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 MARCH 31, 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 March 31, 1996, there were 10,741,407 outstanding shares of
the registrant's Common Stock, $0.01 par value.
BISCAYNE APPAREL, INC.
INDEX
Part I. Financial Information Page No.
Consolidated Balance Sheets
March 31, 1996 and December 31, 1995........
Consolidated Statements of Operations
Three Months Ended March 31, 1996 and 1995...
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1996 and 1995...
Notes to Consolidated Financial Statements....
Management's Discussion and Analysis of
Financial Condition and Results of Operations..
Part II. Other Information
Item 1 - Legal Proceedings.....................
Item 6 - Exhibits and Reports on Form 8-K......
Signatures.....................................
BISCAYNE APPAREL, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
[CAPTION]
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MARCH 31, MARCH 31,
1996 1995
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 176 $ 312
Trade accounts receivable, less
allowances of $1,674 in 1996 and
$1,967 in 1995 10,826 18,271
Inventories 24,574 25,890
Federal income tax receivable 2,936 1,969
Prepaid expenses and other 2,050 1,972
Total current assets 40,562 48,414
Property, plant and equipment, less
accumulated depreciation of $2,056
in 1996 and $1,917 in 1995 3,610 3,652
Investment in Hartwell Sports, Inc. - 1,627
Goodwill, net 6,012 6,072
Other assets, net 1,825 1,977
$52,009 $61,742
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,678 $ 3,841
Accrued liabilities 3,916 5,914
Notes payable to banks 12,950 17,850
Current portion of long-term debt 1,750 1,250
Total current liabilities 22,294 28,855
Subordinated notes 6,444 6,444
Long-term debt 4,500 6,250
Other liabilities 332 358
Commitments and contingencies - -
Stockholders' Equity:
Common stock, $0.01 par value;
25,000,000 shares authorized;
10,741,407 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 (118) (135)
Retained deficit (7,859) (6,446)
Total stockholders' equity 18,439 19,835
$52,009 $61,742
See accompanying notes.
</TABLE>
BISCAYNE APPAREL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of dollars, except per share data)
(Unaudited)
[CAPTION]
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THREE MONTHS ENDED
MARCH 31,
1996 1995
Net sales $ 16,236 $ 15,389
Operating costs and expenses:
Cost of goods sold 12,270 11,524
Selling, general and administrative 5,807 5,964
Operating loss (1,841) (2,099)
Other income and (expenses):
Interest and other expenses (837) (595)
Interest and other income 151 32
Gain on sale and equity in net
income of investee 123 63
Loss before income tax benefit (2,404) (2,599)
Income tax benefit (991) (1,011)
Net loss $ (1,413) $ (1,588)
Net loss per common share $ (0.13) $ (0.15)
Shares used in computing net loss
per common share 10,741,407 10,730,228
See accompanying notes.
</TABLE>
BISCAYNE APPAREL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
[CAPTION]
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THREE MONTHS ENDED
MARCH 31,
1996 1995
Operating activities:
Net loss $(1,413) $(1,588)
Adjustments to reconcile
net loss to net
cash provided by (used in)
operating activities:
(Gain) on sale of assets (11) (3)
(Gain) on sale of equity
investee (123) -
Equity in net income of
investee - (63)
Amortization of unearned stock
award compensation 17 17
Depreciation expense 158 108
Amortization expense 69 57
Provision for losses and
sales allowances
on receivables 1,268 337
(Increase) decrease in
operating assets:
Trade accounts receivable 5,867 11,432
Inventories 1,064 (8,059)
Prepaid expenses and other (101) (1,032)
Federal income tax receivable (967) -
Other assets (133) (870)
Increase (decrease) in
operating liabilities:
Accounts payable (51) (1,5378)
Accrued liabilities (1,226) (1,655)
Other liabilities - (3)
Net cash provided by
(used in) operating
activities 4,418 (2,859)
Investing activities:
Net sale of assets 11 9
Capital expenditures (145) (422)
Proceeds on sale of
equity investee 1,750 -
Net cash provided by
(used in) investing
activities 1,616 (413)
Financing activities:
Payments under notes
payable to banks (13,100) (13,825)
Borrowings under notes
payable to banks 8,200 14,325
Proceeds from term loan - 7,500
Principal payments under
term loan (1,250) -
Repayment of subordinated
notes - (6,276)
Principal payments of
capital leases (20) (6)
Net cash (used in) provided
by financing activities (6,170) 1,718
Net decrease in cash and cash
equivalents (136) (1,554)
Cash and cash equivalents at
beginning of year 312 4,178
Cash and cash equivalents at
end of year $ 176 $ 2,624
Supplemental disclosure
information:
Interest expense paid $ 763 $ 440
Income taxes paid $ 59 $ 114
See accompanying notes.
