street New York, NY 10018
(Address of Principal Executive Offices) (Zip code)
Registrant's Telephone Number, Including Area Code 212-984-8900
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that registrant was
required to file such reports), and (2) has been subject to such filing
requirement for the past 90 days.
Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes X No
No stock is held by any non-affiliates of the registrant as of April 1, 2000
<PAGE>
<TABLE>
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
<S> <C>
Page
Item 1. Financial Statements (Unaudited)
Report of Independent Auditors' as of the period ended April 1, 2000 3
Condensed Consolidated Balance Sheets as of April 1, 2000 and December 31, 1999 4
Condensed Consolidated Statements of Operations for the thirteen weeks ended April 1, 2000
and April 3, 1999 5
Condensed Consolidated Statements of Cash Flows for the thirteen weeks ended April 1, 2000
and April 3, 1999 6
Notes to Condensed Consolidated Financial Statements - April 1, 2000 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations. 18
Item 3. Quantitative and Qualitative Disclosures About Market Risk. 21
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 22
Item 4. Submission of Matters to a Vote of Security Holders 22
Item 6. Exhibits and Reports on Form 8-K 22
SIGNATURES 27
</TABLE>
<PAGE>
REPORT OF DELOITTE & TOUCHE, INDEPENDENT AUDITORS
Board of Directors and Stockholder
Cluett American Corp. and Subsidiaries
We have reviewed the accompanying condensed consolidated balance sheet of Cluett
American Corp. and subsidiaries as of April 1, 2000, and the related condensed
consolidated statements of operations and cash flows for the thirteen-week
period ended April 1, 2000. These financial statements are the responsibility of
the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles in the United States of
America.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of the Company as of December 31,
1999, and the related consolidated statements of operations, stockholder's
equity and cash flows for the year then ended (not presented herein); and in our
report dated March 29, 1999, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth in
the accompanying condensed consolidated balance sheet as of April 1, 2000 is
fairly stated, in all material respects, in relation to the consolidated balance
sheet from which it has been derived.
/s/ Deloitte & Touche LLP
Atlanta, Georgia
May 12, 2000
<PAGE>
<TABLE>
Condensed Consolidated Balance Sheets
(Dollars In Thousands, except per share data)
April 1, December 31,
2000 1999
-----------------------------
(Unaudited) (Note 1)
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents.......................................... $ 3,491 $ 7,239
Accounts receivable, net........................................... 53,003 45,519
Inventories, net .................................................. 84,528 78,105
Prepaid expenses and other current assets.......................... 3,953 3,129
----- -----
Total current assets.................................................. 144,975 133,992
Property, plant and equipment, net.................................... 46,469 47,794
Pension assets........................................................ 32,812 32,187
Deferred financing fees............................................... 10,795 10,842
Goodwill, net......................................................... 4,622 4,740
Other noncurrent assets............................................... 1,910 1,951
----- -----
Total assets.......................................................... $241,583 $231,506
======== ========
Liabilities and stockholder's deficit
Current liabilities:
Accounts payable and accrued expenses.............................. $ 45,004 $ 40,696
Accrued interest payable........................................... 7,240 3,861
Short-term debt and current portion of long-term debt.............. 23,346 14,209
Income taxes payable............................................... 2,010 1,970
----- -----
Total current liabilities............................................. 77,600 60,736
Long-term debt and capital lease obligations.......................... 258,886 258,883
Redeemable preferred stock dividends payable.......................... 2,550 637
Other non-current liabilities......................................... 149 147
Commitments and contingencies
Senior Exchangeable Preferred Stock Due 2010, cumulative, $.01 par value:
authorized 4,950,000, issued and outstanding 599,145 shares
(liquidation preference of $59,915)................................ 58,329 58,329
Stockholder's deficit:
Common stock, $1 par value: authorized, issued and outstanding 1,000
shares.......................................................... 1 1
Additional paid-in capital......................................... 133,188 135,100
Accumulated deficit................................................ (288,771) (282,046)
Accumulated other comprehensive loss............................... (349) (281)
---- ----
Total stockholder's deficit........................................... (155,931) (147,226)
-------- --------
Total liabilities and stockholder's deficit........................... $ 241,583 $ 231,506
========= =========
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
Condensed Consolidated Statements of Operations (Unaudited)
(Dollars In Thousands)
Thirteen weeks ended
April 1, April 3,
2000 1999
------------------------------
<S> <C> <C>
Not covered
by Auditors'
Report
Net sales................................................................. $85,615 $81,099
Cost of goods sold........................................................ 64,188 57,387
------ ------
Gross profit.............................................................. 21,427 23,712
Selling, general and administrative expenses.............................. 20,572 19,297
------ ------
Operating income.......................................................... 855 4,415
Interest expense, net..................................................... 7,232 6,287
Other expense, net........................................................ 147 15
--- --
Loss before income taxes.................................................. (6,524) (1,887)
Provision for income taxes................................................ 202 278
--- ---
Net loss ................................................................. $(6,726) $(2,165)
======= =======
See accompanying notes.
</TABLE>
<PAGE>
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in Thousands)
<TABLE>
Thirteen weeks ended
April 1, April 3,
2000 1999
------------------------------
Not covered
by Auditors'
Report
<S> <C> <C>
Operating activities
Net loss ......................................................... $ (6,726) $ (2,165)
Adjustment to reconcile net loss to net cash and cash equivalents
used in operating activities:
Depreciation................................................... 2,541 2,432
Deferred finance amortization.................................. 423 395
Goodwill amortization.......................................... 124 --
Loss on disposal............................................... -- 12
Changes in operating assets and liabilities:
Accounts receivable............................................ (7,471) (66)
Inventories.................................................... (6,399) (9,054)
Prepaid expenses and other current assets...................... (628) 574
Pension and other noncurrent assets............................ (964) (891)
Accounts payable and accrued expenses.......................... 7,108 (5,391)
Income taxes payable........................................... 40 62
Other liabilities.............................................. 578 439
Effect of changes in foreign currency.......................... (285) (59)
-------------------------------
Net cash and cash equivalents used in operating activities........ (11,659) (13,712)
Investing activities
Purchase of property, plant and equipment......................... (1,212) (2,555)
Proceeds on disposal of property, plant and equipment............. -- 1
-------------------------------
Net cash and cash equivalents used in investing activities........ (1,212) (2,554)
Financing activities
Principal payments on long term debt ............................. (1,150) (650)
Principal payments on long term note ............................. (194) --
Net borrowings under line-of-credit agreement .................... 10,470 14,524
Principal payments under capital lease obligation................. (3) (4)
-------------------------------
Net cash and cash equivalents provided by financing activities.... 9,123 13,870
Effect of foreign currency translation............................ 0 9
-------------------------------
Net change in cash and cash equivalents........................... (3,748) (2,387)
Cash and cash equivalents at beginning of period.................. 7,239 2,868
-------------------------------
Cash and cash equivalents at end of period........................ $ 3,491 $ 481
===============================
See accompanying notes.
</TABLE>
<PAGE>
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of Cluett
American Corp. and its subsidiaries, (the "Company") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the thirteen-week period ended April 1, 2000 are
not necessarily indicative of the operating results that may be expected for the
year ending December 31, 2000.
The Balance Sheet at December 31, 1999 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
For further information, refer to the annual consolidated financial statements
and footnotes of the Company, included in the Annual Report on Form 10-K, for
the year ended December 31, 1999, filed with the Securities and Exchange
Commission on March 30, 2000.
The consolidated financial statements include all subsidiary companies of the
Company. Significant intercompany transactions have been eliminated in
consolidation.
The Company uses a 5-4-4 week fiscal quarter whereby the fiscal quarter ends on
the Saturday nearest the end of the calendar quarter, which accordingly was
April, 1, 2000 and April 3, 1999, respectively.
Certain amounts in the prior year financial statements and footnotes have been
reclassified to conform to the current year presentation.
2. Inventories
Inventories consist of the following:
<TABLE>
April 1, December 31,
2000 1999
-------------------- --------------------
(Dollars In Thousands)
<S> <C> <C>
Finished goods........................................... $ 69,354 $60,854
Work in process.......................................... 6,731 8,260
Raw material and supplies................................ 11,932 11,613
-------------------- --------------------
88,017 80,727
Less: Allowance for obsolete and slow moving inventory.. (3,489) (2,622)
-------------------- --------------------
$ 84,528 $ 78,105
==================== ====================
</TABLE>
<PAGE>
Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)
3. Comprehensive Loss
For the periods ended April 1, 2000 and April 3, 1999, accumulated other
comprehensive loss as shown in the consolidated balance sheets was comprised of
foreign currency translation adjustments, which prior to the adoption was
reported separately in shareholders' equity. The components of comprehensive
income (loss), for these periods were as follows:
<TABLE>
Thirteen
Weeks Ended
-------------------------------------------
April 1, April 3,
2000 1999
------------------- -----------------------
(Dollars In Thousands)
<S> <C> <C>
Net loss................................................. $(6,726) $(2,165)
Foreign currency translation adjustment.................. (68) 364
------------------- ---------------------
Comprehensive loss....................................... $(6,794) $(1,801)
=================== =====================
</TABLE>
4. Restructuring and Facility Closure Charges
During the first quarter ended April 1, 2000, the Company did not have any
terminations related to the 1999 approved restructuring plan. Severance cost
reserve was increased during the first quarter due to actual costs exceeding
estimates. The following is a summary of the components of the restructuring
reserve at April 1, 2000.
<TABLE>
Severance Costs Facility Closure Total
-------------------- -------------------- ------------------
(Dollars in Thousands)
<S> <C> <C> <C>
Balance, December 31, 1999 $ 276 $ 145 $ 421
Charges -- 60 60
Payments -- (50) (50)
-------------------- -------------------- ------------------
Balance, April 1, 2000 $ 276 $ 95 $ 431
==================== ==================== ==================
</TABLE>
<PAGE>
Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)
5. Segment Data
The Company identifies its reportable segments based on the segment's product
offerings. For the quarter ended April 1, 2000, the Company conducted its
business through two principal segments: the Sock Group and the Shirt Group. The
financial results associated with the Burberrys, YSL, Latin America, Canadian
retail operations, Apparel On-Line and unallocated corporate overhead charges,
are referred to collectively as "All other".
<TABLE>
April, 1, 2000 April 3, 1999
-------------- -------------
(Dollars In Thousands)
<S> <C> <C>
Net Sales
Sock $ 38,808 $ 34,138
Shirt 48,331 45,017
All other 73 3,702
Intersegment (1,597) (1,758)
------- -------
$ 85,615 $ 81,099
======== =========
Operating Income (Loss)
Sock $ 5,111 $ 4,522
Shirt (3,751) 285
All other (505) (392)
----- -----
$ 855 $ 4,415
======= ==========
Depreciation Expense
Sock $ 1,571 $ 1,510
Shirt 913 922
All Other 57 --
-- --
$ 2,541 $ 2,432
========= ==========
Amortization expense
Sock $ -- $ --
Shirt -- 8
All other 547 387
--- ---
$ 547 $ 395
========== ===========
Identifiable Assets
Sock $ 83,977 $ 78,614
Shirt 116,963 101,886
All other 759 4,864
--- -----
$201,699 $185,364
======== ========
</TABLE>
<PAGE>
Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)
5. Segment Data (Continued)
<TABLE>
Reconciliation of Reportable Segments Net Sales, Operating Income and Identifiable Assets
April, 1, 2000 April 3, 1999
-------------- -------------
(Dollars In Thousands)
<S> <C> <C>
Net Sales
Total net sales for reportable segments $ 87,139 $ 79,155
Other net sales 73 3,702
Elimination of intersegment net sales (1,597) (1,758)
------- -------
Total consolidated net sales $ 85,615 $ 81,099
========= =========
Operating Profit (Loss)
Total operating profit or loss for
reportable segments $ 1,360 $ 4,807
Other operating profit or loss (206) --
Unallocated amounts:
Corporate expense before pension income (924) (892)
Pension income 625 500
--- ---
Total operating profit $ 855 $ 4,415
=========== ==========
Depreciation and Amortization
Total depreciation for reportable segments $ 2,541 $ 2,432
Amortization 547 395
---- ----
$ 3,088 $ 2,827
========== ==========
Assets
Total assets for reportable segments $200,940 $180,500
Other assets 759 4,864
Unallocated amounts:
Deferred finance costs 10,795 11,247
Pension assets 32,812 31,883
Other unallocated amounts (3,723) (188)
------- -----
Consolidated total $241,583 $228,306
======== ========
</TABLE>
<PAGE>
Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)
6. Guarantor Subsidiaries
The Company's payment obligations under the Senior Credit Facility and the
Senior Subordinated Notes (the "Notes") are fully and unconditionally guaranteed
on a joint and several basis by its current domestic subsidiaries, principally:
Cluett Peabody & Co., Inc., Great American Knitting Mills, Inc., Cluett Designer
Group Inc., Consumer Direct Corporation and Arrow Factory Stores Inc.
(collectively the "Guarantor Subsidiaries"). Each of the Guarantor Subsidiaries
is a direct or indirect wholly-owned subsidiary of the Company. The Company's
payment obligations under the Notes are not guaranteed by the remaining
subsidiaries Bidermann Womenswear Corp. (formerly Ralph Lauren Womenswear Inc. )
Cluett, Peabody Canada Inc., Arrow de Mexico S.A. de C.V., and Arrow
Inter-American & Co., Ltd. (collectively the "Non-Guarantor Subsidiaries"). The
obligation of each Guarantor Subsidiary under its guarantee of the Notes is
subordinated to such subsidiary's obligation under its guarantee of the Senior
Credit Facility.
Presented below is condensed consolidating financial information for the
Company, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries. In the
Company's opinion, separate financial statements and other disclosures
concerning each of the Guarantor Subsidiaries would not provide additional
information that is material to investors. Therefore, the Guarantor Subsidiaries
are consolidated in the presentation below. Investments in subsidiaries are
accounted for by the Company using the equity method of accounting. Earnings
(losses) of subsidiaries are, therefore, reflected in the Parent Company's
investments in and advances to/from subsidiaries account and earnings (losses).
The elimination entries eliminate investments in subsidiaries, the related
stockholder's deficit and other intercompany balances and transactions.
<PAGE>
Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)
6. Guarantor Subsidiaries (Continued)
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
APRIL 1, 2000
(DOLLARS IN THOUSANDS)
<TABLE>
PARENT GUARANTOR NON-GUARANTOR
COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATION CONSOLIDATED
<S> <C> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ -- $ 3,351 $ 140 $ -- $ 3,491
Accounts receivable, net -- 46,316 6,687 -- 53,003
Inventories, net -- 72,340 12,188 -- 84,528
Prepaid expenses and other current assets -- 3,175 778 -- 3,953
-- ----- --- -- -----
Total current assets -- 125,182 19,793 -- 144,975
Investment in subsidiaries (110,169) -- 110,169 --
Intercompany receivable (payable) 15,000 (15,000) -- -- --
Property, plant and equipment, net -- 44,534 1,935 -- 46,469
Deferred finance costs -- 10,795 -- -- 10,795
Pension assets -- 32,812 -- -- 32,812
Goodwill, net -- 4,622 -- -- 4,622
Other noncurrent assets -- 1,264 646 -- 1,910
-- ----- --- -- -----
Total assets $ (95,169) $204,209 $ 22,374 $110,169 $241,583
=========== ======== ========= ======== ========
Liabilities and stockholder's deficit
Current liabilities:
Accounts payable and accrued expenses $ -- $ 42,516 $ 2,488 $ -- $ 45,004
Accrued interest payable -- 7,240 -- -- 7,240
Short-term debt and current portion of -- 15,405 7,941 -- 23,346
long-term debt
Income taxes payable -- 1,803 207 -- 2,010
-- ----- --- -- -----
Total current liabilities -- 66,964 10,636 -- 77,600
Long-term debt and capital lease obligations -- 258,658 228 -- 258,886
Other noncurrent liabilities -- 149 -- -- 149
Redeemable preferred stock dividends payable 2,550 -- -- 2,550
Commitments and contingencies:
Senior exchangeable preferred stock due 2010
cumulative, $.01 par value: authorized
4,950,000 shares, issued and outstanding
599,145 shares (liquidation preference
of $59,915) 58,329 -- -- -- 58,329
------ ------
Total stockholder's deficit (156,048) (121,562) 11,510 110,169 (155,931)
--------- --------- ------ ------- ---------
Total liabilities and stockholder's deficit $ (95,169) $204,209 $ 22,374 $110,169 $241,583
=========== ======== ========= ======== ========
</TABLE>
<PAGE>
Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)
6. Guarantor Subsidiaries (Continued)
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
PARENT GUARANTOR NON-GUARANTOR
COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATION CONSOLIDATED
<S> <C> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ -- $ 7,099 $ 140 $ -- $ 7,239
Accounts receivable, net -- 40,635 4,884 -- 45,519
Inventories, net -- 64,608 13,497 -- 78,105
Prepaid expenses and other current assets -- 2,422 707 -- 3,129
-- ----- --- -- -----
Total current assets -- 114,764 19,228 -- 133,992
Investment in subsidiaries (103,443) -- -- 103,443 --
Intercompany receivable (payable) 15,000 (15,000) -- -- --
Property, plant and equipment, net -- 45,802 1,992 -- 47,794
Deferred finance costs -- 10,842 -- -- 10,842
Pension assets -- 32,187 -- -- 32,187
Goodwill, net -- 4,740 -- -- 4,740
Other noncurrent assets -- 1,259 692 -- 1,951
-- ----- --- -- -----
Total assets $(88,443) $194,594 $ 21,912 $103,443 $231,506
========= ======== ========== ======== ========
Liabilities and stockholder's deficit
Current liabilities:
Accounts payable and accrued expenses $ -- $ 38,239 $ 2,457 $ -- $ 40,696
Accrued interest payable -- 3,861 -- -- 3,861
Short-term debt and current portion of -- 6,405 7,804 -- 14,209
long-term debt
Income taxes payable -- 1,763 207 -- 1,970
-- ----- --- -- -----
Total current liabilities -- 50,268 10,468 -- 60,736
Long-term debt and capital lease obligations -- 258,652 231 -- 258,883
Other noncurrent liabilities -- 147 -- -- 147
Redeemable preferred stock dividends payable 637 -- -- -- 637
Commitments and contingencies:
Senior exchangeable preferred stock due 2010
cumulative, $.01 par value: authorized
4,950,000 shares, issued and outstanding
599,145 shares (liquidation preference
of $59,915) 58,329 -- -- -- 58,329
------ ------
Stockholder's deficit (147,409) (114,473) 11,213 103,443 (147,226)
--------- --------- ------ ------- ---------
Total liabilities and stockholder's deficit $(88,443) $194,594 $ 21,912 $103,443 $231,506
========= ======== ========= ======== ========
</TABLE>
<PAGE>
Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)
6. Guarantor Subsidiaries (Continued)
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
APRIL 1, 2000
(DOLLARS IN THOUSANDS)
<TABLE>
PARENT GUARANTOR NON-GUARANTOR
COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATION CONSOLIDATED
<S> <C> <C> <C> <C> <C>
Net sales $ -- $77,502 $ 8,113 $ -- $85,615
Cost of goods sold -- 58,092 6,096 -- 64,188
-- ------ ----- -- ------
Gross profit -- 19,410 2,017 -- 21,427
Selling, general and administrative expenses -- 18,822 1,750 -- 20,572
-- ------ ----- -- ------
Operating income -- 588 267 -- 855
Income (loss) on investments in subsidiaries (6,726) -- -- 6,726 --
Interest expense, net -- 6,533 699 -- 7,232
Other expense, net -- 147 -- -- 147
-- --- -- -- ---
Income (loss) before provision for income (6,726) (6,092) (432) 6,726 (6,524)
taxes
Provision for income taxes -- 194 8 -- 202
-- --- - -- ---
Net income (loss) $ (6,726) $ (6,286) $ (440) $ 6,726 $ (6,726)
========= ========= ========= ======== =========
</TABLE>
<PAGE>
Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)
6. Guarantor Subsidiaries (Continued)
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
APRIL 3, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
PARENT GUARANTOR NON-GUARANTOR
COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATION CONSOLIDATED
<S> <C> <C> <C> <C> <C>
Net sales $ -- $ 73,295 $ 7,804 $ -- $ 81,099
Cost of goods sold -- 51,490 5,897 -- 57,387
-- ------ ----- -- ------
Gross profit -- 21,805 1,907 -- 23,712
Selling, general and administrative expenses -- 17,268 2,029 -- 19,297
-- ------ ----- -- ------
Operating income (loss) -- 4,537 (122) -- 4,415
Income (loss) on investments in subsidiaries (2,165) -- -- 2,165 --
Interest expense, net -- 6,169 118 -- 6,287
Other expense, net -- 15 -- -- 15
-- -- -- -- --
Income (loss) before provision for income (2,165) (1,647) (240) 2,165 (1,887)
taxes
Provision for income taxes -- 226 52 -- 278
-- --- -- -- ---
Net income (loss) $ (2,165) $ (1,873) $ (292) $ 2,165 $ (2,165)
============= ============ ============== ============ =============
</TABLE>
<PAGE>
Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)
6. Guarantor Subsidiaries (Continued)
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
APRIL 1, 2000
(DOLLARS IN THOUSANDS)
<TABLE>
PARENT GUARANTOR NON-GUARANTOR
COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATION CONSOLIDATED
<S> <C> <C> <C> <C> <C>
Operating activities:
Net loss $ (6,726) $ (6,286) $ (440) $ 6,726 $ (6,726)
Adjustments to reconcile net income (loss) to
net cash and cash equivalents used in
operating activities:
Loss on investments in subsidiaries 6,726 -- -- (6,726) --
Depreciation -- 2,468 73 -- 2,541
Deferred finance amortization -- 423 -- -- 423
Goodwill and license fee amortization -- 124 -- -- 124
Loss on disposal of fixed assets -- -- -- -- --
Changes in operating assets and liabilities -- (8,283) 262 -- (8,021)
-- ------- --- -- -------
Net cash and cash equivalents used in
operating activities -- (11,554) (105) -- (11,659)
Investing activities:
Purchase of fixed assets -- (1,200) (12) -- (1,212)
Proceeds on disposal of fixed assets -- -- -- -- --
-- -- -- -- --
Net cash and cash equivalents used in
investing activities -- (1,200) (12) -- (1,212)
Financing activities:
Net borrowings under line-of credit agreements -- 10,350 120 -- 10,470
Principal payments on long term debt -- (1,150) -- -- (1,150)
Principal payments on long term notes (CAT) -- (194) -- -- (194)
Principal payments on capital lease obligation -- -- (3) -- (3)
-- -- --- -- ---
Net cash and cash equivalents provided by
financing activities -- 9,006 117 -- 9,123
Effect of exchange rate changes on cash -- 0 0 -- 0
-- - - -- -
Net change in cash and cash equivalents -- (3,748) 0 -- (3,748)
Cash and cash equivalents at beginning of year -- 7,231 8 -- 7,239
-- ----- - -- -----
Cash and cash equivalents at end of period $ -- $ 3,483 $ 8 $ -- $ 3,491
=========== ========= =========== ============ =========
</TABLE>
<PAGE>
Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)
6. Guarantor Subsidiaries (Continued)
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
APRIL 3, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
PARENT GUARANTOR NON-GUARANTOR
COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATION CONSOLIDATED
<S> <C> <C> <C> <C> <C>
Operating activities:
Net income (loss) $ (2,165) $ (1,873) $ (292) $ 2,165 $ (2,165)
Adjustments to reconcile net income (loss)
to net cash and cash equivalents used
in operating activities:
Loss on investments in subsidiaries 2,165 -- (2,165) --
Depreciation -- 2,361 79 -- 2,440
Deferred finance amortization -- 387 -- -- 387
Goodwill and license fee amortization -- -- -- -- --
Loss on disposal of fixed assets -- 12 -- -- 12
Changes in operating assets and liabilities -- (10,467) (3,919) -- (14,386)
-- -------- ------- -- --------
Net cash and cash equivalents used in
operating activities -- (9,580) (4,132) -- (13,712)
Investing activities:
Purchase of fixed assets -- (2,550) (5) -- (2,555)
Proceeds on disposal of fixed assets -- -- 1 -- 1
-- -- - -- -
Net cash and cash equivalents used in
investing activities -- (2,550) (4) -- (2,554)
Financing activities:
Net borrowings under line-of credit agreements -- 10,699 3,825 -- 14,524
Principal payments on long term debt -- (650) -- -- (650)
Principal payments on long term notes (CAT) -- -- -- -- --
Principal payments on capital lease obligation -- -- (4) -- (4)
-- -- --- -- ---
Net cash and cash equivalents provided by
financing activities -- 10,049 3,821 -- 13,870
Effect of exchange rate changes on cash -- -- 9 -- 9
-- -- - -- -
Net change in cash and cash equivalents -- (2,081) (306) -- (2,387)
Cash and cash equivalents at beginning of year -- 2,396 472 -- 2,868
-- ----- --- -- -----
Cash and cash equivalents at end of period $ $ 315 $ 166 $ $ 481
============ =========== ========== ========== ==========
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations: Thirteen weeks ended April 1, 2000 vs. April 3, 1999
The following table is derived from the Company's Consolidated Statements of
Operations and sets forth, for the period indicated, net sales, gross profit,
operating income, interest expense, bankruptcy reorganization costs and net
income (loss) of the Company:
<TABLE>
Thirteen weeks ended
April 1, April 3,
2000 1999
------------------------------
(Dollars In Thousands)
<S> <C> <C>
Net sales................................................................. $85,615 $81,099
Gross profit.............................................................. 21,427 23,712
Operating income ......................................................... 855 4,415
Interest expense ......................................................... 7,232 6,287
Net loss.................................................................. $ (6,726) $ (2,165)
</TABLE>
Net Sales: For the first quarter ended April 1, 2000, net sales increased $4.5
million to $85.6 million compared to $81.1 million for the same period last
year. The increase is completely attributable to the Company's reportable
segments where Sock Group net sales increased $4.7 million to $38.8 million and
Shirt Group net sales increased $3.3 million to $48.3 million. The growth in the
Company's core businesses in 2000 was somewhat masked by 1999 sales related to
the YSL and Burberrys terminated businesses.
Gross Profit: For the first quarter 2000, gross profit decreased $2.3 million to
$21.4 million compared to $23.7 million for the first quarter 1999. The
Company's gross profit margin decreased to 25.0% for the first quarter in 2000
from 29.2% for the first quarter in 1999. The Sock Group's gross profit
increased $1.4 million while margin declined slightly from 34.6% to 34.2% of net
sales year over year. The $1.4 million gross profit improvement resulted from
additional sales volume and improved manufacturing costs offset by decreases in
mix and price. The Shirt Group's gross margin decreased from 26.4% of net sales
to 16.8% for the same period in 1999, primarily due to margin deterioration at
the US Wholesale division. This margin decrease was primarily due to a decline
in staple dress shirt demand (traditionally the Company's most profitable
product offering), new product launches and dress shirt cost increases due to
quality improvements without offsetting price increases.
Operating Income: The Company's operating income for the first quarter ended
April 1, 2000 declined to $0.9 million from $4.4 million for the same period
last year. The largest contributing factor was the Shirt Group's gross margin
decline mentioned above.
Interest expense: Interest expense increased $0.9 million for the first quarter
ended April 1, 2000 as a result of higher debt levels.
Net (Loss) income: Net loss for the first quarter ended April 1, 2000 increased
$4.6 million to a loss of $6.7 million from a loss of $2.2 million for the same
period in 1999. This reduction was primarily related to the decline in the Shirt
Group's operating profit and the Company's overall increased interest expense.
<PAGE>
Liquidity and Capital Resources
The Company broadly defines liquidity as its ability to generate sufficient cash
flow from operating activities to meet its obligations and commitments. In
addition, liquidity includes the ability to obtain appropriate debt and equity
financing and, to convert into cash, those assets that are no longer required to
meet existing strategic and financial objectives. Therefore, liquidity cannot be
considered separately from capital resources that consist of current or
potentially available funds for use in achieving long range business objectives
and meeting debt service commitments.
In 1999, the Company obtained a $3.0 million revolving credit facility
("Additional Revolver") which is guaranteed by Vestar and bears interest, at the
Company's option, at either the Eurodollar rate plus 1.5% or the Prime rate plus
0.5%. This facility expires on December 31, 2000. At December 31, 1999, there
were no amounts outstanding under the Additional Revolver. On February 17, 2000,
the Additional Revolver was increased to $7.5 million.
On March 29, 2000, the Additional Revolver was increased to $12.0 million and
was incorporated into the Senior Credit Facility as Tranche C. Subsequently, the
additional revolver was increased to $13.2 million. Borrowings under Tranche C
are due and payable on June 30, 2000 (unless certain events occur, in which case
the maturity can be extended to December 31, 2001) and are guaranteed by Vestar.
