SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 June 1, 1996
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 1-6454
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KLEINERT'S, INC.
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(Exact name of registrant as specified in its charter)
Pennsylvania 13-0921860
- -----------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
120 West Germantown Pike, Suite 100
Plymouth Meeting, Pennsylvania 19462
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(610) 828-7261
- --------------
- -----------------------------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report.
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 the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes ___X___ No _______
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date:
Class Outstanding at July 11, 1996
- ------------------------------ --------------------------------
Common Stock 3,731,431
Par Value $1.00 per share
<PAGE>
KLEINERT'S, INC.
INDEX
Part I. Financial information PAGE
----
Item 1. Financial statements
Consolidated statements of operations 3
for the three months and six months
ended June 1, 1996 and June 3, 1995
Consolidated balance sheets at 4
June 1, 1996, December 2, 1995 and
June 3, 1995
Consolidated statements of cash flows 6
for the six months ended June 1, 1996
and June 3, 1995
Notes to consolidated financial statements 8
Item 2. Management's discussion and analysis of 11
the financial condition and results of
operations
Part II. Other information
Item 6. Exhibits and Reports on Form 8-K 13
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
KLEINERT'S, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(000's omitted, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ -----------------
June 1, June 3, June 1, June 3,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $11,291 $10,132 $23,011 $17,845
Cost of goods sold 8,598 7,641 17,806 13,316
------- ------- ------- -------
Gross profit 2,693 2,491 5,205 4,529
------- ------- ------- -------
Selling, general and
administrative expenses 1,372 1,227 2,798 2,396
Interest expense, net 424 416 760 685
------- ------- ------- -------
1,796 1,643 3,558 3,081
------- ------- ------- -------
Income before income
taxes 897 848 1,647 1,448
Provision for income taxes 327 308 598 526
------- ------- ------- -------
Net income $ 570 $ 540 $ 1,049 $ 922
------- ------- ------- -------
Earnings per share:
Net income $ .15 $ .14 $ .28 $ .25
------- ------- ------- -------
Weighted average shares
outstanding 3,767 3,761 3,752 3,759
------- ------- ------- -------
</TABLE>
See accompanying notes
<PAGE>
KLEINERT'S, INC.
CONSOLIDATED BALANCE SHEETS
(000's Omitted)
ASSETS
June 1, Dec. 2, June 3,
1996 1995 1995
------- ------ ------
Current assets:
Cash $ 44 $ 327 $ 205
Accounts receivable (net) 13,723 21,899 10,429
Inventories:
Raw materials 10,209 4,222 6,112
Work-in-process 5,032 4,321 4,128
Finished goods 20,570 5,987 20,093
------- ------- -------
Total inventories 35,811 14,530 30,333
------- ------- -------
Other current assets 1,343 2,380 1,740
------- ------- -------
Total current assets 50,921 39,136 42,707
------- ------- -------
Property, plant & equipment, at cost 13,697 11,544 10,998
Less: accumulated depreciation and
amortization 6,516 6,051 5,732
------- ------- -------
net property, plant and
equipment 7,181 5,493 5,266
------- ------- -------
Other assets 4,668 3,593 3,278
------- ------- -------
$62,770 $48,222 $51,251
======= ======= =======
See accompanying notes
<PAGE>
KLEINERT'S, INC.
CONSOLIDATED BALANCE SHEETS
(000's Omitted)
LIABILITIES AND SHAREHOLDERS' EQUITY
June 1, Dec. 2, June 3,
1996 1995 1995
------- ------- -------
Current liabilities
Notes payable and current portion
of long-term debt $20,245 $14,195 $17,955
Accounts payable 6,180 5,024 6,977
Accrued expenses 1,129 1,331 792
Income taxes payable 386 29 606
------- ------- -------
Total current liabilities 27,940 20,579 26,330
------- ------- -------
Deferred income taxes 134 134 123
Long-term debt 7,629 3,429 4,124
------- ------- -------
Total liabilities 35,703 24,142 30,577
------- ------- -------
Shareholders' equity:
Preferred stock-par value $1.00 per
share, 2,000,000 shares authorized,
none issued -- -- --
Common stock par value $1.00 per
share, 10,000,000 shares authorized,
4,198,398, 3,798,398 and 3,798,398
shares issued and outstanding,
respectively 4,198 3,798 3,798
Capital in excess of par value 12,164 10,626 10,626
Retained earnings 13,921 12,872 9,466
------- ------- -------
30,283 27,296 23,890
------- ------- -------
Less:
Treasury stock, at cost, 466,967 (3,216) (3,216) (3,216)
------- ------- ------
Total shareholders' equity 27,067 24,080 20,674
------- ------- -------
$62,770 $48,222 $51,251
======= ======= =======
See accompanying notes
<PAGE>
KLEINERT'S, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(000's Omitted)
Six Months Ended
June 1, June 3,
1996 1995
-------- --------
Cash flows from operating activities:
Net income $ 1,049 $ 922
Adjustments to reconcile net income to
net cash used by operating activities:
Depreciation and amortization 472 326
Provision for losses on accounts receivable (14) 2
Change in assets and liabilities:
Decrease in accounts receivable 8,219 7,620
(Increase) in inventory (19,242) (17,636)
(Increase) decrease in other current assets 1,037 (127)
Increase in accounts payable and
accrued expenses 953 2,601
Increase in income taxes payable 358 505
(Increase) decrease in other assets (129) 3
-------- --------
Total adjustments ( 8,346) (6,706)
-------- --------
Net cash used in operating activities ( 7,297) (5,784)
-------- --------
Cash flows from investing activities:
Purchase of assets -- Pixie Acquisition (4,650) -
Capital expenditures (584) (443)
Note receivable related party (Note 2) - (500)
Proceeds from note receivable 60 40
-------- --------
Net cash used in investing activities
activities (5,174) (903)
-------- --------
See accompanying notes
<PAGE>
KLEINERT'S, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(000's Omitted)
(CONTINUED)
Six Months Ended
June 1, June 3,
1996 1995
-------- --------
Cash flows from financing activities:
Net borrowings under revolving
line-of-credit agreement $ 5,850 $7,260
Principal payments of debt (250) (500)
Proceeds from long-term debt 4,650 --
Exercise of stock options 1,938 --
------- ------
Net cash provided by financing
activities 12,188 6,760
------- ------
Net increase (decrease) in cash (283) 73
Cash at beginning of period 327 132
------- ------
Cash at end of period $ 44 $ 205
------- ------
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 505 $ 612
Income taxes $ 240 $ 75
See accompanying notes
<PAGE>
KLEINERT'S, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Six Months Ended June 1, 1996 and June 3, 1995
(1) Basis of presentation:
The condensed financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of management, the
information furnished reflects all adjustments (consisting of only normal
recurring adjustments) necessary for a fair presentation of the results for the
interim periods. Operating results for the six months ended June 1, 1996 are
not necessarily indicative of the results that may be expected for the year
ended November 30, 1996. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. The Company believes that the disclosures presented are
adequate for a fair presentation of the financial statements. It is suggested
that these condensed financial statements be read in conjunction with the
financial statements and the notes thereto included in the Company's Annual
Report on Form 10-K for the fiscal year ended December 2, 1995.
(2) Acquisition
On December 19, 1995, Kleinert's, Inc., through its newly formed,
wholly-owned subsidiary, Kleinert's, Inc. of Florida, ("together, the Company"),
consummated a transaction (the "Pixie Acquisition") pursuant to which the
Company acquired substantially all of the assets of Pixie Playmates, Inc.
("Pixie") and Certified Sewing Services, Inc. ("Certified") two Florida
corporations, and all of the capital stock of Certified Apparel Services of
Honduras, Inc., S.A., a Honduran corporation ("CASH"). Pixie, Certified and
CASH, all of which were affiliated entities, are engaged in the manufacture and
sale of children's apparel. Concurrent with the Pixie Acquisition, the Company
entered into a three year lease agreement with the principal shareholder of
Pixie for the premises in which Pixie was conducting business. To date the
Company has continued manufacturing operations as was conducted by Pixie,
Certified and CASH prior to the Pixie Acquisition.
In consideration for the assets of Pixie and Certified and the shares of
CASH, the Company paid an aggregate purchase price of $4,650,000 in cash.
The purchase price was financed by the Company through an amendment to its
existing bank financing agreement to provide for an additional term debt
facility.
The acquisition has been accounted for using the purchase method, and
accordingly, the results of operations are included in the Company's results
from the date of acquisition, December 19, 1995.
<PAGE>
The proforma unaudited results of operations for the six months ended June
1, 1996 and June 3, 1995, assuming consummation of the purchase and amendment of
the term debt as of December 4, 1994 are as follows:
Three Months Ended Six Months Ended
------------------------------------------
June 1, June 3, June 1, June 3,
1996 1995 1996 1995
------- ------- ------- -------
Net sales $11,291 $12,245 $23,082 $22,841
Net income 570 391 1,049 688
Net income per common share: .15 .10 .28 .18
(3) Refinancing of Term Loan
On February 28, 1996 the Company refinanced its existing term loan and
provided for an additional term debt facility of $4,650,000 to finance the
Pixie Acquisition. The term loan is in the form of an amended and restated
term loan note with the same bank as the original term loan. The total
borrowing at June 1, 1996 was $8,049,000 which is payable in quarterly
installments of $300,000 through September, 2002 with a final installment of
$249,000 due December 2002. The interest rate is based on LIBOR but has been
effectively fixed at 7.00% by an interest rate swap agreement with the same
bank.
(4) Related Party Transactions
On December 5, 1994 the Company loaned Scott Mills, Inc. ("Scott Mills")
$500,000. Scott Mills, formerly an indirect wholly-owned subsidiary of the
Company, is a knitting and textile manufacturer and the successor in interest to
the Company's textile division, the assets of which were transferred to Scott
Mills on November 27, 1993. The loan bears interest, payable annually, at 8 1/2%
per annum and the principal is due in full on December 4, 1997. Scott Mills,
which has operated independently of the Company since November 27, 1993,
continues to be a principal supplier of fabric to the Company.
The Company provides certain third party services on behalf of Scott Mills,
including data processing and account payable check processing functions and
business management services for which Scott Mills reimburses the Company. As
a consequence, the balance due the Company fluctuates based on the timing
of Scott Mills repayments to the Company for disbursements made on behalf of
Scott Mills. On December 1, 1995 the Company executed a working capital
agreement with Scott Mills that confirms Scott Mills' obligations to the Company
and provides to the Company a first lien and security interest in substantially
all of Scott Mills' assets to secure Scott Mills' obligation to repay to the
Company the loan balance due of $2,488,000 as of June 1, 1996.
In March 1995, the Company subleased knitting machines to Scott Mills for a
forty-five month term to be used to produce certain fabrics on behalf of the
Company. The terms of the sublease were reached at an arms length basis.
<PAGE>
(5) Subsequent Events
Acquisition
On June 10, 1996, Kleinert's, Inc., Kleinert's, Inc. of Alabama, a wholly-
owned subsidiary of Kleinert's, Inc., and Scott Mills, Inc. entered into an
Agreement and Plan of Merger (the "Merger Agreement") pursuant to which Scott
Mills, Inc. shall be merged with and into Kleinert's, Inc. of Alabama (the
"Merger"). In the Merger, each share of Common Stock of Scott Mills, Inc.
which is issued and outstanding on the effective date of the Merger shall be
converted into the right to receive $0.03 in cash and such fraction of a share
of Kleinert's, Inc. Common Stock as shall have a value of $0.27, based upon
the average closing price of the Kleinert's Common Stock for the five trading
days immediately preceding the Merger. Cash will be paid in lieu of fractional
shares of Kleinert's, Inc. Common Stock otherwise issuable in the Merger.
Based upon approximately 3,368,000 issued and outstanding shares of Common
Stock of Scott Mills, Inc., it is expected that Kleinert's, Inc., will issue
approximately 56,000 shares of its Common Stock in the Merger. The consummation
of the Merger is subject to a number of conditions, including approval of the
Merger by the stockholders of Scott Mills, Inc.
Kleinert's is the largest customer of Scott Mills. Scott Mills' sales for
the six months ended June 1, 1996 were $4,118,000 of which $3,685,000 were sales
to Kleinert's. The proposed merger of Scott Mills with Kleinert's is expected to
permit Kleinert's to maintain its flexibility in servicing its retail customers
in its sleepwear and activewear products.
Stock Repurchase Program
On June 21, 1996, the Company announced the commencement of a common stock
repurchase program. Purchases under the program will occur in the public
market and in negotiated private transactions. Total purchases under the
repurchase program will not exceed $5,000,000.
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The Company's apparel business is highly seasonal. Consequently the sales
and operating results for the six months ended June 1, 1996 are not necessarily
indicative of the results that may be expected for the entire fiscal year ending
November 30, 1996.
