UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended JUNE 30, 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 1-9635
------
BISCAYNE APPAREL, INC.
(Exact name of registrant as specified in its charter)
Florida 65-0200397
- --------------------------- ----------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1373 Broad Street, Clifton, New Jersey 07013
-------------------------------------------------
(Address of principal executive offices) (Zip Code)
(201) 473-3240
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all the
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 [ ]
At July 31, 1996, there were 10,741,521 outstanding shares of the
registrant's Common Stock, $0.01 par value.
<PAGE>
BISCAYNE APPAREL, INC.
INDEX
Part I. Financial Information Page No.
--------
Consolidated Balance Sheets
June 30, 1996 and December 31, 1995............... 2
Consolidated Statements of Operations
Six Months Ended June 30, 1996 and 1995........... 3
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1996 and 1995........... 4
Notes to Consolidated Financial Statements........ 5
Management's Discussion and Analysis of
Financial Condition and Results of Operations..... 7
Part II. Other Information
Item 1 - Legal Proceedings......................... 10
Item 4 - Submission of Matters to Vote of Security
Holders............................................ 10
Item 6 - Exhibits and Reports on Form 8-K.......... 10
Signatures......................................... 12
1
<PAGE>
BISCAYNE APPAREL, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
JUNE 30, DECEMBER 31,
1996 1995
---------- ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents .................. $ 114 $ 312
Trade accounts receivable, less
allowances of $1,184 in 1996 and
$1,967 in 1995 ............................ 9,809 18,271
Inventories ................................ 30,951 25,890
Federal income tax receivable .............. 2,302 1,969
Prepaid expenses and other ................. 2,256 1,972
-------- --------
Total current assets ................ 45,432 48,414
Property, plant and equipment, less
accumulated depreciation of $2,184
in 1996 and $1,917 in 1995 ................. 3,520 3,652
Investment in Hartwell Sports, Inc. ............ -- 1,627
Goodwill, net .................................. 5,963 6,072
Other assets, net .............................. 1,664 1,977
-------- --------
$ 56,579 $ 61,742
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ........................... $ 7,463 $ 3,841
Accrued liabilities ........................ 3,819 5,914
Notes payable to banks ..................... 16,023 17,850
Current portion of long-term debt .......... 1,750 1,250
-------- -------
Total current liabilities ........... 29,055 28,855
Subordinated notes ............................. 6,444 6,444
Long-term debt ................................. 4,500 6,250
Other liabilities .............................. 305 358
Commitments and contingencies .................. -- --
Stockholders' Equity:
Common stock, $0.01 par value;
25,000,000 shares authorized;
10,741,521 issued and outstanding
in 1996 and 10,741,253 in 1995 ............. 107 107
Additional paid-in capital ..................... 26,309 26,309
Unearned stock award compensation .............. (101) (135)
Retained deficit ............................... (10,040) (6,446)
-------- -------
Total stockholders' equity .......... 16,275 19,835
-------- -------
$56,579 $61,742
======== =======
See accompanying notes.
2
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BISCAYNE APPAREL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of dollars, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ----------------
1996 1995 1996 1995
----- ------ ------ ------
<S> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . $ 12,893 $ 14,517 $ 29,129 $29,906
Operating costs and expenses:
Cost of goods sold. . . . . . . . . . . . . . . . . 10,336 11,194 22,606 22,718
Selling, general and administrative . . . . . . . . 5,137 5,468 10,944 11,432
------- ------- ------- -------
Operating loss . . . . . . . . . . . . . . . . . . . . (2,580) (2,145) (4,421) (4,244)
Other income and (expenses):
Interest and other expenses . . . . . . . . . . . . (794) (806) (1,631) (1,402)
Interest and other income . . . . . . . . . . . . . 12 36 163 68
Gain on sale and equity in net
income of investee . . . . . . . . . . . . . . . . - 20 123 83
------- ------- ------- -------
Loss before income tax benefit . . . . . . . . . . . . (3,362) (2,895) (5,766) (5,495)
Income tax benefit . . . . . . . . . . . . . . . . . . (1,181) (1,108) (2,172) (2,120)
------- ------- ------- -------
Net loss . . . . . . . . . . . . . . . . . . . . . . . $(2,181) $(1,787) $(3,594) $(3,375)
======= ======= ======= =======
Net loss per common share. . . . . . . . . . . . . . . $ (0.20) $ (0.17) $ (0.33) $ (0.31)
======= ======= ======= =======
Shares used in computing net loss
per common share. . . . . . . . . . . . . . . . . 10,741,521 10,730,214 10,741,521 10,730,214
========== ========== ========== ==========
</TABLE>
See accompanying notes.
3
<PAGE>
BISCAYNE APPAREL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
SIX MONTHS ENDED
JUNE 30,
-------------------
1996 1995
------ ------
Operating activities:
Net loss. . . . . . . . . . . . . . . . . . . . . . . $(3,594) $(3,375)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:
(Gain) on sale of assets . . . . . . . . . . . . . . (11) (3)
(Gain) on sale of equity investee. . . . . . . . . . (123) -
Equity in net income of investee . . . . . . . . . . - (89)
Amortization of unearned stock award compensation . 34 34
Depreciation expense . . . . . . . . . . . . . . . . 279 250
Amortization expense . . . . . . . . . . . . . . . . 133 62
Provision for losses and sales allowances
on receivables. . . . . . . . . . . . . . . . . . . 1,937 597
(Increase) decrease in operating assets:
Trade accounts receivable. . . . . . . . . . . . . . . 6,215 8,430
Inventories. . . . . . . . . . . . . . . . . . . . . . (5,314) (15,640)
Prepaid expenses and other . . . . . . . . . . . . . . (352) (672)
Federal income tax receivable. . . . . . . . . . . . . (287) -
Other assets . . . . . . . . . . . . . . . . . . . . . 13 (1,671)
Increase (decrease) in operating liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . 3,744 (639)
Accrued liabilities. . . . . . . . . . . . . . . . . . (1,339) (2,416)
Other liabilities. . . . . . . . . . . . . . . . . . . - (228)
------ ------
Net cash provided by (used in)
operating activities . . . . . . . . . . . . . . . 1,335 (15,360)
Investing activities:
Net sale of assets . . . . . . . . . . . . . . . . . . 11 8
Capital expenditures . . . . . . . . . . . . . . . . . (176) (725)
Proceeds on sale of equity investee. . . . . . . . . . 1,750 -
------ ------
Net cash provided by (used in)
investing activities . . . . . . . . . . . . . . . 1,585 (717)
Financing activities:
Payments under notes payable to bank . . . . . . . . . (19,520) (14,675)
Borrowings under notes payable to banks. . . . . . . . 17,693 26,317
Proceeds from term loan. . . . . . . . . . . . . . . . - 7,500
Repayment of term loan . . . . . . . . . . . . . . . . (1,250) -
Repayment of subordinated notes. . . . . . . . . . . . - (6,276)
Principal payments of capital leases . . . . . . . . . (41) (12)
------ ------
Net cash (used in) provided by
financing activities . . . . . . . . . . . . . . . (3,118) 12,854
Net decrease in cash and cash equivalents . . . . . . . (198) (3,223)
Cash and cash equivalents at beginning of year . . . . . 312 4,178
------ ------
Cash and cash equivalents at end of year . . . . . . . . $ 114 $ 955
====== ======
Supplemental disclosure information:
Interest expense paid. . . . . . . . . . . . . . . . . $ 1,611 $ 1,385
Income taxes paid. . . . . . . . . . . . . . . . . . . $ 60 $ 1,253
See accompanying notes.