The Company's liquidity needs arise primarily from debt service on the
indebtedness and the funding of working capital and capital expenditures. As of
April 1, 2000, the Company had outstanding $271.8 million of debt consisting of
$125.0 million in senior subordinated notes, a Senior Credit Facility consisting
of a $45.0 million term A loan, a $59.0 million term B loan, $36.3 million in
revolving credit borrowings and $6.5 million in additional revolver, $7.9
million in Canadian revolving credit borrowings and a $2.3 million CAT
acquisition note payable. For the first quarter ended April 1, 2000, the Company
had a net increase in revolving credit borrowings of $10.5 million and repaid
$1.3 million in term loans and notes payable.
On May 12, 2000, the Company formed a special purpose non-guarantee subsidiary
for the purpose of an accounts receivable sale transaction allowed under the
Senior Credit Facility. The Company has the right but not the obligation to sell
up to $24.0 million of accounts receivable on or before June 30, 2000. On May
12, 2000, the Company sold approximately $6.4 million of accounts receivable.
Cash Flows
Cash and cash equivalents decreased $3.8 million to $3.5 million at April 1,
2000 from $7.2 million at December 31, 1999 primarily as a result of $11.7
million and $1.2 million in net cash used in operating and investing activities,
respectively, offset by $9.1 million in net cash provided by financing
activities. Net cash used in operating activities resulted primarily from the
Company's $6.7 million net loss offset by $3.1 million in non-cash depreciation
and amortization charges. Net cash used in investing activities resulted
primarily from $1.2 million in capital expenditures. Net cash provided by
financing activities resulted primarily from $10.5 million in net borrowings
under the Company's revolving credit facilities.
Covenant Restrictions
The Senior Credit Facility contains a number of covenants that, among other
things, restrict the ability of the Company and its subsidiaries, other than
pursuant to specified exceptions, to dispose of assets, incur additional
indebtedness, incur guarantee obligations, repay other indebtedness, pay
dividends, create liens on assets, enter into leases, make investments, loans or
advances, make acquisitions, engage in mergers or consolidations, make capital
expenditures, enter into sale and leaseback transactions, change the nature of
their business or engage in certain transactions with subsidiaries and
affiliates and otherwise restrict corporate activities. In addition, under the
Senior Credit Facility the Company is required to comply with specified
financial ratios and tests, including minimum fixed charge coverage and interest
coverage ratios and maximum leverage ratios, including a senior leverage ratio
and a total leverage ratio, and a minimum Sock Group EBITDA test each of which
is tested as of the last day of each fiscal quarter of the Company and its
subsidiaries. The amendments in December 1998, March 1999, September 1999 and
March 2000 revised the original covenants. Additionally, the September 1999
amendment requires Vestar to infuse up to $30 million of new capital if certain
leverage ratios are not met.
<PAGE>
At December 31, 1999, the Company was not in compliance with its financial ratio
covenants and received a waiver dated March 29, 2000. The March 2000 waiver and
amendment also revised on-going covenants and the Company expects to meet these
covenants in 2000.
On March 29, 2000, the Senior Credit Facility and the Investment and Deposit
agreement were amended. The March 2000 amendment requires (i) Vestar to infuse
up to $30 million of new capital into the Company and (ii) the Company to make
$20 million in additional principal payments on the Senior Credit Facilities
between June 30, 2000 (or in certain circumstances August 31, 2000) and December
31, 2000 if certain financial ratios are not met by June 30, 2000.
Capital Expenditures
Capital spending for the first quarter ended April 1, 2000 was $1.2 million and
related primarily to general improvements to the Company's manufacturing
facilities. Total capital spending for 2000 is expected to be $7.0 million and
also relates primarily to general improvements to the Company's manufacturing
facilities.
Financing Sources and Cash Flows
At April 1, 2000 the Company had $3.5 million in cash and additional
availability of $9.2 million under the revolving credit facilities included in
the Senior Credit Facility, after consideration of $10.0 million in open trade
letters of credit and $1.4 million of stand-by letters of credit. At December
31, 1999 the Company also had additional availability of $1.6 million Canadian
dollars under the Canadian revolving credit facility, after consideration of
$0.9 million Canadian dollars in open trade letters of credit.
Based upon the current level of operations, management believes that cash flow
from operations and available cash, together with available borrowings under the
revolving credit facilities, are adequate to meet the Company's future liquidity
needs until at least the end of 2000. The Company may, however, need to
refinance all or a portion of the principal of the Senior Credit Facility on or
prior to maturity and there can be no assurance that the Company will be able to
effect any such refinancing. In addition, there can be no assurances that the
Company's business will generate sufficient cash flow from operations, that
anticipated revenue growth and operating improvements will be realized or that
future borrowings will be available under the Senior Credit Facility in an
amount sufficient to (i) enable the Company to service its indebtedness or (ii)
fund its other liquidity needs.
Backlog and Seasonality
The amount of the Company's backlog orders at any particular time is affected by
a number of factors, including seasonality and scheduling of the manufacturing
and shipment of products. In general, the Company's electronic data interchange
("EDI") system and vendor managed inventory systems have resulted in shortened
lead times between submission of purchase orders and delivery and has lowered
the level of backlog orders. Consequently, the Company believes that the amount
of its backlog is not an appropriate indicator of future production levels.
The industries in which the Company operates are cyclical. Purchases of apparel
tend to decline during recessionary periods and also may decline at other times.
A recession in the general economy or uncertainties regarding future economic
prospects could affect consumer spending habits and could have an adverse effect
on the Company's results of operations. Weak sales and resulting markdown
requests from customers could also have a material adverse effect on the
Company's business, results of operations and financial condition.
The Company's business is seasonal, with higher sales and income during its
third and fourth quarters. The third and fourth quarters coincide with the
Company's two peak retail selling seasons: (i) the first season runs from the
start of the back-to-school and fall selling seasons, beginning in August and
continuing through September; and (ii) the second season runs from the start of
the Christmas selling season beginning with the weekend following Thanksgiving
and continuing through the week after Christmas.
Also contributing to the strength of the third quarter is the high volume of
fall shipments to wholesale customers which are generally more profitable than
spring shipments. The slower spring selling season at wholesale combines with
retail seasonality to make the first half of the year particularly weak.
<PAGE>
Cautionary Statement Regarding Forward-Looking Statements
The Quarterly Report on Form 10-Q contains certain statements which describe the
Company's beliefs concerning future business conditions and the outlook for the
Company based on currently available information. The preceding Management's
Discussion and Analysis contains forward-looking statements regarding the
Company's performance, liquidity and the adequacy of its capital resources.
These forward looking statements are subject to risks, uncertainties and other
factors which could cause the Company's actual results, performance or
achievement to differ materially from those expressed in, or implied by these
statements. As a result, the Company cautions that the forward-looking
statements are qualified by the financial strength of the retail industry, the
risks of increased competition from other manufacturers of men's dress shirts
and socks, shifting consumer demand, changing consumer credit markets and
general economic conditions, hiring and retaining effective team members,
sourcing merchandise from domestic and international vendors, preparing for the
impact of year 2000, and other risks and uncertainties. Therefore, while
management believes that there is a reasonable basis for the forward-looking
statements, undue reliance should not be placed on those statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The Company has exposure to fluctuations in interest rates and foreign currency
exchange rates. The Company operates under a senior credit facility at variable
interest rates. Interest expense is primarily affected by the general level of
U.S. interest rates, LIBOR and European base rates. The Company is subject to
risk from sales and loans to its foreign subsidiary as well as sales, purchases
from third party customers, suppliers and creditors, denominated in foreign
currencies. Currently, the Company does not engage in any material derivative
type instruments in order to hedge against interest rate and Canadian foreign
currency exchange rate fluctuations. However, the Company feels it is limited in
its exposure of foreign currency exchange rate changes as most inventory
purchase contracts are denominated in US Dollars.
The Company evaluated its market risks (floating interest rate, fixed interest
rate and currency risks) at the fiscal year ended December 31, 1999, which is
disclosed in the Company's annual report filed on Form 10-K. There has not been
any material change (adverse or favorable) in the risk factors identified since
the evaluation performed by the Company at December 31, 1999.
<PAGE>
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company and its subsidiaries are involved in various legal proceedings, both
as plaintiff and as defendant, which are normal to its business. In March 2000,
the Company and a former employee settled all matters relating to an employment
action; all amounts were reserved for in 1998 and 1999. It is the opinion of
management that the aforementioned actions and claims, if determined adversely
to the Company, will not have a material adverse effect on the financial
condition or operations of the Company taken as a whole.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during the quarter
ended April 1, 2000.
Item 6. Exhibits and Reports on Form 8-K
(a) (1) Financial Statements
Included in Part I, Item 1
(2) Financial Statement Schedules
Schedule II - Valuation and Qualifying
Accounts
All other schedules for which provision is made in the
applicable accounting regulation of the Securities and
Exchange Commission are not required under the related
instructions or are inapplicable and therefore have been
omitted.
(3) List of Exhibits
(b) The Company filed one Form 8-K, dated January 3, 2000 during the first
quarter ended April, 1, 2000
(c) Exhibits: See (a)(3) above for a listing of the exhibits included as
part of this report.
(d) Financial Statement Schedules: See (a)(1) and (a)(2) above for a
listing of the financial statements and schedules submitted as part of
this report.
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- --------------------------------------------------------------------------------
2.1 Third Amended plan of Reorganization of Cluett American Corp. and Cluett
American Investment Corp. (incorporated by reference to Exhibit 2.1 to the
Company's Registration Statement on Form S-4 (Reg. No. 333-58059) filed on June
30, 1998).
2.2 Subscription Agreement dated as of March 30, 1998 among Bidermann Industries
U.S.A., Inc., Vestar Capital Partners III, L.P. and Alvarez & Marsal, Inc.
(incorporated by reference to Exhibit 2.2 to the Company's Registration
Statement on Form S-4 (Reg. No. 333-58059) filed on June 30, 1998).
2.3 Stockholders' Agreement dated as of May 18, 1998 among Cluett American
Investment Corp., Vestar Capital Partners III, L.P., A&M Investment Associates
#7, LLC, the Co-Investors named therein, the Original Equity Holders named
therein and the Management Investors named therein (incorporated by reference to
Exhibit 2.3 to the Company's Registration Statement on Form S-4 (Reg. No.
333-58059) filed on June 30, 1998).
2.4 Joinder Agreement dated as of June 30, 1998 among Cluett American Investment
Corp., Vestar Capital Partners III, L.P. and each other signatory thereto (an
"Additional Stockholder") (incorporated by reference to Exhibit 2.4 to the
Company's Registration Statement on Form S-4 (Reg. No. 333-58059) filed on June
30, 1998).
3.1 Restated Certificate of Incorporation of Cluett American Corp. (incorporated
by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-4
(Reg. No. 333-58059) filed on June 30, 1998).
3.2 Bylaws of Cluett American Corp. (incorporated by reference to Exhibit 3.2 to
the Company's Registration Statement on Form S-4 (Reg. No. 333-58059) filed on
June 30, 1998).
4.1 Indenture between Cluett American Corp. and The Bank of New York, as Trustee
(incorporated by reference to Exhibit 4.1 to the Company's Registration
Statement on Form S-4 (Reg. No. 333-58059) filed on June 30, 1998).
4.2 Exchange Debenture Indenture between Cluett American Corp. and The Bank of
New York, as Trustee (incorporated by reference to Exhibit 4.2 to the Company's
Registration Statement on Form S-4 (Reg. No. 333-58059) filed on June 30, 1998).
4.3 Certificate of Designations of the 12 1/2% Senior Exchangeable Preferred
Stock Due 2010 (incorporated by reference to Exhibit 4.3 to the Company's
Registration Statement on Form S-4 (Reg. No. 333-58059) filed on June 30, 1998).
4.4 Form of 10 1/8% Senior Subordinated Notes Due 2008 (incorporated by
reference to Exhibit 4.4 to the Company's Registration Statement on Form S-4
(Reg. No. 333-58059) filed on June 30, 1998).
4.5 Form of 10 1/8% Series B Senior Subordinated Notes Due 2008 (incorporated by
reference to Exhibit 4.5 to the Company's Registration Statement on Form S-4
(Reg. No. 333-58059) filed on June 30, 1998).
4.6 Form of 12 1/2% Senior Exchangeable Preferred Stock Due 2010 (incorporated
by reference to Exhibit 4.6 to the Company's Registration Statement on Form S-4
(Reg. No. 333-58059) filed on June 30, 1998).
4.7 Form of 12 1/2% Series B Senior Exchangeable Preferred Stock Due 2010
(incorporated by reference to Exhibit 4.7 to the Company's Registration
Statement on Form S-4 (Reg. No. 333-58059) filed on June 30, 1998).
4.8 Note Registration Rights Agreement dated May 18, 1998 among Cluett American
Corp., NationsBanc Montgomery Securities LLC and NatWest Capital Markets Limited
(incorporated by reference to Exhibit 4.8 to the Company's Registration
Statement on Form S-4 (Reg. No. 333-58059) filed on June 30, 1998).
4.9 Preferred Stock Registration Rights Agreement dated May 18, 1998 among
Cluett American Corp., NationsBanc Montgomery Securities LLC and NatWest Capital
Markets Limited (incorporated by reference to Exhibit 4.9 to the Company's
Registration Statement on Form S-4 (Reg. No. 333-58059) filed on June 30, 1998).
10.1 $160,000,000 Credit Agreement dated as of May 18, 1998 among Cluett
American Corp., as the Borrower, NationsBank, N.A., as Administrative Agent and
Collateral Agent, NationsBanc Montgomery Securities LLC, as Arranger and
Syndication Agent, and lenders (incorporated by reference to Exhibit 10.1 to the
Company's Registration Statement on Form S-4 (Reg. No. 333-58059) filed on June
30, 1998).
10.2 First Amendment to the Credit Agreement and Assignment dated May 27, 1998
by an among Cluett American Corp., Cluett American Investment Corp., Cluett
American Group, Inc. and certain subsidiaries, the Existing Lenders, New
Lenders, and agents (incorporated by reference to Exhibit 10.2 to the Company's
Registration Statement on Form S-4 (Reg. No. 333-58059) filed on June 30, 1998).
10.2.1 Second Amendment to the Credit Agreement and Assignment dated as December
18, 1998 by an among Cluett American Corp., Cluett American Investment Corp.,
Cluett American Group, Inc. and certain subsidiaries, the Existing Lenders, New
Lenders, and agents (incorporated by reference to Exhibit 10.2.1 to the
Company's Annual Report on Form 10-K (Reg No. 333-58059) filed on March 29,
1999).
10.2.2 Third Amendment to the Credit Agreement and Assignment dated as of March
19, 1999 by an among Cluett American Corp., Cluett American Investment Corp.,
Cluett American Group, Inc. and certain subsidiaries, the Existing Lenders, New
Lenders, and agents (incorporated by reference to Exhibit 10.2.1 to the
Company's Annual Report on Form 10-K (Reg No. 333-58059) filed on March 29,
1999).
10.2.3 Waiver to the Credit Agreement and Assignment dated July 28, 1999 by an
among Cluett American Corp., Cluett American Investment Corp., Cluett American
Group, Inc. and certain subsidiaries, the Existing Lenders, New Lenders, and
agents (incorporated by reference to Exhibit 10.2.3 to the Company's Annual
Report on Form 10-K (Reg No. 333-58059) filed on March 29, 1999).
10.2.4 Fourth Amendment to the Credit Agreement and Assignment dated September
30, 1999 by an among Cluett American Corp., Cluett American Investment Corp.,
Cluett American Group, Inc. and certain subsidiaries, the Existing Lender, New
Lender, and agents (incorporated by reference to Exhibit 10.2.4 to the Company's
Quarterly Report on Form 10-Q (Reg No. 333-58059) filed on November 16, 1999).
10.2.5 Investment and Deposit Agreement between Vestar Capital Partners and Bank
of America dated September 30, 1999 (incorporated by reference to Exhibit 10.2.5
to the Company's Quarterly Report on Form 10-Q (Reg No. 333-58059) filed on
November 16, 1999).
10.2.6 $3.0 million Credit Agreement dated as of November 9, 1999 among Cluett
American Corp., as the borrower Bank of America, N.A. and Vestar Capital
Partners III, L.P. as guarantor (incorporated by reference to Exhibit 10.2.6 to
the Company's Quarterly Report on Form 10-Q (Reg No. 333-58059) filed on
November 16, 1999).
10.2.7 $7.5 million Amended and Restated Credit Agreement dated as of February
17, 2000, among Cluett American Corp., as the borrower, Bank of America, N.A.
and Vestar Capital Partners III, L.P., as guarantor (incorporated by reference
to Exhibit 10.2.7 to the Company's Annual Report on Form 10-K (Reg No.
333-58059) filed on March 30, 2000).
10.2.8 Fifth Amendment to Credit Agreement and Waiver dated March 29, 2000 by
and among Cluett American Corp., Cluett American Investment Corp., Cluett
American Group, Inc. and certain subsidiaries, the Existing Lender, New Lender,
and agents (incorporated by reference to Exhibit 10.2.8 to the Company's Annual
Report on Form 10-K (Reg No. 333-58059) filed on March 30, 2000).
10.2.9 Amended and Restated Investment and Deposit Agreement between Vestar
Capital Partners III, L.P. and Bank of America dated March 29, 2000
(incorporated by reference to Exhibit 10.2.9 to the Company's Annual Report on
Form 10-K (Reg No. 333-58059) filed on March 30, 2000).
10.3 Security Agreement dated as of May 18, 1998 made by Cluett American Corp.,
Cluett American Investment Corp., Cluett American Group, Inc. and certain
Subsidiaries of Cluett American Investment Corp. in favor of NationsBank, N.A.
as agent (incorporated by reference to Exhibit 10.3 to the Company's
Registration Statement on Form S-4 (Reg. No. 333-58059) filed on June 30, 1998).
10.4 Pledge Agreement dated as of May 18, 1998 made by Cluett American Corp.,
Cluett American Investment Corp., Cluett American Group, Inc. and certain
Subsidiaries of Cluett American Investment Corp. in favor of NationsBank, N.A.,
as agent (incorporated by reference to Exhibit 10.4 to the Company's
Registration Statement on Form S-4 (Reg. No. 333-58059) filed on June 30, 1998).
10.5 Joinder Agreement dated as of May 18, 1998 by and between Bidermann
Tailored Clothing, Inc., and NationsBank, N.A., in its capacity as Agent under
that certain Credit Agreement dated as of May 18, 1998 (incorporated by
reference to Exhibit 10.5 to the Company's Registration Statement on Form S-4/A
(Reg. No. 333-58059) filed on September 3, 1998).
10.6 CDN $15,000,000 Loan Agreement dated as of August 8, 1997 between Cluett,
Peabody Canada Inc., as the Borrower, and Congress Financial Corporation
(Canada), as Lender (incorporated by reference to Exhibit 10.6 to the Company's
Registration Statement on Form S-4 (Reg. No. 333-58059) filed on June 30, 1998).
+10.7 Employment Agreement dated March 7, 1997 by and between Great American
Knitting Mills, Inc. and James A. Williams (incorporated by reference to Exhibit
10.7 to the Company's Registration Statement on Form S-4/A (Reg. No. 333-58059)
filed on September 3, 1998).
+10.8 Severance Agreement dated as of August 8, 1997 by and between Cluett,
Peabody & Co., Inc. and Phil Molinari (incorporated by reference to Exhibit 10.8
to the Company's Registration Statement on Form S-4/A (Reg. No. 333-58059) filed
on September 3, 1998).
+10.9 Severance Agreement dated as of May 5, 1997 by and between Great American
Knitting Mills, Inc. and William Sheely (incorporated by reference to Exhibit
10.9 to the Company's Registration Statement on Form S-4/A (Reg. No. 333-58059)
filed on September 3, 1998).
+10.10 Severance Agreement dated as of May 5, 1997 by and between Great American
Knitting Mills, Inc. and Kathy Wilson (incorporated by reference to Exhibit
10.10 to the Company's Registration Statement on Form S-4/A (Reg. No. 333-58059)
filed on September 3, 1998).
+10.11 Advisory Agreement dated May 18, 1998 among Cluett American Investment
Corp., Cluett American Corp. and Vestar Capital Partners (incorporated by
reference to Exhibit 10.11 to the Company's Registration Statement on Form S-4/A
(Reg. No. 333-58059) filed on September 3, 1998).
10.12 Secured Promissory Note dated May 18, 1998 made by A&M Investment
Associates #7, LLC in favor of Cluett American Investment Corp. (incorporated by
reference to Exhibit 10.12 to the Company's Registration Statement on Form S-4/A
(Reg. No. 333-58059) filed on September 3, 1998).
10.13 Form of Secured Promissory Note made by the Management Investors in favor
of Cluett American Investment Corp. (incorporated by reference to Exhibit 10.13
to the Company's Registration Statement on Form S-4/A (Reg. No. 333-58059) filed
on September 3, 1998).
+10.14 Severance Agreement dated as of August 8, 1997 by and between Cluett,
Peabody & Co., Inc. and Robert Riesbeck (incorporated by reference to Exhibit
10.14 to the Company's Registration Statement on Form S-4/A (Reg. No. 333-58059)
filed on October 15, 1998).
+10.15 Severance Agreement dated as of January 16, 1996 by and between Bidermann
Industries Corp. and Steven J. Kaufman (incorporated by reference to Exhibit
10.15 to the Company's Registration Statement on Form S-4/A (Reg. No. 333-58059)
filed on October 15, 1998).
*10.16 Limited Liability Company Agreement of Cluett American Receivables,
LLC, entered into by Great American Knitting Mills, Inc. as the sole equity
member and Dwight Jenkins and Lori Rezza as the special members (filed herewith
as Exhibit 10.16)
*10.16.1 Receivable Transfer Agreement dated May 12, 2000 between Great American
Knitting Mills, Inc. and Cluett American Receivables, LLC (filed herewith as
Exhibit 10.16.1)
*10.16.2 Receivable Purchase Agreement entered into between Cluett American
Receivable, LLC and Banc of America Commercial Corp. dated May 12, 2000 (filed
herewith as Exhibit 10.16.2).
*10.16.3 Partial Release Agreement dated May 12, 2000, by and among Bank of
America, N.A. f/k/a/ Nationsbank, N.A. as agent for the Lenders under the Credit
Agreement, Great American Knitting Mills, Inc. and Cluett American Corp. (filed
herewith as Exhibit 10.16.3).
*10.16.4 Guarantee Agreement dated May 12, 2000 made by Cluett American Corp.
(filed herewith as Exhibit 10.16.4).
*10.16.5 Repurchase Agreement dated May 12, 2000 made by Vestar Capital Partners
III, L.P. in favor of Banc of America Commerical Corporation (filed herewith as
Exhibit 10.16.5).
16.1 Letter from Ernst & Young LLP, former Certifying Accountants (incorporated
by reference to Exhibit 16.1 to the Company's Current Report filed on Form 8-K
(Reg. No. 333-58059) filed on January 10,2000).
21 List of Subsidiaries (incorporated by reference to Exhibit 10.6 to the
Company's Registration Statement on Form S-4 (Reg. No. 333-58059) filed on June
30, 1998).
23.1 Consent of Ernst & Young LLP, independent certified public accountants
(filed herewith as Exhibit 23.1)
24 Powers of Attorney (included on pages II-5--II-11) (incorporated by reference
to Exhibit 24 to the Company's Registration Statement on Form S-4 (Reg. No.
333-58059) filed on June 30, 1998).
*27 Financial Data Schedule (filed herewith as Exhibit 27)
99.1 Form of Note Letter of Transmittal (incorporated by reference to Exhibit
99.1 to the Company's Registration Statement on Form S-4 (Reg. No. 333-58059)
filed on June 30, 1998).
99.2 Form of Preferred Stock Letter of Transmittal (incorporated by reference to
Exhibit 99.2 to the Company's Registration Statement on Form S-4 (Reg. No.
333-58059) filed on June 30, 1998).
99.3 Form of Note Notice of Guaranteed Delivery (incorporated by reference to
Exhibit 99.3 to the Company's Registration Statement on Form S-4 (Reg. No.
333-58059) filed on June 30, 1998).
99.4 Form of Preferred Stock Notice of Guaranteed Delivery (incorporated by
reference to Exhibit 99.4 to the Company's Registration Statement on Form S-4
(Reg. No. 333-58059) filed on June 30, 1998).
+ This is a management contract or compensatory plan or arrangement
* Filed herewith
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CLUETT AMERICAN CORP.
(Registrant)
May 15, 2000 /s/ Bryan P. Marsal
---------------------------------
Bryan P. Marsal
Director, President and Chief Executive Officer
May 15, 2000 /s/ W. Todd Walter
--------------------------------
W. Todd Walter
Vice President and Chief Financial Officer
<PAGE>
Item 6 (d). Financial Statement Schedules
SCHEDULE II
CLUETT AMERICAN CORP.
VALUATION AND QUALIFYING ACCOUNTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
ADDITIONS
BALANCE AT CHARGED TO CHARGED TO BALANCE
BEGINNING COSTS AND OTHER AT END
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD
- ----------- --------- -------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Period Ended April 1, 2000:
Deductions from asset accounts:
Allowance for doubtful accounts $1,620 $ 234 $ -- $ 106 (1) $ 1,748
Customer allowances 8,554 3,220 -- 3,865 (1) 7,909
Inventory reserves 2,622 2,150 -- 1,283 (1) 3,489
----- ----- -- --------- -----
Total $12,796 $5,604 $ -- $ 5,254 (1) $13,146
======= ====== ===== ========= =======
<FN>
(1) Write offs, net of recoveries
</FN>
</TABLE>
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
CLUETT AMERICAN RECEIVABLES, LLC
This Limited Liability Company Agreement (together with the schedules
attached hereto, and as amended, restated or supplemented or otherwise modified
from time to time, this "Agreement") of Cluett American Receivables, LLC (the
"Company"), is entered into by Great American Knitting Mills, Inc. (a
wholly-owned subsidiary of Cluett American Corp. (the "Parent")), as the sole
equity member (the "Member"), and Dwight Jenkins and Lori Rezza as the Special
Members (as defined on Schedule A hereto).
The Member, by execution of this Agreement, hereby forms the Company as a
limited liability company pursuant to and in accordance with the Delaware
Limited Liability Company Act (6 Del. C. ' 18-101 et seq.), as amended from time
to time (the "Act"), and this Agreement, and the Member, Dwight Jenkins and Lori
Rezza hereby agree as follows:
Section 1. Name.
The name of the limited liability company formed hereby is Cluett American
Receivables, LLC.
Section 2. Principal Business Office.
The principal business office of the Company shall be located at 661 Plaid
Street, Burlington, NC 27215 or such other location as may hereafter be
determined by the Member.
Section 3. Registered Office.
The address of the registered office of the Company in the State of
Delaware is c/o The Corporation Trust Company, Corporate Trust Center, 1209
Orange Street, Wilmington, New Castle County, Delaware 19801.
Section 4. Registered Agent.
The name and address of the registered agent of the Company for service of
process on the Company in the State of Delaware is The Corporation Trust
Company, Corporate Trust Center, 1209 Orange Street, Wilmington, New Castle
County, Delaware 19801.
Section 5. Members.
(a) The mailing address of the Member is set forth on Schedule B attached
hereto. The Member was admitted to the Company as a member of the Company upon
its execution of a counterpart signature page to this Agreement.
(b) Subject to Section 9(j), the Member may act by written consent.
(c) Upon the occurrence of any event that causes the Member to cease to be
a member of the Company (other than (i) upon an assignment by the Member of all
of its limited liability company interest in the Company and the admission of
the transferee pursuant to Sections 21 and 23, or (ii) the resignation of the
Member and the admission of an additional member of the Company pursuant to
Sections 22 and 23), each person acting as an Independent Manager pursuant to
Section 10 shall, without any action of any Person and simultaneously with the
Member ceasing to be a member of the Company, automatically be admitted to the
Company as a Special Member and shall continue the Company without dissolution.
No Special Member may resign from the Company or transfer its rights as Special
Member unless (i) a successor Special Member has been admitted to the Company as
Special Member by executing a counterpart to this Agreement, and (ii) such
successor has also accepted its appointment as an Independent Manager pursuant
to Section 10; provided, however, the Special Members shall automatically cease
to be members (but not Independent Managers) of the Company upon the admission
to the Company of a substitute Member. Each Special Member shall be a member of
the Company that has no interest in the profits, losses and capital of the
Company and has no right to receive any distributions of Company assets.
Pursuant to Section 18-301 of the Act, a Special Member shall not be required to
make any capital contributions to the Company and shall not receive a limited
liability company interest in the Company. A Special Member, in its capacity as
Special Member, may not bind the Company. Except as required by any mandatory
provision of the Act, each Special Member, in its capacity as Special Member,
shall have no right to vote on, approve or otherwise consent to any action by,
or matter relating to, the Company, including, without limitation, the merger,
consolidation or conversion of the Company. In order to implement the admission
to the Company of each Special Member, each person acting as an Independent
Manager pursuant to Section 10 shall execute a counterpart to this Agreement.