Three Months Ended Six Months Ended
------------------ ----------------
($000's) ($000's)
June 1, June 3, June 1, June 3,
1996 1995 1996 1995
------- ------- ------- -------
Net Sales $11,291 $10,132 $23,011 $17,845
======= ======= ======= =======
Gross Profit $ 2,693 $ 2,491 $ 5,205 $ 4,529
======= ======= ======= =======
Selling,
general and
administrative
expenses $ 1,372 $ 1,227 $ 2,798 $ 2,396
======= ======= ======== =======
Net sales increased by $5,166,000 or 29% to $23,011,000 from $17,845,000
for the six months ended June 1, 1996 compared to the six months ended June 3,
1995. Sales of products associated with the Pixie business following the
acquisition by Kleinert's of the assets of Pixie Playmates, Inc. ("Pixie") and
Certified Sewing Services, Inc. and of the Stock of Certified Apparel Services
of Honduras, S.A. (the "Pixie Acquisition") accounted for an approximately
19% increase and the remaining 10% increase related to Kleinert's continuing
business. Gross profit increased by $676,000 or 15% primarily as a result of
increased sales volume.
Selling, general and administrative expenses increased 17% or $402,000
primarily reflecting expenses associated with the Pixie business.
Interest expense for the first six months of 1996 was $760,000 compared to
$685,000 in the first six months of 1995 reflecting increased borrowing levels
associated with financing the Pixie acquisition.
Net income increased 14% to $1,049,000 for the first six months of 1996
when compared to $922,000 for the first six months of 1995. Approximately 7% of
the increase was attributable to the basic Kleinert's business, while the Pixie
acquisition accounted for the balance.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Net cash used by operating activities increased from $5,784,000 in the
first six months of fiscal year 1995 to $7,297,000 in the first six months of
fiscal year 1996. This change resulted from increases in inventory levels during
the six months ended June 1, 1996. The higher inventory levels reflect higher
production levels in anticipation of increased sales expected for the entire
year 1996.
In consideration for the assets of Pixie and Certified and the shares of
CASH purchased in the Pixie Acquisition, the Company paid an aggregate purchase
price of $4,650,000 in cash which was financed through an additional term
debt facility through an amendment to the Company's bank financing agreement.
The term loan as amended in connection with the Pixie Acquisition is in the
form of an amended and restated term loan note with the same bank as the
original term loan. The total borrowing at June 1, 1996, was $8,049,000 which is
payable in quarterly installments of $300,000 through September, 2002 with a
final installment of $249,000 due December 2002. The interest rate is based on
LIBOR but has been effectively fixed at 7.00% by an interest rate swap agreement
with the same bank.
It is expected that the Pixie Acquisition will enhance the Company's
earnings and, ultimately, its cash flows; however, due to the seasonality
of the Company's business, additional working capital requirements continue to
be anticipated in periods when production levels exceed future sales.
Traditionally the Company has used its short-term borrowings to build
inventory levels for shipment in the fall season.
The Company believes that cash flow generated by operations, together with
amounts available under its existing credit arrangements, should be sufficient
to fund its working capital needs in fiscal year 1996 and for the foreseeable
future.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(10) Material Contracts
(1) Fourth Amendment to line of credit and Term Loan
Agreement dated February 28, 1996 by and among
Kleinert's, Inc. of Alabama, Kleinert's, Inc. of Florida
and CoreStates Bank, N.A.
(2) Third Amended and Restated Term Loan Note dated
February 28, 1996 between Kleinert's, Inc. of Alabama
and Kleinert's, Inc. of Florida and CoreStates Bank, N.A.
(3) Guaranty dated February 28, 1996 between Kleinert's, Inc.
and CoreStates Bank, N.A.
(4) Certificate of Corporate Resolutions dated February
1996 -- Kleinert's, Inc. of Florida.
(5) Certificate of Corporate Resolutions dated February
1996 -- Kleinert's, Inc. of Alabama.
(6) Schedule to Master Agreement dated February 28, 1996
between Kleinert's, Inc. of Alabama, Kleinert's, Inc.
of Florida and CoreStates Bank, N.A.
(7) International Swap Dealers Association, Inc. Master
Agreement dated February 28, 1996 between Kleinert's,
Inc. of Alabama and Kleinert's, Inc. of Florida and
CoreStates Bank, N.A.
(b) Reports on Form 8-K
None
<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.
KLEINERT'S, INC.
Date: July 16, 1996 By:/s/Gerald E. Monigle
-----------------------------------
Gerald E. Monigle
Vice President--Finance
(Principal Accounting Officer)
FOURTH AMENDMENT TO LINE OF CREDIT AND TERM LOAN AGREEMENT
This Fourth Amendment to Line of Credit and Term Loan Agreement
("Fourth Amendment" or "Amendment") is made this 28th day of February, 1996, by
and among KLEINERT'S, INC. OF ALABAMA, an Alabama corporation ("Kleinert's
Alabama"), KLEINERT'S, INC. OF FLORIDA, a Florida corporation ("Kleinert's
Florida") (Kleinert's Alabama and Kleinert's Florida are sometimes herein
together called "Borrower"), and CORESTATES BANK, N.A., a national banking
association ("Bank").
BACKGROUND
Kleinert's Alabama and Bank have entered into various agreements,
documents and instruments, including, without limitation, a Line of Credit and
Term Loan Agreement dated April 8, 1993, an Amendment to Line of Credit and Term
Loan Agreement dated December 10, 1993, a Second Amendment to Line of Credit and
Term Loan Agreement dated November 10, 1994, and a Third Amendment to Line of
Credit and Term Loan Agreement dated December 11, 1995, and various other
documents providing for loans from Bank to Kleinert's Alabama (all of which
agreements, documents and instruments are hereinafter collectively called the
"Agreement"), with such loans being evidenced by a Second Amended and Restated
Term Loan Note dated November 10, 1994 (the "Note") and by a Revolving Credit
Note dated December 11, 1995 (the "R/C Note"). Kleinert's Alabama and Bank
desire to amend the Agreement, it being the intention of the parties that this
Fourth Amendment set forth such amendments, to provide, among other things, for
adding the principal amount outstanding under the R/C Note to the principal
amount outstanding under the Note and causing the aggregate principal amount
outstanding under both the R/C Note and the Term Note to be evidenced by a Third
Amended and Restated Term Loan Note which shall be subject to the terms and
conditions set forth in the Agreement as amended by this Fourth Amendment. As an
inducement to Bank to enter into this Fourth Amendment, Kleinert's Florida, for
whose benefit a portion of the proceeds of the R/C Note was applied, has agreed
to become jointly and severally liable with Kleinert's Alabama to Bank under and
with respect to the Agreement as amended by this Fourth Amendment.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Amendment to Agreement; Definition of Terms. This Fourth Amendment
is intended to amend the Agreement and the Agreement shall be so amended from
and after the date hereof. This Amendment does not constitute an extinguishment
of any debt evidenced by the Line of Credit Note, the Note or the R/C Note nor
does it affect or impair any Collateral which may hereafter be held by Bank to
secure payment by Kleinert's Alabama or
<PAGE>
Kleinert's Florida of liabilities to Bank under the Agreement, the Note or R/C
Note. All terms used herein as defined terms shall have the same meanings
ascribed to them in the Agreement, unless herein provided to the contrary.
2. Amendment to Agreement.
2.01. Section 1.01 of the Agreement is hereby amended by the
addition of the following definitions; provided, further, that if any of the
definitions set forth below pertains to a defined term whose definition is
currently set forth in Section 1.01, such defined term so set forth therein
shall be defined as set forth below:
"Advance(s)" means extensions of credit under the Line in the form
of Fixed Rate Advances, Prime-Based Advances, LIBOR-Based Rate Advances, or any
of them, as the context may require.
"Applicable Margin" means, for each LIBOR-Based Rate Advance during
each Interest Period, a rate per annum of one and twelve-tenths percent (1.12%).
"Interest Period" means (a) with respect to any Fixed Rate Advance:
the period commencing on the date such Advance is made, converted or renewed and
ending 30, 60, 90, 120, 150 or 180 days thereafter as selected by the Borrower
pursuant to Section 2.03, provided that if an Interest Period would end on a day
that is not a Business Day, such Interest Period shall be extended to the next
Business Day; and (b) with respect to any LIBOR-Based Rate Advance:
(i) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such LIBOR-Based Rate
Advance and ending one, two, three or six months thereafter, as selected by
Borrower in its notice of borrowing or notice of conversion, as the case may be,
given with respect thereto; and
(ii) thereafter, each period commencing on the day following
the last day of the next preceding Interest Period applicable to such
LIBOR-Based Rate Advance and ending one, two, three or six months thereafter, as
selected by Borrower by notice to Bank not less than one Business Day prior to
the last day of the then current Interest Period with respect thereto;
-2-
<PAGE>
provided that, all of the following provisions relating to Interest Periods are
subject to the following:
(1) if any Interest Period pertaining to a LIBOR-Based Rate Advance
would otherwise end on a day that is not a Business Day, such Interest Period
shall be extended to the next succeeding Business Day unless the result of such
extension would be to carry such Interest Period into another calendar month in
which event such Interest Period shall end on the immediately preceding Business
Day;
(2) any Interest Period that would otherwise extend beyond the
Maturity Date shall end on the Maturity Date; and
(3) any Interest Period pertaining to a LIBOR-Based Rate Advance
that begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Business Day of a calendar month.
"LIBOR-Based Rate" means for any Interest Period with respect to any
LIBOR-Based Rate Advance, the per annum rate of interest calculated pursuant to
the following formula:
LIBOR Based Rate = LIBOR Base + Applicable Margin
-------------------------
100% - Reserve Percentage
"LIBOR-Based Rate Advances" means one or more Advances when and to the
extent the interest rate therefor is at a LIBOR-Based Rate for the Interest
Period selected by Borrower.
"LIBOR Rate" means for any Interest Period with respect to any
LIBOR-Based Rate Advance, the interest rate per annum determined by averaging
the respective rates at which deposits in Dollars are offered to major banks in
the offshore Dollar interbank markets at approximately 9:00 a.m. (Philadelphia,
Pennsylvania time) two (2) Business Days before the date that the LIBOR Rate
shall become applicable to a particular LIBOR-Based Rate Advance, for a period
of time comparable to the Interest Period to be made applicable to such
LIBOR-Based Rate Advance and in an amount comparable to the principal amount of
such LIBOR-Based Rate Advance.
"Reserve Percentage" means, for any LIBOR-Based Rate Advance for any
Interest Period therefor, the daily average of the stated maximum rate
(expressed as a decimal) at which reserves (including any marginal,
supplemental, or emergency reserves), if any, are required to be maintained
during such Interest Period by Bank against "Eurocurrency liabilities" (as
-3-
<PAGE>
such term is used in Regulation D of the Federal Reserve Board of Governors or
any other law or regulation of any other governmental authority having
jurisdiction dealing with reserve requirements for "Eurocurrency" funding), but
without benefit or credit of proration, exemptions, or offsets that might
otherwise be available to Bank from time to time pursuant to any such
requirements. Without limiting the effect of the foregoing, the Reserve
Percentage shall reflect any other reserves required to be maintained by Bank
against (1) any category of liabilities that includes deposits by reference to
which the LIBOR Rate for LIBOR-Based Rate Advances is to be determined; or (2)
any category of extension of credit or other assets that includes LIBOR-Based
Rate Advances.
2.02. Section 2.06 of the Agreement is hereby amended to read in its
entirety as follows:
"SECTION 2.06. Term Loan. On or about November 10, 1994, Bank
extended to Borrower a loan (the "Term Loan") in the amount of
$4,942,733, to be repaid as provided by the Second Amended and
Restated Term Loan Note. On or about December 11, 1995, Bank
extended to Borrower a loan (the "Revolving Loan") in the amount of
$5,000,000, to be repaid as provided by the Revolving Credit Note.
Bank hereby agrees to increase the Term Loan by adding thereto the
principal amount outstanding under the Revolving Credit Note, to be
repaid as provided in the Third Amended and Restated Term Loan Note
(as defined below). The term "Term Loan" shall hereafter be deemed
to refer to the Term Loan, as hereinafter increased, as provided
above."
2.03. Section 2.07A is hereby deleted in its entirety.
-4-
<PAGE>
2.04. A new Section 2.06A is added to the Agreement to read as
follows:
"SECTION 2.06A.1. Interest on the Term Loan; Conversion to Prime-
Based or LIBOR-Based Rate Advance.
(a) Commencing on the date of issuance of the Third Amended and
Restated Term Loan Note, the Term Loan shall be a Prime-Based
Advance. Immediately thereafter, Borrower may elect from time to
time to convert all or a portion of the principal amount outstanding
under the Term Loan into Prime-Based Advances or LIBOR-Based Rate
Advances; provided, however, that (i) no more than four (4) portions
(tranches) of principal of LIBOR-Based Rate Advances may be
outstanding at any one time; (ii) if Borrower fails to elect to
convert a LIBOR-Based Rate Advance prior to the end of the Interest
Period applicable to such LIBOR-Based Rate Advance, such LIBOR-
Based Rate Advance shall be automatically converted into a
Prime-Based Advance; and (iii) no Interest Period for any
LIBOR-Based Rate Advance may end beyond the Maturity Date.