<PAGE>
BISCAYNE APPAREL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying unaudited consolidated financial statements, which
are for an interim period, do not include all disclosures provided in
the annual consolidated financial statements. These unaudited
consolidated financial statements should be read in conjunction with
the consolidated financial statements and the footnotes with respect
thereto, contained in the Biscayne Apparel, Inc., ("Company") 1995
Annual Report on Form 10-K.
The consolidated financial statements of the Company include the
accounts of the parent company, and its wholly-owned subsidiaries,
Biscayne Apparel International, Inc. ("BAII"), and M&L International,
Inc. ("M&L"), which was acquired in 1994, and its wholly-owned
subsidiaries, Unidex Garments (Philippines), Inc., Watersports Garment
Manufacturing, Inc., Teri Outerwear Manufacturing, Inc., GES Sportswear
Manufacturing Corp. and M&L International (H.K.) Limited. As of March
1, 1996, Unidex, Watersports, Teri and GES ceased operations due to
operating losses caused by labor increases and production
inefficiencies.
BAII operates through two divisions, Andy Johns Fashions International
("Andy Johns") and Varon, and its wholly-owned subsidiaries, Mackintosh
of New England Co., Mackintosh (U.K.) Limited and Amy Industries De
Honduras, S.A. de C.V., which was organized during 1995. The Company
had a 20% interest in Hartwell Sports, Inc. and accounted for this
investment, over which it exercised significant influence, under the
equity method in accordance with Accounting Principle Board Opinion No.
18. All material intercompany balances and transactions have been
eliminated. Certain amounts included in prior period financial
statements have been reclassified to conform with the 1996
presentation.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
2. In the opinion of the Company, the accompanying unaudited
consolidated financial statements contain all adjustments (consisting
of only normal recurring accruals) necessary for a fair presentation of
the financial statements.
5
<PAGE>
3. The results of operations for the three and six month periods ended
June 30, 1996 and 1995 are not necessarily indicative of the results to
be expected for the full year.
4. Earnings per common share are based on the weighted average number
of common and common equivalent shares, if dilutive, outstanding during
the period. Common stock equivalents include incremental shares from
the exercise of stock options and warrants under the treasury stock
method. Earnings (loss) per share and weighted average shares have been
restated for the Company's May 1995 stock dividend.
5. Included in accounts payable at June 30, 1996 and June 30, 1995 are
the Company's obligations under outstanding letters of credit of
$3,294,000 and $1,149,000, respectively.
6. On March 27, 1996, the Company sold its 20% investment in Hartwell
Sports, Inc. for $1,750,000. The sale resulted in a gain of $123,000
during the first quarter ended March 31, 1996. Cash proceeds from this
sale were used to reduce Biscayne's outstanding bank indebtedness.
7. On March 28, 1996, Biscayne amended its loan agreements to provide
for a $56,250,000 credit facility. This facility provides financing for
working capital growth and capital expenditures, and includes a
revolving credit facility of $50,000,000 and a $6,250,000 term loan.
8. The Company's management agreement with Trivest, Inc. ("Trivest"),
an affiliate of the Company, was amended effective January 1, 1996 to
reduce the amount of the annual base management fee ("Base Fee") by
$200,000 ("1996 Reduction Amount") for the calendar year beginning
January 1, 1996. The amount of the Base Fee payable for periods
beginning January 1, 1997 and thereafter will be determined as if the
foregoing reduction had not taken effect, provided the Company is in
compliance with the terms of its loan agreements. Otherwise, such
prospective payments will be deferred and subordinated to the Company's
senior lenders.
In lieu of the 1996 Reduction Amount, the Company issued to Trivest a
warrant ("Warrant") to purchase an aggregate of 200,000 shares of the
Company's Common stock, $0.01 par value, for an exercise price of $0.75
per share, the market value as of March 26, 1996. The Warrant will be
exercisable in whole or in part at any time during the period beginning
January 1, 1997 and ending at the close of business on December 31,
2001. Additionally, assuming the Company's Andy Johns Fashion
International Divisions' and Mackintosh of New England, Co.
Subsidiary's combined pretax income plus management fees, corporate
expense and amortization of goodwill ("Operating Income") exceeds 75%
of the actual 1993 Operating Income of $3,400,000, or $2,550,000,
Trivest shall have the option to receive a cash payment of an amount
("Cash Payment of the
6
<PAGE>
1996 Reduction Amount") equal to 1% of the 1996 Reduction Amount for
each 1% of excess Operating Income earned in 1996, 1997 or 1998 above
$2,550,000. The Cash Payment of the 1996 Reduction Amount shall not
exceed the remainder of (X) the 1996 Reduction Amount minus (Y) the
number of shares of stock issuable under the Warrant.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
QUARTER ENDED JUNE 30, 1996 VERSUS QUARTER ENDED JUNE 30, 1995
Net sales for the second quarter of 1996 decreased to $12,893,000 from second
quarter 1995 sales of $14,517,000. The 11% decrease was mainly attributable to
Mackintosh and M&L, offset by increased sales at Andy Johns.
Cost of goods sold as a percentage of net sales was 80% versus 77% for the
quarters ended June 30, 1996 and 1995, respectively. The increase is
attributable to M&L realizing no gross profit in 1996 from its seasonal
Philippine operations, which were closed in March 1996 and lower than normal
selling prices on the selloff of prior season products, offset by lower product
costs realized by Varon and Mackintosh.
Selling, general and administrative expenses ("S,G&A") as a percentage of net
sales increased to 40% in 1996 from 38% in 1995. This increase is a result of
lower quarterly sales. Actual S,G&A dollars decreased by 6% for the quarter
ended June 30, 1996 compared with the quarter ended June 30, 1995.
OTHER
Interest and other expenses for the quarter ended June 30, 1996 decreased
slightly by $12,000 from the comparable quarter of 1995. The decrease is due to
decreased borrowings during the second quarter of 1996, offset by higher
interest rates compared to 1995.
Interest and other income decreased during the first quarter of 1996 by $24,000,
due to lower levels of interest income.
SIX MONTHS ENDED JUNE 30, 1996 VERSUS SIX MONTHS ENDED JUNE 30, 1995
Net sales for the six months ended June 30, 1996 decreased to $29,129,000 from
$29,906,000 for 1995. This 3% decrease is mainly attributable to the Mackintosh
division, with lower decreases in Varon and M&L, offset by an increase in sales
in the Andy Johns division.