Prior to its admission to the Company as Special Member, each person acting as
an Independent Manager pursuant to Section 10 shall not be a member of the
Company.
Section 6. Certificates.
James G. Leyden, Jr. is hereby designated as an "authorized person" within
the meaning of the Act, and has executed, delivered and filed the Certificate of
Formation of the Company with the Secretary of State of the State of Delaware.
Upon the filing of the Certificate of Formation with the Secretary of State of
the State of Delaware, his powers as an "authorized person" ceased, and the
Member thereupon became the designated "authorized person" and shall continue as
the designated "authorized person" within the meaning of the Act. The Member
shall execute, deliver and file any other certificates (and any amendments
and/or restatements thereof) necessary for the Company to qualify to do business
in North Carolina and in any other jurisdiction in which the Company may wish to
conduct business.
The existence of the Company as a separate legal entity shall continue
until cancellation of the Certificate of Formation as provided in the Act.
Section 7. Purposes.
The purpose to be conducted or promoted by the Company is to engage in the
following activities:
(a)
(i) to purchase from time to time, pursuant to a receivables transfer
agreement between the Company and the Member, current and future receivables
(the "Receivables") and other rights, assets and property of the Member and to
transfer or sell the Receivables and such other rights, assets and property to
commercial banks, financial institutions other purchasers pursuant to an
agreement therewith;
(ii) to acquire, own, hold, sell, transfer, service, convey, safekeep,
dispose of, pledge, assign, borrow money against, finance, refinance or
otherwise deal with, publicly or privately and whether with unrelated third
parties or with affiliated entities, the Receivables and other rights, assets
and property;
(iii) to engage in any lawful act or activity and to exercise any powers
permitted to limited liability companies organized under the laws of the State
of Delaware that are related or incidental to and necessary, convenient or
advisable for the accomplishment of the above-mentioned purposes (including the
entering into of interest rate or basis swap, cap, floor or collar agreements,
currency exchange agreements or similar hedging transactions and referral,
management, servicing and administration agreements).
(b) The Company may enter into and perform any documents, agreements,
certificates or financing statements relating to the transactions set forth in
paragraph (a) above, all without any further act, vote or approval of any other
Person notwithstanding any other provision of this Agreement, the Act or
applicable law, rule or regulation. The foregoing authorization shall not be
deemed a restriction on the powers of the Member to enter into other agreements
on behalf of the Company.
Section 8. Powers.
Subject to Section 9(j), the Company (i) shall have and exercise all powers
necessary, convenient or incidental to accomplish its purposes as set forth in
Section 7 and (ii) shall have and exercise all of the powers and rights
conferred upon limited liability companies formed pursuant to the Act.
Section 9. Management.
(a) Board of Directors. Subject to Section 9(j), the business and affairs
of the Company shall be managed by or under the direction of a Board of one or
more Directors designated by the Member. Subject to Section 10, the Member may
determine at any time in its sole and absolute discretion the number of
Directors to constitute the Board. The authorized number of Directors may be
increased or decreased by the Member at any time in its sole and absolute
discretion, upon notice to all Directors, and subject in all cases to Section
10. The initial number of Directors shall be one. Each Director elected,
designated or appointed by the Member shall hold office until a successor is
elected and qualified or until such Director's earlier death, resignation,
expulsion or removal. Each Director shall execute and deliver the Management
Agreement. Directors need not be a Member. The initial Directors designated by
the Member are listed on Schedule D hereto.
(b) Powers. Subject to Section 9(j), the Board of Directors shall have the
power to do any and all acts necessary, convenient or incidental to or for the
furtherance of the purposes described herein, including all powers, statutory or
otherwise. Subject to Section 7, the Board of Directors has the authority to
bind the Company. A Director is hereby designated as a "manager" of the Company
within the meaning of Section 18-101(10) of the Act.
(c) Meeting of the Board of Directors. The Board of Directors of the
Company may hold meetings, both regular and special, within or outside the State
of Delaware. Regular meetings of the Board may be held without notice at such
time and at such place as shall from time to time be determined by the Board.
Special meetings of the Board may be called by the President on not less than
one day's notice to each Director by telephone, facsimile, mail, telegram or any
other means of communication, and special meetings shall be called by the
President or Secretary in like manner and with like notice upon the written
request of any one or more of the Directors. The Board of Directors may act by
written consent.
(d) Quorum: Acts of the Board. At all meetings of the Board, a majority of
the Directors shall constitute a quorum for the transaction of business and,
except as otherwise provided in any other provision of this Agreement, the act
of a majority of the Directors present at any meeting at which there is a quorum
shall be the act of the Board. If a quorum shall not be present at any meeting
of the Board, the Directors present at such meeting may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present. Any action required or permitted to be taken at any
meeting of the Board or of any committee thereof may be taken without a meeting
if all members of the Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board or committee, as the case may be.
(e) Electronic Communications. Members of the Board, or any committee
designated by the Board, may participate in meetings of the Board, or any
committee, by means of telephone conference or similar communications equipment
that allows all persons participating in the meeting to hear each other, and
such participation in a meeting shall constitute presence in person at the
meeting. If all the participants are participating by telephone conference or
similar communications equipment, the meeting shall be deemed to be held at the
principal place of business of the Company.
(f) Committees of Directors.
(i) The Board may, by resolution passed by a majority of the whole Board,
designate one or more committees, each committee to consist of one or more of
the Directors of the Company. The Board may designate one or more Directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee.
(ii) In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not such members constitute a quorum, may unanimously appoint
another member of the Board to act at the meeting in the place of any such
absent or disqualified member.
(iii) Any such committee, to the extent provided in the resolution of the
Board, shall have and may exercise all the powers and authority of the Board in
the management of the business and affairs of the Company. Such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the Board. Each committee shall keep regular minutes of
its meetings and report the same to the Board when required.
(g) Compensation of Directors; Expenses. The Board shall have the authority
to fix the compensation of Directors. The Directors may be paid their expenses,
if any, of attendance at meetings of the Board, which may be a fixed sum for
attendance at each meeting of the Board or a stated salary as Director. No such
payment shall preclude any Director from serving the Company in any other
capacity and receiving compensation therefor. Members of special or standing
committees may be allowed like compensation for attending committee meetings.
(h) Removal of Directors. Unless otherwise restricted by law, any Director
or the entire Board of Directors may be removed or expelled, with or without
cause, at any time by the Member, and any vacancy caused by any such removal or
expulsion may be filled by action of the Member.
(i) Directors as Agents. To the extent of their powers set forth in this
Agreement and subject to Section 9(j), the Directors are agents of the Company
for the purpose of the Company's business, and the actions of the Directors
taken in accordance with such powers set forth in this Agreement shall bind the
Company. Notwithstanding the last sentence of Section 18-402 of the Act, except
as provided in this Agreement or in a resolution of the Directors, a Director
may not bind the Company.
(j) Limitations on the Company's Activities.
(i) This Section 9(j) is being adopted in order to comply with certain
provisions required in order to qualify the Company as a "special purpose"
entity.
(ii) The Member shall not, prior to the date which is one year and one date
after the date on which all obligations of the Company under the documents
referred to in Section 7(a)(i) have been paid in full, amend, alter, change or
repeal the definition of "Independent" or Sections 5(c), 7, 8, 10, 20, or 31 (or
Schedule A of this Agreement to the extent such modification would affect the
foregoing provisions) without the prior written consent of the Independent
Managers. Subject to this Section 9(j), the Member reserves the right to amend,
alter, change or repeal any provisions contained in this Agreement in accordance
with Section 31.
(iii) Notwithstanding any other provision of this Agreement and any
provision of law that otherwise so empowers the Company, the Member, the Board,
any Officer or any other Person, none of the Company, the Member or the Board or
any Officer or any other Person shall be authorized or empowered, nor shall they
permit the Company, to take any of the following actions without the prior
written consent of the Independent Managers:
1. File or consent to the filing of any bankruptcy, insolvency or
reorganization petition naming the Company as debtor or otherwise institute
bankruptcy or insolvency proceedings by or against the Company or otherwise seek
with respect to the Company relief under any laws relating to the relief from
debts or the protection of debtors generally;
2. Seek or consent to the appointment of a receiver, liquidator,
conservator, assignee, trustee, sequestrator, custodian or any similar official
for the Company or all or any portion of any of its properties;
3. Make or consent to any assignment for the benefit of the Company's
creditors;
4. Take any action that might reasonably be expected to cause the Company
to become insolvent;
5. Admit in writing the inability of the Company to pay its debts generally
as they become due;
Except as contemplated by the documents referred to in Section 7(a)(i),
engage in any transactions with an Affiliate of the Company;
Consent to substantive consolidation with the Member or the Parent;
Declare or permit any distribution to the Member other than out of legally
available funds or otherwise in accordance with the documents referred to in
Section 7(a)(i); or
Take any action in furtherance of any of the preceding actions.
(iv) The Board and the Member shall cause the Company to do or cause to be
done all things necessary to preserve and keep in full force and effect its
existence, rights (charter and statutory) and franchises; provided, however,
that the Company shall not be required to preserve any such right or franchise
following the date which is one year and one date after the date on which all
obligations of the Company under the documents referred to in Section 7(a)(i)
have been paid in full if the Board shall determine that the preservation
thereof is no longer desirable for the conduct of its business and that the loss
thereof is not disadvantageous in any material respect to the Company. The
Company shall, and the Board shall cause the Company to:
1. At all times have at least two Independent Managers.
2. At all times have sufficient personnel to run its business and
operations. Compensate its employees (if any) from its own available funds for
services provided to it. In the event employees of the Company participate in
pension, insurance and other benefit plans of the Member or the Parent or any
Affiliates of the Member or the Parent, the Company will on a current basis
reimburse the Member, the Parent or the relevant Affiliate, as the case may be,
for its pro rata share of the costs thereof.
3. Pay its own liabilities out of its own funds and assets.
4. Maintain a separate office (a) which if leased from the Member or the
Parent will be on terms no more or less favorable to the Company than could be
obtained in a comparable arm's-length transaction with an unaffiliated Person
and (b) which will be conspicuously identified as the Company's office so it can
be easily located by outsiders. The Company will use its own stationery,
invoices, checks and telephone and facsimile numbers.
5. The Company will hold itself out and identify itself as a separate and
distinct entity under its own name and not as a division or part of any other
Person.
6. The Company will promptly correct any misunderstanding regarding its
separate existence and identity.
7. The Company will prepare and maintain its own full and complete books,
records and financial statements separate from any other Person. The Company's
financial statements will comply with generally accepted accounting principles.
8. The Company will maintain a bank account in its name.
9. Except for the servicing of the Receivables pursuant to the documents
referred to in Section 7(a)(i), all business transactions entered into by the
Company with any of its Affiliates will be on terms that are intrinsically fair
and not more or less favorable to the Company, as the case may be, than terms
and conditions available at the time to the Company for comparable arm's-length
transactions with unaffiliated Persons.
10. The Company will not assume or guarantee or become obligated for debts
of the Member or the Parent and neither the Member nor the Parent will assume or
guarantee or become obligated for the debts of the Company, other than as
provided in the documents referred to in Section 7(a)(i). The Company will not
hold its credit out as being available to satisfy the obligations of any other
Persons.
11. The Company will not acquire obligations or securities of the Member,
the Parent or any of their respective Affiliates. The Company will not make
loans to the Member or the Parent.
12. Except to the limited extent provided in the documents referred to in
Section 7(a)(i), the Company will not commingle any of its money or other assets
with the money or assets of the Member or the Parent. The Company will ensure
that its funds will be clearly traceable at each step in any financial
transaction.
13. The Company will engage in transactions and conduct all other business
activities solely in its own name and through its own authorized officers and
agents and will present itself to the public as a separate company. Except to
the limited extent provided in the documents referred to in Section 7(a)(i),
neither the Member nor the Parent will be appointed agent of the Company.
14. The Company will not engage in any transaction with any of its
Affiliates involving any intent to hinder, delay or defraud any Person.
Failure of the Company or the Member or the Board on behalf of the Company
to comply with any of the foregoing covenants or any other covenants contained
in this Agreement shall not affect the status of the Company as a separate legal
entity or the limited liability of the Member or the Directors.
(v) Prior to the date which is one year and one date after the date on
which all obligations of the Company under the documents referred to in Section
7(a)(i) have been paid in full, the Company shall not and the Member shall not
cause or permit the Company to:
1. Except as contemplated by the documents referred to in Section 7(a)(i),
guarantee any obligation of any Person, including any Affiliate;
2. Engage, directly or indirectly, in any business other than the actions
required or permitted to be performed under Section 7 or this Section 9(j);
3. Incur, create or assume any indebtedness other than as expressly
permitted under the documents referred to in Section 7(a)(i);
4. Make or permit to remain outstanding any loan or advance to, or own or
acquire any stock or securities of, any Person, except that the Company may
invest in those investments permitted under the documents referred to in Section
7(a)(i);
5. To the fullest extent permitted by law, engage in any dissolution,
liquidation, consolidation, merger, asset sale or transfer of ownership
interests other than such activities as are expressly permitted pursuant to any
provision of the documents referred to in Section 7(a)(i); or
6. Form, acquire or hold any subsidiary (whether corporate, partnership,
limited liability company or other).
Section 10. Independent Managers.
Prior to the date which is one year and one date after the date on which
all obligations of the Company under the documents referred to in Section
7(a)(i) have been paid in full, the Member shall cause the Company at all times
to have at least two managers, appointed by the Member, who will be (x) natural
persons and (y) Independent (each, an "Independent Manager"). The initial
Independent Managers appointed by the Member are Dwight Jenkins and Lori Rezza.
Each Independent Manager is hereby designated as a "manager" of the Company
within the meaning of Section 18-101(10) of the Act. Each Independent Manager
shall execute and deliver the Management Agreement.
To the fullest extent permitted by law, including Section 18-1101(c) of the
Act, the Independent Managers shall consider only the interests of the Company,
including its respective creditors, in acting or otherwise voting on the matters
referred to in Section 9(j)(iii).
The Independent Managers may be removed by the Member at any time. No
resignation or removal of an Independent Manager shall be effective until a
successor Independent Manager is appointed and such successor (i) shall have
accepted his or her appointment as an Independent Manager by a written
instrument, which may be a counterpart signature page to the Management
Agreement, and (ii) shall have executed a counterpart to this Agreement as
required by Section 5(c). In the event of a vacancy in the position of an
Independent Manager, the Member shall, as soon as practicable, appoint a
successor Independent Manager.
All right, power and authority of the Independent Managers shall be limited
to the extent necessary to exercise those rights and perform those duties
specifically set forth in this Agreement. Except as provided in the second
paragraph of this Section 10, in exercising its rights and performing its duties
under this Agreement, each Independent Manager shall have a fiduciary duty of
loyalty and care similar to that of a director of a business corporation
organized under the General Corporation Law of the State of Delaware. No
Independent Manager shall at any time serve as trustee in bankruptcy for the
Company or any Affiliate of the Company.
Section 11. Officers.
(a) Officers. The initial Officers of the Company shall be designated by
the Member. The additional or successor Officers of the Company shall be chosen
by the Board and shall consist of at least a President, a Secretary and a
Treasurer. The Board of Directors may also choose one or more Vice Presidents,
Assistant Secretaries and Assistant Treasurers. Any number of offices may be
held by the same person. The Board shall choose a President, a Secretary and a
Treasurer. The Board may appoint such other Officers and agents as it shall deem
necessary or advisable who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board. The salaries of all Officers and agents of the Company shall
be fixed by or in the manner prescribed by the Board. The Officers of the
Company shall hold office until their successors are chosen and qualified. Any
Officer may be removed at any time, with or without cause, by the affirmative
vote of a majority of the Board. Any vacancy occurring in any office of the
Company shall be filled by the Board. The initial Officers of the Company
designated by the Member are listed on Schedule E hereto.
(b) President. The President shall be the chief executive officer of the
Company, shall preside at all meetings of the Board, shall be responsible for
the general and active management of the business of the Company and shall see
that all orders and resolutions of the Board are carried into effect. The
President or any other Officer authorized by the President or the Board shall
execute all bonds, mortgages and other contracts, except: (i) where required or
permitted by law or this Agreement to be otherwise signed and executed,
including Section 7(b); (ii) where signing and execution thereof shall be
expressly delegated by the Board to some other Officer or agent of the Company,
and (iii) as otherwise permitted in Section 11(c).
(c) Vice President. In the absence of the President or in the event of the
President's inability to act, the Vice President, if any (or in the event there
be more than one Vice President, the Vice Presidents in the order designated by
the Directors, or in the absence of any designation, then in the order of their
election), shall perform the duties of the President, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
President. The Vice Presidents, if any, shall perform such other duties and have
such other powers as the Board may from time to time prescribe.
(d) Secretary and Assistant Secretary. The Secretary shall be responsible
for filing legal documents and maintaining records for the Company. The
Secretary shall attend all meetings of the Board and record all the proceedings
of the meetings of the Company and of the Board in a book to be kept for that
purpose and shall perform like duties for the standing committees when required.
The Secretary shall give, or shall cause to be given, notice of all meetings of
the Member, if any, and special meetings of the Board, and shall perform such
other duties as may be prescribed by the Board or the President, under whose
supervision the Secretary shall serve. The Assistant Secretary, or if there be
more than one, the Assistant Secretaries in the order determined by the Board
(or if there be no such determination, then in order of their election), shall,
in the absence of the Secretary or in the event of the Secretary's inability to
act, perform the duties and exercise the powers of the Secretary and shall
perform such other duties and have such other powers as the Board may from time
to time prescribe.
(e) Treasurer and Assistant Treasurer. The Treasurer shall have the custody
of the Company funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Company and shall deposit
all moneys and other valuable effects in the name and to the credit of the
Company in such depositories as may be designated by the Board. The Treasurer
shall disburse the funds of the Company as may be ordered by the Board, taking
proper vouchers for such disbursements, and shall render to the President and to
the Board, at its regular meetings or when the Board so requires, an account of
all of the Treasurer's transactions and of the financial condition of the
Company. The Assistant Treasurer, or if there shall be more than one, the
Assistant Treasurers in the order determined by the Board (or if there be no
such determination, then in the order of their election), shall, in the absence
of the Treasurer or in the event of the Treasurer's inability to act, perform
the duties and exercise the powers of the Treasurer and shall perform such other
duties and have such other powers as the Board may from time to time prescribe.
(f) Officers as Agents. The Officers, to the extent of their powers set
forth in this Agreement or otherwise vested in them by action of the Board not
inconsistent with this Agreement, are agents of the Company for the purpose of
the Company's business and, subject to Section 9(j), the actions of the Officers
taken in accordance with such powers shall bind the Company.
(g) Duties of Board and Officers. Except to the extent otherwise provided
herein, each Director and Officer shall have a fiduciary duty of loyalty and
care similar to that of directors and officers of business corporations
organized under the General Corporation Law of the State of Delaware. No
director or officer shall at any time serve as trustee in bankruptcy for any
Affiliate of the Company.
Section 12. Limited Liability.
Except as otherwise expressly provided by the Act, the debts, obligations
and liabilities of the Company, whether arising in contract, tort or otherwise,
shall be the debts, obligations and liabilities solely of the Company, and
neither the Member, the Independent Managers, any Special Member nor any
Director shall be obligated personally for any such debt, obligation or
liability of the Company solely by reason of being a Member, Special Member,
Independent Manager or Director of the Company.
Section 13. Capital Contributions.
The Member has contributed to the Company property of an agreed value as
listed on Schedule B attached hereto. In accordance with Section 5(c), Special
Members shall not be required to make any capital contributions to the Company.
Section 14. Additional Contributions.
The Member is not required to make any additional capital contribution to
the Company. However, the Member may make additional capital contributions to
the Company at any time upon the written consent of the Member. To the extent
that the Member makes an additional capital contribution to the Company, the
Member shall revise Schedule B of this Agreement. The provisions of this
Agreement, including this Section 14, are intended to benefit the Member and the
Special Members and, to the fullest extent permitted by law, shall not be
construed as conferring any benefit upon any creditor of the Company (and no
such creditor of the Company shall be a third-party beneficiary of this
Agreement) and the Member and the Special Members shall not have any duty or
obligation to any creditor of the Company to make any contribution to the
Company or to issue any call for capital pursuant to this Agreement. Section 15.
Allocation of Profits and Losses.
The Company's profits and losses shall be allocated to the Member.
Section 16. Distributions.
Distributions shall be made to the Member at the times and in the aggregate
amounts determined by the Board. Notwithstanding any provision to the contrary
contained in this Agreement, the Company shall not be required to make a
distribution to the Member on account of its interest in the Company if such
distribution would violate Section 18-607 of the Act or any other applicable law
or any agreement referred to in Section 7(a)(i).
Section 17. Books and Records.
The Board shall keep or cause to be kept complete and accurate books of
account and records with respect to the Company's business. The books of the
Company shall at all times be maintained by the Board. The Member and its duly
authorized representatives shall have the right to examine the Company books,
records and documents during normal business hours. The Company, and the Board
on behalf of the Company, shall not have the right to keep confidential from the
Member any information that the Board would otherwise be permitted to keep
confidential from the Member pursuant to Section 18-305(c) of the Act. The
Company's books of account shall be kept using the method of accounting
determined by the Member. The Company's independent auditor, if any, shall be an
independent public accounting firm selected by the Member.
Section 18. Reports.
(a) Within 60 days after the end of each fiscal quarter, the Board shall
cause to be prepared an unaudited report setting forth as of the end of such
fiscal quarter:
(i) unless such quarter is the last fiscal quarter, a balance sheet of the
Company; and
(ii) unless such quarter is the last fiscal quarter, an income statement of
the Company for such fiscal quarter.
(b) The Board shall use diligent efforts to cause to be prepared and mailed
to the Member, within 120 days after the end of each fiscal year, an audited or
unaudited report setting forth as of the end of such fiscal year:
(i) a balance sheet of the Company;
(ii) an income statement of the Company for such fiscal year; and
(iii) a statement of the Member's capital account.
(c) The Board shall, after the end of each fiscal year, use reasonable
efforts to cause the Company's independent accountants, if any, to prepare and
transmit to the Member as promptly as possible any such tax information as may
be reasonably necessary to enable the Member to prepare its federal, state and
local income tax returns relating to such fiscal year.
Section 19. Other Business.
The Member, the Special Members, the Independent Managers and any Affiliate
of the Member, Special Members or Independent Managers may engage in or possess
an interest in other business ventures (unconnected with the Company) of every
kind and description, independently or with others. The Company shall not have
any rights in or to such independent ventures or the income or profits therefrom
by virtue of this Agreement.
Section 20. Exculpation and Indemnification.
(a) Neither the Member, the Special Members, the Independent Managers nor
any agent of the Company nor any employee, representative, agent or Affiliate of
the Member, Special Members or Independent Managers (collectively, the "Covered
Persons") shall be liable to the Company or any other Person who has an interest
in or claim against the Company for any loss, damage or claim incurred by reason
of any act or omission performed or omitted by such Covered Person in good faith
on behalf of the Company and in a manner reasonably believed to be within the
scope of the authority conferred on such Covered Person by this Agreement,
except that a Covered Person shall be liable for any such loss, damage or claim
incurred by reason of such Covered Person's gross negligence or willful
misconduct.
(b) To the fullest extent permitted by applicable law, a Covered Person
shall be entitled to indemnification from the Company for any loss, damage or
claim incurred by such Covered Person by reason of any act or omission performed
or omitted by such Covered Person in good faith on behalf of the Company and in
a manner reasonably believed to be within the scope of the authority conferred
on such Covered Person by this Agreement, except that no Covered Person shall be
entitled to be indemnified in respect of any loss, damage or claim incurred by
such Covered Person by reason of such Covered Person's gross negligence or
willful misconduct with respect to such acts or omissions; provided, however,
that any indemnity under this Section 20 by the Company shall be provided out of
and to the extent of Company assets only, and the Member, the Special Members
and the Independent Managers shall not have personal liability on account
thereof; and provided further, that prior to the date which is one year and one
date after the date on which all obligations of the Company under the documents
referred to in Section 7(a)(i) have been paid in full, no payment of any
indemnity (or advance of expenses) from funds of the Company (as distinct from
funds from other sources, such as insurance) under this Section 20 shall be
payable from amounts allocable to any other Person pursuant to the such
documents.
(c) To the fullest extent permitted by applicable law, expenses (including
legal fees) incurred by a Covered Person defending any claim, demand, action,
suit or proceeding shall, from time to time, be advanced by the Company prior to
the final disposition of such claim, demand, action, suit or proceeding upon
receipt by the Company of an undertaking by or on behalf of the Covered Person
to repay such amount if it shall be determined that the Covered Person is not
entitled to be indemnified as authorized in this Section 20.
(d) A Covered Person shall be fully protected in relying in good faith upon
the records of the Company and upon such information, opinions, reports or
statements presented to the Company by any Person as to matters the Covered
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Company, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, or any other facts pertinent to the
existence and amount of assets from which distributions to the Member might
properly be paid.
(e) To the extent that, at law or in equity, a Covered Person has duties
(including fiduciary duties) and liabilities relating thereto to the Company or
to any other Covered Person, a Covered Person acting under this Agreement shall
not be liable to the Company or to any other Covered Person for its good faith
reliance on the provisions of this Agreement or any approval or authorization
granted by the Company or any other Covered Person. The provisions of this
Agreement, to the extent that they restrict the duties and liabilities of a
Covered Person otherwise existing at law or in equity, are agreed by the Member
and the Special Members to replace such other duties and liabilities of such
Covered Person.
(f) The foregoing provisions of this Section 20 shall survive any
termination of this Agreement.
Section 21. Assignments.
Subject to Section 23, the Member may assign in whole or in part its
limited liability company interest in the Company. If the Member transfers all
of its limited liability company interest in the Company pursuant to this
Section 21, the transferee shall be admitted to the Company as a member of the
Company upon its execution of an instrument signifying its agreement to be bound
by the terms and conditions of this Agreement, which instrument may be a
counterpart signature page to this Agreement. Such admission shall be deemed
effective immediately prior to the transfer and, immediately following such
admission, the transferor Member shall cease to be a member of the Company.
Notwithstanding anything in this Agreement to the contrary, any successor to the
Member by merger or consolidation in compliance with the documents set forth in
Section 7(a)(i) shall, without further act, be the Member hereunder, and such
merger or consolidation shall not constitute an assignment for purposes of this
Agreement and the Company shall continue without dissolution.
Section 22. Resignation.
Prior to the date which is one year and one day after the date on which all
obligations of the Company under the documents referred to in Section 7(a) have
been paid in full, the Member may not resign, except as permitted under such
documents. If the Member is permitted to resign pursuant to this Section 22, an
additional member of the Company shall be admitted to the Company, subject to
Section 23, upon its execution of an instrument signifying its agreement to be
bound by the terms and conditions of this Agreement, which instrument may be a
counterpart signature page to this Agreement. Such admission shall be deemed
effective immediately prior to the resignation and, immediately following such
admission, the resigning Member shall cease to be a member of the Company.
Section 23. Admission of Additional Members.
One or more additional members of the Company may be admitted to the
Company with the written consent of the Member.
Section 24. Dissolution.
(a) Subject to Section 9(j), the Company shall be dissolved, and its
affairs shall be wound up upon the first to occur of the following: (i) the
termination of the legal existence of the last remaining member of the Company
or the occurrence of any other event which terminates the continued membership
of the last remaining member of the Company in the Company unless the business
of the Company is continued in a manner permitted by this Agreement or the Act
or (ii) the entry of a decree of judicial dissolution under Section 18-802 of
the Act. Upon the occurrence of any event that causes the last remaining member
of the Company to cease to be a member of the Company, to the fullest extent
permitted by law, the personal representative of such member is hereby
authorized to, and shall, within 90 days after the occurrence of the event that
terminated the continued membership of such member in the Company, agree in
writing (i) to continue the Company and (ii) to the admission of the personal
representative or its nominee or designee, as the case may be, as a substitute
member of the Company, effective as of the occurrence of the event that
terminated the continued membership in the Company of the last remaining member
of the Company.
(b) Notwithstanding any other provision of this Agreement, the Bankruptcy
of the Member or the Special Members shall not cause the Member or Special
Members, respectively, to cease to be a member of the Company and upon the
occurrence of such an event, the business of the Company shall continue without
dissolution.
(c) In the event of dissolution, the Company shall conduct only such
activities as are necessary to wind up its affairs (including the sale of the
assets of the Company in an orderly manner), and the assets of the Company shall
be applied in the manner, and in the order of priority, set forth in Section
18-804 of the Act.
(d) The Company shall terminate when (i) all of the assets of the Company,
after payment of or due provision for all debts, liabilities and obligations of
the Company shall have been distributed to the Member in the manner provided for
in this Agreement and (ii) the Certificate of Formation shall have been canceled
in the manner required by the Act.
Section 25. Waiver of Partition; Nature of Interest.