(b) Borrower shall give Bank notice of its election to convert any
principal portion of the Term Loan into a Prime-Based Advance or
LIBOR-Based Rate Advance no later than 12:00 noon (Philadelphia,
Pennsylvania time) on the date which is one Business Day prior to
the date on which any selection is to become effective stating (i)
the Advance or Advances selected; (ii) the principal amount of each
Advance and (iii) the Interest Period of each LIBOR-Based Rate
Advance.
-5-
<PAGE>
(c) Interest on the Term Loan shall be due and payable on a
quarterly annual basis commencing March 1, 1996 and ending December
1, 2002; provided, however, that interest on any LIBOR-Based Rate
Advance shall be due and payable at the end of the Interest Period
applicable to such LIBOR-Based Rate Advance, and if the applicable
Interest Period is greater than ninety (90) days, then on the day
which is ninety days after the first day of such Interest Period.
SECTION 2.06A.2. Special Provisions Applicable to LIBOR-Based
Advances. The following special provisions shall apply to
LIBOR-Based Rate Advances:
(a) In the event that (i) Borrower shall have selected a LIBOR-Based
Rate Advance in accordance with Section 2.06A.1(a) hereof and Bank
shall have reasonably determined in good faith (which determination
shall be final and conclusive) that by reason of changes affecting
the Eurocurrency market, adequate and reasonable means do not exist
for ascertaining the LIBOR Rate for any Interest Period, or (ii) at
any time Bank shall have determined in good faith (which
determination shall be final and conclusive) that (A) the election
of a LIBOR-Based Rate Advance or the continuation of any part of the
Term Loan bearing interest at the LIBOR-Based Rate has been made
impracticable or unlawful by (1) the occurrence of a contingency
which materially and adversely affects the market for Eurocurrency
deposits or (2) compliance by Bank in good faith with any applicable
law or governmental regulations, guideline or order or change in the
interpretation or administration
-6-
<PAGE>
thereof by any governmental authority charged with the
interpretation or administration thereof or with any request or
directive of any such governmental authority (whether or not having
the force by law); or (B) the LIBOR Rate shall no longer represent
the effective cost to Bank for obtaining Eurocurrency deposits;
then, and in any such event, Bank shall forthwith notify Borrower of
such determination. Such a determination shall be prima facie
evidence of the correctness of the fact and the amount of any
additional cost to Bank. Until Bank notifies Borrower that the
circumstances giving rise to such notice no longer apply, the
obligation of Bank to allow the election of a LIBOR-Based Rate
Advance by Borrower shall be suspended.
(b) Upon such date as shall be specified in a notice given by Bank
pursuant to Section 2.06A.2(a) hereof, the LIBOR-Based Rate shall
cease to apply to the Term Loan or any principal portion thereof and
Borrower shall convert any LIBOR-Based Rate Advance to a Prime
Based Advance. Upon such specified date, Borrower shall pay to Bank
the accrued and unpaid interest on all LIBOR-Based Rate Advances to
(but not including) such specified date. If, at the time that Bank
gives a notice pursuant to Section 2.06A.2(a) hereof, Borrower has
previously given notice of any selection of the LIBOR-Based Rate
Advance with respect to all or any portion of the Term Loan, but
such selection has not yet become effective, such notification shall
be deemed to be of no force and effect and in the absence of another
notification from Borrower,
-7-
<PAGE>
the Prime-Based Advance shall be deemed to have been selected.
(c) Borrower shall indemnify Bank against any loss or exposure
(including loss of margin or loss incurred in obtaining, liquidating
or employing deposits from the parties) which Bank shall have
sustained or incurred as a consequence of payment, prepayment or
conversion of any LIBOR-Based Rate Advance on a day other than the
last day of the corresponding Interest Period (whether or not any
such payment is pursuant to demand by Bank to the extent Bank is
entitled to demand the same and whether or not any such payment,
prepayment or conversion is consented to by Bank in writing, unless
Bank shall have expressly waived such indemnity in writing). If Bank
sustains any such loss, it shall from time to time notify Borrower
of the amount determined in good faith by Bank (which determination
shall be conclusive) to be necessary to indemnify Bank for such loss
or expense. Such amount shall be due and payable to Bank on demand.
3. Amended Note. In connection with the funding of the Term Loan,
Borrower hereby agrees to execute and deliver to Bank a Third Amended and
Restated Term Loan Note substantially in form attached hereto, which is hereby
incorporated herein by reference. The Third Amended and Restated Term Loan Note
shall be deemed to restate, but not to replace or repay, the Note or the R/C
Note. Upon delivery of the executed Third Amended and Restated Term Loan Note,
the Note and the R/C Note shall be marked "Cancelled" and returned to Borrower,
and the term "Note" shall be amended to refer to the Third Amended and Restated
Term Loan Note.
4. Joinder by Kleinert's Florida. Kleinert's Florida agrees to become
jointly and severally liable with Kleinert's Alabama for and in respect of each
and every obligation and liability to which Kleinert's Alabama shall be
obligated and liable to Bank in the same manner and with the same effect as if
-8-
<PAGE>
Kleinert's Florida were named a Borrower under the Agreement from and after the
date of this Amendment; provided, however, that except as to the representations
and warranties made by Kleinert's Florida set forth below, the representations
and warranties of Borrower set forth in the Agreement shall be deemed made by
Kleinert's Alabama and Kleinert's Florida together as a whole and not
individually.
5. Representations and Warranties of Kleinert's Florida. Kleinert's
Florida hereby represents and warrants and, with each request for an extension
of credit under the Line, shall be deemed to represent and warrant to Bank,
that:
5.01. Incorporation, Good Standing, and Due Qualification.
Kleinert's Florida is a corporation duly incorporated, validly existing and in
good standing or subsisting under the law of the jurisdiction of its
incorporation; has the corporate power and authority to own its assets and to
transact the business in which it is now engaged; and is duly qualified as a
foreign corporation and in good standing under the laws of each other
jurisdiction in which such qualification is required, except where the failure
to be so qualified would not have a material adverse impact on Kleinert's
Florida, Kleinert's Alabama, Kleinert's Inc. of Delaware and the Guarantor,
taken as a whole.
5.02. Corporate Power and Authority. The execution, delivery and
performance by Kleinert's Florida of this Amendment and the Third Amended and
Restated Term Loan Note have been duly authorized by all necessary corporate
action and do not and will not (A) require any consent or approval of the
shareholders of such corporation; (b) contravene such corporation's charter or
by-laws; (c) violate any provision of any law, rule, regulation (including,
without limitation, Regulation U of the Board of Governors of the Federal
Reserve System), order, writ, judgment, injunction, decree, determination or
award presently in effect having applicability to such corporation; (d) result
in, or require the creation or imposition of any Lien upon or with respect to
any of the properties now owned or hereafter acquired by such corporation except
as contemplated by the Agreement; or (e) cause such corporation to be in default
under any such law, rule, regulation, order, writ, judgment, injunction, decree,
determination, or award or any indenture, loan or credit agreement, or any other
agreement, lease, or instrument to which the corporation is a party or by which
it or its properties may be bound or affected.
-9-
<PAGE>
5.03. Legally Enforceable Agreement. The Agreement, this Amendment,
and each of the other Loan Documents when delivered under the Agreement are, or
will be, the legal, valid and binding obligations of Kleinert's Florida,
enforceable by the Bank in accordance with their respective terms, except to the
extent that such enforcement may be limited by applicable bankruptcy,
insolvency, moratorium and other similar laws affecting creditor's rights
generally, including general equitable principles.
6. Representations, Warranties and Covenants. All representations,
warranties and covenants of Borrower contained in the Agreement are hereby
ratified and confirmed without condition as if made anew upon the execution of
this Fourth Amendment and are hereby incorporated by reference.
7. Certification of No Default. Borrower hereby represents and warrants
to Bank that, as to the date of the execution of the Fourth Amendment, no Event
of Default under the Agreement and no event, which with the giving of notice or
passage of time, or both, could become such an Event of Default has occurred.
8. Delivery of Guaranty. Kleinert's, Inc., a Pennsylvania corporation
("Guarantor"), has executed and delivered to Bank its Guaranty, dated of even
date herewith, guarantying the payment and performance of the liabilities of
Borrower to Bank. Guarantor hereby acknowledges that Borrower's liabilities to
Bank, as defined in said Guaranty, shall mean and include all liabilities of
Borrower to Bank under the Agreement and Fourth Amendment and the Note delivered
in connection therewith.
9. Miscellaneous. Except as modified by the terms hereof, all terms,
provisions, and conditions of the Agreement are hereby ratified and confirmed
without condition, shall continue in full force and effect, and are hereby
incorporated herein by reference. This Fourth Amendment and the Agreement shall
be deemed as complementing one another and not restricting Bank's rights
hereunder or thereunder. If there is any conflict or discrepancy between the
provisions of this Fourth Amendment and those of the Agreement, the terms and
provisions of this Fourth Amendment shall control and prevail.
10. Effectiveness of Amendment. Anything to the contrary contained in
this Fourth Amendment notwithstanding, the provisions hereof shall not be
effective until this Fourth Amendment is: (a) duly executed, sealed and
delivered by authorized officers of Borrower to Bank's office in Philadelphia,
-10-
<PAGE>
Pennsylvania; and (b) duly signed by an authorized officer of Bank.
IN WITNESS WHEREOF, the parties hereto have caused this Fourth
Amendment to be executed and delivered by the proper and duly authorized
officers as of the day and year first written above.
ATTEST: (affix corporate seal) KLEINERT'S, INC. OF ALABAMA
By: _________________________ By: ________________________
Title:________________________ Title:_______________________
ATTEST: (affix corporate seal) KLEINERT'S INC. OF FLORIDA
By: _________________________ By: _________________________
Title:________________________ Title:________________________
CORESTATES BANK, N.A.
By:___________________________
Karl F. Schultz
Vice President
Guarantor Acknowledgement: (affix corporate seal)
KLEINERT'S, INC.
By:___________________________
Title:________________________
-11-
THIRD AMENDED AND RESTATED
TERM LOAN NOTE
$8,299,000 February 28, 1996
FOR VALUE RECEIVED, the undersigned, KLEINERT'S, INC. OF
ALABAMA, an Alabama corporation, and KLEINERT'S, INC. OF FLORIDA, a Florida
corporation, (together, the "Borrower"), HEREBY JOINTLY AND SEVERALLY PROMISE TO
PAY to the order of CORESTATES BANK, N.A., at its office located at Broad and
Chestnut Streets, Philadelphia, Pennsylvania, 19107, the principal amount of
EIGHT MILLION TWO HUNDRED NINETY-NINE THOUSAND DOLLARS ($8,299,000) in lawful
money of the United States and in immediately available funds in twenty-eight
(28) consecutive quarterly installments, the first of which in the amount of TWO
HUNDRED FIFTY THOUSAND DOLLARS ($250,000), on March 1, 1996, followed by
twenty-six (26) equal, consecutive quarterly installments of THREE HUNDRED
THOUSAND DOLLARS ($300,000) beginning on June 1, 1996 and a twenty-eighth and
final installment of TWO HUNDRED FORTY-NINE THOUSAND DOLLARS ($249,000) on
December 1, 2002; provided, however, that the last installment shall be in an
amount necessary to repay in full the unpaid principal amount of this Third
Amended and Restated Term Loan Note, and to pay interest from the date of this
Third Amended and Restated Term Loan Note, at the times and at the rates per
annum as provided in the Agreement. Subject to Section 2.09 of the Agreement (as
hereinafter defined), any amount of principal hereof which is not paid when due,
whether at stated maturity, by acceleration, or otherwise, and, to the extent
permitted by law, any overdue interest, shall bear interest from the date when
due until said principal amount is paid in full, payable on demand, at a rate
per annum equal at all times to two percent (2%) above the rate which would
otherwise be applicable.
If any installment of this Third Amended and Restated Term
Loan Note becomes due and payable on a Saturday, Sunday or business holiday in
the Commonwealth of Pennsylvania, the maturity thereof shall be extended to the
next succeeding business day, and the interest shall be payable thereon at the
rate herein specified during such extension.
This Third Amended and Restated Term Loan Note is the Note
referred to in, and is entitled to the benefits of, the Line of Credit and Term
Loan Agreement, dated as of April 8, 1993, as amended by the First Amendment to
Line of Credit and Term Note Agreement, dated December 10, 1993, by the Second
Amendment to Line of Credit and Term Loan Agreement, dated November 10, 1994, by
the Third Amendment to Line of Credit and Term Loan Agreement dated December 11,
1995, and by the Fourth Amendment to Line of Credit and Term Loan Agreement
dated February 28, 1996, between the Borrower and the Bank (said Line of Credit
and Term Loan Agreement, as it may be hereafter amended, renewed or extended,
the "Agreement"). This Agreement, among other things, contains provisions for
acceleration of the maturity of this Third Amended and Restated Term Loan Note
upon the happening of certain stated events and also for the prepayments on
account of principal hereof prior to the maturity of this Third Amended and
Restated Term Loan Note upon the terms and conditions specified in the
Agreement.