7
<PAGE>
Consolidated sales plus backlog at June 30, 1996 increased to $91,863,000 from
$87,288,000 at June 30, 1995. This increase results from enhancements to product
development and increased sales in the Company's Andy Johns division.
Cost of goods sold as a percentage of net sales increased to 78% for the first
half of 1996, from 76% for the first half of 1995. This increase is a result of
Andy Johns, Mackintosh and M&L realizing lower selling prices of 1995 selloff
goods offset by lower product costs for Varon. M&L also has no gross profit in
1996 from its seasonal Philippine operations, which were closed in March of
1996.
Selling, general and administrative expenses ("S,G&A") as a percentage of net
sales remained constant at 38% for the periods ended June 30, 1996 and 1995,
however, the actual S,G&A dollars for 1996 versus 1995, declined by 4%.
Historically, the apparel industry has been subject to substantial cyclical
variation, with purchases of apparel and related goods tending to decline during
recessionary periods when disposable income is low. This trend could have a
material adverse effect on the Company's business.
The Company believes that the weakness of retail sales of outerwear in 1995
adversely affected its operating results, and believes that its operating
results will continue to be adversely affected as long as this weakness
continues. In addition, various retailers, including some of Biscayne's
customers, have experienced financial difficulties during recent years which
have increased the risk of extending credit to such retailers.
OTHER
Interest and other expenses for the six months ended June 30, 1996 increased to
$1,631,000 versus $1,402,000 for the six months ended June 30, 1995. The
increase is due to increased bank borrowings incurred during 1995 and related
interest rate increases.
Interest and other income increased to $163,000 for the first half of 1996 from
$68,000 for the first half of 1995, primarily due to license revenues earned by
M&L in the first quarter of 1996.
On March 27, 1996, the Company sold its 20% interest in Hartwell Sports, Inc.
for $1,750,000. Proceeds were used to reduce notes payable to banks. The sale
resulted in a gain during 1996 of $123,000.
INCOME TAXES
For the quarters and six months ended June 30, 1996 and 1995, the income tax
benefit was greater than the benefit which would be derived upon application of
the federal statutory rate, primarily because of state income tax benefits,
non-taxable interest income offset by nondeductible amortization of goodwill.
8
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents were $114,000 and $312,000 at June 30, 1996 and
December 31, 1995, respectively. At June 30, 1996, the Company's working capital
was $16,377,000, representing a current ratio of 1.56 to 1.00. This compares to
working capital of $19,559,000 and a current ratio of 1.68 to 1.00 at December
31, 1995. The decrease in the working capital ratio is due to year-to-date
losses.
As presented in the Consolidated Statements of Cash Flows for the six months
ended June 30, 1996, the decrease of accounts receivable of $6,215,000, the
increase in inventories of $5,314,000 and accounts payable of $3,744,000 and the
decrease in accrued liabilities of $1,339,000 are due to the seasonality of the
Company's operations. On March 16, 1996 the Company repaid $1,250,000 of its
long-term debt.
Capital expenditures for the six months ended June 30, 1996 decreased to
$176,000 from $725,000 in 1995. The decrease is primarily due to Varon, which in
1995 had invested in equipment for its new Honduran plant.
The Company expects that cash on hand, cash from operations, and borrowings
under its revolving credit agreement will be sufficient to fund current
operations and to enable the Company to meet its obligations as they become due.
EFFECT OF INFLATION AND SEASONALITY
The Company believes that inflation will not significantly effect its profit
margins or have a material effect on the prices of other goods and services used
in its business operations. Further, in connection with recent increases in wool
and cotton costs over the last several years, the Company will seek additional
offshore production opportunities.
Sales of women's and children's outerwear are seasonal. Historically, Andy
Johns, Mackintosh, M&L and Varon have significantly higher revenues in the third
and fourth quarters than in the first and second quarters. Therefore, the
results of any interim period are not necessarily indicative of the results
which might be expected during a full year. Additionally, there is a risk
inherently related to the outerwear industry, resulting from dependence on
consumer reactions to weather patterns, which have recently had a material
effect on the Company's sales and profitability.
9
<PAGE>
Part II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is, from time to time, involved in routine litigation. None
of such litigation in which the Company is presently involved is material to its
financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
a) The Registrant held its Annual Meeting of Shareholders on June
12, 1996.
b) Not required.
c) The matter voted on at the Annual Meeting of Shareholders, and
the tabulation of votes on such matter are as follows:
ELECTION OF DIRECTORS
BROKER
NAME FOR WITHHELD NON-VOTES
---- --- -------- ---------
Harold E. Berritt 7,427,491 140,905 -0-
Phillip T. George, M.D. 7,426,269 142,127 -0-
Joseph G. Gildenhorn 7,427,491 140,905 -0-
Kurt C. Gutfreund 7,427,517 140,879 -0-
John W. Partridge 7,425,864 142,532 -0-
James J. Pinto 7,427,491 140,905 -0-
John E. Pollack 7,427,491 140,905 -0-
Earl W. Powell 7,426,635 141,761 -0-
Peter Vandenberg, Jr. 7,427,491 140,905 -0-
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 10.1 - First Amendment to Amended and Restated
Management Agreement dated as of March 26, 1996
among the Registrant and Trivest, Inc.
Exhibit 10.2 - Warrant for the Purchase of Shares of Common
Stock dated as of March 26, 1996 among the
Registrant and Trivest, Inc.
Exhibit 11 - Computation of Per Share Earnings
Exhibit 27 - Financial Data Schedule
10
<PAGE>
(b) Reports on Form 8-K:
During the quarter for which this Quarterly Report on Form 10-Q
is filed, the Registrant did not file any Current Reports on
Form 8-K.
11
<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:
BISCAYNE APPAREL, INC.
Date: August 7, 1996 By: /s/ JOHN E. POLLACK
--------------------------
John E. Pollack
President and Chief
Executive Officer
Date: August 7, 1996 By: /s/ PETER VANDENBERG, JR.
--------------------------
Peter Vandenberg, Jr.
Vice President, Treasurer and
Chief Financial Officer
12
EXHIBIT 10.1
FIRST AMENDMENT
TO
AMENDED AND RESTATED MANAGEMENT AGREEMENT
This Agreement is made and entered into as of the 26th day of March,
1996, to be effective as of January 1, 1996, by and between BISCAYNE APPAREL,
INC., a Florida corporation (the "Company"), and TRIVEST, INC., a Delaware
corporation (the "Manager").
PRELIMINARY STATEMENTS:
A. The Company and the Manager are parties to an Amended and Restated
Management Agreement, dated as of November 30, 1995, pursuant to which the
Manager serves as the sole and exclusive manager of and consultant to the
Company's business (the "Management Agreement").