Except as otherwise expressly provided in this Agreement, to the fullest
extent permitted by law, each of the Member and the Special Members hereby
irrevocably waives any right or power that such Person might have to cause the
Company or any of its assets to be partitioned, to cause the appointment of a
receiver for all or any portion of the assets of the Company, to compel any sale
of all or any portion of the assets of the Company pursuant to any applicable
law or to file a complaint or to institute any proceeding at law or in equity to
cause the dissolution, liquidation, winding up or termination of the Company.
The Member shall not have any interest in any specific assets of the Company,
and the Member shall not have the status of a creditor with respect to any
distribution pursuant to Section 16 hereof. The interest of the Member in the
Company is personal property.
Section 26. Benefits of Agreement; No Third-Party Rights.
None of the provisions of this Agreement shall be for the benefit of or
enforceable by any creditor of the Company or by any creditor of the Member or
the Special Members. Nothing in this Agreement shall be deemed to create any
right in any Person (other than Covered Persons) not a party hereto, and this
Agreement shall not be construed in any respect to be a contract in whole or in
part for the benefit of any third Person (except as provided in Section 29).
Section 27. Severability of Provisions.
Each provision of this Agreement shall be considered severable and if for
any reason any provision or provisions herein are determined to be invalid,
unenforceable or illegal under any existing or future law, such invalidity,
unenforceability or illegality shall not impair the operation of or affect those
portions of this Agreement which are valid, enforceable and legal.
Section 28. Entire Agreement.
This Agreement constitutes the entire agreement of the parties with respect
to the subject matter hereof.
Section 29. Binding Agreement.
Notwithstanding any other provision of this Agreement, the Member agrees
that this Agreement constitutes a legal, valid and binding agreement of the
Member, and is enforceable against the Member by the Independent Managers in
accordance with its terms. In addition, each Independent Manager shall be an
intended beneficiary of this Agreement.
Section 30. Governing Law.
This Agreement shall be governed by and construed under the laws of the
State of Delaware (without regard to conflict of laws principles), all rights
and remedies being governed by said laws.
Section 31. Amendments.
Subject to Section 9(j), this Agreement may be modified, altered,
supplemented or amended pursuant to a written agreement executed and delivered
by the Member except that no such modification, alteration, supplement or
amendment may modify, alter, supplement or amend the rights, duties and
limitations of the Independent Managers without the consent of each Independent
Manager.
Section 32. Counterparts.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original of this Agreement and all of which together shall
constitute one and the same instrument.
Section 33. Notices.
Any notices required to be delivered hereunder shall be in writing and
personally delivered, mailed or sent by telecopy, electronic mail or other
similar form of rapid transmission, and shall be deemed to have been duly given
upon receipt (a) in the case of the Company, to the Company at its address in
Section 2, (b) in the case of the Member, to the Member at its address as listed
on Schedule B attached hereto and (c) in the case of either of the foregoing, at
such other address as may be designated by written notice to the other party.
Section 34. Effectiveness.
Pursuant to Section 18-201(d) of the Act, this Agreement shall be effective
as of the time of the filing of the Certificate of Formation with the Office of
the Delaware Secretary of State on May 8, 2000.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby,
has duly executed this Limited Liability Company Agreement as of the 12th day of
May, 2000.
MEMBER:
GREAT AMERICAN KNITTING MILLS, INC.
By:_______________________________
Name:
Title:
SPECIAL MEMBERS:
--------------------
Name: Dwight Jenkins
--------------------
Name: Lori Rezza
<PAGE>
SCHEDULE A
Definitions
A. Definitions
When used in this Agreement, the following terms not otherwise defined
herein have the following meanings:
"Act" has the meaning set forth in the preamble to this Agreement.
"Affiliate" means, with respect to any Person, any other Person directly or
indirectly Controlling or Controlled by or under direct or indirect common
Control with such Person.
"Bankruptcy" means, with respect to any Person, if such Person (i) makes an
assignment for the benefit of creditors, (ii) files a voluntary petition in
bankruptcy, (iii) is adjudged a bankrupt or insolvent, or has entered against it
an order for relief, in any bankruptcy or insolvency proceedings, (iv) files a
petition or answer seeking for itself any reorganization, arrangement,
composition, readjustment, liquidation or similar relief under any statute, law
or regulation, (v) files an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against it in any
proceeding of this nature, (vi) seeks, consents to or acquiesces in the
appointment of a trustee, receiver or liquidator of the Person or of all or any
substantial part of its properties, or (vii) if 120 days after the commencement
of any proceeding against the Person seeking reorganization, arrangement,
composition, readjustment, liquidation or similar relief under any statute, law
or regulation, if the proceeding has not been dismissed, or if within 90 days
after the appointment without such Person's consent or acquiescence of a
trustee, receiver or liquidator of such Person or of all or any substantial part
of its properties, the appointment is not vacated or stayed, or within 90 days
after the expiration of any such stay, the appointment is not vacated. The
foregoing definition of "Bankruptcy" is intended to replace and shall supersede
and replace the definition of"Bankruptcy" set forth in Sections 18-101(1) and
18-304 of the Act.
"Board" or "Board of Directors" means the Board of Directors of the
Company.
"Certificate of Formation" means the Certificate of Formation of the
Company filed with the Secretary of State of the State of Delaware on May 8,
2000, as amended or amended and restated from time to time.
"Company" means Cluett American Receivables, LLC, a Delaware limited
liability company.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of management, policies or activities of a Person,
whether through ownership of voting securities, by contract or otherwise.
"Covered Persons" has the meaning set forth in Section 20(a).
"Directors" means the persons elected to the Board of Directors from time
to time by the Member, in their capacity as managers of the Company within the
meaning of Section 18-101(10) of the Act.
"Independent" means, with respect to a manager of the Company, a Person who
shall not have been at the time of such Person's appointment, and may not have
been at any time during the preceding five years and shall not be as long as
such Person is a manager of the Company (i) a director, member, officer,
manager, partner, shareholder or employee of the Member or any of its directors,
members, partners, subsidiaries, shareholders or Affiliates (collectively, the
"Independent Parties"), (ii) a supplier to any of the Independent Parties, (iii)
a person Controlling or under common Control with any directors, members,
partners, shareholder or supplier of any of the Independent Parties or (iv) a
member of the immediate family of any director, member, partner, shareholder,
officer, manager, employee or supplier of the Independent Parties.
"Independent Manager" has the meaning set forth in Section 10.
"Management Agreement" means the agreement of the Directors in the form
attached hereto as Schedule C. The Management Agreement shall be deemed
incorporated into, and a part of, this Agreement.
"Member" means Great American Knitting Mills, Inc., as the initial member
of the Company, and includes any Person admitted as an additional member of the
Company or a substitute member of the Company pursuant to the provisions of this
Agreement, each in its capacity as a member of the Company, provided, however,
the term "Member" shall not include any Special Member.
"Officer" means an officer of the Company described in Section 11.
"Parent" has the meaning set forth in the preamble to this Agreement.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, limited liability partnership, association, joint
stock company, trust, unincorporated organization, or other organization,
whether or not a legal entity, and any governmental authority.
"Special Member" means, upon such Person's admission to the Company as a
member of the Company pursuant to Section 5(c), a Person acting as an
Independent Manager, in such Person's capacity as a member of the Company. A
Special Member shall only have the rights and duties expressly set forth in this
Agreement.
B. Rules of Construction
Definitions in this Agreement apply equally to both the singular and plural
forms of the defined terms. The words "include" and "including" shall be deemed
to be followed by the phrase "without limitation." 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. The Section
titles appear as a matter of convenience only and shall not affect the
interpretation of this Agreement. All Section, paragraph, clause, Exhibit or
Schedule references not attributed to a particular document shall be references
to such parts of this Agreement.
<PAGE>
B-1
SCHEDULE B
Member
<TABLE>
<S> <C> <C> <C>
Agreed Value of Membership
Name Mailing Address Capital Contribution Interest
- ----------------------------- -------------------------------------- ---------------------------- ------------------
Great American 661 Plaid Street
Knitting Mills, Inc. Burlington, NC 27215 $318,057.88 100%
Attention: Bryan P. Marsal
- ----------------------------- -------------------------------------- ---------------------------- ------------------
</TABLE>
<PAGE>
SCHEDULE C
Management Agreement
Cluett American Receivables, LLC
661 Plaid Street
Burlington, NC 27215
Re: Management Agreement -- Cluett American Receivables, LLC
Ladies and Gentlemen:
For good and valuable consideration, each of the undersigned, who have been
designated as [Directors] [Independent Managers] of Cluett American Receivables,
LLC, a Delaware limited liability company (the "Company"), in accordance with
and as defined in the Limited Liability Company Agreement of the Company, dated
as of May 10, 2000, as it may be amended or restated from time to time (the "LLC
Agreement"), hereby agree as follows:
1. Each of the undersigned accepts his or her rights and authority as a
[Director] [Independent Manager] under the LLC Agreement and agrees to perform
and discharge his or her duties and obligations as a [Director] [Independent
Manager] under the LLC Agreement, and further agrees that such rights,
authorities, duties and obligations under the LLC Agreement shall continue until
his or her successor as a [Director] [Independent Manager] is designated [or
until his or her resignation or removal as a Director in accordance with the LLC
Agreement]. Each of the undersigned agrees and acknowledges that he or she has
been designated as a "manager" of the Company within the meaning of the Delaware
Limited Liability Company Act. [For Independent Managers: The undersigned hereby
represents and warrants that the undersigned has read the definition of
"Independent" set forth in the LLC Agreement and is Independent within the
meaning thereof].
2. Prior to the date which is one year and one day after the date on which
all obligations of the Company under the documents referred to in Section
7(a)(i) have been paid in full, the undersigned agrees, solely in the
undersigned's capacity as a creditor of the Company on account of any
indemnification or other payment owing to the undersigned by the Company, not to
acquiesce, petition or otherwise invoke or cause the Company to invoke the
process of any court or governmental authority for the purpose of commencing or
sustaining a case against the Company under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Company or any
substantial part of the property of the Company, or ordering the winding up or
liquidation of the affairs of the Company.
3. THIS MANAGEMENT AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, AND ALL RIGHTS AND REMEDIES
SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAWS.
Initially capitalized terms used and not otherwise defined herein have the
meanings set forth in the LLC Agreement.
This Management Agreement may be executed in any number of counterparts,
each of which shall be deemed an original of this Management Agreement and all
of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Management Agreement
as of the day and year first above written.
-------------------------------
Name:
Agreed and accepted as of the
date first above written:
CLUETT AMERICAN RECEIVABLES, LLC
By: ________________________
Name: ________________________
Title: ________________________
<PAGE>
D-1
SCHEDULE D
DIRECTORS
1. Bryan P. Marsal
E-1
SCHEDULE E
OFFICERS
NAME TITLE
- -------------------------------- ----------------------------------------------
James Williams President and Chief Executive Officer
Scott Coleman Secretary
Tony Bernice Treasurer
Kathy Wilson Vice President
TABLE OF CONTENTS
Page
Section 1. Name.........................................................4
Section 2. Principal Business Office....................................4
Section 3. Registered Office............................................4
Section 4. Registered Agent.............................................4
Section 5. Members......................................................4
Section 6. Certificates.................................................5
Section 7. Purposes.....................................................5
Section 8. Powers.......................................................6
Section 9. Management...................................................6
Section 10. Independent Managers..........................................10
Section 11. Officers......................................................12
Section 12. Limited Liability.............................................12
Section 13. Capital Contributions.........................................12
Section 14. Additional Contributions......................................12
Section 15. Allocation of Profits and Losses..............................12
Section 16. Distributions.................................................12
Section 17. Books and Records.............................................12
Section 18 Reports.....................................................13
Section 19. Other Business................................................13
Section 20. Exculpation and Indemnification...............................13
Section 21. Assignments...................................................14
Section 22. Resignation...................................................14
Section 23. Admission of Additional Members...............................15
Section 24. Dissolution...................................................15
Section 25. Waiver of Partition; Nature of Interest.......................15
Section 26. Benefits of Agreement; No Third-Party Rights..................16
Section 27. Severability of Provisions....................................16
Section 28. Entire Agreement..............................................16
Section 29. Binding Agreement.............................................16
Section 30. Governing Law.................................................16
Section 31. Amendments....................................................16
Section 32. Counterparts..................................................16
Section 33. Notices.......................................................16
Section 34. Effectiveness.................................................16
<PAGE>
RECEIVABLE TRANSFER AGREEMENT
RECEIVABLES TRANSFER AGREEMENT, dated as of May 12, 2000, between GREAT
AMERICAN KNITTING MILLS, INC., a Delaware corporation (in its capacity as
originator of the Receivables and as the seller hereunder, the "Company"; in its
capacity as servicer hereunder, the "Servicer"), and CLUETT AMERICAN
RECEIVABLES, LLC, a Delaware limited liability company, as purchaser (the
"Purchaser").
W I T N E S S E T H :
WHEREAS, in the ordinary course of business, the Company generates accounts
receivable; WHEREAS, the Company desires to sell to the Purchaser and the
Purchaser desires to purchase from the Company on the First Purchase Date, and
the Purchaser may purchase from the Company and the Company may sell to the
Purchaser, at the Purchaser's option, on the Second Purchase Date (each, a
"Purchase Date"), all of the Company's right, title and interest in, to and
under the Receivables identified in the Assignment dated such Purchase Date, and
in the rights of the Company in, to and under all Related Security with respect
thereto;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
DEFINITIONS
Defined Terms. i) Capitalized terms used in this Agreement shall have the
respective meanings assigned to such terms in the Receivables Purchase Agreement
unless otherwise defined herein.
(a) The following capitalized terms shall have the following meanings:
"Affiliate" means with respect to any specified Person, any other Person
(i) which directly or indirectly controls, or whose directors or officers
directly or indirectly control, or is controlled by, or is under common control
with, such specified Person, (ii) which beneficially owns or holds, or whose
directors or officers beneficially own or hold, five percent (5%) or more, of
any class of the voting stock (or, in the case of an entity that is not a
corporation, five percent (5%) or more of the equity interest) of such specified
Person, or (iii) five percent (5%) or more of the voting stock (or, in the case
of an entity that is not a corporation, five percent (5%) or more of the equity
interest) of which is owned or held by such specified Person. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise. In addition, (i) each
department, branch, agency or instrumentality of the United States government
shall be deemed to be an Affiliate of the United States government, and (ii)
each department, branch, agency or instrumentality of a state government shall
be deemed to be an Affiliate of such state government.
"Assignment" shall mean an assignment in the form of Exhibit A hereto.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with the Company within the meaning
of Section 4001 of ERISA or is part of a group which includes the Company and
which is treated as a single employer under Section 414 of the Code.
"Company Person" shall mean the Company and each of its Affiliates other
than the Purchaser.
"Company Repurchase Payment" shall have the meaning specified in Section
2.6.
"Credit and Collection Policy" means, collectively, those credit and
collection policies and practices of the Company and the Servicer with respect
to the Receivables as in effect on the First Purchase Date.
"Cutoff Date" shall mean, with respect to any Purchased Receivables, the
date identified as such in the related Assignment.
"Defaulted Receivable" means any Receivable (i) with respect to which any
payment (or any portion thereof) remains unpaid for more than ninety (90) days
past the original due date, (ii) the Obligor of which is subject to a bankruptcy
or insolvency proceeding, or (iii) which has been written off or should be
written off in accordance with the Credit and Collection Policy.
"Documents" means this Agreement, the Receivables Purchase Agreement, the
certificate of formation of the Purchaser, the limited liability company
agreement of the Purchaser, and any other instrument, surety bond, insurance
policy, surety bond reimbursement agreement, insurance policy reimbursement
agreement, UCC financing statement, notice, certificate, report, agreement or
document delivered in connection herewith or therewith.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Face Amount" shall mean, with respect to any Receivable, the dollar amount
thereof as shown on the applicable Assignment.
"First Purchase Date" shall mean May 12, 2000, or such subsequent date as
shall be mutually agreed.
"Governmental Authority" shall mean the federal government of the United
States, any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Indemnification Amounts" shall have the meaning set forth in Section
6.2(a).
"Insolvency" or "Insolvent" shall mean, with respect to any Multiemployer
Plan, the condition that such Plan is insolvent within the meaning of Section
4245 of ERISA.
"Lien" shall mean any ownership or security interest, lien, charge, pledge,
participation, mortgage or encumbrance of any kind.
"LLC Agreement" means the limited liability company agreement of the
Purchaser, as the same may be amended, restated or otherwise modified from time
to time.
"Material Adverse Effect" shall mean a material adverse effect on (i) the
validity or enforceability of this Agreement, (ii) the ability of the Company to
perform its obligations under this Agreement or (iii) the value, enforceability
or collectibility of any Purchased Receivables.
"Multiemployer Plan" shall mean a multiemployer plan as defined in Section
4001(a)(3) of ERISA and covered by Title IV thereof, and to which the Company or
any Commonly Controlled Entity contributes or was obligated to contribute in the
immediately preceding five years.
"Obligor" with respect to any Purchased Receivable means the Person
identified on the schedule to the related Assignment as obligated to make
payment of such Purchased Receivable.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"Permitted Lien" shall mean any Lien for municipal or other local taxes if
such taxes shall not at the time be due and payable or if the Company shall
currently be contesting the validity thereof in good faith by appropriate
proceedings and shall have set aside on its books adequate reserves with respect
thereto.
"Plan" shall mean, at a particular time, any employee benefit plan within
the meaning of Section 3(3) of ERISA which is subject to ERISA and in respect of
which the Company or a Commonly Controlled Entity is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA be deemed to be) an
"employer" as defined in Section 3(5) of ERISA.
"Purchase Date" shall have the meaning given to it in the recitals hereto.
"Purchase Price" shall mean, with respect to (a) the Initial Receivables,
$6,286,414.03, and (b) the Subsequent Receivables, (i) the Face Amount of such
Receivables as of the related Cutoff Date less (ii) the product of (A) the Prime
Rate in effect as of the Second Purchase Date, (B) the Face Amount of such
Receivables and (C) 55 divided by 360, plus (iii) the product of 0.20% and the
Face Amount of such Receivables.
"Purchased Receivable" shall mean any Receivable sold to the Purchaser by
the Company pursuant to, and in accordance with the terms of, this Agreement and
not resold to the Company pursuant to Section 2.6 or 2.7.
"Receivables" shall mean amounts due to the Company, whether constituting
an account, chattel paper, instrument, or general intangible, arising in
connection with the sale of socks.
"Receivables Purchase Agreement" means the Receivables Purchase Agreement
among the Purchaser, the Servicer and the Unaffiliated Buyer, as the same may be
amended, restated or otherwise modified from time to time.
"Records" means, with respect to any Receivable, all documents, books,
records and other information (including, without limitation, computer programs,
tapes, discs, punch cards, data processing software and related property and
rights) relating to such Receivable or the related Obligor.
"Related Security" shall mean, with respect to each Receivable, (i) all
security interests or liens and property from time to time purporting to secure
payment of such Receivable, together with all financing statements signed by an
Obligor describing any collateral securing such Receivable, and (ii) all
guarantees, insurance and other arrangements of whatever character from time to
time supporting or securing payment of such Receivable.
"Reorganization" shall mean, with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
"Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day notice
period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. '
2615.
"Requirements of Law" for any Person shall mean the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation, or determination of an
arbitrator or Governmental Authority, in each case applicable to or binding upon
such Person or to which such Person is subject, whether federal, state or local
(including, without limitation, usury laws, and Regulation Z and Regulation B of
the Board of Governors of the Federal Reserve System).
"Second Purchase Date" shall mean the date, if any, on which the Purchaser
shall make a second purchase of Receivables hereunder, such date being mutually
agreed between the Company and the Seller.
"Servicing Documents" shall have the meaning set forth in subsection
2.10(c).
"Single Employer Plan" shall mean any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Solvent" shall mean, when used with respect to any Person, as of any date
of determination, (a) the amount of the "present fair saleable value" of the
assets of such Person will, as of such date, exceed the amount of all
"liabilities of such Person, contingent or otherwise", as of such date, as such
quoted terms are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the liability of such Person on its
debts as such debts become absolute and matured, (c) such Person will not have,
as of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such Person will be able to pay its debts as they mature.
For purposes of this definition, (i) "debt" means liability on a "claim", and
(ii) "claim" means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y)
right to an equitable remedy for breach of performance if such breach gives rise
to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
"Subsidiary" means, as to any Person, (i) any corporation more than fifty
percent (50%) of whose stock having by the terms thereof ordinary voting power
to elect a majority of the directors of such corporation (irrespective of
whether or not at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time owned by such Person and/or one or more
Subsidiaries of such Person and (ii) any partnership, limited liability company,
association, joint venture or other entity in which such Person and/or one or
more Subsidiaries of such Person has more than fifty percent (50%) equity
interest at the time.
"Unaffiliated Buyer" shall mean Banc of America Commercial Corporation.
Other Definitional Provisions. (a) The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, "including" means including without limitation and section,
subsection, schedule and exhibit references are to this Agreement unless
otherwise specified.
(b) As used herein and in any certificate or other document made or
delivered pursuant hereto, accounting terms relating to the Company and the
Purchaser, unless otherwise defined herein, shall have the respective meanings
given to them under generally accepted accounting principles.
(c) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
PURCHASE AND SALE OF RECEIVABLES
1.1. Purchase and Sale of Receivables. (a) Subject to the terms and conditions
of this Agreement, the Company shall sell, assign, transfer and convey to
the Purchaser, and the Purchaser shall purchase from the Company, on the
First Purchase Date but as of the related Cutoff Date, all of the Company's
right, title and interest, in, to and under (i) the Receivables identified
in the applicable Assignment delivered pursuant to Subsection 3.2(a) (the
"Initial Receivables") and all payment and enforcement rights (but none of
the obligations) with respect to such Initial Receivables, (ii) all Related
Security with respect to such Initial Receivables and (iii) all proceeds
(including, without limitation, "proceeds" as defined in Section 9-306 of
the UCC as in effect in the State of New York) of, and any and all amounts
received or receivable under, any or all of the foregoing.
(b) Subject to the terms and conditions of this Agreement, the Company may,
if so requested by the Purchaser, sell, assign, transfer and convey to the
Purchaser, and the Purchaser shall purchase from the Company, on the Second
Purchase Date but as of the related Cutoff Date, all of the Company's right,
title and interest, in, to and under (i) the Receivables identified in the
applicable Assignment delivered pursuant to Subsection 3.2(a) (the "Subsequent
Receivables") and all payment and enforcement rights (but none of the
obligations) with respect to such Subsequent Receivables, (ii) all Related
Security with respect to such Subsequent Receivables and (iii) all proceeds
(including, without limitation, "proceeds" as defined in Section 9-306 of the
UCC as in effect in the State of New York) of, and any and all amounts received
or receivable under, any or all of the foregoing.
(c) The sale of Receivables and Related Security by the Company hereunder
shall be without recourse to, or representation or warranty of any kind (express
or implied) by, the Company, except as otherwise specifically provided herein.
The foregoing sale, assignment, transfer and conveyance does not constitute and
is not intended to result in a creation or assumption by the Purchaser of any
obligation of the Company or any other Person in connection with the
Receivables, the Related Security or any other agreement or instrument relating
thereto, including any obligation to any Obligor.
(d) In connection with the foregoing conveyances, the Company agrees to
record and file on or prior to the related Purchase Date, at its own expense,
UCC-1 financing statements (and thereafter continuation statements with respect
to such financing statements when applicable) with respect to the Receivables
and the Related Security to be purchased on such Purchase Date, from the
Company, meeting the requirements of applicable state law in such manner and in
such offices as are necessary or as the Purchaser may reasonably request to
perfect or protect the purchases of such Receivables and the Related Security by
the Purchaser from the Company, to obtain oral confirmation of such filing on or
prior to the related Purchase Date and to deliver file-stamped copies of such
financing statements or other evidence of such filings within five Business Days
after the related Purchase Date.
(e) In connection with the foregoing conveyances, the Company agrees at its
own expense to indicate on its computer files relating to the Purchased
Receivables that the Purchased Receivables and the Related Security have been
sold to the Purchaser in accordance with this Agreement.
(f) It is the express intent of the Company and the Purchaser that the
conveyance of the Purchased Receivables and the Related Security by the Company
to the Purchaser pursuant to this Agreement be construed as a sale of the
Purchased Receivables and the Related Security by the Company to the Purchaser.
It is, further, not the intention of the Company and the Purchaser that such
conveyance be deemed a grant of a security interest in the Purchased Receivables
and the Related Security by the Company to the Purchaser to secure a debt or
other obligation of the Company. However, in the event that the conveyance of
the Purchased Receivables and Related Security hereunder is characterized by a
court or other Governmental Authority as a loan rather than a sale, the Company
shall be deemed hereunder to have granted to the Purchaser, and the Company
hereby grants to the Purchaser, a security interest in all of the Company's
right, title and interest in, to and under all of the items set forth in
subsections 2.1(a)(i) through (iii) above, whether now or hereafter owned,
existing or arising and wherever located. The Purchaser shall have, with respect
to the property described in this subsection 2.1(f), and in addition to all the
other rights and remedies available to the Purchaser under this Agreement and
applicable law, any additional rights and remedies of a secured party under any
applicable UCC.
(g) In consideration of the Purchaser's purchase of the Purchased
Receivables, the Company hereby acknowledges and agrees that the Purchaser
intends to sell such Receivables and Related Security to the Unaffiliated Buyer,
and the Company agrees to cooperate fully with the Unaffiliated Buyer in the
exercise of the rights attendant thereto.
(h) In no event shall the Purchaser be obligated to purchase, or shall the
Company be obligated to sell, Receivables having an aggregate Face Amount in
excess of $24,000,000.
1.2. Purchase Price. On each Purchase Date, the Purchaser shall pay to the
Company, in consideration of the sale hereunder, in immediately available
funds, the related Purchase Price. Such Purchase Price shall be
non-refundable.
1.3. Payment of Purchase Price.
(a) Upon the fulfillment of the applicable conditions set forth in Article
III, except as provided in subsection 2.3(b) below, the Purchase Price for
Receivables and the Related Security shall be due and payable on the related
Purchase Date. The Purchase Price shall be paid or provided for on each related
Purchase Date in the manner provided in subsections (b) and (c) below.
(b) The Purchase Price for the Receivables and the Related Security with
respect thereto shall be due and payable on the related Purchase Date and shall
be paid by the Purchaser in cash from amounts distributed to the Purchaser
pursuant to the Receivables Purchase Agreement or from amounts otherwise
available to the Purchaser.
(c) Whenever any payment to be made under this Agreement shall be stated to
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day. Amounts not paid when due shall bear interest at a
rate equal at all times to 9%, payable on demand.
1.4. No Repurchase. Except to the extent expressly set forth herein, the Company
shall not have any right or obligation under this Agreement, by implication
or otherwise, to repurchase from the Purchaser any Purchased Receivables or
Related Security or to rescind or otherwise retroactively affect the
purchase of any Purchased Receivables or Related Security. Adjustments.
Without the Purchaser's prior written consent, the Company will not vary
the terms (including, but not limited to, amount, maturity and the like)
on, or grant any adjustment, refund or other indulgence with respect to,
any Purchased Receivable. The Company shall promptly notify the Purchaser
upon accepting returns or granting allowances under the terms of any
Purchased Receivable. The Purchaser agrees to use good faith efforts (but
shall have no obligation) to cooperate and assist the Company in the
adjustment of any Customer Dispute.
1.5. Limited Repurchase Obligation. If (i) any of the representations or
warranties contained in Section 4.2 in respect of any Purchased Receivable
is not true and correct in any material respect as of the date made
hereunder or (ii) the Company shall have breached the covenant contained in
Section 5.2 with respect to any Purchased Receivable, then, after the
earlier to occur of the discovery of such event by the Company or notice of
such event by the Purchaser to the Company, the Company shall repurchase
such Receivable on the terms and conditions set forth in this Section 2.6.
The Company shall repurchase such Receivable by paying to the Purchaser (a
"Company Repurchase Payment") an amount equal to the Face Amount of such
Receivable (whether the Purchaser paid the Purchase Price of such
Receivable in cash or otherwise), such payment to occur on the Business Day
after the day on which such repurchase obligation arises. The obligation to
repurchase any Purchased Receivable shall constitute the sole remedy with
respect to the sale of Purchased Receivables hereunder respecting an event
of the type specified above available to the Purchaser. Simultaneously with
any Company Repurchase Payment with respect to any Purchased Receivable,
such Receivable and the Related Security with respect thereto shall
immediately and automatically be sold, assigned, transferred and conveyed
by the Purchaser to the Company, without recourse, representation or
warranty, without any further action by the Purchaser or any other Person.