<PAGE>
Upon Default hereunder the Borrower hereby irrevocably
authorizes and empowers the prothonotary or clerk or any attorney of any court
of record to appear for and confess judgment against the Borrower for the amount
due hereon (or, if such an attorney so elects, for the amount which may be due
hereon as evidenced by an affidavit signed by an officer of the Bank setting
forth the amount then due), including accrued interest, plus reasonable
attorneys' fees and costs, with cost of suit and release of error. If a copy
hereof, verified by an affidavit, shall have been filed in said proceeding, it
shall not be necessary to file the original as a warrant of attorney. The
Borrower waives the right to any stay of execution and the benefit of all
exemption laws now or hereafter in effect. No single exercise of the foregoing
warrant and power to confess judgment shall be deemed to exhaust the power,
whether or not any such exercise shall be held by any court to be invalid,
voidable, or void, but the power shall continue undiminished and may be
exercised from time to time as often as the holder hereof shall elect, until all
sums payable or that may become payable by the Borrower have been paid in full.
There shall be excluded from the lien of any judgment obtained solely pursuant
to this paragraph (a) all improved real estate in any area identified by the
Federal Emergency Management Agency as having special flood hazards if the
community in which such areas located is participating in the National Flood
Insurance Program and (b) any residential real property as that term is defined
in the Pennsylvania statute codified at 41 P.S. Section 101. Any such exclusion
shall not effect any lien upon property not so excluded.
This Third Amended and Restated Term Loan Note replaces and
supersedes but does not extinguish the Borrower's obligations under that certain
Second Amended and Restated Term Loan Note in the face amount of $4,942,733 of
Kleinert's, Inc. of Alabama to Bank dated November 10, 1994 and that certain
Revolving Credit Note in the face amount of $5,000,000 of Kleinert's, Inc. of
Alabama to Bank dated December 11, 1995.
This Third Amended and Restated Term Loan Note shall be
governed by the laws of the Commonwealth of Pennsylvania.
KLEINERT'S, INC OF ALABAMA KLEINERT'S, INC. OF FLORIDA
By:_________________________ By:___________________________
Title:______________________ Title:________________________
-2-
GUARANTY
1. Definitions -- As used herein the following terms shall have the
meanings indicated:
"Undersigned" means the person, including any form of legal entity, or,
if more than one, all of the persons by whom, or on whose behalf, this Guaranty
is signed.
"Bank" means CORESTATES BANK, N.A.
"Principal Debtor" means KLEINERT'S INC. OF ALABAMA and KLEINERT'S INC.
OF FLORIDA.
"Principal Debtor's Liabilities to Bank" means all existing and future
liabilities, whether absolute or contingent, of the Principal Debtor to the Bank
of any nature whatsoever and out of whatever transactions arising.
2. Continuing Guaranty -- The undersigned hereby unconditionally
guarantees to the Bank the due performance, including, but not being limited to,
the prompt payment when due, of the Principal Debtor's Liabilities to Bank. This
Guaranty is a continuing one and shall be effective and binding on the
Undersigned regardless of how long before or after the date hereof any of the
Principal Debtor's Liabilities to Bank were or are incurred; provided, however,
that any one of the Undersigned who gives written notice to Bank to that effect
shall not be liable hereunder for such of the Principal Debtor's Liabilities to
Bank as are incurred after the receipt by the Bank of such written notice,
unless the same are renewals, extensions or modifications of liabilities
theretofore existing or unless the Bank is bound by agreement entered into
before the receipt of such notice to permit the same to be incurred.
3. Amount of Liability -- The amount of the Undersigned's liability
hereunder shall be unlimited.
4. Unconditional Liability -- The liability of the Undersigned
hereunder is absolute and unconditional and shall not be affected in any way by
reason of (a) any failure to retain or preserve, or the lack of prior
enforcement of, any rights against any person or persons (including the
Principal Debtor and any of the Undersigned) or in any property, (b) the
invalidity of any such rights which may be attempted to be obtained, (c) any
delay in enforcing or failure to enforce any such rights even if such rights are
thereby lost, or (d) any delay in making demand on the Undersigned for
performance or payment of the Undersigned's obligations hereunder.
5. Security Interest -- The Undersigned hereby assigns to the Bank and
grants to the Bank a security interest in any balance or assets in any deposit
or other account of the Undersigned in or with the Bank whenever and so long as
any of
<PAGE>
the Principal Debtor's Liabilities to Bank shall be outstanding and unpaid and
agrees that the security interest hereby granted shall be independent of the
right of setoff.
6. Waivers -- The Undersigned hereby waives all notices of any
character whatsoever with respect to this Guaranty and the Principal Debtor's
Liabilities to bank, including, but not being limited to, notice of the
acceptance hereof and reliance hereon, of the present existence or future
incurring of any of the Principal Debtor's Liabilities to Bank, of the amount,
terms and conditions thereof, and of any defaults thereon. The Undersigned
hereby consents to the taking of, or failure to take, from time to time without
notice to the Undersigned, any action of any nature whatsoever with respect to
the Principal Debtor's Liabilities to Bank and with respect to any rights
against any person or persons (including the Principal Debtor and any of the
Undersigned) or in any property, including, but not being limited to, any
renewals, extensions, modifications, postponements, compromises, indulgences,
waivers, surrenders, exchanges and releases, and the Undersigned will remain
fully liable hereon notwithstanding any of the foregoing; provided, however,
that the granting of a release of the liability hereunder of less than all of
the Undersigned shall be effective with respect to the liability hereunder of
the one or more who are specifically so released but shall in no way effect the
liability hereunder of any other of the Undersigned. The Undersigned hereby
waives the benefit of all laws now or hereafter in effect in any way limiting or
restricting the liability of the Undersigned hereunder, including, without
limitation, (a) all defenses whatsoever to the Undersigned's liability hereunder
except the defense of payments made on account of the Principal Debtor's
Liabilities to Bank and the Undersigned's liability hereunder, and (b) all
rights to stay of execution and exemption of property in any action to enforce
the liability of the Undersigned hereunder.
7. Payment of Costs -- In addition to all other liability of the
Undersigned hereunder and notwithstanding the limit, if any, set forth in
paragraph 3 hereof, the Undersigned also agrees to pay to the Bank on demand all
costs and expenses (including reasonable attorneys' fees and legal expenses)
which may be incurred in the enforcement of the Principal Debtor's Liabilities
to Bank or the liability of the Undersigned hereunder.
8. Acceleration of Liabilities -- If any of the Principal Debtor's
Liabilities is not duly performed, including the prompt payment when due of any
amount payable thereon, all the Principal Debtor's Liabilities to Bank shall at
the Bank's
-2-
<PAGE>
option be deemed to be forthwith due and payable for the purposes of this
Guaranty and the liability of the Undersigned hereunder.
9. Financial Information Guarantor -- The Undersigned agrees to provide
the Bank with such information on the business affairs and financial condition
of the Undersigned as the Bank from time to time may reasonably request and to
notify the Bank of any change in the address of the Undersigned. In the event
that the Undersigned fails to comply with a request for information as herein
agreed, within ten (10) days after receipt of the request, the Undersigned upon
demand by the Bank agrees to purchase from the Bank without representation,
warranty or recourse the Principal Debtor's Liabilities to Bank and to pay
therefor the unpaid principal amount of all such Liabilities, including interest
thereon to the date of purchase.
10. Confession of Judgment -- The Undersigned hereby irrevocably
authorizes and empowers any attorney of any court of record to appear for and
confess judgment therein against the Undersigned, or any of them, for the amount
for which the Undersigned may be or become liable to Bank under this Guaranty as
evidenced by an affidavit signed by an officer of Bank setting forth the amount
then due, plus 15% thereof, but no less than $500, as an attorney's commission,
with costs of suit, release of errors, and without right of appeal. If a copy
hereof, verified by an affidavit, shall have been filed in said proceeding, it
shall not be necessary to file the original as a warrant of attorney. The
Undersigned waives the right to any stay of execution and the benefit of all
exemption laws now or hereafter in effect. No single exercise of the foregoing
warrant and power to confess judgment shall be deemed to exhaust the power,
whether or not any such exercise shall be held by any court to be invalid,
voidable, or void, but the power shall continue undiminished and may be
exercised from time to time as often as the Bank shall elect, until all sums
payable or that may become payable by the Undersigned have been paid in full.
11. No Subrogation -- So long as the Principal Debtor's Liabilities to
Bank have been paid in full, no payment by the Undersigned pursuant to the
provisions hereof shall entitle the Undersigned, by subrogation to the rights of
the Bank or otherwise, to any payment by the Principal Debtor or out of the
property of the Principal Debtor.
12. Other Guaranties-- A subsequent guaranty by the Undersigned or any
other guarantor of the Principal Debtor's Liabilities to Bank shall not be
deemed to be in lieu of or to supersede or terminate this guaranty but shall be
construed as an additional or supplementary guaranty unless otherwise expressly
provided therein; and in the event the Undersigned or any other
-3-
<PAGE>
guarantor has given to the Bank a previous guaranty or guaranties, this guaranty
shall be construed to be an additional or supplementary guaranty, and not to be
in lieu thereof or to terminate such previous guaranty or guaranties unless
expressly so provided herein.
13. Miscellaneous -- If the Undersigned consists of more than one
person, such persons shall be jointly and severally liable hereunder. This
Guaranty shall inure to the benefit of the Bank, its successors, assigns,
endorsees and any person or persons, including any banking institution or
institutions, to whom the Bank may grant any interest in the Principal Debtor's
Liabilities to Bank or any of them, and shall be binding upon the Undersigned
and the Undersigned's executor, administrators, successors, assigns, and other
legal representatives. The Undersigned intends this to be a sealed instrument
and to be legally bound hereby. All issues arising hereunder shall be governed
by the law of Pennsylvania.
Executed this 28th day of February, 1996.
KLEINERT'S INC.
120 W. Germantown Pike
Plymouth Meeting, PA 19462
By: ___________________________
Title: ________________________
-4-
CERTIFICATE OF CORPORATE RESOLUTIONS
I, the undersigned, Assistant Secretary of Kleinert's, Inc. of
Florida, a corporation organized and validly existing under the laws of Florida,
DO HEREBY CERTIFY that the following resolutions were unanimously adopted by the
Board of Directors of said corporation by unanimous consent in writing effective
February __, 1996:
RESOLVED, that the Chairman of the Board, President,
Vice-President, Secretary and Assistant Secretary of this
corporation, or any one or more of them, are authorized, at
any time or times, on behalf of this corporation and in its
name, and upon such terms as they may determine: (a) to borrow
money, obtain credit and other financial accommodations from,
and engage in any other borrowing transactions with CoreStates
Bank, N.A. ("Bank") on a secured and/or unsecured basis,
including the execution and delivery of, and borrowing and
performance under, a Fourth Amendment to Line of Credit and
Term Loan Agreement (the "Fourth Amendment") between this
corporation and Bank, with such changes as may be approved by
said officers; (b) to execute, endorse, assign, negotiate,
accept, deliver and authorize the payment of notes, drafts,
checks, bills of exchange, acceptances, and other instruments
in connection with and in furtherance of this corporation's
borrowing transactions with Bank; (c) to secure any and all
existing and future liabilities and obligations of this
corporation to Bank by pledging, mortgaging, assigning,
transferring or granting to Bank a lien or security interest
in any of the real, personal, tangible and/or intangible
property of this corporation, whether now owned or hereafter
acquired by this corporation; (d) to execute and deliver to
Bank any and all notes, including the Third Amended and
Restated Term Loan Note, loan and security agreements,
documents and instruments required by Bank to reflect such
borrowing
<PAGE>
transactions and collateral granted to Bank, including those
authorizing confession of judgment against this corporation
and to perform and carry out the terms and conditions
contained therein; (e) to execute and deliver to Bank any and
all amendments, renewals, extensions, additions and
substitutions of the above-described agreements, documents and
collateral; (f) to execute and deliver to Bank any and all
financial statements, certificates, schedules, and other
documents, statements or papers as may from time to time be
required by Bank pursuant to this corporation's borrowing
transactions with Bank; and (g) to do and perform all other
necessary and appropriate acts in furtherance of this
corporation's borrowing transactions with Bank.
FURTHER RESOLVED, that any and all acts heretofore taken by
any officers of this corporation with respect to any of the
matters and transactions described above are hereby ratified
and confirmed.