B. The Company intends to enter into an Amended and Restated Credit
Agreement and Guaranty, dated as of March 28, 1996 (the "Credit Agreement"),
among the Company, Biscayne Apparel International, Inc., Mackintosh of New
England Co., M&L International, Inc., the lenders signatory to the Credit
Agreement, Chase Manhattan Bank, N.A., as lender and agent, and Milberg Factors,
Inc., as lender and servicing agent.
C. The Company has issued to the Manager a Warrant, dated March 26,
1996, to purchase 200,000 shares of the Company's common stock in consideration
of the Manager entering into this Agreement (the "Warrant").
D. The parties desire (at the request of the lenders under the Credit
Agreement) to amend the Management Agreement with respect to the annual base
cash compensation payable to the Manager thereunder.
AGREEMENT:
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. PREAMBLE AND RECITALS; DEFINED TERMS. The preamble and recitals
hereinabove set forth are incorporated herein and made a part hereof. Except as
otherwise provided herein, capitalized terms used in this First Amendment to the
Amended and Restated Management Agreement shall have the meanings ascribed
thereto in the Management Agreement or the Credit Agreement.
- 1 -
<PAGE>
2. AMENDMENT TO SECTION 6.1 OF THE MANAGEMENT AGREEMENT. Effective from
and after January 1, 1996, Section 6.1 of the Management Agreement is hereby
amended and restated in its entirety as follows:
6.1 MANAGEMENT FEE.
(a) During the period from January 1, 1996 through December 31,
1996, the Manager shall receive annually with respect to the management of the
business operations of the Company and its subsidiaries, a cash consulting fee
equal to $180,000 (the "Minimum Base Compensation"), payable in advance in equal
quarterly installments.
(b) From January 1, 1997 through the remaining term of the
Agreement, the Manager shall receive annually with respect to the management of
the business operations of the Company and its subsidiaries, a base cash
consulting fee of $380,000, payable in advance in equal quarterly installments
("Base Compensation"); provided, that, in the event that a Default or Event of
Default shall occur and be continuing during such period, the payment of the
Base Compensation in excess of the Minimum Base Compensation shall be deferred
until such Default or Event of Default is cured (the "Deferred Base
Compensation"). The payment of any Deferred Base Compensation will be
subordinated to any and all obligations of the Borrowers to the agents and
lenders under the Credit Agreement. The Base Compensation shall be adjusted
annually to reflect any increase from the previous year in the Consumer Price
Index for the Miami, Florida area. The Company acknowledges that the
determination of the amount of the Base Compensation payable to the Manager
hereunder is based upon the Company's present business activities.
(c) The $200,000 difference between the Base Compensation and
the Minimum Base Compensation is referred to as the "1996 Reduction Amount."
Assuming the combined pretax income plus management fees, corporate expense and
amortization of goodwill ("Operating Income") of the Company's Andy Johns
Fashions International divisions and Mackintosh of New England, Co. subsidiary
exceeds 75% of the actual 1993 Operating Income of $3,400,000 (or $2,550,000),
the Manager shall have the option to receive a cash payment of an amount (the
"Cash Payment of the 1996 Reduction Amount") equal to 1% of the 1996 Reduction
Amount for each 1% of excess Operating Income earned in 1996, 1997 or 1998 above
$2,550,000. The aggregate Cash Payment of the 1996 Reduction Amount shall not
exceed the remainder of (x) the 1996 Reduction Amount minus (y) the number of
shares of Warrant Stock (as defined in the Warrant) issued to the Manager under
the Warrant.
3. AFFIRMATION. In all other respects the Management Agreement is
affirmed.
- 2 -
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this First Amendment to
Amended and Restated Management Agreement to be executed as of the date first
above written.
BISCAYNE APPAREL, INC.
By:_______________________
Earl W. Powell
Chairman of the Board
TRIVEST, INC.
By:_______________________
Phillip T. George, M.D.
Chairman of the Board
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EXHIBIT 10.2
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED, TRANSFERRED OR OTHERWISE
DISPOSED OF, UNLESS REGISTERED PURSUANT TO THE PROVISIONS OF THE SECURITIES ACT
OR AN OPINION OF COUNSEL IS OBTAINED STATING THAT SUCH DISPOSITION IS IN
COMPLIANCE WITH AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION.
MARCH 26, 1996
BISCAYNE APPAREL, INC.
(INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA)
WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK
NO. W-2
FOR VALUE RECEIVED, BISCAYNE APPAREL, INC. (the "Company"), a Florida
corporation, hereby certifies that Trivest, Inc., a Delaware corporation, or
transferees or assigns (the "Holder") is entitled, subject to the provisions of
this Warrant, to purchase from the Company, up to 200,000 fully paid and
non-assessable shares of Common Stock at a price of $0.75 per share (the
"Exercise Price").
The term "Common Stock" means the Common Stock, par value $.01 per share,
of the Company as constituted on March 26, 1996 (the "Base Date"). The number of
shares of Common Stock to be received upon the exercise of this Warrant may be
adjusted from time to time as hereinafter set forth. The shares of Common Stock
deliverable upon such exercise, and as adjusted from time to time, are
hereinafter referred to as "Warrant Stock." The term "Other Securities" means
any other equity or debt securities that may be issued by the Company in
addition thereto or in substitution for the Warrant Stock. The term "Company"
means and includes the corporation named above as well as (i) any immediate or
more remote successor corporation resulting from the merger or consolidation of
such corporation (or any immediate or more remote successor corporation of such
corporation) with another corporation, or (ii) any corporation to which such
corporation (or any immediate or more remote successor corporation of such
corporation) has transferred its property or assets as an entirety or
substantially as an entirety.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant, and (in the case of
loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Warrant, if mutilated, the Company shall
execute and deliver a new Warrant of like tenor and date. Any
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such new Warrant executed and delivered shall constitute an additional
contractual obligation on the part of the Company, whether or not this Warrant
so lost, stolen, destroyed or mutilated shall be at any time enforceable by
anyone.
The Holder agrees with the Company that this Warrant is issued, and all
the rights hereunder shall be held subject to, all of the conditions,
limitations and provisions set forth herein.
1. EXERCISE OF WARRANT. This Warrant may be exercised in whole or in
part at any time, or from time to time during the period commencing on January
1, 1997 and expiring 5:00 p.m. Eastern Time on December 31, 2001 (the
"Expiration Date") or, if such day is a day on which banking institutions in New
York are authorized by law to close, then on the next succeeding day that shall
not be such a day, by presentation and surrender of this Warrant to the Company
at its principal office, or at the office of its stock transfer agent, if any,
with the Warrant Exercise Form attached hereto duly executed and accompanied by
payment (either in cash or by bank check, payable to the order of the Company)
of the Exercise Price for the number of shares specified in such form and
instruments of transfer, if appropriate, duly executed by the Holder or his or
her duly authorized attorney. In the alternative, the Exercise Price for the
number of shares specified in the Warrant Exercise Form may be paid by (i)
surrendering to the Company securities of the Company having a fair market value
equal to the Exercise Price, or (ii) deducting from the number of shares of
Warrant Stock to be delivered upon exercise of the Warrant a number of shares
which has an aggregate fair market value equal to the Exercise Price. Fair
market value shall be determined as provided in paragraph 3 hereof. If this
Warrant should be exercised in part only, the Company shall, upon surrender of
this Warrant for cancellation, execute and deliver a new Warrant evidencing the
rights of the Holder thereof to purchase the balance of the shares purchasable
hereunder. Upon receipt by the Company of this Warrant, together with the
Exercise Price, at its office, or by the stock transfer agent of the Company at
its office, in proper form for exercise, the Holder shall be deemed to be the
holder of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of the Company shall then be
closed or that certificates representing such shares of Common Stock shall not
then be actually delivered to the Holder. The Company shall pay any and all
documentary stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of shares of Common Stock on exercise of this Warrant.