1.6. Purchase of Receivables. (a) In the event of any breach of any of the
representations and warranties set forth in Section 4.1, which breach has a
Material Adverse Effect on the interests of the Purchaser in the Purchased
Receivables, then the Purchaser by notice to the Company, may direct the
Company to purchase all outstanding Purchased Receivables and the Company
shall be obligated to make such purchase on the Business Day which is five
(5) Business Days after the date of such notice on the terms and conditions
set forth below; provided, however, that no such purchase shall be required
to be made if, by such date of repurchase, such breach has been remedied in
all material respects and any Material Adverse Effect on the interests of
the Purchaser in the Purchased Receivables caused thereby has been cured.
(b) The Company shall pay to the Purchaser, on the Business Day preceding
such date of repurchase, an amount equal to the aggregate Face Amount of
the Purchased Receivables as of such date. Upon payment of such amount, in
immediately available funds, to the Purchaser, the Purchaser's rights with
respect to the Purchased Receivables shall terminate and such interest
therein shall be transferred to the Company and the Purchaser shall have no
further rights with respect thereto. If the Purchaser gives notice
directing the Company to purchase the Purchased Receivables as provided
above, the obligation of the Company to purchase the Purchased Receivables
pursuant to this Section 2.7 shall constitute the sole remedy with respect
to the sale of Purchased Receivables hereunder respecting an event of the
type specified in the first sentence of this Section 2.7 available to the
Purchaser.
1.7. Certain Charges. The Company and the Purchaser agree that late charge
revenue, reversals of discounts, other fees and charges and other similar
items, whenever created or accrued in respect of Purchased Receivables
shall be the property of the Purchaser and all Collections with respect
thereto shall continue to be allocated and treated as Collections in
respect of Purchased Receivables.
1.8. Certain Allocations. The Company agrees that, in the event that the Company
cannot identify a particular Collection to a specific Receivable, all cash
collections and other proceeds received with respect to the Obligor on such
Receivable that are not so identified to a Purchased Receivable or a
Receivable not sold to the Purchaser shall be applied first, to pay the
outstanding Face Amount of Purchased Receivables of such Obligor until such
Purchased Receivables are paid in full and second, amounts in excess
thereof shall be paid to the Company to pay Receivables of such Obligor not
sold to the Purchaser.
1.9. Further Action. The Company agrees that:
(a) Following the occurrence and during the continuance of a default by the
Servicer in the performance of its obligations under Section 5.3, the Purchaser
shall have the right to require that the Company, at the Company's expense,
notify the Obligors of the Purchaser's ownership of the Purchased Receivables;
(b) The Purchaser shall have the right to (i) sue for collection on, and
exercise any and all remedies with respect to, any Purchased Receivables, (ii)
sell any Purchased Receivables to any Person for a price that is acceptable to
the Purchaser or (iii) otherwise freely exercise all rights of ownership of the
Purchased Receivables, in each case without any consent of or notice to the
Company;
(c) Upon the occurrence of any transfer of servicing pursuant to the
Receivables Purchase Agreement, the Company shall, upon the Purchaser's request
and at the Company's expense, (i) assemble all the Company's documents,
instruments and other records (including credit files and computer tapes or
disks) that (A) evidence or will evidence or record Receivables sold by the
Company and (B) are otherwise necessary or reasonably determined by the
Purchaser to be useful to effect Collections of such Purchased Receivables
(collectively, the "Servicing Documents"), (ii) deliver the Servicing Documents
to the Purchaser or its designee at a place designated by the Purchaser, (iii)
deliver to the Purchaser or its designee all computer programs and related
material necessary or reasonably determined by the Purchaser to be useful to the
immediate collection of the Purchased Receivables by the Purchaser, with or
without the participation of the Company, and (iv) make such arrangements with
respect to the collection of the Purchased Receivables as may be reasonably
required by the Purchaser. In recognition of the Company's need to have access
to any Servicing Documents which may be transferred to the Purchaser hereunder,
as a result of its continuing business relationship with the Obligors, the
Purchaser hereby grants to the Company a license to access the Servicing
Documents transferred by the Company to the Purchaser and to access any such
transferred computer software in connection with any activity arising in the
ordinary course of the Company's business, provided that the Company shall not
disrupt or otherwise interfere with the Purchaser's use of and access to the
Servicing Documents and its computer software during such license period;
(d) The Company hereby irrevocably authorizes the Purchaser or its designee
to take any and all steps in the Company's name necessary, in the reasonable
opinion of the Purchaser, to collect, in a timely manner, all amounts due under
the Purchased Receivables, including endorsing the Company's name on checks and
other instruments representing Collections, enforcing the Purchased Receivables
and exercising all rights and remedies in respect thereof; and
(e) On or prior to the First Purchase Date, the Company shall have taken
all reasonably necessary steps to cause the Purchaser to be satisfied with the
Purchaser's ability to use any computer programs, tapes, disks, cassettes and
data necessary or advisable to permit the timely collection of the Purchased
Receivables by a servicer without the participation of the Company.
1.10.Further Assurances by Purchaser. From time to time at the request and at
the expense of the Company, the Purchaser shall deliver to the Company such
documents, assignments, releases and instruments of termination as the
Company may reasonably request to evidence the reconveyance by the
Purchaser to the Company of a Purchased Receivable pursuant to the terms of
Section 2.5, provided that, the Purchaser shall have been paid all amounts
due hereunder.
CONDITIONS TO PURCHASE AND SALE
1.11.Conditions Precedent to the First Purchase of Receivables. The obligation
of the Purchaser to purchase Receivables and Related Security hereunder on
the First Purchase Date from the Company is subject to the conditions
precedent that (a) each of this Agreement and the Receivables Purchase
Agreement shall be in full force and effect and (b) the conditions set
forth below shall have been satisfied on or before the First Purchase Date:
(i) the Purchaser shall have received copies of duly adopted resolutions of
the Board of Directors of the Company as in effect on the First Purchase
Date and in form and substance reasonably satisfactory to the Purchaser,
authorizing the execution, delivery and performance of this Agreement, the
Assignments, the other documents to be delivered by the Company hereunder
and the transactions contemplated hereby, certified by the Secretary or
Assistant Secretary of the Company; (ii) the Purchaser shall have received
duly executed certificates of the Secretary or an Assistant Secretary of
the Company, dated the date hereof, and in form and substance reasonably
satisfactory to the Purchaser, certifying the names and true signatures of
the officers authorized on behalf of the Company to sign this Agreement,
the Assignments and any other instruments or documents to be delivered in
connection with this Agreement; and (iii) the Purchaser shall have received
evidence reasonably satisfactory to the Purchaser that the Company shall
have obtained all consents required in connection with the sale of the
related Receivables contemplated hereby.
1.12.Conditions Precedent to each Purchase of Receivables. The obligation of the
Purchaser to purchase Receivables and Related Security hereunder on any
Purchase Date from the Company is subject to the fulfillment on or before
such Purchase Date of the following conditions precedent (i) the Purchaser
shall have received a duly executed Assignment setting forth the Obligors
and Face Amount of the Receivables to be purchased hereunder on such
Purchase Date; (ii) all corporate and other legal matters incident to the
execution and delivery of this Agreement and to the purchases by the
Purchaser of the related Receivables on the related Purchase Date from the
Company shall be reasonably satisfactory to counsel for the Purchaser; and
(iii)the representations and warranties of the Company contained in
Sections 4.1 and 4.2 shall be true and correct in all material respects on
and as of such Purchase Date as though made on and as of such date, except
insofar as such representations and warranties are expressly made only as
of another date.
REPRESENTATIONS AND WARRANTIES
1.13.Representations and Warranties of the Company Relating to the Company. The
Company hereby represents and warrants to the Purchaser on each Purchase
Date that:
(a) Organization and Good Standing. The Company is duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
full corporate power, authority and the legal right to own and operate its
properties, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, and to execute, deliver and perform
its obligations under this Agreement and to sell the related Receivables and the
Related Security hereunder;
(b) Due Qualification. The Company is duly qualified to do business and is
in good standing as a foreign corporation (or is exempt from such requirements)
and has obtained all necessary licenses and approvals in each jurisdiction in
which the conduct of its business requires such qualification except where the
failure to so qualify or obtain licenses or approvals would not have a Material
Adverse Effect;
Due Authorization. The execution and delivery of this Agreement and the
Assignments and the consummation of the transactions provided for herein have
been duly authorized by all necessary corporate action on the part of the
Company;
(c) Binding Obligation. Each of this Agreement and the Assignments, when
executed and delivered hereunder, constitutes the legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other similar
laws now or hereinafter in effect affecting the enforcement of creditors' rights
in general and except as such enforceability may be limited by general
principles of equity (whether considered in a proceeding at law or in equity);
(d) No Violation or Conflict. The execution and delivery of this Agreement
and the Assignments by the Company, the performance of the transactions
contemplated hereby and the fulfillment of the terms hereof applicable to the
Company will not conflict with, violate, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or lapse of time
or both) a default under, any Requirement of Law applicable to the Company or
any indenture, contract, agreement, mortgage, deed of trust, or other instrument
to which the Company or its parent or any of its Subsidiaries is a party or by
which any such Person or its properties are bound;
(e) Compliance with Requirements of Law. The Company is in compliance in
all material respects with all Requirements of Law, except to the extent that
the failure to comply therewith would not have a Material Adverse Effect;
(f) No Proceedings. There are no proceedings or investigations pending or,
to the best knowledge of the Company, threatened, against the Company before any
court or Governmental Authority (i) asserting the invalidity of this Agreement
or any Assignment, (ii) seeking to prevent the sale of any Receivables or the
Related Security hereunder or (iii) seeking any determination or ruling that
would materially and adversely affect the performance by the Company of its
obligations under this Agreement;
(g) Taxes. No tax Lien has been filed against the Company. Each of the
statements in this sentence is true, except to the extent that the potential
liability to the Company as a result of the circumstances causing any such
statement to be untrue would not have a Material Adverse Effect: it has filed or
caused to be filed all tax returns which are required to be filed and has paid
all taxes shown to be due and payable on said returns or on any assessments made
against it or any of its property and all other taxes, fees or other charges
imposed on it or any of its property by any Governmental Authority and, to the
best knowledge of the Company, no claim is being asserted with respect to any
such taxes, fees or other charges (other than with respect to Permitted Liens);
(h) Solvency. The Company is, and the Company and its Subsidiaries taken as
a whole are, and in each case after giving effect to the transactions
contemplated to occur on or prior to any Purchase Date will be, Solvent and no
sale of Receivables hereunder is made with the intent to hinder, delay or
defraud any creditor of the Company or its parent or any of its Subsidiaries;
(i) ERISA. Each of the following statements is true, except where the
amount involved in any untrue statement, either individually or in the
aggregate, would not have a Material Adverse Effect: Neither a Reportable Event,
an "accumulated funding deficiency" (within the meaning of Section 412 of the
Code or Section 302 of ERISA) nor a failure to make a required contribution as
described in Section 412(n) of the Code has occurred during the five-year period
prior to the date on which this representation is made or deemed made with
respect to any Plan, and each Plan has complied in all material respects with
the applicable provisions of ERISA and the Code. No termination of a Single
Employer Plan has occurred, no steps have been taken to institute the
termination of any Plan and no Lien in favor of the PBGC or a Plan has arisen
during such five-year period, and no Lien exists in favor of the PBGC. The
present value of all accrued benefits under each Single Employer Plan (based on
those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits. Neither it nor any Commonly Controlled Entity has had a complete or
partial withdrawal from any Multiemployer Plan, and neither it nor any Commonly
Controlled Entity would become subject to any liability under ERISA if it or any
such Commonly Controlled Entity were to withdraw completely from all
Multiemployer Plans as of the valuation date most closely preceding the date on
which this representation is made or deemed made. To its best knowledge, no such
Multiemployer Plan is in Reorganization or Insolvent. The present value
(determined using actuarial and other assumptions which are reasonable in
respect of the benefits provided and the employees participating) of the
liability of it and each Commonly Controlled Entity for post-retirement benefits
to be provided to their current and former employees under Plans which are
welfare benefit plans (as defined in Section 3(1) of ERISA) does not, in the
aggregate, exceed the assets under all such Plans allocable to such benefits by
an amount which would be reasonably likely to result in a liability having a
Material Adverse Effect;
(j) Location of Chief Executive Office. The chief executive office of the
Company is located in Burlington, North Carolina, which office is the place
where the Company is "located" for the purposes of Section 9-103(3)(d) of the
UCC of the State of New York and the office of the Company where the Company
keeps its records concerning the Receivables;
(k) Taxpayer Identification Number. The Internal Revenue Service taxpayer
identification number of the Company is 13-4116023; and
(m) No agreement, document, instrument, certificate, report, statement or
other document or information furnished to the Purchaser in connection herewith
or with the consummation of the transactions contemplated hereby, contains any
material misstatement of fact or omits to state a material fact or any fact
necessary to make statements contained herein or therein not misleading in light
of the circumstances under which they were made.
1.14.Representations and Warranties of the Company Relating to the Receivables.
The Company hereby represents and warrants to the Purchaser on each
Purchase Date with respect to each Receivable purchased by the Purchaser on
such date, that as of the related Cutoff Date:
(a) The Company is the sole legal and beneficial owner of and has all
right, title and interest in and to such Receivable and any Related Security,
and upon the sale of such Receivable and Related Security to the Purchaser, the
Purchaser will become the sole legal and beneficial owner of such Purchased
Receivable and Related Security, free and clear of any Liens (other than
Permitted Liens), and no effective financing statement or other instrument
similar in effect covering all or any part of such Purchased Receivable, the
Related Security or Collections with respect thereto will at such time be on
file against the Company in any filing or recording office except such as have
been filed in favor of the Purchaser in accordance with this Agreement or in
favor of the Unaffiliated Buyer in accordance with the Receivables Purchase
Agreement;
(b) Such Receivable has been designated by the Unaffiliated Buyer in
writing as an Approved Receivable, the Face Amount thereof is the dollar amount
thereof shown on the books and records of the Company, and such Receivable is
not a Defaulted Receivable;
(c) All consents, licenses, approvals, orders or other actions of any
Person or any Governmental Authority required to be obtained, effected or given
by the Company in connection with the sale of such Receivable and Related
Security to the Purchaser have been duly obtained, effected or given and are in
full force and effect;
(d) The Obligor on such Receivable is not an Affiliate or in any other way
related to the Company, its parent or any of its Subsidiaries;
(e) Such Receivable, together with the sale of goods out of which such
Receivable arises, (i) complies with all applicable Requirements of Law, (ii)
constitutes a valid and binding unconditional obligation of the Obligor to pay
the Face Amount of such Receivable and is not subject to any defense, set-off or
counterclaim, (iii) is based on an actual and bona fide sale and delivery in the
ordinary course of business of goods that have been delivered to and accepted by
such Obligor, (iv) provides for payment by such Obligor in U.S. Dollars, (v) is
not past its due date, (vi) is not subject to any Lien, (vii) does not include
any amount as to which such Obligor is permitted to withhold payment until the
occurrence of a specified event or condition (including but not limited to
"guaranteed" or "conditional" sales), unless such Obligor has acknowledged in
writing that such specified event or condition has occurred ans such amount is
owing, (viii) is not the subject of any legal or arbitral proceeding, (ix) is
not disputed and (x) is not subject to the Federal Assignment for Claims Act of
1940 or any other transfer restriction; and
(f) The Company has not waived any of its rights with respect to such
Receivable or taken or omitted to take any action which action or omission may
reduce or impair the rights that the Purchaser would otherwise have with respect
to such Receivable.
COVENANTS
1.15.Affirmative Covenants of the Company. The Company hereby agrees that, so
long as there are any amounts outstanding with respect to Purchased
Receivables, the Company shall:
(a) Compliance with Requirements of Law. Duly satisfy all obligations on
its part to be fulfilled under or in connection with the Receivables and comply
with all Requirements of Law applicable to the Receivables the failure to
satisfy or to comply with which would have a Material Adverse Effect.
(b) Keeping of Records. Retain copies of the Records as custodian and agent
for the Purchaser and other Persons with interests in the Purchased Receivables
and at its own expense indicate on its computer files relating to the Purchased
Receivables that the Purchased Receivables have been sold to the Purchaser in
accordance with this Agreement.
(c) Credit and Collection Policy. Comply in all material respects with its
Credit and Collection Policy in regard to the Purchased Receivables.
(d) Inspection of Property; Discussions. At any time and from time to time
during the Company's regular business hours, on reasonable advance notice,
permit the Purchaser or the agents or representatives of the Purchaser to visit
the offices of the Company in order (i) to examine and make abstracts from any
of the Records and (ii) to discuss matters relating to the Receivables and the
Company's performance hereunder with officers and employees of the Company
having knowledge of such matters.
(e) Corporate Existence. Maintain its corporate existence in the
jurisdiction of its incorporation, and qualify and remain qualified as a foreign
corporation in each jurisdiction where it does business, except where the
failure to maintain such existence and qualifications would not have a Material
Adverse Effect.
(f ) Notices. Furnish to the Purchaser:
(i) promptly upon determining that any representation or warranty made by
the Company hereunder was incorrect or the Company has failed to
comply with any of the agreements or provisions hereof applicable to
it, written notice of such determination;
(ii) promptly after becoming aware of any Lien on any Purchased Receivable;
(iii)promptly if any failure to make a contribution occurs that could
constitute an accumulated funding deficiency or could give rise to a
Lien under Section 412 of the Code or Section 302 of ERISA;
(iv) promptly upon the institution of any steps by any Person to
terminate a Plan;
(v) promptly upon the occurrence of a Reportable Event; and
(vi) promptly upon the institution of any steps by the Company or
any Commonly Controlled Entity to make a complete or partial
withdrawal from a Multiemployer Plan.
(g) Further Action. At its expense, promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or, in the reasonable opinion of the Purchaser, desirable in
order to fully effect the purposes of this Agreement and to perfect,
protect or more fully evidence the Purchaser's right, title and interest in
the Purchased Receivables and the Related Security, or to enable the
Purchaser to exercise or enforce any of its rights in respect thereof.
Without limiting the generality of the foregoing, the Company will execute
and file such financing or continuation statements relating to the
Receivables and the Related Security for filing under the provisions of the
UCC, or amendments thereto, and such other instruments or notices, as may
be necessary or, in the reasonable opinion of the Purchaser, desirable. The
Company hereby irrevocably authorizes the Purchaser to file one or more
financing or continuation statements, and amendments thereto, relating to
all or any part of the Purchased Receivables sold or to be sold and the
Related Security without the signature of the Company.
1.16.Negative Covenants of the Company. The Company hereby agrees that, so long
as there are any amounts outstanding with respect to Purchased Receivables,
it shall not, directly or indirectly:
(a) Liens. Except as otherwise herein provided, sell, pledge, assign or
transfer to any other Person, or grant, create, incur, assume or suffer to exist
any Lien on, any Receivable or the Related Security, whether now existing or
hereafter created, with respect thereto, and the Company shall defend the right,
title and interest of the Purchaser in, to and under any Purchased Receivable
and the Related Security, whether now existing or hereafter created, against all
claims of third parties claiming through or under the Company; provided, that
nothing in this paragraph (a) shall prevent or be deemed to prohibit the Company
from suffering to exist upon any of the Receivables any Permitted Liens.
(b) Extension or Amendment of Receivables. Extend, rescind, cancel, amend
or otherwise modify, or attempt or purport to extend, amend or otherwise modify,
the terms of any Purchased Receivables (including, without limitation, extending
the due dates thereof or impairing the collectibility thereof); provided,
however, that the Company, as Servicer under the Receivables Purchase Agreement,
may do so in accordance with the terms of the Credit and Collection Policy or as
required by any Requirement of Law.
(c) Change in Name. Change (i) its name or identity in any manner or (ii)
its corporate structure in any manner that would or might make any financing
statement or continuation statement relating to this Agreement seriously
misleading within the meaning of Section 9-402(7) of the UCC in effect in the
relevant jurisdiction, in each case without 20 days' prior written notice to the
Purchaser.
(d) Location of Records. Move the location of its chief executive office or
the location of the office where it keeps its records with respect to the
Receivables outside of Alamance County, North Carolina, without 20 days' prior
written notice to the Purchaser, and the Company shall promptly take all actions
reasonably required (including but not limited to all filings and other acts
necessary or advisable under the UCC of each relevant jurisdiction) in order to
protect the Purchaser's interest in the Purchased Receivables. The Company shall
give the Purchaser prompt notice of a change of the location of its chief
executive office or any office where it keeps its records with respect to the
Receivables within the city or county where such office is located.
(e) Accounting of Purchases. Prepare any financial statements which shall
account for the transactions contemplated hereby in any manner other than as
sales of the Purchased Receivables by the Company to the Purchaser or account
for or treat the transactions contemplated hereby for accounting purposes and,
where taxes are not consolidated, for tax reporting purposes, except as required
by law, in any manner other than as sales of the Purchased Receivables by the
Company to the Purchaser.
(f) Chattel Paper. Take any action to cause any Receivable to be evidenced
by any instrument or chattel paper (each as defined in the UCC as in effect in
the State of New York) except in connection with its enforcement or collection
of a Receivable.
(g) Credit and Collection Policy. Make any change or modification to the
Credit and Collection Policy that could reasonably be expected to have an
adverse effect on the interests of the Purchaser in the Purchased Receivables or
the Related Security.
(h) Separate Existence of Purchaser. Violate or interfere with the
Purchaser's compliance with clauses 1 through 14 of subsection 9(j)(iv) of the
LLC Agreement.
1.17.Covenants of the Servicer. The Servicer hereby agrees to collect and
service (including the remittance of collections on the Purchased
Receivables) the Purchased Receivables in accordance with Section 4.1 of
the Receivables Purchase Agreement.
1.18.Accounting of Purchases. The Purchaser hereby agrees that the Purchaser
shall not prepare any financial statements which shall account for the
transactions contemplated hereby in any manner other than as purchases of
the Purchased Receivables by the Purchaser or in any other respect account
for or treat such transactions (including for accounting purposes and,
where taxes are not consolidated, for tax reporting purposes, except as
required by law) in any manner other than as purchases of the Purchased
Receivables by the Purchaser.
MISCELLANEOUS
1.19.Payments. Each cash payment to be made by the Purchaser or the Company
hereunder shall be made not later than 3:00 p.m. (New York time) on the
required payment date in Dollars by wire transfer to a bank account of the
Purchaser or the Company, as the case may be, designated in writing by the
Purchaser to the Company or the Company to the Purchaser, as the case may
be.
1.20.Costs and Expenses. (a) The Company hereby agrees to indemnify the
Purchaser from and against any and all claims, damages, expenses, losses,
liabilities, penalties, judgments, suits, actions, costs, charges, and
disbursements (including all reasonable fees and all other charges and
disbursements of any law firm or other counsel for the Purchaser)
(collectively, "Indemnification Amounts") of any kind or nature whatsoever
arising out of, relating to or resulting from (whether directly or
indirectly) this Agreement or the transactions contemplated hereby, or with
respect to the use of proceeds of purchases, or in respect of any Purchased
Receivable and Related Security purchased hereunder, including any and all
Indemnification Amounts relating to or resulting from any of the following:
(i)the failure of any Purchased Receivable to be an Approved
Receivable, the failure of any information contained in any
report delivered under this Agreement to be true and
correct, or the failure of any other information provided to
the Purchaser with respect to the Purchased Receivables or
pursuant to or in connection with this Agreement to be true
and correct;
(ii)the failure of any representation or warranty or statement or
certification
(iii)made or deemed made by the Company (or any of its officers)
under or in connection with this Agreement to have been true
and correct in all material respects when made;
(iv)the failure by the Company to comply with any applicable law,
rule or regulation (including without limitation "bulk
sales" or analogous laws of any jurisdiction) with respect
to any Purchased Receivable; or the failure of any Purchased
Receivable to conform to any such applicable law, rule or
regulation;
(iv)the failure to vest in the Purchaser a valid and enforceable
ownership interest in the Purchased Receivables, in each
case free and clear of any Lien (other than Permitted
Liens);
(v)the failure to have filed, or any delay in filing, financing
statements or other similar instruments or documents under
the UCC of any applicable jurisdiction or other applicable
laws with respect to any Purchased Receivables, whether at
the time of purchase or at any subsequent time;
(vi)(A) any dispute, claim, offset, billing adjustment or defense
of the Obligor to the payment of any Purchased Receivable
(including, without limitation, a defense based on such
Receivable not being a legal, valid and binding obligation
of such Obligor enforceable against it in accordance with
its terms), (B) or any other claim resulting from the sale
of the goods or services related to such Purchased
Receivable or the furnishing or failure to furnish such
goods or services or relating to collection activities with
respect to such Purchased Receivable, or (C) any Customer
Dispute;
(vii)any failure of the Company to perform or comply with its
duties or obligations in accordance with the provisions of
this Agreement;
(viii)any claim, investigation, litigation or proceeding arising
out of or in connection with the goods, insurance or
services relating to any Purchased Receivable;
(ix)the commingling of any portion of Collections at any time
with other funds;
(x)any investigation, litigation or proceeding (including any
bankruptcy proceeding, insolvency proceeding or appellate
proceeding) related to this Agreement, the use of proceeds
of purchases of Receivables or the ownership of the
Purchased Receivables and Related Security;
(xi)the failure to notify any Obligor of the assignment of any
Receivable from the Company to the Purchaser, or the failure
to require that payments (including without limitation under
insurance policies) be made directly to the Purchaser, as
permitted by law;
(xii)any taxes asserted or imposed in respect of the Purchased
Receivables or purchases and sales of Receivables or
interests therein; or
(xiii) any action or omission by the Company which reduces or
impairs the rights of the Purchaser with respect to any
Purchased Receivable or Related Security; provided, however,
that in no event shall the Company be required to pay any
Indemnification Amount hereunder to the extent such amount
(A) results from the gross negligence or willful misconduct
on the part of the Purchaser, (B) relates to any overall net
income taxes or franchise taxes imposed on the Purchaser by
the State of Delaware or (C) results from an Obligor's
failure to pay amounts in respect of such Purchased
Receivable because of such Obligor's financial inability to
pay such amounts.
(b) In addition to the rights of indemnification granted under paragraph
(a) above, the Company hereby agrees to pay:
(i) all reasonable costs and expenses (including, without
limitation, all reasonable fees and all other charges and
disbursements of any law firm or other counsel for the
Purchaser) of the Purchaser in connection with (A) the
preparation, negotiation, execution, delivery and
administration (including, without limitation, periodic
auditing) of this Agreement and any potential or actual
amendment, modification or waiver of this Agreement; (B) the
Purchaser's obtaining advice as to the rights and remedies
of any Person under this Agreement (including without
limitation in connection with any "workout" or any
bankruptcy or insolvency proceeding or any litigation or
other adversary proceeding); and (iii) the enforcement of
this Agreement; and
(ii) any and all stamp and other taxes and fees payable in
connection with the execution, delivery, filing and
recording of this Agreement; and the Company agrees to save
the Purchaser harmless from and against any liabilities with
respect to or resulting from any delay in paying or omission
to pay such taxes and fees.
(c) The benefits of this Section 6.2 may be assigned by the Purchaser and
enforced by the assignees of the Purchaser.
1.21.Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the Company and the Purchaser and their respective
successors (whether by merger, consolidation or otherwise) and assigns. The
Company agrees that it will not assign or transfer all or any portion of
its rights or delegate any of its obligations hereunder without the prior
written consent of the Purchaser.
The Company acknowledges that the Purchaser will, concurrently herewith,
assign to the Unaffiliated Purchaser all of the Purchaser's right, title and
interest in, to and under (but none of the Purchaser's obligations under),
whether now or hereafter owned, existing or arising, this Agreement and the
Assignments. The Company consents to such assignment and agrees that the
Unaffiliated Purchaser, to the extent provided in the Receivables Purchase
Agreement, shall be entitled to enforce the terms of this Agreement and the
Assignments and the rights (including, without limitation, the right to grant or
withhold any consent or waiver) of the Purchaser directly against the Company.
The Company hereby consents to all of the terms of the Receivables Purchase
Agreement.
1.22.GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
1.23.No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Purchaser, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of
any other right, remedy, power or privilege. The rights, remedies, powers
and privileges herein provided are cumulative and not exhaustive of any
rights, remedies, powers and privileges provided by law.
1.24.Amendments and Waivers. Neither this Agreement nor any terms hereof may be
amended, supplemented or modified except in a writing signed by the
Purchaser and the Company.
1.25.Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
1.26.Notices. All demands, notices and communications hereunder shall be in
writing delivered by hand or by facsimile and shall be deemed to have been
duly given, in the case of notice by facsimile, when telecopied to the
following number, or, in the case of notice by hand, if personally
delivered at the following addresses or to such other addresses as may be
hereafter notified by the respective parties hereto:
The Purchaser:
Cluett American Receivables, LLC
661 Plaid Street
Burlington, NC 27215
Attention: Bryan P. Marsal
The Company:
Great American Knitting Mills, Inc.