FURTHER RESOLVED, that (a) the Secretary and Assistant
Secretary of this corporation, and either of them, are hereby
authorized and directed to certify to Bank a copy of these
resolutions and the names and specimen signatures of the
present incumbents in the offices referred to in these
resolutions and to further certify to Bank from time to time
hereafter the names of any successors to the present
incumbents in such offices, together with specimens of their
respective signatures; and (b) Bank is hereby authorized and
empowered to rely upon any such certificate, unless and until
the resolutions referred to therein shall have been formally
modified or rescinded by action of this corporation's Board of
Directors and a subsequent certificate of this corporation to
that effect shall have been actually received by Bank.
I further certify that the foregoing resolutions have not been
modified or rescinded and are in full force and effect,
<PAGE>
and that all of the foregoing is not in contravention of the articles of
incorporation and by-laws of this corporation.
IN WITNESS WHEREOF, I have hereunto set my hand as of the __
day of February, 1996.
------------------------------
Joseph J. Connors
Assistant Secretary
CERTIFICATE OF CORPORATE RESOLUTIONS
I, the undersigned, Assistant Secretary of Kleinert's, Inc. of
Alabama, a corporation organized and validly existing under the laws of Alabama,
DO HEREBY CERTIFY that the following resolutions were unanimously adopted by the
Board of Directors of said corporation by unanimous consent in writing effective
February __, 1996:
RESOLVED, that the Chairman of the Board, President,
Vice-President, Secretary and Assistant Secretary of this
corporation, or any one or more of them, are authorized, at
any time or times, on behalf of this corporation and in its
name, and upon such terms as they may determine: (a) to borrow
money, obtain credit and other financial accommodations from,
and engage in any other borrowing transactions with CoreStates
Bank, N.A. ("Bank") on a secured and/or unsecured basis,
including the execution and delivery of, and borrowing and
performance under, a Fourth Amendment to Line of Credit and
Term Loan Agreement (the "Fourth Amendment") between this
corporation and Bank, with such changes as may be approved by
said officers; (b) to execute, endorse, assign, negotiate,
accept, deliver and authorize the payment of notes, drafts,
checks, bills of exchange, acceptances, and other instruments
in connection with and in furtherance of this corporation's
borrowing transactions with Bank; (c) to secure any and all
existing and future liabilities and obligations of this
corporation to Bank by pledging, mortgaging, assigning,
transferring or granting to Bank a lien or security interest
in any of the real, personal, tangible and/or intangible
property of this corporation, whether now owned or hereafter
acquired by this corporation; (d) to execute and deliver to
Bank any and all notes, including the Third Amended and
Restated Term Loan Note, loan and security agreements,
documents and instruments required by Bank to reflect such
borrowing
<PAGE>
transactions and collateral granted to Bank, including those
authorizing confession of judgment against this corporation
and to perform and carry out the terms and conditions
contained therein; (e) to execute and deliver to Bank any and
all amendments, renewals, extensions, additions and
substitutions of the above-described agreements, documents and
collateral; (f) to execute and deliver to Bank any and all
financial statements, certificates, schedules, and other
documents, statements or papers as may from time to time be
required by Bank pursuant to this corporation's borrowing
transactions with Bank; and (g) to do and perform all other
necessary and appropriate acts in furtherance of this
corporation's borrowing transactions with Bank.
FURTHER RESOLVED, that any and all acts heretofore taken by
any officers of this corporation with respect to any of the
matters and transactions described above are hereby ratified
and confirmed.
FURTHER RESOLVED, that (a) the Secretary and Assistant
Secretary of this corporation, and either of them, are hereby
authorized and directed to certify to Bank a copy of these
resolutions and the names and specimen signatures of the
present incumbents in the offices referred to in these
resolutions and to further certify to Bank from time to time
hereafter the names of any successors to the present
incumbents in such offices, together with specimens of their
respective signatures; and (b) Bank is hereby authorized and
empowered to rely upon any such certificate, unless and until
the resolutions referred to therein shall have been formally
modified or rescinded by action of this corporation's Board of
Directors and a subsequent certificate of this corporation to
that effect shall have been actually received by Bank.
I further certify that the foregoing resolutions have not been
modified or rescinded and are in full force and effect,
<PAGE>
and that all of the foregoing is not in contravention of the articles of
incorporation and by-laws of this corporation.
IN WITNESS WHEREOF, I have hereunto set my hand as of the __
day of February, 1996.
------------------------------
Joseph J. Connors
Assistant Secretary
(Local Currency-Single Jurisdiction)
ISDA(R)
International Swap Dealers Association, Inc.
SCHEDULE
to the
Master Agreement
dated as of February 28, 1996
Kleinert's, Inc. of Alabama and
between CoreStates Bank, N.A. and Kleinert's, Inc. of Florida
("Party A") ("Party B")
Part 1. Termination Provisions.
(a) "Specified Entity" means in relation to Party A for the
purpose of:--
Section 5(a)(v), none
Section 5(a)(vi), none
Section 5(a)(vii), none
Section 5(b)(ii), none
and in relation to Party B for the purpose of:--
Section 5(a)(v), Kleinert's, Inc.
Section 5(a)(vi), Kleinert's, Inc.
Section 5(a)(vii), Kleinert's, Inc.
Section 5(b)(ii), Kleinert's, Inc.
(b) "Specified Transactions" will have the meaning specified in
Section 14 of this Agreement.
(c) The "Cross Default" provisions of Section 5(a)(vi)
will apply to Party A
will apply to Party B
If such provisions apply:--
"Specified Indebtedness" will have the meaning specified in
Section 12 of this Agreement except that such term shall not
include obligations in respect of deposits received in the
ordinary course of a party's banking business.
"Threshold Amount" means $10 million.
<PAGE>
(d) The "Credit Event Upon Merger" provisions of Section 5(b)(ii)
will apply to Party A
will apply to Party B
(e) The "Automatic Early Termination" provision of Section 6(a)
will not apply to Party A
will not apply to Party B
(f) Payments on Early Termination. For purpose of Section 6(e) of this
Agreement:--
(i) Market Quotation will apply.
(ii) The Second Method will apply.
(g) Additional Termination Event will not apply.
Part 2. Agreement to Deliver Documents.
For the purpose of Section 4(a) of this Agreement, each party agrees to deliver
the following documents, as applicable:--
<TABLE>
<S> <C> <C> <C>
Party required to Form/Document/ Date by which Covered by
deliver document Certificate to be delivered Section 3(d)
Representation
Party B Certificate Upon Execution Yes
substantially in of this Agreement
the form of
Exhibit II
Party B Opinion of Counsel Upon Execution No
substantially in the of this Agreement
form of Exhibit III
Party B Financial Statements As Requested Yes
</TABLE>
Part 3. Miscellaneous
(a) Addresses for Notices. For the purpose of Section 10(a) of this
Agreement:--
Address for notices or communications to Party A:--
Front Office issues:
CoreStates Bank, N.A.
Street Address: 1345 Chestnut Street, Philadelphia, PA 19107
Mailing Address: P.O. Box 7618, Philadelphia, PA 19101-7618
Attention: Interest Rate Desk, F.C. 1-1-9-49
FAX: (215) 973-6201
Phone: (215) 973-6028
Back Office issues:
Street Address: 1345 Chestnut Street, Philadelphia, PA 19107
Mailing Address: P.O. Box 8590, Philadelphia, PA 19101-8590
Attention: Investment Operations, F.C. 1-1-8-4
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<PAGE>
Master Documentation and Confirmations:
Attention: Ms. Nancy Doyle
FAX: (215) 973-8388
Phone: (215) 973-1148
Resets and Settlements:
Attention: Ms. Wendy Havens
FAX: (215) 973-6693
Phone: (215) 973-1022
Electronic Messaging System Details: ...........................
Address for notices or communications to Party B:--
Address: Suite 100; 120 West Germantown Pike; Plymouth Meeting, PA
19462-1420
Attention: Gerald E. Monigle
Telex No.: .......................... Answerback: ..............
Facsimile No.: (610) 828 - 4589 Telephone No.: (610) 828 - 7261
Electronic Messaging System Details: ...........................
(b) Calculation Agent. The Calculation Agent is Party A unless
otherwise specified in a Confirmation in relation to the relevant
Transaction.
(c) Credit Support Document. N/A
(d) Credit Support Provider. Credit Support Provider means in relation
to Party A. None
Credit Support Provider. Credit Support Provider means in relation
to Party B. None
(e) Governing Law. This Agreement will be governed by and construed
in accordance with the laws of the State of New York (without
reference to choice of law doctrine).
2(f) Netting of Payments. Subparagraph (ii) of Section 2(c) of this
Agreement will not apply to any Transaction unless otherwise
specified in a Confirmation in relation to the relevant
Transaction.
(g) "Affiliate" will have the meaning specified in Section 12 of this
Agreement.
Part 4. Other Provisions.
(a) Confirmations. Notwithstanding anything to the contrary in this
Agreement:
(i) The parties hereto agree that with respect to each Transaction
hereunder a legally binding agreement shall exist from the moment
that the parties hereto agree on the essential terms of such
Transaction, which the parties anticipate will occur by telephone.
(ii) For each Transaction Party A and Party B agree to enter into
- 3 -
<PAGE>
hereunder, Party A shall promptly send to Party B a Confirmation,
substantially in the form of Exhibit I setting forth the terms of
such Transaction. Party B shall execute and return the
Confirmation to Party A or request correction of any error within
three Business Days of receipt. Failure of Party B to respond
within such period shall not affect the validity or enforceability
of such Transaction and shall be deemed to be an affirmation of
such terms.
(b) Additional Agreements.
(i) Each party agrees, upon learning of the occurrence of any
event or commencement of any condition that constitutes (or that
with the giving of notice or passage of time or both would
constitute) an Event of Default or Termination Event with respect
to the party, promptly to give the other party notice of such
event or condition (or, in lieu of giving notice of such event or
condition in the case of an event or condition that with the
giving of notice or passage of time or both would constitute an
Event of Default or Termination Event with respect to the party,
to cause such event or condition to cease to exist before becoming
an Event of Default or Termination Event).
(ii) Party B agrees to give all notices described in (b)(i) of
this Part 4 with respect to any Credit Support Provider.
(c) Additional Representations. Section 3 of the Agreement is hereby
amended by adding at the end thereof the following subsections (e)
and (f):
"(e) Eligible Swap Participant. It is an "eligible swap
participant" as that term is defined by the Commodity Futures
Trading Commission at 17 C.F.R. ss. 35.1(b)(2)."
"(f) Line of Business. It has entered into this Agreement
(including each Transaction evidenced hereby) in conjunction
with its line of business (including financial intermediation
services) or the financing of its business."
(d) FDIC Requirements. The following Additional Representations and
Agreements will apply to Party A and will not apply to Party B:
(i) The necessary action to authorize referred to in the
representation in Section 3 (a)(ii) of this Agreement includes
all authorizations required under the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 and any
regulations and guidelines thereunder.
(ii) At all times during the term of this Agreement, it will
continuously include and maintain as part of its official
written books and records, this Agreement, this Schedule and
all other exhibits, supplements, and attachments hereto and
documents incorporated by reference herein, all Confirmations
and evidence of all necessary approvals. In addition to any
other remedies which the other party may have under this
Agreement or otherwise, if it breaches or defaults on any of
its obligations set forth in this subparagraph (ii), the other
party shall be entitled to apply to any court of competent
jurisdiction for an order requiring specific performance of
such obligations, and it shall not contest any such
application and shall comply with any such order.
(e) Set-Off. Section 6 of the Agreement is amended by adding the
following new subsection 6(f):
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<PAGE>
"(f) Set-off. Without affecting the provisions of this
Agreement requiring the calculation of certain net payment
amounts, all payments under this Agreement shall be made
without set-off or counterclaim and will not be subject to any
conditions except as provided in Section 2 of this Agreement
and except as provided in this Section 6(f). Any amount (the
'Early Termination Amount') payable to one party (the 'Payee')
by the other party (the 'Payer') under Section 6(e), in
circumstances where there is a Defaulting Party or one
Affected Party in the case where a Termination Event under
Section 5(b) has occurred, will, at the option of the party
('X') other than the Defaulting Party or the Affected Party
(and without prior notice to the Defaulting Party or the
Affected Party), be reduced by its set-off against any
amount(s) (the 'Other Agreement Amount') payable (whether at
such time or in the future or upon the occurrence of a
contingency) by the Payee to the Payer (irrespective of the
currency, place of payment or booking office of the
obligation) under any other agreement(s) between the Payee and
the Payer or instrument(s) or undertaking(s) issued or
executed by one party to, or in favor of, the other party (and
the Other Agreement Amount will be discharged promptly and in
all respects to the extent it is so set-off). X will give
notice to the other party of any set-off effected under this
Section 6(f).
"For this purpose, either the Early Termination Amount or the
Other Agreement Amount (or the relevant portion of such
amounts) may be converted by X into the currency in which the
other is denominated at the rate of exchange at which such
party would be able, acting in a reasonable manner and in good
faith, to purchase the relevant amount of such currency.