Notwithstanding any other provisions hereof, if an exercise of any portion of
the Warrant is to be made in connection with a public offering of Common Stock,
the exercise of any portion of this Warrant may at the election of the Holder be
conditioned upon the consummation of such transaction, in which case such
exercise shall not be deemed to be effective until the consummation of such
transaction.
2. RESERVATION OF SHARES; LISTING OF SHARES. The Company will at all
times reserve for issuance and delivery upon exercise of this Warrant all shares
of Common Stock or other shares of capital stock of the Company (and Other
Securities) from time to time receivable upon exercise of this Warrant. All such
shares (and Other Securities) shall be duly authorized and, when issued upon
such exercise, shall be validly issued, fully paid and non-assessable and free
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of all preemptive rights. The Company will use its best efforts to cause the
Warrant Stock, immediately upon such exercise, to be listed on any domestic
securities exchange upon which shares of Common Stock are listed at the time of
such exercise.
3. FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant, but the
Company shall pay the holder an amount equal to the fair market value of such
fractional share of Common Stock in lieu of each fraction of a share otherwise
called for upon any exercise of this Warrant. For purposes of this Warrant, the
fair market value of a share of Common Stock shall be determined as follows:
(a) If the Common Stock is listed on a National Securities
Exchange or admitted to unlisted trading privileges on such exchange or
listed for trading on the NASDAQ system, the current market value shall
be the last reported sale price of the Common Stock on such exchange or
system on the last business day prior to the date of exercise of this
Warrant or if no such sale is made on such day, the average of the
closing bid and asked prices for such day on such exchange or system;
or
(b) If the Common Stock is not so listed or admitted to
unlisted trading privileges, the current market value shall be the mean
of the last reported bid and asked prices reported by the National
Quotation Bureau, Inc. on the last business day prior to the date of
the exercise of this Warrant; or
(c) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and asked prices are not so
reported, the current market value shall be an amount, not less than
book value thereof as at the end of the most recent fiscal year of the
Company ending prior to the date of the exercise of the Warrant,
determined in such reasonable manner as may be prescribed by the Board
of Directors of the Company.
4. EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other Warrants of different denominations, entitling the
Holder or Holders thereof to purchase in the aggregate the same number of shares
of Common Stock purchasable hereunder. Upon surrender of this Warrant to the
Company or at the office of its stock transfer agent, if any, with the
Assignment Form annexed hereto duly executed and funds sufficient to pay any
transfer tax, the Company shall, without charge, execute and deliver a new
Warrant in the name of the assignee named in such instrument of assignment and
this Warrant shall promptly be cancelled. This Warrant may be divided or
combined with other Warrants that carry the same rights upon presentation hereof
at the office of the Company or at the office of its stock transfer agent, if
any, together with a written notice specifying the names and denominations in
which new Warrants are to be issued and signed by the Holder hereof.
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5. RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder in the Company, either at law or in
equity, and the rights of the Holder are limited to those expressed in this
Warrant.
6. ANTI-DILUTION PROVISIONS. In order to prevent dilution of the
rights granted under the Warrant, the following provisions shall apply:
6.1 ADJUSTMENT FOR RECAPITALIZATION. If the Company shall at an
time subdivide its outstanding shares of Common Stock (or other securities at
the time receivable upon the exercise of the Warrant) by recapitalization,
reclassification or split-up thereof, or if the Company shall declare a stock
dividend or distribute shares of Common Stock to its shareholders, the number of
shares of Common Stock subject to this Warrant immediately prior to such
subdivision shall be proportionately increased, and if the Company shall at any
time combine the outstanding shares of Common Stock by recapitalization,
reclassification or combination thereof, the number of shares of Common Stock
subject to this Warrant immediately prior to such combination shall be
proportionately decreased. Any such adjustment and adjustment to the Exercise
Price pursuant to this Section 6.1 shall be effective at the close of business
on the effective date of such subdivision or combination or if any adjustment is
the result of a stock dividend or distribution then the effective date for such
adjustment based thereon shall be the record date therefor.
6.2 ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER, ETC.
In case of any reorganization of the Company (or any other corporation, the
securities of which are at the time receivable on the exercise of this Warrant)
after the Base Date or in case after such date the Company (or any such other
corporation) shall consolidate with or merge into another corporation or convey
all or substantially all of its assets to another corporation, then, and in each
such case, the Holder of this Warrant upon the exercise thereof as provided in
Section 1.1 at any time after the consummation of such reorganization,
consolidation, merger or conveyance, shall be entitled to receive, in lieu of
the securities and property receivable upon the exercise of this Warrant prior
to such consummation, the securities or property to which such Holder would have
been entitled upon such consummation if such Holder had exercised this Warrant
immediately prior thereto; in each such case, the terms of this Warrant shall be
applicable to the securities or property receivable upon the exercise of this
Warrant after such consummation.
6.3 ADJUSTMENT FOR SHARE ISSUANCES. In the event the Company
shall issue or sell any shares of Common Stock (other than shares which may be
purchased under the Warrant, shares purchased pursuant to options or warrants
outstanding as of the date of this Warrant, or shares issued pursuant to the
Company's stock option plans for employees and directors) without consideration
or for consideration consisting solely of cash in an amount per share less than
the current market price per share of shares of Common Stock (as determined
pursuant to paragraph 3 hereof) or the Exercise Price in effect immediately
prior to the time of such issuance or sale, then in each such event, the number
of shares of Warrant Stock purchasable upon exercise of this Warrant immediately
prior thereto (the "Initial Number") shall be adjusted so that the Holder shall
be entitled to receive the number of shares of Warrant Stock determined by
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multiplying the Initial Number by a fraction, of which the numerator shall be
the number of shares of Common Stock outstanding on the date of such issuance
plus the number of additional shares of Common Stock to be issued or offered for
purchase and of which the denominator shall be the number of shares of Common
Stock outstanding on the date of such issuance plus the number of shares of
Common Stock which the aggregate offering price of the total number of shares of
Common Stock so to be issued or to be offered for purchase would purchase at
such current market price.