661 Plaid Street
Burlington, NC 27215
Attention: Bryan P. Marsal
1.27.Counterparts. This Agreement may be executed by one or more of the parties
to this Agreement on any number of separate counterparts (including by
telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
1.28.WAIVERS OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES ITS RIGHTS TO A
TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
OR RELATED TO THIS AGREEMENT OR ANY OTHER DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES HERETO AGAINST ANY
OTHER PARTY OR ANY PARTY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE. EACH PARTY HERETO HEREBY AGREES THAT ANY SUCH CLAIM
OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, EACH OF THE PARTIES HERETO FURTHER AGREES THAT ITS
RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION
AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR
IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR
ANY OTHER DOCUMENT OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, AMENDMENTS AND RESTATEMENTS, OR
MODIFICATIONS TO THIS AGREEMENT OR ANY OTHER DOCUMENT (INCLUDING WITHOUT
LIMITATION ANY EXTENSION OR PROPOSED EXTENSION OF THE FACILITY TERMINATION
DATE).
1.29.No Bankruptcy Petition. The Company covenants and agrees that, prior to
the date which is one year and one day after payment in full of all its
obligations hereunder, it will not institute against, or join any other
Person in instituting against, or encourage or solicit any Person to
institute against, the Purchaser any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings
under any federal or state bankruptcy or similar law.
1.30.Limited Recourse; Survival. The obligations of the Purchaser hereunder
shall be due and payable only to the extent that the Purchaser's assets are
sufficient to pay such obligations. Without limitation of the obligations
of the Purchaser, no recourse shall be had for the payment of any amount
owing in respect of this Agreement or any other Document against any
member, manager, director, officer, employee or agent of the Purchaser
based solely on their status as such. The provisions of this Section 6.12
and the other provisions of this Article VI shall survive the termination
of this Agreement.
1.31.Termination. This Agreement will terminate on the earlier of (i) the first
anniversary of the date hereof and (ii) the first date on which all
Receivables sold hereunder have been collected and the proceeds thereof
turned over to the Purchaser and all other amounts owing to the Purchaser
hereunder shall have been paid in full or, if Receivables sold hereunder
have not been collected such Receivables have become Defaulted Receivables
and the Servicer shall have completed its collection efforts in respect
thereto; provided, however, that the indemnities of the Company to the
Purchaser set forth in this Agreement shall survive such termination and
provided further that the Purchaser shall remain entitled to receive any
collections on Receivables sold hereunder which have become Defaulted
Receivables after the Servicer shall have completed its collection efforts
in respect thereof.
1.32.Headings. The headings and captions of sections, subsections and articles
in this Agreement, of schedules to this Agreement, and the table of
contents of this Agreement, are for purposes of reference only and shall
not affect the meaning or interpretation of any provision of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
all as of the day and year first above written.
GREAT AMERICAN KNITTING MILLS, INC.
By: ________________________
Name:
Title:
CLUETT AMERICAN RECEIVABLES, LLC
By: ________________________
Name:
Title:
<PAGE>
EXHIBIT A
Assignment
For Value Received, the undersigned does hereby sell, assign
and transfer unto Cluett American Receivables, LLC, its successors or assigns,
all the right, title and interest of the undersigned in, to and under each and
every Receivable (as defined in the Receivables Transfer Agreement dated as of
May 12, 2000 between the undersigned and said LLC) described in Schedule I
annexed hereto and in, to and under all guarantees thereof and collateral
security therefor, effective as of the close of business on [insert the
related Cutoff Date] (the "Cutoff Date").
This Assignment is made without recourse but pursuant to and
upon all the warranties, representations, covenants and agreements on the part
of the undersigned contained in said Receivables Transfer Agreement and is to
be governed by, and construed and interpreted in accordance with, said
Receivables Transfer Agreement and the law of the State of New York.
IN WITNESS WHEREOF, the undersigned has caused these presents
to be duly executed this 12th day of May, 2000.
GREAT AMERICAN KNITTING MILLS, INC.
By ________________________________
Title:
GREAT AMERICAN KNITTING MILLS, INC.
RECEIVABLES TRANSFER AGREEMENT
Dated as of May 12, 2000
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.1 Defined Terms.................................................1
1.2 Other Definitional Provisions.................................4
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
2.1 Purchase and Sale of Receivables..............................5
2.2 Purchase Price................................................6
2.3 Payment of Purchase Price.....................................7
2.4 No Repurchase.................................................7
2.5 Adjustments....................................................7
2.6 Limited Repurchase Obligation.................................7
2.7 Purchase of Receivables.......................................8
2.8 Certain Charges. .............................................8
2.10 Further Action.................................................8
2.11 Further Assurances by Purchaser................................9
ARTICLE III
CONDITIONS TO PURCHASE AND SALE
3.1 Conditions Precedent to the First Purchase of Receivables......10
3.2 Conditions Precedent to each Purchase of Receivables...........10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Company Relating to the
Company..............................11
4.2 Representations and Warranties of the Company Relating to the
Receivables .........................13
ARTICLE V
COVENANTS
5.1 Affirmative Covenants of the Company...........................14
5.2 Negative Covenants of the Company..............................15
5.3 Covenants of the Servicer......................................17
5.4 Accounting of Purchases........................................17
ARTICLE VI
MISCELLANEOUS
6.1 Payments......................................................17
6.2 Costs and Expenses............................................17
6.3 Successors and Assigns........................................19
6.4 GOVERNING LAW.................................................19
6.5 No Waiver; Cumulative Remedies................................20
6.6 Amendments and Waivers........................................20
6.7 Severability..................................................20
6.8 Notices.......................................................20
6.9 Counterparts..................................................20
6.10 WAIVERS OF JURY TRIAL.........................................20
6.11 No Bankruptcy Petition........................................21
6.12 Limited Recourse; Survival....................................21
6.13 Termination...................................................21
6.14 Headings......................................................22
EXHIBIT
A - Form Assignment
<PAGE>
Bank of America
Banc of America Commercial Corporation
Receivables Purchase Agreement
entered into between
Cluett American Receivables, LLC
and
Banc of America Commercial Corporation
Banc of America Commercial Corporation
P.O. Box 4095
Atlanta, Georgia 30302-4095
Ladies and Gentlemen:
We are pleased to confirm the following agreement whereby from
time to time we may sell certain of our accounts receivable to you and you may
purchase such accounts receivable from us on the terms and conditions set forth
herein.
SECTION 1. DEFINITIONS
1.1......"Approved Receivable" shall mean a Receivable that has been
credit approved by you and is otherwise acceptable to you, as evidenced by your
written approval, as more fully described in Section 2.1 of this Agreement.
1.2......"Assignment" shall mean an Assignment, substantially in the
form of Exhibit A hereto, evidencing our sale, transfer and assignment to you of
a Pool of Approved Receivables.
1.3......"Banking Day" shall mean a day for dealings by and between
banks, excluding Saturday, Sunday and any day which shall be a legal holiday in
the City of Atlanta, Georgia and any other day on which banking institutions are
authorized to close in the City of Atlanta, Georgia.
1.4......"Cluett American" shall mean Cluett American Corp, a Delaware
corporation.
1.5......"Collection Turn-Over Date" shall mean for each Approved
Receivable purchased by you: (i) with respect to payments made to us or Great
American on such Approved Receivable by check, up to four (4) Banking Days after
the date such check is received by us or Great American, as the case may be, or
(ii) with respect to payments made to us or Great American by wire transfer, one
(1) Banking Day after the date we or Great American, as the case may be, receive
such wire transfer.
1.6......"Collections" shall mean, with respect to any Purchased
Receivables, all cash collections and all other amounts at any time received or
obtained with respect thereto or attributed or credited to payment thereof,
including all proceeds.
1.7......"Credit and Collection Policy" shall mean, collectively, those
credit and collection policies and practices of Great American and us with
respect to the Receivables as in effect on the date hereof.
1.8......"Credit Risk" shall mean, with respect to any Receivable or
portion thereof, the risk of loss resulting from a Customer's failure to pay
such Receivable as and when due because of such Customer's financial inability.
1.9......"Customer" shall mean, with respect to any Receivable, the
Person identified on the Schedule to the related Assignment as obligated to make
payment of such Receivable.
1.10....."Customer Dispute" shall mean, with respect to any Receivable,
any cause for nonpayment of such Receivable by a Customer obligated thereon
other than the financial inability of such Customer, including, without
limitation, any alleged defense, offset or counterclaim, act of God, war, civil
strife, currency restriction, change in law or governmental policy or foreign
political impediment.
1.11....."Cutoff Date" shall mean, with respect to any Purchased
Receivables, the date identified as such in the related Assignment.
1.12....."Face Amount" shall mean, with respect to any Receivable, the
dollar amount thereof shown on the schedule to the related Assignment.
1.13....."Final Settlement Date" shall mean, with respect to a Pool of
Purchased Receivables, the Banking Day that is three (3) Banking Days after the
earlier of (i) the first Banking Day as of which you shall have received in cash
Collections from such Purchased Receivables in an aggregate amount at least
equal to the sum of (A) the Purchase Price for such Pool of Purchased
Receivables and (B) all other amounts then due and payable by us to you under
this Agreement and (ii) the first Banking Day which is not less than 90 days
after the Purchase Date of such Pool of Purchased Receivables.
1.14....."Great American" shall mean Great American Knitting Mills,
Inc., a Delaware corporation.
1.15....."Person" shall mean an individual, partnership, corporation,
limited liability company, unincorporated organization, trust or joint venture,
or a governmental agency or political subdivision thereof.
1.16....."Pool" shall mean (i) one or more Receivables or Approved
Receivables, as appropriate, that we propose to sell to you on a single Purchase
Date or (ii) one or more Purchased Receivables sold to you on a single Purchase
Date and identified in the same Assignment.
1.17....."Prime Rate" shall mean the rate of interest announced by Bank
of America, N.A. from time to time as its Prime Rate.
1.18....."Purchase Date" shall mean, with respect to any Pool of
Approved Receivables, the Banking Day such Pool is purchased by you pursuant to
the terms of this Agreement.
1.19....."Purchase Price" shall mean, with respect to any Pool of
Purchased Receivables the purchase price payable by you to us for such Pool of
Purchased Receivables, calculated pursuant to Section 2.2 of this Agreement.
1.20....."Purchased Receivables" shall mean any Approved Receivables
purchased by you from us pursuant to this Agreement.
1.21....."Receivables" shall mean (i) accounts arising from Sales, the
proceeds thereof, and all instruments, contract rights, chattel paper,
documents, insurance proceeds and general intangibles relating directly thereto
and (ii) all security interests or liens and property from time to time
purporting to secure payment of such Receivables, together with all financing
statements signed by a Customer describing any collateral securing such
Receivables, and all guarantees, insurance and other arrangements of whatever
character from time to time supporting or securing payment of such Receivables,
whether now existing or hereafter created.
1.22....."Receivables Transfer Agreement" shall mean the Receivables
Transfer Agreement, dated as of May 12, 2000, between Great American and us.
1.23....."Sales" shall mean the sale of Gold Toe brand and other socks
by Great American in the ordinary course of its business to Customers in the
United States of America.
All terms that are used in this Agreement and that are defined in the
Uniform Commercial Code as currently in effect in the State of New York (the
"New York UCC") are used herein as defined in the New York UCC.
SECTION 2. APPROVAL AND SALE; PURCHASE PRICE; COLLECTIONS
2.1......We may submit to you for your review not more than two times
and only during the period from the date hereof through June 30, 2000, a
schedule identifying a Pool of Receivables, which schedule shall be in a form
acceptable to you and shall include the name of the Customers obligated on such
Receivables, the selling terms of such Receivables, an aging of such
Receivables, a copy of the invoices for such Receivables and such other
information with respect to such Receivables and such Customers as you may
request. Upon receipt of such information, you will make such credit and other
investigations as you deem appropriate in accordance with your customary
business practices. After your completion of such investigations, you will
advise us as to which Receivables, if any, in such Pool of Receivables are
Approved Receivables. We understand that (i) you do not have any obligation to
approve any Receivable or all or any portion of a Pool of Receivables, (ii) you
may approve only a portion of a Pool of Receivables, (iii) in no event will a
Receivable 60 days or more past the due date thereof be an Approved Receivable,
and (iv) any approval of a Receivable or a Pool of Receivables will be made by
you in writing and shall be subject to the terms and conditions of such written
approval.
2.2......Subject to the terms and conditions of this Agreement, on each
Purchase Date we will sell, transfer and assign to you, without recourse to us
other than as provided in this Agreement, and you will purchase from us, the
Pool of Approved Receivables identified on Schedule I to an Assignment that we
deliver to you on such Purchase Date. Upon your receipt of such Assignment on
such Purchase Date, you shall be the absolute owner of all of the Purchased
Receivables identified in such Assignment. In addition, we hereby assign to you
all of our right, title and interest (but none of our obligations), in, to and
under the Receivables Transfer Agreement and the Guarantee dated as of May 12,
2000 (the "Guarantee") made by Cluett American in our favor. The Purchase Price
of the Pool of Approved Receivables sold to you on a Purchase Date shall be an
amount equal to (i) the aggregate Face Amount of the Approved Receivables in
such Pool less (ii) the sum, for all such Approved Receivables, of the product,
for each day during the period from such Purchase Date to the earlier of the
date you have received payment in full of the aggregate Face Amount of such
Approved Receivables and the Final Settlement Date with respect to such Pool, of
(A) 95% of the Face Amount of each Approved Receivable in such Pool less any
payments received and applied before such day against such Approved Receivable
and (B) the Prime Rate less (iii) .5% of the aggregate Face Amount of the
Approved Receivables in such Pool. Any portion of the Purchase Price that has
not been advanced by you to us pursuant to Section 2.5 of this Agreement shall
be payable to us, on the Final Settlement Date for such Pool of Purchased
Receivables, by wire transfer of immediately available funds to an account of
ours that we designate to you in writing.
2.3......Except as provided in Section 4.2 of this Agreement, the sale
and purchase of Receivables contemplated by this Agreement shall be on a
non-notification basis and you shall not notify any Customers without our prior
consent. Great American shall, as agent for you and us, in accordance with
Section 4 of this Agreement and Section 5.3 of the Receivables Transfer
Agreement, receive all Collections on the Purchased Receivables from the
applicable Customers until its authority to do so is terminated pursuant to
Section 4.1 of this Agreement. Prior to any such termination, (i) all
Collections received by us or Great American with respect to Purchased
Receivables shall be held in trust for you. We shall cause all Collections
constituting collected funds with respect to any Purchased Receivable to be wire
transferred to you on each Collection Turn-Over Date, and such collected funds
shall be applied by you to pay such Purchased Receivable, with any excess to be
held by you and applied as provided below in this Section 2.3 and (ii)
Collections with respect to Purchased Receivables may be commingled with other
collections of Receivables owned by Great American pending the transfer of such
Collections to you. On the Final Settlement Date with respect to a Pool of
Purchased Receivables, you may charge our account (which charge shall, without
any further action, constitute a repurchase by us from you of the relevant
Purchased Receivable pursuant to Section 3.3 of this Agreement) with the amount
of each Purchased Receivable in such Pool, that has not been paid by reason of a
Customer Dispute. In the event that Collections received by you on or prior to
the Final Settlement Date with respect to any Pool of Purchased Receivables
exceed the Purchase Price of such Pool, you will apply such excess on such Final
Settlement Date to any other amounts owing by us to you on such Final Settlement
Date (whether on account of dilutions or otherwise). In the event that
Collections received by you on or prior to the Final Settlement Date with
respect to a Pool of Purchased Receivables exceed, after application in
accordance with the immediately preceding sentence, the aggregate of all amounts
owing by us to you hereunder on such Final Settlement Date, you will pay such
excess by wire transfer of immediately available funds to an account of ours
that we designate to you in writing.
2.4......Within fifteen (15) days after the end of each month, you
shall render to us a statement of our account with you showing the accountings
for your charges and receipts and other transactions between us during such
month with respect to the transactions contemplated hereby. Your monthly
statement of our account with you shall be deemed correct and binding upon us
and shall constitute an account stated between us unless you receive a written
statement of our exceptions within thirty (30) days after same is mailed to us.
We shall pay or cause to be paid to you all Collections and other amounts due to
you hereunder on the date when due by wire transfer of immediately available
funds to an account of yours that you designate to us in writing.
2.5......Prior to the Final Settlement Date with respect to a Pool of
Approved Receivables purchased by you, upon our request you will advance to us
all or a portion of the anticipated Purchase Price payable by you to us for each
Purchased Receivable in such Pool, but in any event not exceeding ninety-five
percent (95%) of the Face Amount of such Purchased Receivable. We shall pay to
you interest on such advanced amount at the rate per annum equal to the Prime
Rate for the number of days that such advance remains outstanding until such
Final Settlement Date and thereafter until paid at the rate per annum equal to
the Prime Rate plus 2%. Such advance shall be deemed repaid on such Final
Settlement Date to the extent of the then outstanding balance of Purchased
Receivables in such Pool which are not repaid by reason of Credit Risk, and we
shall have no obligation to pay you interest on any such deemed repaid amount
from and after such Final Settlement Date. Further, interest paid by us as
provided herein shall reduce, dollar for dollar, the amount of the Purchase
Price payable by you to us on such Final Settlement Date. Interest shall be
computed on the basis of a year of three hundred sixty (360) days, for actual
days elapsed.
2.6......It is the express intent of the parties to this Agreement that
each assignment and conveyance of Purchased Receivables pursuant to this
Agreement be construed as a true sale of such Purchased Receivables by us to
you. It is, further, not the intention of the parties to this Agreement that
each such assignment and conveyance be deemed a grant of a security interest in
the Purchased Receivables by us to you to secure a debt or other of our
obligations. However, in the event that any such assignment and conveyance of
the Purchased Receivables hereunder is characterized by any court of competent
jurisdiction as a loan rather than a sale, we shall be deemed hereunder to have
granted to you, and we hereby grant to you, a perfected first priority security
interest in all of our right, title and interest in, to and under all of the
Purchased Receivables, whether now or hereafter owned, existing or arising and
wherever located and all of our right, title and interest in, to and under the
Receivables Transfer Agreement and the Guarantee. You shall have, with respect
to the property described in this subsection 2.6, and in addition to all the
other rights and remedies available to you under this Agreement and applicable
law, any additional rights and remedies of a secured party under any applicable
enactment of the Uniform Commercial Code.
2.7......The sales, transfers, assignments and conveyances of Purchased
Receivables contemplated herein do not constitute, and are not intended to
result in a creation or assumption by you of any of our obligations or the
obligations of any other Person in connection with the Purchased Receivables or
any agreement or instrument relating thereto, including, without limitation, any
obligation to any Customer.
2.8......In connection with the foregoing conveyances, we agree to
record and file on or prior to each related Purchase Date, at our own expense,
UCC-1 financing statements (and thereafter continuation statements with respect
to such financing statements when applicable) with respect to the Approved
Receivables to be purchased on such Purchase Date, meeting the requirements of
applicable state law, in such manner and in such jurisdictions as are necessary
to perfect the purchases of such Approved Receivables by you from us, to obtain
oral confirmation of such filing on or prior to such related Purchase Date and
to deliver file-stamped copies of such financing statements or other evidence of
such filings within five Banking Days after such related Purchase Date.
SECTION 3. CREDIT RISK; REPURCHASE
3.1......Except as hereinafter provided, you assume the entire Credit
Risk on all Purchased Receivables assigned to you under this Agreement as to
which the Customer has actually received and finally accepted the delivery of
Gold Toe brand and other socks. We assume the risk of nonpayment of Purchased
Receivables where nonpayment results from any Customer Dispute.
3.2......Without your prior written consent, we will not vary the terms
(including, without limitation, amount, maturity and the like) of, or grant any
adjustment, refund or other indulgence with respect to, any Purchased
Receivable. We will promptly notify you if any Purchased Receivable is not
timely paid by the Customer, if we become aware of any Customer Dispute, or if
we receive any information of any matter adversely affecting the value,
enforceably or collectibility of any Purchased Receivable or of an adverse
change in the financial condition of any Customer obligated on a Purchased
Receivable. You shall use good faith efforts (but shall have no obligation) to
cooperate and assist us in the adjustment of any Customer Dispute. We shall
promptly notify you, upon accepting returns or granting allowances under the
terms of any Purchased Receivable.
3.3......In the event that you determine that a Purchased Receivable
(i) remains unpaid on the Final Settlement Date for such Purchased Receivable by
reason of a Customer Dispute or is subject to a Customer Dispute at any other
time, (ii) is subject to any change of terms after its Purchase Date without
your prior consent, (iii) is or becomes subject to a lien or security interest
(other than in your favor), or (iv) does not comply with each representation,
warranty and covenant with respect to such Purchased Receivable set forth in
this Agreement or the Receivables Transfer Agreement, you may charge our account
at any time and such charge, without any further action, shall constitute a
repurchase by us from you of the relevant Purchased Receivable. In addition, you
may charge our account with the amount of each Purchased Receivable if we breach
in any material respect any representation or warranty made by us in this
Agreement or if we default in the performance of any payment or other covenant,
obligation or agreement binding on us and contained in this Agreement. Any
repurchase resulting from any such charge to our account shall be without
recourse or warranty of any kind by you other than a warranty that you have not
diminished the title received from us. In connection with any such repurchase,
we shall pay to you on demand all amounts payable by us to you hereunder with
respect to the relevant Purchased Receivable or Purchased Receivables, less any
Collections you received thereon, plus interest at a rate per annum equal to the
Prime Rate plus 2% for the period from the date of such demand to the date of
reassignment.
SECTION 4. SERVICING; NOTIFICATION
4.1......You hereby appoint, with our consent, Great American to
perform all services necessary to administer, service and collect the Purchased
Receivables and remit Collections from such Purchased Receivables to you as
described in Section 2.3 of this Agreement. With respect to such duties Great
American shall be acting as your agent and shall be subject to the following
conditions: (i) it shall exercise that degree of skill and care consistent with
prudent industry standards with respect to the administration, servicing,
collection and reporting of Receivables (both Purchased Receivables and
non-purchased Receivables); (ii) it shall comply with all applicable state and
federal laws and regulations in connection with our performing such duties;
(iii) it shall comply with the Credit and Collection Policy in connection with
the administration, servicing, collection and reporting of Receivables (both
Purchased Receivables and non-purchased Receivables) , a copy of the Credit and
Collection Policy having been delivered to you prior to the initial Purchase
Date under this Agreement; and (iv) without your consent, it shall not take any
action with respect to any Purchased Receivable that could impair your rights
therein or the enforceability, value or collectibility thereof. We understand
that Great American's authority to perform such duties (A) shall terminate
automatically if it has called a meeting of creditors or ceased conducting
business or upon the institution by or against it of any proceeding under any
bankruptcy or insolvency laws or (B) shall terminate at your option, if we
breach any representation, warranty or covenant or default in any of our
obligations in this Agreement.
4.2......You shall have the right to directly communicate with any
Customer obligated on a Purchased Receivable (and, in the case of clauses (ii)
or (iii) below, commence collection proceedings) (i) to obtain current
information that concerns such Customer's financial condition and
creditworthiness and that is not provided promptly by us to you after request,
(ii) if any portion of such Customer's Purchased Receivables remains unpaid five
days after the applicable Final Settlement Date, (iii) if we, Great American,
Cluett American or such Customer has called a meeting of its creditors or ceased
conducting business or upon the institution by or against such Person of any
proceeding under any bankruptcy or insolvency law, or (iv) if we default in the
payment as and when due and payable of any amount payable by us to you under
this Agreement.
4.3......You shall have the right to bring suit, in your name or our
name or the name of Great American, and generally have all other rights
respecting Purchased Receivables which are past due solely and exclusively as a
result of any Customer's financial inability, including without limitation the
right to: accelerate or extend the time of payment, settle, compromise, release
in whole or in part any amounts owing on any Purchased Receivables and issue
credits in your name or ours. You may endorse or sign your name or ours on any
checks or other instruments with respect to Purchased Receivables or the goods
covered thereby. Any and all returned, reclaimed or repossessed inventory and
goods relating to Purchased Receivables shall be set aside by us, marked with
your name and held by us in trust for you as owner, and for your account.
Further, we shall promptly notify you of the receipt of all such inventory and
goods and, at your direction, deliver the same to you or sell the same for your
account and remit the full proceeds to you.
4.4......We agree to make our records, files and books of account
available to you on request, and to allow you and your agents and
representatives to visit our premises during normal business hours to examine
such records, files and books of account and to make copies or extracts thereof,
and to allow you to conduct such examinations as you deem necessary. You shall
be entitled to charge our account the sum of $750 per day for each examiner
involved in such examination up to a maximum amount of $5000 for any Pool of
Receivables audited by you.
4.5......In connection with the sale and assignment of Purchased
Receivables hereunder, we agree, at our own expense, on each Purchase Date, to
indicate or cause to be indicated clearly and unambiguously in our accounting
records that such Purchased Receivables have been sold to you pursuant to this
Agreement as of the applicable Purchase Date.
4.6......Notwithstanding anything to the contrary, Collections which
are received from any Customer who is an account debtor both with respect to
Receivables that are Purchased Receivables and Receivables that are not
Purchased Receivables and which are not identified to specific Receivables,
shall first be applied to such Purchased Receivables until all such Purchased
Receivables have been paid in full and thereafter to Receivables which are not
Purchased Receivables, regardless of the respective dates such Receivables were
originated and regardless of any notations on payment items.
SECTION 5. INFORMATION
5.1......We shall furnish you promptly upon request such reports and
other information relating to Customers, Great American, Cluett American or the
Receivables as you may from time to time reasonably request.
5.2......For all Purchased Receivables which are past due solely and
exclusively as a result of the Customer's financial inability and for which you
have the Credit Risk, upon your request, we shall provide you with each of the
following: (i) a copy of such Customer's purchase order and/or a signed
confirmation thereof; (ii) a copy of each outstanding invoice and all credit
memoranda; (iii) a notarized statement of account; (iv) copies of all
correspondence to and from such Customer; (v) a copy of our complete collection
file on such Customer; (vi) all guarantees, collateral documents and security
agreements, (vi) proof of delivery of goods or rendering of services, and (vii)
such other documents and information that you may request.
SECTION 6. REPRESENTATIONS AND WARRANTIES
6.1......On the date of this Agreement and on each Purchase Date, we
represent and warrant that (i) we are a duly organized and validly existing
limited liability company under the laws of the State of Delaware; (ii) we are
duly qualified to transact business and in good standing in every jurisdiction
where the failure to be so qualified or in good standing would materially
adversely affect the collectibility of any Receivable or our ability to perform
our obligations hereunder; (iii) no provision of our limited liability company
agreement or any other contractual provision which is binding on us or Great
American or to which or any of our property or Great American's property is
subject restrict our ability to enter into or comply with our obligations under
of this Agreement; (iv) this Agreement is, and each Assignment when delivered
hereunder will be, our legal, valid and binding obligation enforceable against
us in accordance with its terms; and (v) each of the representations and
warranties of Great American set forth in the Receivables Transfer Agreement are
true and correct in all material respects.
6.2......On the date of this Agreement and on each Purchase Date, we
represent and warrant that each Receivable: (i) complies with all applicable
legal requirements; (ii) constitutes a valid and binding unconditional
obligation of the Customer to pay the Face Amount of such Receivable and is not
subject to any defense, set-off or counterclaim; (iii) is based on an actual and
bona fide sale and delivery in the ordinary course of business of Gold Toe socks
that have been delivered to and accepted by such Customer; (iv) provides for
payment by such Customer in U.S. Dollars; (v) is not past its due date; (vi) is
our exclusive property and free and clear of all security interests, liens, or
claims (other than any security interest granted pursuant to this Agreement);
(vii) does not include any amount as to which such Customer is permitted to
withhold payment until the occurrence of a specified event or condition
(including but not limited to "guaranteed" or "conditional" sales), unless such
Customer has acknowledged in writing that such specified event or condition has
occurred and such amount is owing; (viii) is not the subject of any legal or
arbitral proceeding; (ix) is not disputed; and (x) is not subject to the Federal
Assignment for Claims Act of 1940 or any other transfer restriction.
6.3......On the date of this Agreement and on each Purchase Date, we
represent and warrant that with respect to each Receivable: (i) the Customer is
not our Affiliate or in any other way related to us and (ii) any taxes or fees
relating to such Receivable are our sole responsibility.
6.4......On the date of this Agreement and on each Purchase Date, our
chief executive office, principal place of business and the office where we keep
all our books, records and documents evidencing Receivables, the related
contracts and security, if any, are located at the address specified in Exhibit
B hereto (or at such other locations, notified to Purchaser in accordance with
Section 7.3).
SECTION 7. COVENANTS
7.1......We shall maintain and implement administrative and operating
procedures (including, without limitation, an ability to recreate records
evidencing Receivables in the event of the destruction of the originals
thereof), and keep and maintain, all documents, books, records and other
information reasonably necessary or advisable for the collection of all
Receivables.
7.2......We shall, at our expense, timely and fully perform and comply
with all material provisions, covenants and other promises required to be
observed by us under the contracts related to Purchased Receivables.