</TABLE>
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., ("the 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.
3. The results of operations for the three month periods ended
March 31, 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 March 31, 1996 and March 31,
1995 are the Company's obligations under outstanding letters
of credit of $1,015,000 and $947,000, 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 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 as of January 1, 1996 to reduce the amount of the
annual base management fee (the "Base Fee") by $200,000 ("the
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 ("the 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 Fashions
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), 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 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 MARCH 31, 1996 VERSUS QUARTER ENDED MARCH 31, 1995:
Net sales for the first quarter of 1996 increased to $16,236,000
from first quarter 1995 sales of $15,389,000. The 6% increase was
attributable to Andy Johns and M&L, offset by decreased sales at
Mackintosh and Varon.
Consolidated sales backlog at April 30, 1996 were $61,091,000,
compared to $51,040,000 at April 30, 1995. The increase of 20%
results from enhancements to product development and sales and
marketing efforts in the Company's outerwear and underwear
operations.
Cost of goods sold as a percentage of net sales was 76% versus 75%
for the quarters ended March 31, 1996 and 1995, respectively.
The slight increase is attributable to Andy Johns and Mackintosh
realizing lower than normal selling prices on the selloff of Fall
1995 products and higher labor costs realized by Varon, offset by
lower product costs realized by M&L.
Selling, general and administrative expenses ("S,G&A") as a
percentage of net sales decreased to 36% in 1996 from 39% in 1995.
This decline resulted from managements continuing efforts to reduce
costs.
The apparel industry historically 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 quarter ended March 31, 1996
increased by $242,000 from the comparable quarter of 1995. The
increase is primarily due to increased borrowings incurred during
1995 and related interest rate increases.
Interest and other income increased during the first quarter of
1996, primarily due to licensee revenues earned by M&L.
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 for the first
quarter of 1996 of $123,000.
INCOME TAXES
For the quarters ended March 31, 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 and
nondeductible amortization of goodwill.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents were $176,000 and $312,000 at March 31,
1996 and December 31, 1995, respectively. At March 31, 1996, the
Company's working capital was $18,268,000, representing a current
ratio of 1.82 to 1. This compares to working capital of
$19,559,000 and a current ratio of 1.68 to 1 at December 31, 1995.
These changes are due to the paydown of bank debt with normal
seasonal reductions of current assets, offset by seasonal first
quarter losses.
As presented in the Consolidated Statements of Cash Flows for the
three months ended March 31, 1996, the decrease of accounts
receivable of $5,867,000, the decrease in inventories of
$1,064,000, and decrease in accrued liabilities of $1,226,000 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 three months ended March 31, 1996
decreased to $145,000 from $422,000 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 raw material
costs, 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.
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 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) Exhibits:
10 Amended and Restated Credit Agreement and
Guaranty dated as of March 28, 1996 among
the Registrant, Biscayne Apparel
International, Inc., Mackintosh of New
England Co. and M&L International, Inc. and
The Chase Manhattan Bank (National
Association) as Agent and Milberg Factors,
Inc. as Servicing Agent.
11 Computation of Per Share Earnings
27 Financial Data Schedule
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.
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: May 8, 1996 By: /s/ John E. Pollack
John E. Pollack
President and Chief
Executive Officer
Date: May 8, 1996 By: /s/ Peter Vandenberg, Jr.
Peter Vandenberg, Jr.
Vice President, Treasurer and
Chief Financial Officer
EXHIBIT 11
Biscayne Apparel, Inc.