6.4 ADJUSTMENT FOR ISSUANCE OF CONVERTIBLE SECURITIES. In the
event that at any time hereafter the Company shall in any manner grant any right
to subscribe for or to purchase, or issue, or sell, or any option for the
purchase of shares of Common Stock (other than options issued under the
Company's stock option plans for employees and directors) or any stock or other
securities convertible into or exchangeable for shares of Common Stock (such
convertible or exchangeable stock or securities being hereinafter referred to as
"Convertible Securities"), and the minimum price per share for which shares of
Common Stock are issuable pursuant to such rights or options or upon conversion
or exchange of such Convertible Securities (determined by dividing (i) the total
amount, if any, received or receivable by the Company as consideration for the
granting of such rights or options, or issuance or sale of such Convertible
Securities, plus the minimum aggregate amount of additional consideration
payable to the Company upon the exercise of such rights or options, plus, in the
case of such Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the conversion or exchange thereof, by (ii)
the total maximum number of shares of Common Stock issuable pursuant to such
rights or options or upon the conversion or exchange of the total maximum amount
of such Convertible Securities) shall be less than the current market price per
share of shares of Common Stock (as determined pursuant to paragraph 3 hereof)
or the Exercise Price in effect immediately prior to the time of the granting of
such rights or options or issuance or sale of such rights, options or
Convertible Securities, then the total maximum number of shares of Common Stock
issuable pursuant to such rights or options or upon conversion or exchange of
the total maximum amount of such Convertible Securities issued or issuable upon
the exercise of such rights or options shall (as of the date of the granting of
such rights or options or issuance or sale of such Convertible Securities) be
deemed to be outstanding and to have been issued or sold for purposes of Section
6.3 hereof for the price per share as so determined; provided, that no further
adjustment of the number of shares of Common Stock issuable upon exercise of the
Warrant shall be made upon the actual issue of shares of Common Stock so deemed
to have been issued; and further provided, that, upon the expiration or
termination of any unexercised rights, options, warrants or conversion or
exchange privileges for which any adjustment was made pursuant to Section 6.3
and this Section 6.4, the number of shares of Common Stock issuable upon
exercise of the Warrant shall be readjusted, and shall thereafter be such number
as would have prevailed had the number of shares of Common Stock issuable upon
exercise of the Warrant been originally adjusted (or had the original adjustment
not been required, as the case may be) on the basis of (A) the shares of Common
Stock, if any, actually issued or sold upon the exercise of such rights,
options, warrants or conversion or exchange rights and (B) the consideration
actually received by the Company upon such exercise plus the consideration, if
any, actually received by the Company for the issuance, sale, or grant
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of all such rights, options, warrants or Convertible Securities whether or not
exercised; PROVIDED, HOWEVER, that no such readjustment shall have the effect of
decreasing the number of shares of Common Stock issuable upon exercise of the
Warrant by an amount in excess of the amount of the adjustment initially made
for the issuance, sale or grant of such rights, options, warrants, or
Convertible Securities.
6.5 PAYMENT OF CASH DIVIDENDS. If the Company shall pay any
dividends on the shares of Common Stock in cash, the Exercise Price for the
Warrant Stock shall be reduced by the amount of any such dividend paid in cash
on each share of Common Stock and, if as a result of this paragraph 6.5 the
Exercise Price shall have been reduced to zero, any such amounts which would
otherwise be applied to reduce the Exercise Price will be paid to the Holder in
cash.
6.6 ADJUSTMENT OF EXERCISE PRICE. Whenever the number of shares
of Common Stock purchasable upon the exercise of this Warrant is adjusted, as
provided in this Section 6, the Exercise Price shall be adjusted to the nearest
cent by multiplying such Exercise Price immediately prior to such adjustment by
a fraction (x) the numerator of which shall be the number of shares of Common
Stock purchasable upon the exercise immediately prior to such adjustment, and
(y) the denominator of which shall be the number of shares of Common Stock so
purchasable immediately thereafter.
6.7 NO DILUTION. The Company will not, by amendment of its
Articles of Incorporation or through reorganization, consolidation, merger,
dissolution, issue or sale of securities, sale of assets or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of the Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder of this Warrant against
dilution or other impairment. Without limiting the generality of the foregoing,
while any Warrant is outstanding, the Company (a) will not permit the par value,
if any, of the shares of stock receivable upon the exercise of this Warrant to
be above the amount payable therefor upon such exercise and (b) will take all
such action as may be necessary or appropriate in order that the Company may
validly and legally issue or sell fully paid and non-assessable stock upon the
exercise of all Warrants at the time outstanding.
6.8 CERTIFICATE AS TO ADJUSTMENTS. In each case of an adjustment
in the number of shares of Common Stock receivable on the exercise of the
Warrant, the Company at its expense will promptly compute such adjustment in
accordance with the terms of the Warrant and prepare a certificate executed by
an executive officer of the Company setting forth such adjustment and showing in
detail the facts upon which such adjustment is based. The Company will forthwith
mail a copy of each such certificate to each Holder.
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6.9 NOTICES OF RECORD DATE, ETC. In case:
(a) the Company shall take a record of the holders of its
Common Stock (or Other Securities at the time receivable upon the exercise of
the Warrant) for the purpose of entitling them to receive any dividend or other
distribution, or any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities, or to receive any other
right; or
(b) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation, or any conveyance of all
or substantially all of the assets of the Company to another corporation; or
(c) of any voluntary or involuntary dissolution, liquidation
or winding up of the Company, then, and in each such case, the Company shall
mail or cause to be mailed to each holder of the Warrant at the time outstanding
a notice specifying, as the case may be, (i) the date on which a record is to be
taken for the purpose of such dividend, distribution or right, and stating the
amount and character of such dividend, distribution or right, or (ii) the date
on which such reorganization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation or winding up is to take place, and the
time, if any is to be fixed, as to which the holders of record of Common Stock
(or such other securities at the time receivable upon the exercise of the
Warrant) shall be entitled to exchange their shares of Common Stock (or such
other securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding up. Such notice shall be mailed at least 20
days prior to the date therein specified and the Warrant may be exercised prior
to said date during the term of the Warrant.