"If an obligation is unascertained, X may in good faith
estimate that obligation and set-off in respect of the
estimate, subject to the relevant party accounting to the
other when the obligation is ascertained.
"Nothing in this Section 6(f) shall be effective to create a
charge or other security interest. This Section 6(f) shall be
without prejudice and in addition to any right of set-off,
combination of accounts, lien or other right to which any
party is at any time otherwise entitled (whether by operation
of law, contract or otherwise)."
(f) Consent to Recording. Each Party (i) consents to the recording of
the telephone conversations of trading and marketing personnel of
the Parties and their Affiliates in connection with this Agreement
or any potential Transaction and (ii) agrees to obtain any
necessary consent of, and give notice of such recording to, such
personnel of it and its Affiliates.
(g) No Reliance. In connection with the negotiation of, the entering
into, and the confirming of the execution of this Agreement, any
Credit Support Document to which it is a party, each Transaction,
and any other documentation relating to this Agreement that it is
required by this Agreement to deliver, each party agrees and
confirms that: (i) the other party hereto or thereto is not
acting as a fiduciary or financial, investment, or commodity
trading advisor for it; (ii) it is not relying (for purposes of
making any investment decision or otherwise) upon any advice,
counsel or representations
- 5 -
<PAGE>
(whether written or oral) of the other party hereto or thereto
other than the representations expressly set forth in this
Agreement, in such Credit Support Document, and in any
Conformation; (iii) the other party hereto or thereto has not
given to it (directly or indirectly through any other person) any
assurance or guaranty whatsoever as to the merits (either legal,
regulatory, tax, financial, accounting or otherwise) of this
Agreement, such Credit Support Document, such Transaction or such
other documentation; (iv) it has consulted with its own legal,
regulatory, tax, business, investment, financial and accounting
advisors to the extent deemed necessary, and it has made its own
judgment and upon any advice as it has deemed necessary and not
upon any view expressed by the other party hereto or thereto; (v)
it has determined that all trading decisions have been the result
of arm's length negotiations between the parties; (vi) it is
entering into this Agreement, such Credit Support Document, such
Transaction and such other documentation with a full understanding
of all or the terms, condition and risks hereof and thereof
(economic and otherwise), and it is capable of assuming and
willing to assume (financially and otherwise) those risks; and
(vii) it is a sophisticated investor.
(h) Interest Rate Caps, Collars, Floors and Options. The condition
precedent in Section 2(a)(iii)(1) of the Agreement does not apply
to a payment and delivery owing by a party if the other party
shall have satisfied in full all its payments and delivery
obligations under Section 2(a)(i) of this Agreement and shall at
the relevant time have no future payment delivery obligations,
whether absolute or contingent, under Section 2(a)(i).
(i) WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES ANY AND ALL
RIGHTS TO TRIAL BY JURY WITH RESPECT TO ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF OR RELATED
TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR ANY
TRANSACTION CONTEMPLATED HEREBY.
- 6 -
(Local Currency-Single Jurisdiction)
ISDA(R)
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of February 28, 1996
Kleinert's, Inc. of Alabama and
CoreStates Bank, N.A. and Kleinert's, Inc. of Florida
have entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties confirming those
Transactions.
Accordingly, the parties agree as follows:-
1. Interpretation
(a) Definitions. The terms defined in Section 12 and in the Schedule will
have the meanings therein specified for the purpose of this Master Agreement.
(b) Inconsistency. In the event of any inconsistency between the provisions
of the Schedule and the other provisions of this Master Agreement, the Schedule
will prevail. In the event of any inconsistency between the provisions of any
Confirmation and this Master Agreement (including the Schedule), such
Confirmation will prevail for the purpose of the relevant Transaction.
(c) Single Agreement. All Transactions are entered into in reliance on
the fact that this Master Agreement and all Confirmations form a single
agreement between the parties (collectively referred to as this "Agreement"),
and the parties would not otherwise enter into any Transactions.
2. Obligations
(a) General Conditions.
(i) Each party will make each payment or delivery specified in each
Confirmation to be made by it, subject to the other provisions of this
Agreement.
(ii) Payments under this agreement will be made on the due date for
value on that date in the place of the account specified in the
relevant Confirmation or otherwise pursuant to this Agreement, in
freely transferable funds and in the manner customary for payments in
the required currency. Where settlement is by delivery (that is, other
than by payment), such delivery will be made for receipt on the due
date in the manner customary for the relevant obligation unless
otherwise specified in the relevant Confirmation or elsewhere in this
Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is subject
to (1) the condition precedent that no Event of Default or Potential
Event of Default with respect to the other party has occurred and is
continuing,
Copyright (C) 1992 by International Swap Dealers Association, Inc.
ISDA (R) 1992
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<PAGE>
(2) the condition precedent that no Early Termination Date in respect
of the relevant Transaction has occurred or been effectively designated
and (3) each other applicable condition precedent specified in this
Agreement.
(b) Change of Account. Either party may change its account for receiving a
payment or delivery by, living notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a reasonable
objection to such change.
(c) Netting. If on my date amounts would otherwise be payable:-
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and discharged and,
if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by the other
party, replaced by an obligation upon the party by whom the larger aggregate
amount would have been payable to pay to the other party the excess of the
larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be made
in the Schedule or a Confirmation by specifying that subparagraph (ii) above
will not apply to the Transactions identified as being subject to the election,
together with the starting date (in which case subparagraph (ii) above will not,
or will cease to, apply to such Transactions from such date). This election may
be made separately for different groups of Transactions and will apply
separately to each pairing of branches or offices through which the parties make
and receive payments or deliveries.
(d) Default Interest; Other Amounts. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant Transaction,
a party that defaults in the performance of any payment obligation will, to the
extent permitted by law and subject to Section 6(c), be required to pay interest
(before as well as after judgment) on the overdue amount to the other party on
demand in the same currency as such overdue amount, for the period from (and
including) the original due date for payment to (but excluding) the date of
actual payment, at the Default Rate. Such interest will be calculated on the
basis of daily compounding and the actual number of days elapsed. If, prior to
the occurrence or effective designation of in Early Termination Date in respect
of the relevant Transaction, a party defaults in the performance of any
obligation required to be settled by delivery, it will compensate the other
party on demand if and to the extent provided for in the relevant Confirmation
or elsewhere in this Agreement.
3. Representations
Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction is entered
into) that:-
(a) Basic Representations.
(i) Status. It is duly organized and validly existing under the laws
of the jurisdiction of its Organization or incorporation and, if
relevant under such laws, in good standing;
(ii) Powers. It has the power to execute this Agreement and any other
documentation relating to this Agreement to which it is a party, to
deliver this Agreement and any other documentation relating to this
Agreement that it is required by this Agreement to deliver and to
perform its obligations under this Agreement
Copyright (C) 1992 by International Swap Dealers Association, Inc.
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<PAGE>
and any obligations it has under any Credit Support Document to which
it is a party and has taken all necessary action to authorize such
execution, delivery and performance;
(iii) No Violation or Conflict. Such execution, delivery and
performance do not violate or conflict with any law applicable to it,
any provision of its constitutional documents, any order or judgment of
any court or other agency of government applicable to it or any of its
assets or any contractual restriction binding on or affecting it or any
of its assets;
(iv) Consents. All governmental and other consents that are required to
have been obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party have been obtained and are in
full force and effect and all conditions of any such consents have been
complied with; and
(v) Obligations Binding. Its obligations under this Agreement and any
Credit Support Document to which it is a party constitute its legal,
valid and binding obligations, enforceable in accordance with their
respective terms (subject to applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditors' rights
generally and subject, as to enforceability, to equitable principles of
general application (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(b) Absence of Certain Events. No Event of Default or Potential Event of
Default or, to its knowledge, Termination Event with respect to it has occurred
and is continuing and no such event or circumstance would occur as a result of
its entering into or performing its obligations under this Agreement or any
Credit Support Document to which it is a party.
(c) Absence of Litigation. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates any action, suit or proceeding
at law or in equity or before any court, tribunal, governmental body,
agency or official or any arbitrator that is likely to affect the legality,
validity or enforceability against it of this Agreement or any Credit Support
Document to which it is a party or its ability to perform its obligations under
this Agreement or such Credit Support Document.
(d) Accuracy of Specified Information. All applicable information that is
furnished in writing by or on behalf of it to the other party and is identified
for the purpose of this Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.
4. Agreements
Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party:-
(a) Furnish Specified Information. It will deliver to the other party any
forms, documents or certificates specified in the Schedule or any Confirmation
by the date specified in the Schedule or such Confirmation or, if none is
specified, as soon as reasonably practicable.
(b) Maintain Authorizations. It will use all reasonable efforts to maintain
in full force and effect all consents of any governmental or other
authority that are required to be obtained by it with respect to this
Agreement or any Credit Support Document to which it is a party and
will use all reasonable efforts to obtain any that may become necessary
in the future.
(c) Comply with Laws. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to
comply would materially impair its ability to perform its obligations
under this Agreement or any Credit Support Document to which it is a
party.
Copyright (C) 1992 by International Swap Dealers Association, Inc.
ISDA (R) 1992
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<PAGE>
5. Events of Default and Termination Events
(a) Events of Default. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any
Specified Entity of such party of any of the following events
constitutes an event of default (an "Event of Default") with respect to
such party:-
(i) Failure to Pay or Deliver. Failure by the party to make, when
due, any payment under this Agreement or delivery under Section 2(a)(i)
or 2(d) required to be made by it if such failure is not remedied on or
before the third Local Business Day after notice of such failure is
given to the party;
(ii) Breach of Agreement. Failure by the party to comply with or
perform any agreement or obligation (other than an obligation to make
any payment under this Agreement or delivery under Section 2(a)(i) or
2(d) or to give notice of a Termination Event) to be complied with or
performed by the party in accordance with this Agreement if such
failure is not remedied on or before the thirtieth day after notice of
such failure is given to the party;
(iii) Credit Support Default.
(1) Failure by the party or any Credit Support Provider of
such party to comply with or perform any agreement or
obligation to be complied with or performed by it in
accordance with any Credit Support Document if such failure is
continuing after any applicable grace period has elapsed;
(2) the expiration or termination of such Credit Support
Document or the failing or ceasing of such Credit Support
Document to be in full force and effect for the purpose of
this Agreement (in either case other than in accordance with
its terms) prior to the satisfaction of all obligations of
such party under each Transaction to which such Credit Support
Document relates without the written consent of the other
party; or
(3) the party or such Credit Support Provider disaffirms,
disclaims, repudiates or rejects, in whole or in part, or
challenges the validity of, such Credit Support Document;
(iv) Misrepresentation. A representation made or repeated or deemed
to have been made or repeated by the party or any Credit Support
Provider of such party in this Agreement or any Credit Support Document
proves to have been incorrect or misleading in any material respect
when made or repeated or deemed to have been made or repeated;
(v) Default under Specified Transaction. The party, any Credit
Support Provider of such party or any applicable Specified Entity of
such party (1) defaults under a Specified Transaction and, after giving
effect to any applicable notice requirement or grace period, there
occurs a liquidation of, an acceleration of obligations under, or an
early termination of, that Specified Transaction, (2) defaults, after
giving effect to any applicable notice requirement or grace period, in
making any payment or delivery due on the last payment, delivery or
exchange date of, or any payment on early termination of, a Specified
Transaction (or such default continues for at least three Local
Business Days if there is no applicable notice requirement or grace
period) or (3) disaffirms, disclaims, repudiates or rejects, in whole
or in part, a Specified Transaction (or such action is taken by any
person or entity appointed or empowered to operate it or act on its
behalf);
(vi) Cross Default. If "Cross Default" is specified in the Schedule
as applying to the party, the occurrence or existence of (1) a default,
event of default or other similar condition or event (however
described) in respect of such party, any Credit Support Provider of
such party or any applicable Specified Entity of such party under one
or more agreements or instruments relating to Specified Indebtedness of
any of them (individually or collectively) in an aggregate amount of
not less than the applicable Threshold Amount (as specified in the
Schedule) which has resulted in such Specified Indebtedness becoming,
or becoming capable at such time of being declared, due and payable
under such agreements or instruments, before it would otherwise have
been due and payable or (2) a default by such party, such Credit
Support Provider or such Specified Entity (individually or
collectively) in making one or more payments on the due date thereof in
an aggregate amount of not less than the applicable Threshold Amount
under such agreements or instruments (after giving effect to any
applicable notice requirement or grace period);
Copyright (C) 1992 by International Swap Dealers Association, Inc.