7.3......We shall keep our principal place of business and chief
executive office, and the office where we keep our records concerning
Receivables and all contracts and security related thereto (and all original
documents relating thereto), at our address referred to in Section 6.3 of this
Agreement or, upon 30 days' prior written notice to you, at such other location
in a jurisdiction where all action required by Section 7.5 of this Agreement
shall have been taken and completed.
7.4......We shall comply in all material respects with our credit
policies and procedures for each Purchased Receivable. We shall not make any
material change in our credit policies and procedures if such change would be
reasonably likely to adversely affect the enforceability, value or
collectibility of any Purchased Receivables.
7.5......We shall execute such financing statements (including
amendments thereto and continuation statements thereof) as may be deemed
advisable by you from time to time to establish, maintain and protect your
ownership interest in the Purchased Receivables.
7.6......We shall take all action necessary to assure that our
computer-based systems will at all times operate and effectively process data
including data fields requiring references to dates on and after January 1,
2000. At your request, we shall provide to you evidence acceptable to you of our
compliance with this Section 7.6.
SECTION 8. EFFECTIVE DATE; TERMINATION; BINDING EFFECT
If accepted by you, this Agreement shall be effective on May
12, 2000. Either you or we may terminate this Agreement at any time by giving
the other written notice of termination stating a termination date not less than
sixty (60) days from the date such notice is delivered. This Agreement continues
uninterrupted unless terminated as herein provided. Notwithstanding the
foregoing, you may terminate this Agreement immediately upon the occurrence of
any of the following events: cessation of our business or the calling of a
meeting of our creditors; the commencement by or against us of any proceeding
under any bankruptcy or insolvency law; breach by us of any representation,
warranty, covenant or obligation contained herein; or our failure to pay when
due any obligation owing by us to you or your affiliates. Any termination of
this Agreement, however, shall not affect obligations incurred hereunder prior
to such termination. This Agreement shall bind us, our successors and assigns
and shall inure to the benefit of you, your successors and assigns.
SECTION 9. MISCELLANEOUS
9.1......You retain the right at any time and from time to time to sell
participation interests in any amount of your interest in the Purchased
Receivables as you may deem desirable. You retain the right at any time to
assign all or a part of your rights under this Agreement.
9.2......This Agreement shall be governed by, and construed and
enforced in accordance with the laws of the State of New York.
9.3......Any taxes (excluding income taxes) payable or ruled payable by
any federal or state authority in respect of this Agreement and your purchase of
Approved Receivables shall be paid by us, together with interest and penalties,
if any. We shall reimburse you for any and all out-of-pocket expenses and
internal charges paid or incurred by you in connection with the preparation,
administration, collection or enforcement (including reasonable attorney's fees)
of this Agreement and any amendments hereto, including expenses incurred in
connection with the filing of financial statements, continuation statements and
record searches. We shall also pay you such reasonable wire transfer and similar
fees as you charge from time to time. We hereby agree to indemnify you from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time be imposed on, incurred by or asserted against
you in any way relating to or arising out of this Agreement, the Assignments or
any of the other agreements related hereto or the transactions contemplated
hereby or any action taken or omitted to be taken by us under or in connection
with any of the foregoing; provided, however, that we shall not be liable for
the payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
solely from your gross negligence or willful misconduct as finally determined by
a court of competent jurisdiction or from Credit Risk. The agreements in this
Section 9.3 shall survive the termination of this Agreement.
9.4 No delay or failure on your part in exercising any right,
privilege, or option hereunder shall operate as a waiver of such or of any other
right, privilege, or option, and no waiver, amendment, or modification of any
provision of this Agreement shall be valid, unless in writing signed by you and
then only to the extent therein stated. All rights and remedies existing
hereunder or under any other documents are cumulative to and not exclusive of
any rights or remedies otherwise available. Should any provision of this
Agreement be prohibited by or invalid under applicable law, the validity of the
remaining provisions shall not be affected thereby. Any notices, requests,
demands or other communications given by you under this Agreement may be sent by
mail, delivery or telecopy to our most current address as reflected in your
records. The headings used herein are intended to be for convenience of
reference only and shall not define or limit the scope, extent or intent or
otherwise effect the meaning of any portion hereof.
9.5......All demands, notices and communications hereunder shall be in
writing delivered by hand or by facsimile and shall be deemed to have been duly
given, in the case of notice by facsimile, when telecopied to the following
number, or, in the case of notice by hand, if personally delivered at the
following addresses or to such other addresses as may be hereafter notified by
the respective parties hereto:
Banc of America Commercial Corporation
335 Madison Avenue, 6th Floor
New York, New York 10017
Attention: Darren Linder
Telecopy: 212-503-7091
Cluett American Receivables, LLC
661 Plaid Street
urlington, North Carolina 27215
Attention: Bryan P. Marsal
Telecopy: 425-940-6659
9.6......This Agreement embodies our entire agreement as to the subject
matter and supersedes all prior agreements as to the subject matter. EACH PARTY
HERETO HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
RELATING TO TRANSACTIONS UNDER THIS AGREEMENT.
Cluett American Receivables, LLC
By:
Name:
Title:
ACCEPTANCE
The foregoing Receivables Purchase Agreement is accepted in the City of
Atlanta, Georgia as of the 12th day of May, 2000.
Banc of America Commercial Corporation
By:
Name:
Title:
ACKNOWLEDGMENT AND AGREEMENT
GREAT AMERICAN KNITTING MILLS, INC. hereby acknowledges the provisions of
the foregoing Receivables Purchase Agreement and agrees to be bound by and
perform its obligations under Sections 2.3 and 4 thereof.
Great American Knitting Mills, Inc.
Name:
Title:
<PAGE>
EXHIBIT A
ASSIGNMENT
FOR VALUE RECEIVED, in accordance with the Receivables
Purchase Agreement dated as of May 12, 2000 (the "Agreement") between the
undersigned and Banc of America Commercial Corporation (the "Buyer"), the
undersigned does hereby sell, assign and transfer effective as of the close of
business on May 11, 2000 to the Buyer and its successors and assigns all right,
title and interest of the undersigned in, to and under each and every Approved
Receivable (as defined in the Agreement) identified in Schedule I attached
hereto and in, to and under all guarantees thereof and collateral security
therefor.
This Assignment is made without recourse to the undersigned
except to the extent otherwise provided in the Agreement, but is made pursuant
to and upon all of the representations, warranties, covenants and agreements
contained in the Agreement.
This Assignment has been delivered to the Buyer by the
undersigned in the State of New York and shall be governed by and construed in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the undersigned has caused this Assignment
to be executed by its duly authorized officer as of this 12th day of May, 2000.
CLUETT AMERICAN RECEIVABLES, LLC
By:
Name:
Title:
<PAGE>
SCHEDULE I TO ASSIGNMENT
Customer Name Invoice Numbers
Belk Leggett 4292597
4293029-4293338
4295019-4295231
4301264-4301398
4304479-4304571
4310512-4310626
4316134-4316156
4316176-4316256
Total $175,581.12
Boscov's 4291724-4291757
4292499-4292507
4303902-4303943
4305371-4305402
4306708-4306775
4307760-4307793
4311323-4311351
Total $202,411.02
Burlington 4292404-4290477
4297713-4297922
4301007-4301008
4309286
4311799-4311909
Total $32,911.80
Carson Pirie Scott & Co. 4290518-4290567
4294445-4294545
4298644
4299169-4299189
4300311-4300319
4305942-4305946
4307560-4307603
4314601-4314673
4318948-4319117
Total $98,681.55
DHDSC 4287793-4287828
4295232-4295248
4295580-4295621
4304014-4304162
4304572-4304610
4304972-4305119
4306594-4306605
4307696-4307759
4307848-4307883
4310744-4310887
4311146-4311189
4316927-4317046
4317295-4317335
Total $215,999.76
Famous Barr Service 4287741-4287750
4291465-4291528
4291947-4291991
4293001-4293028
4295737-4295916
4296727-4296752
4301011-4301031
4301493-4301524
4302564-4302573
4310181-4310211
4310892-4310914
4311493-4311580
4311957-4311966
Total $278,666.34
Filenes 4291000-4291248
4292878-4292921
4296604-4296726
4301399-4301442
4305165-4305184
4307885-4307958
4310140-4310180
4314446-4314517
4317800-4317822
Total $246,258.58
Fingerhut 4298992
4318567
Total $37,953.60
Foleys 4287688-4287740
4292127-4292328
4296890-4296979
4299636-4299710
4301145-4301258
4306225-4306236
4306313-4306336
4307639-4307695
4307959-4307997
4310444-4310511
4312960-4313015
Total $160,510.26
Herbergus 4290216-4290329
4290477-4290516
4299610-4299635
4301566-4301602
4306861
Total $80,963.94
HQ AAFES 4287751-4287792
4287829-4287836
4292525-4292568
4292576-4292585
4294610-4294621
4297033-4297038
4298622
4300304-4300307
4302574
4302576
4305926
4306337-4306342
4306667-4306699
4306707
4306862-4306887
4307794-4307796
4307806-4307834
4310742-4310743
4311968-4311969
4312143-4312145
4314520
4314522
4315859-4315866
4318562
4318575
Total $33,839.80
JC Penney 4305936
4305960
4306000
4306017-4306018
4316071-4316104
4286760-4287279
4287334-4287687
4287837-4288544
4288573-4288590
4288744-4288900
4292480-4292497
4292616-4292868
4292873-4292876
4293526-4294442
4297233-4297699
4297924-4298039
4298672-4298985
4300321-4300980
4301009
4302028-4302475
4302636-4302663
4302675-4302676
4305403-4305618
4305647-4305921
4305959
4305961-4306127
4306904-4306907
4306911-4307070
4308115-4309106
4309267-4309273
4309289-4309329
4309345-4309346
4309348
4309429-4309448
4309456-4309967
4311912-4311925
4312044-4312138
4312142
4312146-4312251
4315146-4315641
4315672-4315853
4315983-4316047
4318576-4318872
4318904
4318906-4318908
4319147-4320086
4320123-4320217
Total $1,284,741.40
Kmart 4299712-4300153
4302690-4303209
4303211-4303790
4310230-4310440
4312348-4312447
4312541-4312679
4312680-4312959
4313017-4314444
Total $457,543.14
Kaufmanns 4290026-4290171
4295249-4295575
4299475-4299524
4301443-4301491
4308036-4308074
4310692-4310741
4315115-4315138
Total $299,770.60
Kohls 4291589-4291592
4308111-4308114
Total $65,106.72
Macys West 4287330-4287333
4290657-4290991
4291709-4291723
4292922-4293000
4296980-4296994
4299167
4305199-4305273
4305299-4305370
4311352-4311492
4317336-4317340
4317466-4317577
Total $366,384.12
Mamaxx Group/Marshalls 4287280
4299001
4299003
4299166
4305619-4305620
4306312
4318570
Total $536,311.24
Mamaxx/TJ Maxx 4298993-4299609
4301259-4301263
4306310-4306311
4314173-4314176
Total $315,713.00
McRaes Inc. 4299453-4299474
4306129-4306223
43147254314768
4316107-4316133
Total $32,319.54
Meier & Frank 4288546-4288554
4290173-4290210
4291760-4291783
4292350-4292361
4298625-4298641
4300260-4300299
4304449-4304478
4308075-4308082
4309107-4309111
4310212-4310228
4311781-4311794
4315099-4315114
4315139-4315144
4318873-4318891
4319118-4319135
Total $104,806.28
Rich's 4287281-4287329
4288642-4288715
4290440-4290476
4291645-4291708
4295623-4295736
4296286-4296292
4299525-4299564
4303819-4303884
4316157-4316175
4317675-4317796
4318914-4310946
Total $249,655.56
Robinsons/May 4290399-4290438
4291249-4291318
4296293-4296390
4300154-4300259
4301092-4301144
4310628-4310691
4311190-4311322
4317941-4317991
Total $119,917.80
Sterns 4288592-4288641
4291784-4291876
4294546-4294570
4294861-4294978
4305185-4305197
4306244-4306258
4311698-4311722
4312253-4312274
4315074-4315098
4317823-4317880
Total $148,669.80
Ross Stores 4286755-4286759
4290213
4298987-4298991
4300300-4300301
4304164-4304165
4306308-4306309
4314518-4314519
Total $321,863.64
The Bon Ton Stores 4288723-4288743
4289879-4290025
4299005-4299165
4303945-4304013
4314912-4314982
4314991-4315011
4315013-4315039
4315041-4315073
4316052
4316054-4316070
4319137-4319146
Total $129,655.86
The Hecht Co. 4291868-4291914
4292055-4292126
4292331-4292345
4296753-4296889
4298040-4298258
4298397-4299384
4299565-4299605
4300984-4300990
4307998-4308035
4308083-4308110
4314777-4314910
4318464-4318513
Total $344,301.18
EXHIBIT B
Chief Executive Office, Principal Place of Business and
Location of Books and Records with Respect to Receivables
661 Plaid Street
Burlington, North Carolina 27215
<PAGE>
PARTIAL RELEASE AGREEMENT
PARTIAL RELEASE AGREEMENT, dated as of May 12, 2000, by and among Bank of
America, N.A. f/k/a Nationsbank, N.A., as agent for the Lenders under the Credit
Agreement referred to below (in such capacity, the "Agent"), Great American
Knitting Mills, Inc., a Delaware corporation ("Great American") and Cluett
American Corp., a Delaware corporation (the "Borrower").
W I T N E S S E T H :
WHEREAS, the Borrower, Cluett American Investment Corp., Cluett American
Group, Inc., the Subsidiary Guarantors party thereto (including Great American),
the Lenders party thereto, the Agent and Gleacher Natwest Inc., as documentation
agent, are parties to a Credit Agreement, dated as of May 18, 1998 (as amended
through the date hereof, the "Credit Agreement"), pursuant to which the Lenders
agreed to extend credit to the Borrower;
WHEREAS, the obligations of the Borrower to the Agent and the
Lenders under the Credit Agreement are guaranteed by the Subsidiary Guarantors
(including Great American) pursuant to the Credit Agreement and are secured by
the Collateral (as defined in the Credit Agreement);
WHEREAS, the Borrower, Great American and the other Credit
Parties (as defined in the Credit Agreement) have requested that the Agent and
the Lenders release any and all security interests in the Collateral described
on Schedule I attached hereto (the "Released Collateral") in connection with the
Receivables Transfer Agreement, dated as of the date hereof, between Great
American and Cluett American Receivables, LLC, a Delaware limited liability
company and a wholly-owned subsidiary of Great American;
WHEREAS, the Agent and the Lenders are willing to release
their security interests in the Released Collateral, on the terms and conditions
set forth herein;
NOW, THEREFORE, in consideration of the premises and
agreements herein, the Borrower, Great American and the Agent hereby agree as
follows:
1. All terms used herein that are defined in the Credit
Agreement and not otherwise defined herein are used herein as defined therein.
2. Without recourse and without any representation or warranty
of any kind except as expressly provided herein, (a) the Agent hereby terminates
and releases any and all liens, security interests or other charges or
encumbrances in favor of the Agent, for the benefit of the Lenders, or the
Lenders in the Released Collateral which secures the Credit Party Obligations,
and (b) the Borrower and Great American hereby release the Agent and the Lenders
from any duty, liability or obligation (if any) under the Credit Agreement and
any other Credit Document with respect to the Released Collateral.
3. Concurrently with its execution and delivery hereof, the
Agent will execute and deliver to Great American the UCC-3 Financing Statements
described in Schedule II hereto and releasing its security interests in the
Released Collateral perfected by the filing of the UCC-1 Financing Statements
described in such Schedule II. In addition, at the request and the expense of
Great American, the Agent will promptly execute and deliver to Great American
such additional instruments and other writings, and take such other action, as
Great American may reasonably request to effect or evidence the release of the
security interest of the Agent or the Lenders in the Released Collateral.
4. The Borrower hereby agrees (i) to pay all costs and
expenses in connection with the preparation, execution, delivery, filing and
recording of this Agreement, the release documents executed in furtherance
hereof, and the performance of any other acts and the execution of any other
documents required to effect the release of any security pursuant hereto,
including, without limitation, the fees and disbursements of counsel to the
Agent and the Lenders; and (ii) to pay any and all stamp and other transfer or
filing taxes and fees payable or determined to be payable in connection with the
execution and delivery hereof or any release document pursuant hereto, and to
hold the Agent and the Lenders harmless from and against any and all liabilities
with respect to or resulting from any delay in paying or omission to pay such
taxes or fees.
5. Except as otherwise expressly provided herein, the Borrower
and Great American confirm and agree that (i) to the extent that any Credit
Document purports to assign or pledge to the Agent, for the benefit of the
Lenders, or to grant to the Agent, for the benefit of the Lenders, a security
interest in or lien on, any collateral as security for the Credit Party
Obligations of the Credit Parties from time to time existing in respect of the
Credit Documents, such pledge, assignment and/or grant of a security interest or
lien is hereby ratified and confirmed in all respects as security for all Credit
Party Obligations, whether now existing or hereafter arising. This Agreement
does not and shall not affect any of the Credit Party Obligations of any Credit
Party under or arising from the Credit Agreement or any other Credit Document,
including, without limitation, the Borrower's obligation to repay the Loans in
accordance with the terms thereof and the Credit Agreement, or the Credit Party
Obligations of any other Credit Party under any Credit Document to which such
Person is a party, all of which Credit Party Obligations shall remain in full
force and effect. Except as expressly provided herein, the execution, delivery
and effectiveness of this Agreement shall not operate as a waiver of any right,
power or remedy of the Agent and the Lenders under the Credit Agreement or any
other Credit Document, nor constitute a waiver of any provision of the Credit
Agreement or any other Credit Document.
6. The Agent represents and warrants that (i) to the best of
the Agent's knowledge, but without conducting any searches in any filing office
of any jurisdiction, Schedule II hereto accurately lists all UCC-1 Financing
Statements on file in any filing office and having Great American as debtor and
the Agent or any Lender as secured party that have been filed pursuant to the
Credit Documents and cover any Released Collateral and (ii) the Agent has all
requisite authority pursuant to the Credit Documents (including the consent of
the requisite Lenders) to enter into this Agreement and to release the Released
Collateral hereunder.
7. This Agreement shall (i) be binding on the Agent, the
Lenders, the Borrower and Great American and their respective successors and
assigns, and (ii) inure to the benefit of the Agent, the Lenders, the Borrower
and Great American and their respective successors and assigns.
8. This Agreement may be executed in any number of
counterparts and by the different parties hereto in separate counterparts, each
of which shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement.
9. This Agreement shall be governed by and construed in
accordance with the law of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their duly authorized officers as of
the date first above written.
GREAT AMERICAN KNITTING MILLS, INC.
By:
Name:
Title:
CLUETT AMERICAN CORP.
By:
Name:
Title:
BANK OF AMERICA, N.A., as Agent
By:
Name:
Title:
<PAGE>
SCHEDULE I
Released Collateral
All of Great American's right, title, and interest in, to and
under all of the following, whether now or hereafter owned, existing or arising
and wherever located:
(i) all Initial Receivables and Subsequent Receivables and all
payment and enforcement rights (but none of the obligations of any Person) with
respect to such Initial Receivables and Subsequent Receivables,
(ii) all Related Security with respect to such Initial
Receivables and Subsequent Receivables,
(iii)all Collections, and
(iv) any and all proceeds (including without limitation
"proceeds" as defined in Section 9-306 of the UCC as in effect in the State of
New York), of and any and all amounts received or receivable under, any or all
of the foregoing.
Great American and the LLC intend the transactions
contemplated by the Receivables Transfer Agreement to constitute sales by Great
American to the LLC of the Receivables and the other items described above.
As used herein, the following terms have the meanings set
forth below (such meanings to be equally applicable to both the singular and the
plural forms of the terms defined):
"Assignment" means one or more assignments of Receivables in
the form of Exhibit A to the Receivables Transfer Agreement.
"Collections" means (i) all payments, collections and
recoveries received or paid by or on behalf of the LLC, the Originator, the
Servicer, any Obligor or any other Person with respect to the Initial
Receivables and Subsequent Receivables and all Related Security with respect
thereto and (ii) all payments made by the Originator, the Servicer or the LLC
under the Receivables Transfer Agreement and the Receivables Purchase Agreement.
"First Purchase Date" means May 12, 2000.
"Great American" means Great American Knitting Mills, Inc., a
Delaware corporation.
"Initial Receivables" means the Receivables purchased by the
LLC from Great American on the First Purchase Date and identified on Schedule I
to an Assignment delivered by Great American to the LLC on the First Purchase
Date.
"LLC" means Cluett American Receivables, LLC.
"Obligor" means the Person or Persons obligated to make
payments on a Receivable, including without limitation any guarantor of such
obligations.
"Originator" means Great American.
"Person" means any association, partnership, business trust,
company, corporation, limited liability company, estate, joint venture, natural
person, trust or other entity.
"Receivables" means amounts due to Great American, whether
constituting an account, chattel paper, instrument, or general intangible,
arising in connection with the sale of socks.
"Receivables Purchase Agreement" means the Receivables
Purchase Agreement between the LLC, as seller, and Banc of America Commercial
Corporation, as purchaser, as the same may be amended, amended and restated or
otherwise modified from time to time.
"Receivables Transfer Agreement" means the Receivables
Transfer Agreement between Great American, as originator, seller and servicer,
and the LLC, as purchaser, as the same may be amended, amended and restated or
otherwise modified from time to time.
"Related Security" means, with respect to each Receivable, (i)
all security interests or liens and property from time to time purporting to
secure payment of such Receivable, together with all financing statements signed
by an Obligor describing any collateral securing such Receivable, and (ii) all
guarantees, insurance and other arrangements of whatever character from time to
time supporting or securing payment of such Receivable.
"Second Purchase Date" means the date on which the LLC shall
make a second purchase of Receivables under the Receivables Transfer Agreement,
such date being mutually agreed between Great American and the LLC.
"Secured Party" means the LLC.
"Servicer" means Great American.
"Subsequent Receivables" means the Receivables purchased by
the LLC from Great American on the Second Purchase Date and identified on
Schedule I to an Assignment delivered by Great American to the LLC on the Second
Purchase Date.
"UCC" mean the Uniform Commercial Code as in effect in the
applicable jurisdiction.
<PAGE>
SCHEDULE II
UCC-1 Financing Statements
<TABLE>
<S> <C> <C> <C>
Debtor Filing Office File Number Date
- ----------------------------------- -------------------------------------------- ---------------------- --------------
Great American Knitting Mills, Secretary of State - North Carolina 0199830226 05/29/98
Inc. 0199830227 05/29/98
0199830246 05/29/98
0199830894 06/01/98
Alamance County, North Carolina 98-1068 05/29/98
98-1077 06/01/98
Catawba County, North Carolina 981422 05/29/98
981425 06/01/98
Guilford County, North Carolina 475370 06/01/98
Halifax County, North Carolina 98-536 06/01/98
Orange County, North Carolina 98-628 06/01/98
Department of State - New York 115552 06/01/98
New York County, New York 98PN34323 07/02/98
Secretary of State - Pennsylvania 28981753 05/29/98
28991765 06/01/98
Berks County, Pennsylvania 98-1361ST 05/29/98
98-1407ST 06/03/98
Montgomery County, Pennsylvania 275182 06/01/98
</TABLE>
<PAGE>
GUARANTEE
GUARANTEE, dated as of May 12, 2000 (as amended, supplemented
or otherwise modified from time to time, the "Guarantee"), made by CLUETT
AMERICAN CORP. (together with its successors and assigns permitted herein,
"Cluett American"), in favor of CLUETT AMERICAN RECEIVABLES, LLC (the
"Purchaser").
W I T N E S S E T H :
WHEREAS, pursuant to the Receivables Transfer Agreement, dated
as of May 12, 2000 (as amended, supplemented or otherwise modified from time to
time, the "Transfer Agreement"), between Great American Knitting Mills, Inc.
("Great American"), as seller and servicer ("Great American"), and the
Purchaser, the Purchaser has agreed to purchase certain Receivables (as defined
therein) on the Purchase Dates referred to therein;
WHEREAS, pursuant to Sections 2.6, 2.7 and 6.2(a)(vi) of the
Transfer Agreement, Great American shall have, under certain circumstances,
certain repurchase and indemnification obligations with respect to the Purchased
Receivables (as defined therein); and
WHEREAS, Great American is a wholly-owned subsidiary of Cluett
American and it is to the advantage of Cluett American that the Purchaser
purchase certain Receivables from Great American;
NOW THEREFORE, in consideration of the premises and to induce
the Purchaser to enter into the Transfer Agreement and to induce the Purchaser
to make the purchases from Great American under the Transfer Agreement, Cluett
American hereby agrees with the Purchaser as follows:
1. Defined Terms. Terms defined in the preamble hereof and
the recitals hereto and terms defined in the Transfer Agreement and used herein
without definition shall have their defined meanings when used herein.
2. Cluett American Indemnification Obligation. Cluett American
hereby unconditionally guarantees to the Purchaser the performance by Great
American when due of its obligations under Sections 2.6, 2.7 and 6.2(a)(vi)
of the Transfer
Agreement.
3. No Subrogation, Contribution, Reimbursement or Indemnity.
Notwithstanding anything to the contrary in this Guarantee, Cluett American
hereby irrevocably waives all rights which may have arisen in connection with
this Guarantee to be subrogated to any of the rights (whether contractual, under
Title 11 of the United States Code, including Section 509 thereof, under common
law or otherwise) of the Purchaser against Great American or against any right
of offset of the Purchaser with respect to Great American's obligations under
Section 6.2(a)(vi) the Transfer Agreement. Cluett American hereby further
irrevocably waives all contractual, common law, statutory or other rights of
reimbursement, contribution, exoneration or indemnity (or any similar right)
from or against Great American or any other Person which may have arisen in
connection with this Guarantee. The provisions of this paragraph shall survive
the termination of the Transfer Agreement and the Guarantee; provided that the
foregoing waiver shall be of no force and effect 370 days following the
termination of the Transfer Agreement and the Guarantee but only if during such
370-day period Great American shall not have commenced or have commenced against
it a bankruptcy proceeding under Title 11 of the United States Code.
4. Amendments, etc. with respect to the Purchased Receivables.
Cluett American shall remain obligated hereunder notwithstanding that, without
any reservation of rights against Cluett American, and without notice to or
further assent by Cluett American, any demand for payment of any of the
Purchased Receivables made by the Purchaser may be rescinded by such Purchaser,
and the liability of any Obligor upon or for any part of the Purchased
Receivables, or any collateral security or guarantee therefor or right of offset
with respect thereto, may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived, surrendered or
released by the Purchaser, and the Transfer Agreement or any other documents
executed and delivered in connection therewith may be amended, modified,
supplemented or terminated, in whole or in part, as the Purchaser may deem
advisable from time to time, and any collateral security, guarantee or right of
offset at any time held by the Purchaser for the payment of the Purchased
Receivables may be sold, exchanged, waived, surrendered or released. The
Purchaser shall not have any obligation to protect, secure, perfect or insure
any Lien at any time held by it as security for the Purchased Receivables or for
this Guarantee or any property subject thereto.
5. Guarantee Absolute and Unconditional. Cluett American
waives any and all notice of the creation, renewal, extension or accrual of any
of the Purchased Receivables and notice of or proof of reliance by the Purchaser
upon this Guarantee or acceptance of this Guarantee; the Transfer Agreement
shall conclusively be deemed to have been created, contracted or incurred in
reliance upon this Guarantee; and all dealings between Great American or Cluett
American, on the one hand, and the Purchaser, on the other, shall likewise be
conclusively presumed to have been had or consummated in reliance upon this
Guarantee. Cluett American waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon Great American or Cluett
American with respect to the Purchased Receivables. This Guarantee shall be
construed as a continuing, absolute and unconditional Guarantee without regard
to (a) the validity or enforceability of the Transfer Agreement, the Guarantee,
the Assignments or any other document or instrument executed in connection with
any of the foregoing documents, any of the Purchased Receivables or any
collateral security therefor or guarantee or right of offset with respect
thereto at any time or from time to time held by the Purchaser, (b) any defense
which relates, directly or indirectly, to the matters covered by the
representations and warranties set forth in the Transfer Agreement or set-off
which in either case may at any time be available to or be asserted by Great
American against the Purchaser, or (c) any other circumstance whatsoever (with
or without notice to or knowledge of Great American or Cluett American) which
constitutes, or might be construed to constitute, an equitable or legal
discharge of Great American, any Obligor for the Purchased Receivables, or of
Cluett American under this Guarantee, in bankruptcy or in any other instance;
provided that this clause (c) shall not prevent Cluett American from being
discharged from its obligations under this Guarantee pursuant to confirmation of
a plan of reorganization under Chapter 11 of the United States Code in a case in
which Cluett American is the debtor. When the Purchaser is pursuing its rights
and remedies hereunder against Cluett American, the Purchaser may, but shall be
under no obligation to, pursue such rights and remedies as it may have against
Great American, the Obligor on any Purchased Receivable or any other Person or
against any collateral security or guarantee for the Purchased Receivables or
any right of offset with respect thereto, and any failure by the Purchaser to
pursue such other rights or remedies or to collect any payments from Great
American, any such Obligor or any such other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of Great American, any such Obligor or any such other Person or of any
such collateral security, guarantee or right of offset, shall not relieve Cluett
American of any liability hereunder, and shall not impair or affect the rights
and remedies, whether express, implied or available as a matter of law, of the
Purchaser against Cluett American.