7. REGISTRATION RIGHTS.
7.1 PIGGYBACK REGISTRATION RIGHTS. If the Company, at any time
during the period commencing on the date hereof and ending on the Expiration
Date, proposes to file a registration statement on a general form for
registration under the Securities Act, other than a registration effected solely
to implement any employee benefit plan or a transaction to which Rule 145
promulgated under the Securities Act is applicable, and relating to securities
issued or to be issued by it, then it shall give written notice of such proposal
to each Holder at least 30 days prior to filing such registration statement with
the Securities and Exchange Commission. If, within 20 days after the giving of
such notice, the Holder shall request in writing that all or any shares of
Warrant Stock or Other Securities issued or issuable to the Holder upon exercise
of this Warrant be included in such proposed registration, the Company will also
register such securities as shall have been requested in writing; provided,
however, that:
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(a) the Holder shall cooperate with the Company in the
preparation of such registration statement to the extent required to furnish
information concerning such owners therein;
(b) the Holder may not request that its shares of Warrant
Stock or Other Securities be included, pursuant to this Section 7.1, in more
than two registration statements;
(c) if any underwriter or managing agent is purchasing or
arranging for the sale of the securities then being offered by the Company under
such registration statement, then the Holder (i) shall agree to have the
securities being so registered sold to or by such underwriter or managing agent
on terms substantially equivalent to the terms upon which the Company is selling
the securities so registered, or (ii) if such underwriter or managing agent so
requests, shall delay the sale of such securities for the 90 day period
commencing with the effective date of the registration statement; and
(d) (i) if in the written opinion of the Company's managing
underwriter, if any, for the offering contemplated by such registration
statement, the inclusion of all or a portion of the shares of Warrant Stock or
Other Securities requested to be registered, when added to the securities being
registered by the Company or any selling security holder, will exceed the
maximum amount of the Company's securities which can be marketed (A) at a price
reasonably related to their then current market value, or (B) without otherwise
materially adversely affecting the entire offering, then the Company may exclude
from such offering a pro rata portion of the shares of Warrant Stock or Other
Securities requested to be registered as required by the managing underwriter;
(ii) if securities are proposed to be offered for sale
pursuant to such registration statement by other security holders of the Company
and the total number of securities to be offered by the holders of all the
Warrants and shares of Warrant Stock and Other Securities and such other selling
security holders is required to be reduced pursuant to a request from the
managing underwriter (which request shall be made only for the reasons and in
the manner set forth above) the aggregate number of shares of Warrant Stock and
Other Securities to be offered by the Holders pursuant to such registration
statement shall equal the number which bears the same ratio to the maximum
number of securities that the underwriter believes may be included for all the
selling security holders (including the Holders of all the Warrants) as the
original number of shares of Warrant Stock or Other Securities proposed to be
sold by the Holders of all the Warrants bears to the total original number of
securities proposed to be offered by the Holders of all the Warrants and the
other selling security holders; and
(iii) and in the event the Company exercises the rights
granted under this Section 7.1, the Holder(s) shall retain any remaining demand
registration rights and piggyback registration rights for their shares of
Warrant Stock or Other Securities (to the extent not registered) as set forth in
this Section 7.1 and Section 7.2 hereof.
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7.2 DEMAND REGISTRATION RIGHTS. In addition to the registration
rights set forth in Section 7.1, the Company will, at any time prior to the
Expiration Date or two years thereafter (to the extent exercised), upon the
written request of the Holders of not less than 50% of the aggregate number of
the shares of Common Stock issued or issuable upon exercise of the Warrants (a
"Request"), within a reasonable period after receipt of such Request, prepare
and file and take such reasonable steps as may be required to have declared
effective, a registration statement under the Securities Act, covering such
shares of Warrant Stock or Other Securities issued or issuable upon exercise of
the Warrant requested by such Holders, and in connection therewith shall advise
the persons entitled thereto of their rights under Section 7.1 hereof; provided,
however that:
(a) The Company may include any securities issued or to be
or managing agents as it deems necessary or desirable for the purpose of
purchasing or arranging for the sale of the securities then being offered by the
Company under such registration statement; and
(b) such Holders shall cooperate with the Company in the
preparation of such registration statement to the extent required to furnish
information concerning such owners therein.
7.3 COMPANY OBLIGATIONS. In connection with the filing of a
registration statement pursuant to Section 7.1 or 7.2 hereof, the Company shall:
(a) notify the Holders as to the filing thereof and of all
amendments thereto filed prior to the effective date of said registration
statement;
(b) notify the Holders promptly after it shall have received
notice of the time when the registration statement becomes effective or any
supplement to any prospectus forming a part of the registration statement has
been filed;
(c) prepare and file without expense to the Holders any
necessary amendment or supplement to such registration statement or prospectus
as may be necessary to comply with Section 10(a)(3) of the Securities Act or
advisable in connection with the proposed distribution of the securities by the
Holders;
(d) take all reasonable steps to qualify the shares of
Warrant Stock or Other Securities, issued or issuable upon exercise of this
Warrant for sale under the securities or blue sky laws of such reasonable number
of states as such Holders may designate in writing and to register or obtain the
approval of any federal or state authority which may be required in connection
with the proposed distribution, except, in each case, in jurisdictions in which
the Company must either qualify to do business or file a general consent to
service of process as a condition to the qualification of such securities;
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(e) notify the Holders of any stop order suspending the
effectiveness of the registration statement and use its reasonable best efforts
to remove such stop order;
(f) undertake to keep such registration statement and
prospectus effective for a period of nine months after its effective date; and
(g) furnish to the Holders as soon as available, copies of
any such registration statement and each preliminary or final prospectus and any
supplement or amendment required to be prepared pursuant to the foregoing
provisions of Section 7.1 or 7.2 hereof, all in such quantities as the Holders
may from time to time reasonably request.
7.4 FEES AND EXPENSES. The Holders of the shares of Warrant Stock
or Other Securities being so registered agree to pay all applicable underwriting
discounts and commissions, brokerage commissions and transfer taxes with respect
to the securities owned by them being registered. The Company will pay all other
costs and expenses in connection with a registration statement to be filed
pursuant to Section 7.1 or 7.2 hereof including, without limitation, the fees
and expenses of counsel for the Company and the Holders, the fees and expenses
of its accountants and all other costs and expenses incident to the preparation,
printing and filing under the Securities Act of any such registration statement,
each prospectus and all amendments and supplements thereto, the costs incurred
in connection with the qualification of such securities for sale in such
reasonable number of states as Holders have designated, including fees and
disbursements of counsel for the Company, and the costs of supplying a
reasonable number of copies of the registration statement, each preliminary
prospectus, final prospectus and any supplements or amendments thereto to such
Holders.
7.5 INDEMNIFICATION. The Company agrees to enter into an
appropriate cross-indemnity agreement with any underwriter (as defined in the
Securities Act) for such Holders in connection with the filing of a registration
statement pursuant to Sections 7.1 or 7.2 hereof. If the Company shall file any
registration statement including therein all or any part of the shares of
Warrant Stock or Other Securities, the Company and each Holder shall enter into
an appropriate cross-indemnity agreement whereby the Company shall indemnify and
hold harmless the Holder against any losses, claims, damages or liabilities (or
actions in respect thereof) arising out of or based upon any untrue statement or
alleged untrue statement of any material fact contained in such registration
statement, or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make statements therein not
misleading unless such statement or omission was made in reliance upon and in
conformity with written information furnished or required to be furnished by any
such Holder, and each such Holder shall indemnify and hold harmless the Company,
each of its directors and officers who have signed the registration statement
and each person, if any, who controls the Company, within the meaning of the
Securities Act against any losses, claims, damages or liabilities (or actions in
respect thereof) arising out of or based upon any untrue statement or alleged
untrue statement of any material fact contained in such registration statement,
or any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make statements therein not misleading, if the
statement or omission was made in reliance upon
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and in conformity with written information furnished or required to be furnished
by such Holder expressly for use in such registration statement.