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(vii) Bankruptcy. The party, any Credit Support Provider of such
party or any applicable Specified Entity of such party:-
(1) is dissolved (other than pursuant to a consolidation,
amalgamation or merger); (2) becomes insolvent or is unable to
pay its debts or fails or admits in writing its inability
generally to pay its debts as they become due; (3) makes a
general assignment, arrangement or composition with or for the
benefit of its creditors; (4) institutes or has instituted
against it a proceeding seeking a judgment of insolvency or
bankruptcy or any other relief under any bankruptcy or
insolvency law or other similar law affecting creditors'
rights, or a petition is presented for its winding-up or
liquidation, and, in the case of any such Proceeding or
petition instituted or presented against it, such proceeding or
petition (A) results in a judgment of insolvency or bankruptcy
or the entry of an order for relief or the making of an order
for its winding-up or liquidation or (B) is not dismissed,
discharged, stayed or restrained in each case within 30 days of
the institution or presentation thereof; (5) has a resolution
passed for its winding-up, official management or liquidation
(other than pursuant to a consolidation, amalgamation or
merger); (6) seeks or becomes subject to the appointment of an
administrator, provisional liquidator, conservator, receiver,
trustee, custodian or other similar official for it or for all
or substantially all its assets; (7) has a secured party take
possession of all or substantially all its assets or has a
distress, execution, attachment, sequestration or other legal
process levied, enforced or sued on or against all or
substantially all its assets and such secured party maintains
possession, or any such process is not dismissed, discharged,
stayed or restrained, in each case within 30 days thereafter;
(8) causes or is subject to any event with respect to it which,
under the applicable laws of any jurisdiction, has an analogous
effect to any of the events specified in clauses (1) to (7)
(inclusive); or (9) takes any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any
of the foregoing acts; or
(viii) Merger Without Assumption. The party or any Credit Support
Provider of such party consolidates or amalgamates with, or merges with
or into, or transfers all or substantially all its assets to, another
entity and, at the time of such consolidation, amalgamation, merger or
transfer:-
(1) the resulting, surviving or transferee entity fails to
assume all the obligations of such party or such Credit Support
Provider under this Agreement or any Credit Support Document to
which it or its predecessor was a party by operation of law or
pursuant to an agreement reasonably satisfactory to the other
party to this Agreement; or
(2) the benefits of any Credit Support Document fail to extend
(without the consent of the other party) to the performance by
such resulting, surviving or transferee entity of its
obligations under this Agreement.
(b) Termination Events. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any event specified below constitutes an Illegality if
the event is specified in (i) below, and, if specified to be applicable, a
Credit Event Upon Merger if the event is specified pursuant to (ii) below or an
Additional Termination Event if the event is specified pursuant to (iii) below:-
(i) Illegality. Due to the adoption of, or any change in, any
applicable law after the date on which a Transaction is entered into,
or due to the promulgation of, or any change in, the interpretation by
any court, tribunal or regulatory authority with competent jurisdiction
of any applicable law after such date, it becomes unlawful (other than
as a result of a breach by the party of Section 4(b)) for such party
(which will be the Affected Party):-
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(1) to perform any absolute or contingent obligation to make a
payment or delivery or to receive a payment or delivery in
respect of such Transaction or to comply with any other
material provision of this Agreement relating to such
Transaction; or
(2) to perform, or for any Credit Support Provider of such
party to perform, any contingent or other obligation which the
party (or such Credit Support Provider) has under any Credit
Support Document relating to such Transaction;
(ii) Credit Event Upon Merger. If "Credit Event Upon Merger" is
specified in the Schedule as applying to the party, such party ("X"),
any Credit Support Provider of X or any applicable Specified Entity of
X consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets to, another entity and
such action does not constitute an event described in Section
5(a)(viii) but the creditworthiness of the resulting, surviving or
transferee entity is materially weaker than that of X, such Credit
Support Provider or such Specified Entity, as the case may be,
immediately prior to such action (and, in such event, X or its
successor or transferee, as appropriate, will be the Affected Party);
or
(iii) Additional Termination Event. If an "Additional Termination
Even" is specified in the Schedule or any Confirmation as applying, the
occurrence of such event (and, in such event, the Affected Party or
Affected Parties shall be as specified for such Additional Termination
Event in the Schedule or such Confirmation).
(c) Event of Default and Illegality. If an event or circumstance which
would otherwise constitute or give rise to an Event of Default also constitutes
an Illegality, it will be treated as an Illegality and will not constitute an
Event of Default.
6. Early Termination
(a) Right to Terminate Following Event of Default. If at any time an Event
of Default with respect to a party (the "Defaulting Party") has occurred and is
then continuing, the other party (the "Non-defaulting Party") may, by not more
than 20 days notice to the Defaulting Party specifying the relevant Event of
Default, designate a day not earlier than the day such notice is effective as an
Early Termination Date in respect of all outstanding Transactions. If, however,
"Automatic Early Termination" is specified in the Schedule as applying to a
party, then an Early Termination Date in respect of all outstanding Transactions
will occur immediately upon the occurrence with respect to such party of an
Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6) or, to the
extent analogous thereto, (8), and as of the time immediately preceding the
institution of the relevant proceeding or the presentation of the relevant
petition upon the occurrence with respect to such party of an Event of Default
specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).
(b) Right to Terminate Following Termination Event.
(i) Notice. If a Termination Event occurs, an Affected Party will,
promptly upon becoming aware of it, notify the other party, specifying
the nature of that Termination Event and each Affected Transaction and
will also give such other information about that Termination Event as
the other party may reasonably require.
(ii) Two Affected Parties. If an Illegality under Section 5(b)(i)(1)
occurs and there are two Affected Parties, each party will use all
reasonable efforts to reach agreement within 30 days after notice
thereof is given under Section 6(b)(I) on action to avoid that
Termination Event.
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(iii) Right to Terminate. If.-
(1) an agreement under Section 6(b)(ii) has not been effected
with respect to all Affected Transactions within 30 days after an
Affected Party gives notice under Section 6(b)(i); or
(2) an Illegality other than that referred to in Section
6(b)(ii), a Credit Event Upon Merger or an Additional Termination
Event occurs,
either party in the case of an Illegality, any Affected Party in the case-of an
Additional Termination Event if there is more than one Affected Party, or the
party which is not the Affected Party in the case of a Credit Event Upon Merger
or an Additional Termination Event if there is only one Affected Party may, by
not more than 20 days notice to the other party and provided that the relevant
Termination Event is then continuing, designate a day not earlier than the day
such notice is effective as an Early Termination Date in respect of all Affected
Transactions.
(c) Effect of Designation.
(i) If notice designating an Early Termination Date is given under
Section 6(a) or (b), the Early Termination Date will occur on the date
so designated, whether or not the relevant Event of Default or
Termination Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early
Termination Date, no further payments or deliveries under Section
2(a)(i) or 2(d) in respect of the Terminated Transactions will be
required to be made, but without prejudice to the other provisions of
this Agreement. The amount, if any, payable in respect of an Early
Termination Date shall be determined pursuant to Section 6(e).
(d) Calculations.
(i) Statement. On or as soon as reasonably practicable following the
occurrence of an Early Termination Date, each party will make the
calculations on its part, if any, contemplated by Section 6(e) and will
provide to the other party a statement (1) showing, in reasonable
detail, such calculations (including all relevant quotations and
specifying any amount payable under Section 6(e)) and (2) giving
details of the relevant account to which any amount payable to it is to
be paid. In the absence of written confirmation from the source of a
quotation obtained in determining a Market Quotation, the records of
the party obtaining such quotation will be conclusive evidence of the
existence and accuracy of such quotation.
(ii) Payment Date. An amount calculated as being due in respect of any
Early Termination Date under Section 6(e) will be payable on the day
that notice of the amount payable is effective (in the case of an Early
Termination Date which is designated or occurs as a result of an Event
of Default) and on the day which is two Local Business Days after the
day on which notice of the account payable is effective (in the case of
an Early Termination Date which is designated as a result of a
Termination Event). Such amount will be paid together with (to the
extent permitted under applicable law) interest thereon (before as well
as after judgment), from (and including) the relevant Early Termination
Date to (but excluding) the date such amount is paid, at the Applicable
Rate. Such interest will be calculated on the basis of daily
compounding and the actual number of days elapsed.
(e) Payments on Early Termination. If an Early Termination Date occurs, the
following provisions shall apply based on the parties' election in the Schedule
of a payment measure, either "Market Quotation" or "Loss", and a payment method,
either the "First Method" or the "Second Method". If the parties fail to
designate a payment measure or payment method in the Schedule, it will be deemed
that "Market Quotation" or the "Second Method", as the case may be, shall apply.
The amount, if any, payable in respect of an Early Termination Date and
determined pursuant to this Section will be subject to any Set-off.
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(i) Events of Default. If the Early Termination Date results from an
Event of Default:-
(1) First Method and Market Quotation. If the First Method and
Market Quotation apply, the Defaulting Party will pay to the
Non-defaulting Party the excess, if a positive number, of (A) the
sum of the Settlement Amount (determined by the Non-defaulting
Party) in respect of the Terminated Transactions and the Unpaid
Amounts owing to the Non-defaulting Party over (B) the Unpaid
Amounts owing to the Defaulting Party.
(2) First Method and Loss. If the First Method and Loss apply,
the Defaulting Party will pay to the Non-defaulting Party, it a
positive number, the Non-defaulting Party's Loss in respect of
this Agreement.
(3) Second Method and Market Quotation. If the Second Method and
Market Quotation apply, an amount will be payable equal to (A)
the sum of the Settlement Amount (determined by the
Non-defaulting Party) in respect of the Terminated Transactions
and the Unpaid Amounts owing to the Non-defaulting Party less (B)
the Unpaid Amounts owing to the Defaulting Party. If that amount
is a positive number, the Defaulting Party will pay it to the
Non-defaulting Party; if it is a negative number, the
Non-defaulting Party will pay the absolute value of that amount
to the Defaulting Party.
(4) Second Method and Loss. If the Second Method and Loss apply,
an amount will be payable equal to the Non-defaulting Party's
Loss in respect of this Agreement. If that amount is a positive
number, the Defaulting Party will pay it to the Non-defaulting
Party; if it is a negative number, the Non-defaulting Party will
pay the absolute value of that amount to the Defaulting Party.
(ii) Termination Events. If the Early Termination Date results from a
Termination Event:-
(1) One Affected Party. If there is one Affected Party, the
amount payable will be determined in accordance with
Section 6(e)(i)(3), if Market Quotation applies, or Section
6(e)(i)(4), if Loss applies, except that, in either case,
references to the Defaulting Party and to the
Non-defaulting Party will be deemed to be references to the
Affected Party and the party which is not the Affected
Party, respectively, and, if Loss applies and fewer than
all the Transactions are being terminated, Loss shall be
calculated in respect of all Terminated Transactions.
(2) Two Affected Parties. If there are two Affected Parties:-
(A) if Market Quotation applies, each party will determine
a Settlement Amount in respect of the Terminated
Transactions, and an amount will be payable equal to (1)
the sum of (a) one-half of the difference between the
Settlement Amount of the party with the higher Settlement
Amount ("X") and the Settlement Amount of the party with
the lower Settlement Amount ("Y") and (b) the Unpaid
Amounts owing to X less (II) the Unpaid Amounts owing to Y;
and
(B) if Loss applies, each party will determine its Loss in
respect of this Agreement (or, if fewer than all the
Transactions are being terminated, in respect of all
Terminated Transactions) and an amount will be payable
equal to one-half of the difference between the Loss of the
party with the higher Loss ("X") and the Loss of the party
with the lower Loss ("Y").
If the amount payable is a positive number, Y will pay it to X;
if it is a negative number, X will pay the absolute value of that
amount to Y.
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(iii) Adjustment for Bankruptcy. In circumstances where an Early
Termination Date occurs because "Automatic Early Termination" applies
in respect of a party, the amount determined under this Section 6(e)
will be subject to such adjustments as are appropriate and permitted by
law to reflect any payments or deliveries made by one party to the
other under this Agreement (and retained by such other party) during
the period from the relevant Early Termination Date to the date for
payment determined under Section 6(d)(ii).
(iv) Pre-Estimate. The parties agree that if Market Quotation applies
an amount recoverable under this Section 6(e) is a reasonable
pre-estimate of loss and not a penalty. Such amount is payable for the
loss of bargain and the loss of protection against future risks and
except as otherwise provided in this Agreement neither party will be
entitled to recover any additional damages as a consequence of such
losses.
7. Transfer
Neither this Agreement nor any interest or obligation in or under this Agreement
may be transferred (whether by way of security or otherwise) by either party
without the prior written consent of the other party, except that:-
(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merge with or into, or transfer of all or
substantially all its assets to, another entity (but without prejudice to any
other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in any
amount payable to it from a Defaulting Party under Section 6(e).
Any purported transfer that is not in compliance with this Section will be void.
8. Miscellaneous
(a) Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.
(b) Amendments. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing, (including a writing evidenced by
a facsimile transmission) and executed by each of the, parties or confirmed by
an exchange of telexes or electronic messages on an electronic Messaging system.