6. Reinstatement. This Guarantee shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Purchased Receivables is rescinded or must otherwise
be restored or returned by the Purchaser upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of Great American or any Obligor or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, Great American or any Obligor or any
substantial part of its property, or otherwise, all as though such payments had
not been made.
7. Payments. Cluett American hereby agrees that payments
required to be made by it hereunder will be paid to the Purchaser in immediately
available funds without set-off in U.S. Dollars at the office of the Purchaser
at the address specified in subsection 6.8 of the Transfer Agreement.
8. Severability. Any provision of this Guarantee which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
9. Section Headings. The section headings used in this
Guarantee are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
10. No Waiver; Cumulative Remedies. The Purchaser shall not by
any act (except by a written instrument pursuant to Section 11 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any default or breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on the
part of the Purchaser, any right, power or privilege hereunder shall operate as
a waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Purchaser of any right
or remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Purchaser would otherwise have on any future occasion.
The rights and remedies herein provided are cumulative, may be exercised singly
or concurrently and are not exclusive of any rights or remedies provided by law.
11. Waivers and Amendments; Successors and Assigns. None of
the terms or provisions of this Guarantee may be waived, amended, supplemented
or otherwise modified except by a written instrument executed by Cluett American
and the Purchaser. This Guarantee shall be binding upon the successors and
permitted assigns of Cluett American and shall inure to the benefit of the
Purchaser and its successors and assigns; provided, however, that the Purchaser
shall not assign this Guarantee to any Person except in accordance with the
Transfer Agreement; and provided further, that the Company agrees that it will
not assign or transfer all or any portion of its rights or delegate any of its
obligations hereunder without the prior written consent of the Purchaser.
Cluett American acknowledges that the Purchaser will, concurrently
herewith, assign to the Unaffiliated Purchaser all of the Purchaser's right,
title and interest in, to and under (but none of the Purchaser's obligations
under), whether now or hereafter owned, existing or arising, this Guarantee.
Cluett American consents to such assignment and agrees that the Unaffiliated
Purchaser, to the extent provided in the Receivables Purchase Agreement, shall
be entitled to enforce the terms of this Guarantee and the rights (including,
without limitation, the right to grant or withhold any consent or waiver) of the
Purchaser directly against Cluett American. Cluett American hereby consents to
all of the terms of the Receivables Purchase Agreement.
12. GOVERNING LAW. THIS GUARANTEE AND THE OBLIGATIONS OF
CLUETT AMERICAN HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
13. Notices. All notices by the Purchaser to Cluett American
hereunder to be effective shall be in writing (including by telecopy or telex),
and shall be deemed to have been duly given or made (d) when delivered by hand,
(e) in the case of mail, three Business Days after deposit in the mail, postage
prepaid, (f) in the case of telecopy notice, when received, or (g) in the case
of telex notice, when sent, answer back received, addressed to Cluett American
at its address or transmission number set forth under its signature below.
Cluett American may change its address and transmission numbers by written
notice to the Purchaser.
14. Waiver. The Purchaser hereby irrevocably and
unconditionally waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding relating to
this Guarantee any special, exemplary, punitive or consequential damages;
provided that the waiver contained in this Section 14 shall not extend to any
right to claim or recover from Cluett American any special, exemplary, punitive
or consequential damages for which the Purchaser is liable to any Person (other
than an affiliate of such Purchaser).
15. Acknowledgments. Cluett American hereby acknowledges
with respect to the transactions contemplated by the Transfer Agreement that:
(h) it has been advised by counsel in the negotiation,
execution and delivery of this Guarantee;
(i) the Purchaser has no fiduciary relationship to Cluett
American or Great American and the relationship between the Purchaser,
on the one hand, and Cluett American or Great American, on the other
hand, is solely that of debtor and creditor; and
(j) no joint venture exists between Great American and the
Purchaser or between Cluett American and the Purchaser.
16. WAIVERS OF JURY TRIAL. EACH OF CLUETT AMERICAN AND THE
PURCHASER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTEE AND FOR ANY COUNTERCLAIM
THEREIN.
<PAGE>
IN WITNESS WHEREOF, Cluett American has caused this Guarantee to be
duly executed and delivered in New York, New York by its proper and duly
authorized officer as of the day and year first above written.
CLUETT AMERICAN CORP.
By:
Name:
Title:
Address for Notices:
Cluett American Corp.
48 West 38th Street, 8th Floor
New York, New York 10018-6211
Attention: General Counsel
Acknowledged By:
CLUETT AMERICAN RECEIVABLES, LLC
By:
Name:
Title:
<PAGE>
REPURCHASE AGREEMENT
REPURCHASE AGREEMENT, dated as of May 12, 2000 (as amended,
supplemented or otherwise modified from time to time, the "Repurchase
Agreement"), made by VESTAR CAPITAL PARTNERS III, L.P. (together with its
successors and assigns permitted herein, "Vestar III"), in favor of BANC OF
AMERICA COMMERCIAL CORPORATION (the "Purchaser").
W I T N E S S E T H :
WHEREAS, pursuant to the Receivables Purchase Agreement, dated
as of May 12, 2000 (as amended, supplemented or otherwise modified from time to
time, the "Purchase Agreement"), between Cluett American Receivables, LLC (the
"Seller"), as seller, and the Purchaser, the Purchaser may purchase certain
Receivables (as defined therein) on the Purchase Dates referred to therein;
WHEREAS, it is a condition precedent to any purchases of
Receivables by the Purchaser from the Seller under the Purchase Agreement that
Vestar III shall have executed and delivered this Repurchase Agreement; and
WHEREAS, Vestar III owns a majority of the outstanding common
stock of the indirect parent of the Seller and it is to the advantage of Vestar
III that the Purchaser purchase certain Receivables from the Seller;
NOW THEREFORE, in consideration of the premises and to induce
the Purchaser to enter into the Purchase Agreement and to induce the Purchaser
to make the purchases from the Seller under the Purchase Agreement, Vestar III
hereby agrees with the Purchaser as follows:
1. Defined Terms. Terms defined in the preamble hereof and the
recitals hereto and terms defined in the Purchase Agreement and used herein
without definition shall have their defined meanings when used herein, and the
following terms shall have the following meanings:
"Bankruptcy Event": with respect to any Person, either (i)
such Person shall have an order for relief entered with respect to it
under the Federal bankruptcy laws as now or hereafter in effect, (ii)
such Person shall have voluntarily commenced any proceeding or filed
any petition under any bankruptcy, insolvency or similar law seeking
the dissolution, liquidation or reorganization of such Person or (iii)
involuntary proceedings or an involuntary proceeding shall have been
commenced or filed against such Person under any bankruptcy, insolvency
or similar law seeking the dissolution, liquidation or reorganization
of such Person and such proceeding or petition shall have not been
dismissed for sixty (60) days.
"Capital Call Notice": a capital call notice satisfying
the requirements of Section 3.1 of the Partnership Agreement and
substantially in the form of Exhibit A attached hereto.
"Cluett American": Cluett American Corp., a Delaware
corporation.
"Deposited Notices": a collective reference to the Capital
Call Notices delivered by Vestar III to the Purchaser pursuant to
Section 8 and maintained on deposit with the Purchaser as contemplated
by Section 10(g).
"Diluted Receivable": a Purchased Receivable to the extent
such Purchased Receivable has not been paid in full at maturity for
any reason other than the applicable Customer's financial inability to
pay.
"Limited Partners": the limited partners of Vestar III.
"Material Adverse Effect": a material adverse effect on (i)
the condition (financial or otherwise), operations, business, assets,
liabilities or results of operations of Vestar III, (ii) the ability of
Vestar III to perform any material obligation under this Repurchase
Agreement or (iii) the rights and remedies of the Purchaser under this
Repurchase Agreement.
"Obligations": all obligations of the Seller to the Purchaser
under the Purchase Agreement, whether now existing or hereafter
arising.
"Outstanding Balance": of a Pool of Purchased Receivables at
any time, the Purchase Price of such Pool of Purchased Receivables
minus all amounts theretofore received and applied by the Purchaser in
payment of such Purchase Price.
"Partnership Agreement": that certain limited partnership
agreement, dated as of November 22, 1996, among Vestar Associates III,
L.P., a Delaware limited partnership, as general partner of Vestar III
and the individuals and entities party thereto, as limited partners.
"Plan Asset Regulations": the plan asset regulations of the
U.S. Department of Labor, 29 CFR 2510.3-101 et seq., as amended, and
the advisory opinions and rulings issued thereunder.
"Remaining Capital Commitment Balance": with respect to any
Limited Partner at any time, an amount equal to the total remaining
amount of capital contributions that such Limited Partner is obligated
at such time to make to Vestar III pursuant to the terms of the
Partnership Agreement.
"Repurchase Date": as defined in paragraph 2.
"Repurchase Obligation": for any Pool of Purchased Receivables
on any Repurchase Date, the sum of: (i) the Outstanding Balance of such
Pool of Purchased Receivables on the Final Settlement Date for such
Pool multiplied by (A) in the event that any Bankruptcy Event shall
have occurred with respect to Cluett American or Great American on or
prior to such Final Settlement Date, 100%, or (B) in the event that no
Bankruptcy Event shall have occurred with respect to Cluett American or
Great American on or prior to such Final Settlement Date, 20% minus
(ii) all amounts received by the Purchaser on or prior to such
Repurchase Date from Great American or Cluett American in payment of
any Diluted Receivables.
2. Vestar III Repurchase Obligation. On the seventh Business
Day following delivery to Vestar of the notice referred to in the second
sentence of paragraph 8(b) (the "Repurchase Date") with respect to a Pool of
Purchased Receivables, Vestar III agrees to repurchase from the Purchaser, up to
the Repurchase Obligation, all Purchased Receivables in such Pool which are
Diluted Receivables. The repurchase price for such Diluted Receivables (the
"Repurchase Price") on such Repurchase Date will be equal to the aggregate
Outstanding Balance of such Diluted Receivables. In addition, Vestar III
promises to pay to the Purchaser interest, at a rate equal to the Prime Rate
plus 2% per annum, on the amount payable hereunder on any Repurchase Date
pursuant to the first sentence of this paragraph for each day, if any, during
the period from such Repurchase Date through the date such amount is paid in
full.
If on any Repurchase Date the aggregate Outstanding Balance of
the Diluted Receivables in the related Pool exceeds the Repurchase Obligation,
Vestar III shall be deemed to acquire (i) first Diluted Receivables in full to
the extent the Repurchase Prices thereof would not exceed the Repurchase
Obligation and (ii) to the extent of any remaining Repurchase Obligation, a
subordinated fractional interest in each remaining Diluted Receivable, the
numerator of which shall be the remaining Repurchase Obligation and the
denominator of which shall be the aggregate Repurchase Price for all such
remaining Diluted Receivables. Vestar III agrees that any payments made the
Customers on account of any Diluted Receivables in which it owns a fractional
interest shall be paid first to the Purchaser until the Purchaser has received
in full the Purchase Price paid by it for such Receivables together with all
other amounts owed to it thereunder pursuant to the Receivables Purchase
Agreement.
No less than ten Business Days prior to each Final Settlement
Date, the Purchaser shall give Vestar III written notice of the Repurchase
Obligation as of such notification date (assuming such date was a Final
Settlement Date).
3. No Subrogation, Contribution, Reimbursement or Indemnity.
Notwithstanding anything to the contrary in this Repurchase Agreement, Vestar
III hereby irrevocably waives all rights which may have arisen in connection
with this Repurchase Agreement to be subrogated to any of the rights (whether
contractual, under Title 11 of the United States Code, including Section 509
thereof, under common law or otherwise) of the Purchaser against the Seller,
Great American or Cluett American or against any right of offset of the
Purchaser with respect to the Obligations. Vestar III hereby further irrevocably
waives all contractual, common law, statutory or other rights of reimbursement,
contribution, exoneration or indemnity (or any similar right) from or against
the Seller, Great American, Cluett American or any other Person which may have
arisen in connection with this Repurchase Agreement. The provisions of this
paragraph shall survive the termination of the Purchase Agreement and the
Repurchase Agreement; provided that the foregoing waiver shall be of no force
and effect 370 days following the termination of the Purchase Agreement and the
Repurchase Agreement but only if during such 370-day period the Seller shall not
have commenced or have commenced against it a bankruptcy proceeding under Title
11 of the United States Code.
4. Amendments, etc. with respect to the Purchased Receivables.
Vestar III shall remain obligated hereunder notwithstanding that, without any
reservation of rights against Vestar III, and without notice to or further
assent by Vestar III, any demand for payment of any of the Purchased Receivables
made by the Purchaser may be rescinded by such Purchaser, and the liability of
any Customer upon or for any part of the Purchased Receivables, or any
collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
the Purchaser, and the Purchase Agreement or any other documents executed and
delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Purchaser may deem advisable from time
to time, and any collateral security, guarantee or right of offset at any time
held by the Purchaser for the payment of the Purchased Receivables may be sold,
exchanged, waived, surrendered or released. The Purchaser shall not have any
obligation to protect, secure, perfect or insure any Lien at any time held by it
as security for the Purchased Receivables or for this Repurchase Agreement or
any property subject thereto.
5. Repurchase Agreement Absolute and Unconditional. Vestar III
waives any and all notices of the creation, renewal, extension or accrual of the
Purchase Agreement or any of the Purchased Receivables and notice of or proof of
reliance by the Purchaser upon this Repurchase Agreement or acceptance of this
Repurchase Agreement; the Purchased Agreement shall conclusively be deemed to
have been created, contracted or incurred in reliance upon this Repurchase
Agreement; and all dealings between the Seller, Great American, Cluett American
or Vestar III, on the one hand, and the Purchaser, on the other, shall likewise
be conclusively presumed to have been had or consummated in reliance upon this
Repurchase Agreement. Vestar III waives diligence, presentment, protest, demand
for payment and notice of default or nonpayment to or upon the Seller, Great
American, Cluett American or Vestar III with respect to the Purchased
Receivables. This Repurchase Agreement shall be construed as a continuing,
absolute and unconditional Repurchase Agreement without regard to (k) the
validity or enforceability of the Purchase Agreement, the Receivables Transfer
Agreement, the Assignments or any other document or instrument executed in
connection with any of the foregoing documents, any of the Purchased Receivables
or any collateral security therefor or guarantee or right of offset with respect
thereto at any time or from time to time held by the Purchaser, (l) any defense
which relates, directly or indirectly, to the matters covered by the
representations and warranties set forth in the Purchase Agreement or this
Repurchase Agreement or set-off which in either case may at any time be
available to or be asserted by the Seller, Great American or Cluett American
against the Purchaser, or (m) any other circumstance whatsoever (with or without
notice to or knowledge of the Seller, Great American, Cluett American or Vestar
III) which constitutes, or might be construed to constitute, an equitable or
legal discharge of the Seller, Great American, Cluett American, any Customer for
the Purchased Receivables, or of Vestar III under this Repurchase Agreement, in
bankruptcy or in any other instance; provided that this sentence shall not
prevent Vestar III from being discharged from its obligations under this
Repurchase Agreement pursuant to confirmation of a plan of reorganization under
Chapter 11 of the United States Code in a case in which Vestar III is the
debtor. Except as provided in paragraph 8(b), when the Purchaser is pursuing its
rights and remedies hereunder against Vestar III, the Purchaser may, but shall
be under no obligation to, pursue such rights and remedies as it may have
against the Seller, the Customer on any Purchased Receivable or any other Person
or against any collateral security or guarantee for the Purchased Receivables or
any right of offset with respect thereto, and any failure by the Purchaser to
pursue such other rights or remedies or to collect any payments from the Seller,
any such Customer or any such other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of the Seller, any such Customer or any such other Person or of any such
collateral security, guarantee or right of offset, shall not relieve Vestar III
of any liability hereunder, and shall not impair or affect the rights and
remedies, whether express, implied or available as a matter of law, of the
Purchaser against Vestar III.
6. Reinstatement. This Repurchase Agreement shall continue to
be effective, or be reinstated, as the case may be, if at any time payment, or
any part thereof, of any of the Purchased Receivables is rescinded or must
otherwise be restored or returned by the Purchaser upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Seller or any
Customer or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Seller or any Customer or
any substantial part of its property, or otherwise, all as though such payments
had not been made. Vestar III agrees that it will indemnify the Purchaser for
all reasonable costs and expenses (including, without limitation, fees and
expenses of counsel) incurred by the Purchaser in connection with such
rescission or restoration, including any such costs and expenses incurred in
defending against any claim alleging that such payment constituted a preference,
fraudulent transfer or similar payment under any bankruptcy, insolvency or
similar law.
7. Payments. Vestar III hereby agrees that all payments
made by it hereunder will be paid to the Purchaser in immediately available
funds without set-off in U.S. Dollars at the office of the Purchaser at the
address for notices thereto specified in the Purchase Agreement.
8. Deposit of Capital Call Notices. (a) On each Purchase Date,
Vestar III will deliver to the Purchaser Capital Call Notices for the Pool of
Receivables to be purchased on such date. Each of the Capital Call Notices
delivered by Vestar III to the Purchaser hereunder shall be held by the
Purchaser and shall be (i) duly completed by the Purchaser no earlier than the
Final Settlement Date for the related Pool of Receivables, stating the amount of
the applicable Capital Contribution thereunder will be equal to the pro rata
share of the applicable Limited Partner (determined in proportion to such
Limited Partner's total capital commitment obligation to Vestar III under the
Partnership Agreement) of the Repurchase Obligation due on such Final Settlement
Date (such amount for a Pool of Purchased Receivables, the "Reserved Amount" for
such Pool) and (ii) delivered by the Purchaser to the Limited Partners only in
the event that Vestar III fails to pay any of its payment obligations hereunder
within three Business Days after the applicable Final Settlement Date. All
payments received by the Purchaser from the Limited Partners pursuant to the
Capital Call Notices shall be applied to the payment of Vestar III's obligations
hereunder.
(b) It shall be a condition precedent to the obligation of
Vestar III to pay any amounts hereunder, and to the right of the Purchaser to
deliver any Deposited Notices that the Purchaser shall have made demand, in
writing, for payment of any Diluted Receivables of both Great American and
Cluett American to the extent each such Person is obligated therefor under the
Receivables Transfer Agreement or any guaranties thereof. The Purchaser shall
deliver a copy of such notice to Vestar. It shall be a further condition
precedent to the right of the Purchaser to deliver any Deposited Notices to the
Limited Partners that the Purchaser shall have given Vestar III no less than 2
Business Days' prior written notice of such intended action.
(c) No later than the fifteenth (15) Business Day following
each Final Settlement Date, the Purchaser shall deliver to Vestar III any
Deposited Notices for the related Pool of Receivables which have not theretofore
been delivered to the Limited Partners.
9. Attorneys' Fees and Costs of Collection. Vestar III further
agrees to pay all costs and expenses of the Purchaser, if any (including,
without limitation, reasonable attorneys' fees and expenses and the cost of
internal counsel), in connection with any enforcement (whether through
negotiations, legal proceedings, or otherwise) of this Repurchase Agreement.
10. Representations and Warranties. Vestar III represents and
warrants to the Purchaser that:
(a) Vestar III is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of
Delaware, and is in good standing as a foreign limited partnership in
each other jurisdiction where the ownership of its properties or the
conduct of its business requires it to be so other than in such
jurisdictions where failure to be in good standing could not reasonably
be expected to have a Material Adverse Effect, and has all power and
authority under such laws and its partnership agreement and all
material governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted.
(b) Vestar III has the partnership or other necessary power
and authority, and the legal right, to enter into this Repurchase
Agreement and to perform its obligations hereunder and consummate the
transactions contemplated hereby and has by proper action duly
authorized the execution and delivery of this Repurchase Agreement.
(c) Neither the execution and delivery of this Repurchase
Agreement nor the consummation of the transactions contemplated herein,
nor performance of and compliance with the terms and provisions hereof
will (i) violate or conflict with any provision of the Partnership
Agreement or other governance document of Vestar III, (ii) violate any
material law, regulation, order, writ, judgment, injunction, decree or
permit applicable to Vestar III, (iii) violate or conflict with
contractual provisions of, or cause an event of default under, any
indenture, loan agreement, mortgage, deed of trust, contract or other
agreement or instrument to which Vestar III is a party or by which it
may be bound, (iv) result in or require the creation of any lien,
security interest or other charge or encumbrance upon or with respect
to Vestar III's properties.
(d) No consent, approval, authorization or order of, or
filing, registration or qualification with, any court or Governmental
Authority or other Person is required in connection with the execution,
delivery or performance of this Repurchase Agreement.
(e) This Agreement has been duly executed and delivered by
Vestar III and constitutes legal, valid and binding obligations of
Vestar III, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or laws affecting creditors' rights
generally and subject to general principles of equity, regardless of
whether considered in proceedings in equity or at law and by an implied
covenant of good faith and fair dealing.
(f) Vestar III is a venture capital operating company within
the meaning of the Plan Asset Regulations or Vestar III satisfies
another exception under the Plan Asset Regulations such that the assets
of Vestar III are not "plan assets" within the meaning and as defined
in the Plan Asset Regulations.
(g) On each Purchase Date Vestar III will have delivered to
the Purchaser an original Capital Call Notice for each Limited Partner,
in each case executed in blank by the General Partner and directing
such Limited Partner to wire transfer funds to the Purchaser in an
amount to be completed by the Purchaser pursuant to paragraph 8. Each
Deposited Notice, when delivered by the Purchaser to the applicable
Limited Partner in accordance with the terms of Section 8, will give
rise to a legal, valid and binding obligation on the part of such
Limited Partner to pay to the Purchaser (for the account of Vestar III)
such Limited Partner's pro rata share of the Reserved Amount for the
applicable Pool of Purchased Receivables, enforceable against such
Limited Partner in accordance with the terms of such Deposited Notice
and the Partnership Agreement.
(h) Limitations on Actions. Vestar III is not aware of any
event or condition that could (i) have a material adverse effect on its
ability of Vestar III to perform its obligations under this Repurchase
Agreement, (ii) render invalid or unenforceable any of the Deposited
Notices or (iii) otherwise modify the obligations of any of the
Partners and/or any Person becoming Partners subsequent to the date
hereof which arise upon the due delivery of, and as contemplated by,
the Deposited Notices.
(i) Remaining Capital Commitments. As of each Purchase Date,
the aggregate Remaining Capital Commitment Balance of all Limited
Partners will equal or exceed the sum of (i) the maximum aggregate
Reserved Amount as of such date (after giving effect to any purchased
on such date) plus (ii) all other outstanding indebtedness or other
obligations of Vestar III.
Vestar III agrees that the foregoing representations and
warranties shall be deemed to have been made by Vestar III on each Purchase
Date.
11. Covenants. Vestar III hereby covenants and agrees that so
long as this Agreement is in effect.
(a) Vestar III will cause the aggregate Remaining Capital
Commitment Balance of all Limited Partners to equal or exceed the sum
of (i) the aggregate Reserved Amount plus (ii) all other indebtedness
or other obligations of Vestar III.
(b) General Partner. Vestar III will cause (i) Vestar
Associates III, L.P. to be the sole general partner of Vestar III at all
times and (ii) Vestar Associates Corporation III to be the sole general
partner of the General Partner at all times.
(c) Plan Assets, etc. Vestar III shall either (i) be a venture
capital operating company within the meaning of the Plan Asset
Regulations or (ii) satisfy another exception under the Plan Asset
Regulations such that the assets of Vestar III are not "plan assets"
within the meaning and as defined in the Plan Asset Regulations.
(d) Receipt of Vestar III Pursuant to the Deposited Notices.
Immediately upon receipt by Vestar III or any of its Affiliates of
payment by any Limited Partner in respect of a Deposited Notice
delivered by the Purchaser pursuant to Section 8, Vestar III shall (i)
notify the Purchaser in writing specifying the Limited Partner making
such payment and the amount thereof and (ii) forward, or cause to be
forwarded, the funds representing such payment to the Purchaser.
(e) Limitations on Actions. Vestar III shall not take any
action that could (i) render invalid or unenforceable any of the
Deposited Notices or (ii) otherwise modify the obligations of any of
the Partners and/or any Person becoming Partners subsequent to the date
hereof which arise upon the due delivery of, and as contemplated by,
the Deposited Notices.
12. Severability. Any provision of this Repurchase Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
13. Section Headings. The section headings used in this
Repurchase Agreement are for convenience of reference only and are not to affect
the construction hereof or be taken into consideration in the interpretation
hereof.
14. No Waiver; Cumulative Remedies. The Purchaser shall not by
any act (except by a written instrument pursuant to Section 14 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any default or breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on the
part of the Purchaser, any right, power or privilege hereunder shall operate as
a waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Purchaser of any right
or remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Purchaser would otherwise have on any future occasion.
The rights and remedies herein provided are cumulative, may be exercised singly
or concurrently and are not exclusive of any rights or remedies provided by law.
15. Waivers and Amendments; Successors and Assigns. None of
the terms or provisions of this Repurchase Agreement may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
Vestar III and the Purchaser. This Repurchase Agreement shall be binding upon
the successors and assigns of Vestar III and shall inure to the benefit of the
Purchaser and its successors and assigns. The Purchaser agrees that it shall not
assign its rights under this Repurchase Agreement nor shall it assign any rights
under any Purchased Receivable except that any such assignment may be made (i)
if a Bankruptcy Event shall have occurred and be continuing with respect to
Great American, Cluett American, the Seller or Vestar III or (ii) if any such
party shall be in default in the performance of any of its material obligations
under the Receivables Transfer Agreement, the Receivables Purchase Agreement,
the Guaranty or this Repurchase Agreement or (iii) as a result of a change in
control, merger, consolidation or sale of all or substantially all the assets of
the Purchaser.
16. GOVERNING LAW. THIS REPURCHASE AGREEMENT AND THE
OBLIGATIONS OF VESTAR III HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
17. Notices. All notices by the Purchaser to Vestar III
hereunder to be effective shall be in writing (including by telecopy or telex),
and shall be deemed to have been duly given or made (n) when delivered by hand,
(o) in the case of mail, three Business Days after deposit in the mail, postage
prepaid, (p) in the case of telecopy notice, when received, or (q in the case of
telex notice, when sent, answerback received, addressed to Vestar III at its
address or transmission number set forth under its signature below. Vestar III
may change its address and transmission numbers by written notice to the
Purchaser.
18. Waiver. The Purchaser hereby irrevocably and
unconditionally waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding relating to
this Repurchase Agreement any special, exemplary, punitive or consequential
damages; provided that the waiver contained in this Section 12 shall not extend
to any right to claim or recover from Vestar III any special, exemplary,
punitive or consequential damages for which the Purchaser is liable to any
Person (other than an affiliate of such Purchaser).
19. Acknowledgments. Vestar III hereby acknowledges with
respect to the transactions contemplated by the Purchase Documents that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Repurchase Agreement;
(b) the Purchaser has no fiduciary relationship to Vestar III
or the Seller and the relationship between the Purchaser, on the one
hand, and Vestar III or the Seller, on the other hand, is solely that
of debtor and creditor; and
(c) no joint venture exists among the Seller and the Purchaser
or among Vestar III and the Purchaser.
20. WAIVERS OF JURY TRIAL. VESTAR III AND THE PURCHASER
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS REPURCHASE AGREEMENT AND FOR ANY COUNTERCLAIM
THEREIN.
IN WITNESS WHEREOF, Vestar III has caused this Repurchase
Agreement to be duly executed and delivered in New York, New York by its proper
and duly authorized officer as of the day and year first above written.
VESTAR CAPITAL PARTNERS III, L.P.
By: Vestar Associates III, L.P., its
General Partner
By: Vestar Associates Corporation III,
its General Partner
By:
Name:
Title:
Address for Notices:
Vestar Capital Partners
245 Park Avenue, 41st Floor
New York, NY 10067
Attention: General Counsel
Acknowledged By:
BANC OF AMERICA COMMERCIAL
CORPORATION
By:
Name:
Title:
<PAGE>
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<NAME> CLUETT AMERICAN CORP.
<MULTIPLIER> 1,000
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-2000
<PERIOD-START> Jan-01-2000
<PERIOD-END> Dec-31-2000
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<BONDS> 0
0
58,329
<COMMON> 1
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<TOTAL-LIABILITY-AND-EQUITY> 241,583
<SALES> 85,615
<TOTAL-REVENUES> 85,615
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<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,232
<INCOME-PRETAX> (6,542)
<INCOME-TAX> 202
<INCOME-CONTINUING> (6,726)
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<NET-INCOME> (6,726)
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