7.6 MISCELLANEOUS. Nothing herein shall be construed to require
any of the Holders who may desire to include any shares of Warrant Stock in any
registration statement referred to in Section 7.1 or 7.2 hereof to exercise
their Warrants prior to the effective date of any registration statement and
such Holders, at their option, to the extent permissible by law, may exercise
the Warrants against payment of the proceeds of the sale of such Warrant Stock
or Other Securities pursuant to a registration statement.
8. TRANSFER TO COMPLY WITH THE SECURITIES ACT. This Warrant and any
Warrant Stock or Other Securities may not be sold, transferred, pledged,
hypothecated or otherwise disposed of except as follows: (a) to a person who, in
the opinion of counsel to the Company, is a person to whom this Warrant or the
Warrant Stock or Other Securities may legally be transferred without
registration and without the delivery of a current prospectus under the
Securities Act with respect thereto and then only against receipt of an
agreement of such person to comply with the provisions of this Section 8 with
respect to any resale or other disposition of such securities; or (b) to any
person upon delivery of a prospectus then meeting the requirements of the
Securities Act relating to such securities and the offering thereof for such
sale or disposition, and thereafter to all successive assignees.
9. LEGEND. Unless the shares of Warrant Stock or Other Securities
have been registered under the Securities Act, upon exercise of any of the
Warrants and the issuance of any of the shares of Warrant Stock, all
certificates representing shares shall bear on the face thereof substantially
the following legend:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may
not be sold, offered for sale, assigned, transferred or otherwise
disposed of, unless registered pursuant to the provisions of that
Act or unless an opinion of counsel to the Corporation is obtained
stating that such disposition is in compliance with an available
exemption from such registration.
10. ADJUSTMENT FOR MANAGEMENT FEE REDUCTION. The Company has entered
into that certain First Amendment to Amended and Restated Management Agreement,
dated the date hereof, with the Holder (the "Management Agreement Amendment").
Notwithstanding anything to the contrary contained herein, in the event the
Manager (as defined in the Management Agreement Amendment) is entitled to and
elects to receive any or all of the Cash Payment of the 1996 Reduction Amount
(as defined in the Management Agreement Amendment), the number of shares of
Warrant Stock issuable to the Holder hereunder shall be reduced by an amount
equal to such Cash Payment of the 1996 Reduction Amount, subject to the
anti-dilution adjustments provided herein.
- 11 -
<PAGE>
11. NOTICES. All notices required hereunder shall be in writing and
shall be deemed given when telegraphed, delivered personally or within two days
after mailing when mailed by certified or registered mail, return receipt
requested, to the Company or the Holder, as the case may be, for whom such
notice is intended, at the address of such party as set forth on the first page,
or at such other address of which the Company or the Holder has been advised by
notice hereunder.
12. APPLICABLE LAW. The Warrant is issued under and shall for all
purposes be governed by and construed in accordance with the laws of the State
of Florida.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed on
its behalf, in its corporate name, by its duly authorized officer, all as of the
day and year first above written.
BISCAYNE APPAREL, INC.
By:_______________________________
- 12 -
<PAGE>
WARRANT EXERCISE FORM
The undersigned hereby irrevocably elects to exercise the within Warrant
to the extent of purchasing _____ shares of Common Stock of Biscayne Apparel,
Inc., a Florida corporation, and hereby makes payment of $ ____________________
in payment therefor.
__________________________________________________________________________
Signature
__________________________________________________________________________
Signature, if jointly held
__________________________________________________________________________
Date
INSTRUCTIONS FOR ISSUANCE OF STOCK
(IF OTHER THAN TO THE REGISTERED HOLDER OF THE WITHIN WARRANT)
Name___________________________________________________________________________
(Please typewrite or print in block letters)
Address________________________________________________________________________
________________________________________________________________________
Social Security or Taxpayer
Identification Number____________________________________________________
- 13 -
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, _____________________________________________________
hereby sells, assigns and transfers unto
Name___________________________________________________________________________
(Please typewrite or print in block letters)
the right to purchase Common Stock of Biscayne Apparel, Inc., a Florida
corporation, represented by this Warrant to the extent of shares as to which
such right is exercisable and does hereby irrevocably constitute and appoint
__________________________________ Attorney, to transfer the same on the books
of the Company with full power of substitution in the premises.
DATED:_______________________, 199__.
_______________________________________
Signature
_______________________________________
Signature, if jointly held
- 14 -
EXHIBIT 11
Biscayne Apparel, Inc.
Computation of Per Share Earnings
(Dollars in Thousands, Except
Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- ----------------------
1996 1995 1996 1995
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Net loss............................................... $(2,181) $(1,787) $(3,594) $(3,375)
======= ======= ======= =======
PRIMARY:
Common and common equivalent shares:
Weighted average common shares outstanding........... 10,741,521 10,730,214 10,741,521 10,730,214
Potential dilution upon exercise of stock
options and warrants................................ - - - -
---------- ---------- ---------- ----------
Shares used in computing net loss
per common share.................................... 10,741,521 10,730,214 10,741,521 10,730,214
========== ========== ========== ==========
PER SHARE AMOUNTS:
Net loss per share..................................... $ (0.20) $ (0.17) $ (0.33) $ (0.31)
========== ========== ========== ==========
FULLY DILUTED:
Common and common equivalent shares:
Weighted average common shares outstanding........... 10,741,521 10,730,214 10,741,521 10,730,214
Potential dilution upon exercise of
stock options and warrants.......................... - - - -
---------- ---------- ---------- -----------
Shares used in computing of earnings loss
per common share..................................... 10,741,521 10,730,214 10,741,521 10,730,214
========== ========== ========== ==========
PER SHARE AMOUNTS:
Net loss per share..................................... $ (0.20) $ (0.17) $ (0.33) $ (0.31)
========== ========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 114
<SECURITIES> 0
<RECEIVABLES> 10,993
<ALLOWANCES> (1,184)
<INVENTORY> 30,951
<CURRENT-ASSETS> 45,432
<PP&E> 5,704
<DEPRECIATION> (2,184)
<TOTAL-ASSETS> 56,579
<CURRENT-LIABILITIES> 29,055
<BONDS> 0
0
0
<COMMON> 107
<OTHER-SE> 16,168
<TOTAL-LIABILITY-AND-EQUITY> 56,579
<SALES> 29,129
<TOTAL-REVENUES> 29,129
<CGS> 22,606
<TOTAL-COSTS> 22,606
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,631
<INCOME-PRETAX> (5,766)
<INCOME-TAX> (2,172)
<INCOME-CONTINUING> (3,594)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,594)
<EPS-PRIMARY> (0.33)
<EPS-DILUTED> (0.33)
</TABLE>