Computation of Per Share Earnings
(Dollars in Thousands, Except
Per Share Amounts)
(Unaudited)
[CAPTION]
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THREE MONTHS ENDED
MARCH 31,
1996 1995
Net loss $ (1,413) $ (1,588)
PRIMARY:
Common and common equivalent shares:
Weighted average common shares
outstanding 10,741,407 10,730,228
Potential dilution upon exercise
of stock options and warrants - -
Shares used in computing net loss
per common share 10,741,407 10,730,228
PER SHARE AMOUNTS:
Net loss per share $ (0.13) $ (0.15)
FULLY DILUTED:
Common and common equivalent shares:
Weighted average common shares
outstanding 10,741,407 10,730,228
Potential dilution upon exercise of
stock options and warrants - -
Shares used in computing net loss
per common share 10,741,407 10,730,228
PER SHARE AMOUNTS:
Net loss per share $ (0.13) $ (0.15)
</TABLE>
EXHIBIT 10
AMENDED AND RESTATED CREDIT AGREEMENT AND GUARANTY
Dated as of March 28, 1996
among
BISCAYNE APPAREL, INC.
BISCAYNE APPAREL INTERNATIONAL, INC.
MACKINTOSH OF NEW ENGLAND CO.,
and
M & L INTERNATIONAL, INC.
the Lenders signatory hereto
and
THE CHASE MANHATTAN BANK, N.A.
as Agent
MILBERG FACTORS, INC.
as Servicing Agent
TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS. . . . . . . . . . .
Section 1.01. Definitions. . . . . . . . . . . . . . . .
Section 1.02. Accounting Terms . . . . . . . . . . . . . .
Section 1.03. Rules of Construction. . . . . . . . . . . .
ARTICLE 2. THE LOANS. . . . . . . . . . . . . . . . . . . . . .
Section 2.01. Revolving Credit Loans . . . . . . . . . . .
Section 2.02. Term Loans . . . . . . . . . . . . . . . . .
Section 2.03. The Notes. . . . . . . . . . . . . . . . . .
Section 2.04. Purpose. . . . . . . . . . . . . . . . . . .
Section 2.05. Borrowing Procedures . . . . . . . . . . . .
Section 2.06. Funding of Revolving Credit
Loans by Servicing Agent . . . . . . . . . .
Section 2.07. Prepayments and Conversions. . . . . . . . .
Section 2.08. Mandatory Prepayments. . . . . . . . . . . .
Section 2.09. Interest Periods; Renewals . . . . . . . . .
Section 2.10. Changes of Revolving Credit
Commitments. . . . . . . . . . . . . . . . .
Section 2.11. Certain Notices. . . . . . . . . . . . . . .
Section 2.12. Collection of Accounts . . . . . . . . . . .
Section 2.13. Minimum Amounts. . . . . . . . . . . . . . .
Section 2.14. Interest . . . . . . . . . . . . . . . . . .
Section 2.15. Fees . . . . . . . . . . . . . . . . . . . .
Section 2.16. Payments Generally . . . . . . . . . . . . .
Section 2.17. Administration and Servicing . . . . . . . .
Section 2.18. Adjustments to Existing Loans
and Participations . . . . . . . . . . . . .
ARTICLE 3. LETTERS OF CREDIT. . . . . . . . . . . . . . . . . .
Section 3.01. Letters of Credit. . . . . . . . . . . . . .
Section 3.02. Reimbursement Obligation . . . . . . . . . .
Section 3.03. Payment of Commissions,
Expenses and Interest. . . . . . . . . . . .
Section 3.04. Proper Drawing; Chase's Honoring . . . . . .
Section 3.05. Amendment, Change, Modification,
No Waiver. . . . . . . . . . . . . . . . . .
Section 3.06. U.C.P.; Agreements and
Acknowledgments; Indemnification . . . . . .
Section 3.07. Licenses; Insurance; Regulations . . . . . .
Section 3.08. Additional Security. . . . . . . . . . . . .
Section 3.09. Continuing Rights and Obligations. . . . . .
Section 3.10. Instructions; No Liability . . . . . . . . .
Section 3.11. Amended Agreement. . . . . . . . . . . . . .
Section 3.12. Chase Micro L/C. . . . . . . . . . . . . . .