(c) Survival of Obligations. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive the
termination of any Transaction.
(d) Remedies Cumulative. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.
(e) Counterparts and Confirmations.
(i) This Agreement (and each amendment, modification and waiver in
respect of it) may be executed and delivered in counterparts (including
by facsimile transmission), each of which will be deemed an original.
(ii) The parties intend that they are legally bound by the term of
each Transaction from the moment they agree to those terms
(whether orally or otherwise). A Confirmation shall be entered
into as soon as practicable and may be executed and delivered in
counterparts (including by facsimile transmission) or be created
by an exchange of telexes or by an exchange of electronic
messages on an electronic Messaging system, which in each case
will be sufficient for all purposes to evidence a binding
supplement to this Agreement. The parties will specify therein or
through another effective means that any such counterpart, telex
or electronic message constitutes a Confirmation.
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(f) No Waiver of Rights. A failure or delay in exercising any right, power
or privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege will
not be presumed to preclude any subsequent or further exercise, of that right,
power or privilege or the exercise of any other right, power or privilege.
(g) Headings. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.
9. Expenses
A Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees,
incurred by such other party by reason of the enforcement and protection of its
rights under this Agreement or any Credit Support Document to which the
Defaulting Party is a party or by reason of the early termination of any
Transaction, including, but not limited to, costs of collection.
10. Notices
(a) Effectiveness. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic Messaging system) to the address or number or in
accordance with the electronic Messaging system details provided (see the
Schedule) and will be deemed effective as indicated:-
(i) if in writing and delivered in person or by courier, on the date
it is delivered;
(ii) if sent by telex, on the date the recipient's answerback is
received;
(iii) if sent by facsimile transmission, on the date that transmission
is received by a responsible employee of the recipient in legible form
(it being agreed that the burden of proving receipt will be on the
sender and will not be met by a transmission report generated by the
sender's facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas) or
the equivalent (return receipt requested), on the date that mail is
delivered or its delivery is attempted; or
(v) if sent by electronic Messaging system, on the date that electronic
message is received,
unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.
(b) Change of Addresses. Either party may by notice to the other change the
address, telex or facsimile number or electronic Messaging system details at
which notices or other communications are to be given to it.
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11. Governing Law and Jurisdiction
(a) Governing Law. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) Jurisdiction. With respect to any suit, action or proceedings relating
to this Agreement ("Proceedings"), each party irrevocably:-
(i) submits to the jurisdiction of the English courts, if this
Agreement is expressed to be governed by English law, or to the
non-exclusive jurisdiction of the courts of the State of New York and
the United States District Court located in the Borough of Manhattan in
New York City, if this Agreement is expressed to be governed by the
laws of the State of New York; and
(ii) waives any objection which it may have at anytime to the laying of
venue of any Proceedings brought in any such court, waives any claim
that such Proceedings have been brought in an inconvenient forum and
further waives the right to object, with respect to such Proceedings,
that such court does not have any jurisdiction over such party.
Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments Act 1982 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(c) Waiver of Immunities. Each party irrevocably waives, to the fullest
extent permitted by applicable law, with respect to itself and its revenues and
assets (irrespective of their use or intended use), all immunity on the grounds
of sovereignty or other similar grounds from (I) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction, order for specific performance or for
recovery of property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it or its
revenues or assets might otherwise be entitled in any Proceedings in the courts
of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings. -
12. Definitions
As used in this Agreement:-
"Additional Termination Event" has the meaning specified in Section 5(b).
"Affected Party" has the meaning specified in Section 5(b).
"Affected Transactions" means (a) with respect to any Termination Event
consisting of an Illegality, all Transactions affected by the occurrence of such
Termination Event and (b) with respect to any other Termination Event, all
Transactions.
"Affiliate" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control" of
any entity or person means ownership of a majority of the voting power of the
entity or person.
"Applicable Rate" means:-
(a) in respect of obligations payable or deliverable (or which would have been
but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of either
party from and after the date (determined in accordance with Section 6(d)(ii))
on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which would
have been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default
Rate; and
(d) in all other cases, the Termination Rate.
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"consent" includes a consent, approval, action, authorisation, exemption,
notice, filing, registration or exchange control consent.
"Credit Event Upon Merger" has the meaning specified in Section 5(b).
"Credit Support Document" means any agreement or instrument that is specified as
such in this Agreement.
"Credit Support Provider" has the meaning specified in the Schedule.
"Default Rate" means a rate per annum equal to the cost (without
proof or evidence of any actual cost) to the relevant payee (as certified by it)
if it were to fund or of funding the relevant amount plus 1 % per annum.
"Defaulting Party" has the meaning specified in Section 6(a).
"Early Termination Date" means the date determined in accordance with Section
6(a) or 6(b)(iii).
"Event of Default" has the meaning specified in Section 5(a) and, if applicable,
in the Schedule.
"Illegality" has the meaning specified in Section 5(b).
"Law" includes any treaty, law, rule or regulation and "lawful" and "unlawful,
will be construed accordingly.
"Local Business Day" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and foreign
currency deposits) (a) in relation to any obligation under Section 2(a)(i), in
the place(s) specified in the relevant Confirmation or, if not so specified, as
otherwise agreed by the parties in writing or determined pursuant to provisions
contained, or incorporated by reference, in this Agreement, (b) in relation to
any other payment, in the place where the relevant account is located, (c) in
relation to any notice or other communication, including notice contemplated
under Section 5(a)(I), in the city specified in the address for notice provided
by the recipient and, in the case of a notice contemplated by Section 2(b), in
the place where the relevant new account is to be located and (d) in relation to
Section 5(a)(v)(2), in the relevant locations for performance with respect to
such Specified Transaction.
"Loss" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, an amount that party reasonably
determines in good faith to be its total losses and costs (or gain, in which
case expressed as a negative number) in connection with this Agreement or that
Terminated Transaction or group of Terminated Transactions, as the case may be,
including any loss of bargain, cost of funding or, at the election of such party
but without duplication, loss or cost incurred as a result of its terminating,
liquidating, obtaining or reestablishing any hedge or related trading position
(or any gain resulting from any of them). Loss includes losses and costs (or
gains) in respect of any payment or delivery required to have been made
(assuming satisfaction of each applicable condition precedent) on or before the
relevant Early Termination Date and not made, except, so as to avoid
duplication, if Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies. Loss does
not include a party's legal fees and out-of-pocket expenses referred to under
Section 9. A party will determine its Loss as of the relevant Early Termination
Date, or, if that is not reasonably practicable, as of the earliest date
thereafter as is reasonably practicable. A party may (but need not) determine
its Loss by reference to quotations of relevant rates or prices from one or more
leading dealers in the relevant markets.
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"Market Quotation" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with respect to the obligations of such party) and the quoting Reference Market-
maker to enter into a transaction (the "Replacement Transaction") that would
have the effect of preserving for such party the economic equivalent of any
payment or delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable condition precedent)
by the parties under Section 2(a)(i) in respect of such Terminated Transaction
or group of Terminated Transactions that would, but for the occurrence of the
relevant Early Termination Date, have been required after that date. For this
purpose, Unpaid Amounts in respect of the Terminated Transaction or group of
Terminated Transactions are to be excluded but, without limitation, any payment
or delivery that would, but for the relevant Early Termination Date, have been
required (assuming satisfaction of each applicable condition precedent) after
that Early Termination Date is to be included. The Replacement Transaction would
be subject to such documentation as such party and the Reference Market-maker
may, in good faith, agree. The party making the determination (or its agent)
will request each Reference Market-maker to provide its quotation to the extent
reasonably practicable as of the same day and time (without regard to different
time zones) on or as soon as reasonably practicable after the relevant Early
Termination Date. The day and time as of which those quotations are to be
obtained will be selected in good faith by the party obliged to make a
determination under Section 6(e), and, if each party is so obliged, after
consultation with the other. If more than three quotations are provided, the
Market Quotation will be the arithmetic mean of the quotations, without regard
to the quotations having the highest and lowest values. If exactly three such
quotations are provided, the Market Quotation will be the quotation remaining
after disregarding the highest and lowest quotations. For this purpose, if more
than one quotation has the same highest value or lowest value, then one of such
quotations shall be disregarded. If fewer than three quotations are provided, it
will be deemed that the Market Quotation in respect of such Terminated
Transaction or group of Terminated Transactions cannot be determined.
"Non-default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it) if
it were to fund the relevant amount.
"Non-defaulting Party" has the meaning specified in Section 6(a).
"Potential Event of Default" means any event which, with the giving of notice or
the lapse of time or both, would constitute an Event of Default.
"Reference Market-makers" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria that
such party applies generally at the time in deciding whether to offer or to make
an extension or credit and (b) to the extent practicable, from among such
dealers having an office in the same city.
"Scheduled Payment Date" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"Set-off" means set-off, offset, combination of accounts, right of retention or
withholding or similar right or requirement to which the payer of an account
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or imposed
on, such payer.
"Settlement Amount" means, with respect to a party and any Early Termination
Date, the sum of:-
(a) the Market Quotations (whether positive or negative) for each Terminated
Transaction or group of Terminated Transactions for which a Market Quotation is
determined; and
(b) such party's Loss (whether positive or negative and without reference to any
Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not (in
the reasonable belief of the party making the determination) produce a
commercially reasonable result.
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"Specified Entity" has the meaning specified in the Schedule.
"Specified Indebtedness" means, subject to the Schedule, any obligation (whether
present or future, contingent or otherwise, as principal or surety or otherwise)
in respect of borrowed money.
"Specified Transaction" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter entered
into between one party to this Agreement (or any Credit Support Provider of such
party or any applicable Specified Entity of such party) and the other party to
this Agreement (or any Credit Support Provider of such other party or any
applicable Specified Entity of such other party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions), (b) any combination of
these transactions and (c) any other transaction identified as a Specified
Transaction in this Agreement or the relevant confirmation.
"Terminated Transactions" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in effect
immediately before the effectiveness of the notice designating that Early
Termination Date (or, if "Automatic Early Termination" applies, immediately
before that Early Termination Date).
"Termination Event" means an Illegality or, if specified to be applicable, a
Credit Event Upon Merger or an Additional Termination Event.
"Termination Rate" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.
"Unpaid Amounts" owing to any party means, with respect to an Early Termination
Date, the aggregate of (a) in respect of all Terminated Transactions, the
amounts that became payable (or that would have become payable but for Section
2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under Section
2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be
settled by delivery to such party on or prior to such Early Termination Date and
which has not been so settled as at such Early Termination Date, an amount equal
to the fair market value of that which was (or would have been) required to be
delivered as of the originally scheduled date for delivery, in each case
together with (to the extent permitted under applicable law) interest in the
currency of such amounts, from (and including) the date such amounts or
obligations were or would have been required to have been paid or performed to
(but excluding) such Early Termination Date, at the Applicable Rate. Such
amounts of interest will be calculated on the basis of daily compounding and the
actual number of days elapsed. The fair market value of any obligation referred
to in clause (b) above shall be reasonably determined by the party obliged to
make the determination under Section 6(e) or, if each party is so obliged, it
shall be the average of the fair market values reasonably determined by both
parties.
Copyright (C) 1992 by International Swap Dealers Association, Inc.
ISDA (R) 1992
Second Printing
14
<PAGE>
IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.
Kleinert's, Inc. of Alabama and
CoreStates Bank, N.A. Kleinert's, Inc. of Florida
(Name of Party) (Name of Party)
By: ............................. By: ....................................
Name: William Breesman Name: Jack Brier
Title: Vice President Title: Chairman
Date: March 5, 1996 Date: March 5, 1996
Copyright (C) 1992 by International Swap Dealers Association, Inc.
ISDA (R) 1992
Second Printing
15
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-END> JUN-01-1996
<CASH> 44
<SECURITIES> 0
<RECEIVABLES> 13,723<F1>
<ALLOWANCES> 0
<INVENTORY> 35,811
<CURRENT-ASSETS> 50,921
<PP&E> 13,697
<DEPRECIATION> 6,516
<TOTAL-ASSETS> 62,770
<CURRENT-LIABILITIES> 27,940
<BONDS> 0
0
0
<COMMON> 4,198
<OTHER-SE> 22,869<F2>
<TOTAL-LIABILITY-AND-EQUITY> 62,770
<SALES> 11,291
<TOTAL-REVENUES> 11,291
<CGS> 8,598
<TOTAL-COSTS> 8,598
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0<F3>
<INTEREST-EXPENSE> 424
<INCOME-PRETAX> 897
<INCOME-TAX> 327
<INCOME-CONTINUING> 570<F4>
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 570
<EPS-PRIMARY> .15
<EPS-DILUTED> 0
<FN>
<F1>1. Accounts receivable, (net)
<F2>2. Capital in excess of par value
Retained earnings
Treasury stock, at cost
<F3>3. Not disclosed separately in interim reports
<F4>4. Net income
</FN>
</TABLE>