Section 3.13. Bills of Lading. . . . . . . . . . . . . . .
Section 3.14. Use of Loans . . . . . . . . . . . . . . . .
ARTICLE 4. LETTERS OF INDEMNITY . . . . . . . . . . . . . . . .
Section 4.01. Letters of Indemnity . . . . . . . . . . . .
Section 4.02. Reimbursement Agreement. . . . . . . . . . .
Section 4.03. Authorization. . . . . . . . . . . . . . . .
Section 4.04. Delivery of Required Documentation . . . . .
Section 4.05. Continuing Obligations . . . . . . . . . . .
Section 4.06. Instructions . . . . . . . . . . . . . . . .
Section 4.07. Fees . . . . . . . . . . . . . . . . . . . .
ARTICLE 5. PARTICIPATIONS . . . . . . . . . . . . . . . . . . .
Section 5.01. Sale and Purchase Of
Participations . . . . . . . . . . . . . . .
Section 5.02. Participation in Fees and
Collateral; Relationship . . . . . . . . . .
Section 5.03. Procedures . . . . . . . . . . . . . . . . .
Section 5.04. Collections and Remittances. . . . . . . . .
Section 5.05. Administration Standard of Care. . . . . . .
ARTICLE 6. YIELD PROTECTION; ILLEGALITY; ETC. . . . . . . . . .
Section 6.01. Additional Costs . . . . . . . . . . . . . .
Section 6.02. Limitation on Types of Loans . . . . . . . .
Section 6.03. Illegality . . . . . . . . . . . . . . . . .
Section 6.04. Certain Conversions pursuant to
Sections 6.01 and 6.03 . . . . . . . . . . .
Section 6.05. Certain Compensation . . . . . . . . . . . .
ARTICLE 7. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . .
Section 7.01. Conditions Precedent to the
Effectiveness of this
Agreement and the Initial Use
of a Credit Facility on
or after the Second Closing Date . . . . . .
Section 7.02. Additional Conditions Precedent. . . . . . .
Section 7.03. Deemed Representations . . . . . . . . . . .
ARTICLE 8. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . .
Section 8.01. Incorporation, Good Standing and
Due Qualification. . . . . . . . . . . . . .
Section 8.02. Corporate Power and Authority; No
Conflicts. . . . . . . . . . . . . . . . . .
Section 8.03. Legally Enforceable Agreements . . . . . . .
Section 8.04. Litigation . . . . . . . . . . . . . . . . .
Section 8.05. Financial Statements . . . . . . . . . . . .
Section 8.06. Ownership and Liens. . . . . . . . . . . . .
Section 8.07. Taxes. . . . . . . . . . . . . . . . . . . .
Section 8.08. ERISA. . . . . . . . . . . . . . . . . . . .
Section 8.09. Subsidiaries and Ownership of
Stock. . . . . . . . . . . . . . . . . . . .
Section 8.10. Credit Arrangements. . . . . . . . . . . . .
Section 8.11. Operation of Business. . . . . . . . . . . .
Section 8.12. Hazardous Materials. . . . . . . . . . . . .
Section 8.13. No Default on Outstanding Judgments
or Orders. . . . . . . . . . . . . . . . . .
Section 8.14. No Defaults on Other Agreements. . . . . . .
Section 8.15. Labor Disputes and Acts of God . . . . . . .
Section 8.16. Governmental Regulation. . . . . . . . . . .
Section 8.17. Partnerships . . . . . . . . . . . . . . . .
Section 8.18. No Forfeiture. . . . . . . . . . . . . . . .
Section 8.19. Solvency . . . . . . . . . . . . . . . . . .
ARTICLE 9. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . .
Section 9.01. Maintenance of Existence . . . . . . . . . .
Section 9.02. Conduct of Business. . . . . . . . . . . . .
Section 9.03. Maintenance of Properties. . . . . . . . . .
Section 9.04. Maintenance of Records . . . . . . . . . . .
Section 9.05. Maintenance of Insurance . . . . . . . . . .
Section 9.06. Compliance with Laws . . . . . . . . . . . .
Section 9.07. Right of Inspection. . . . . . . . . . . . .
Section 9.08. Asset Based Audit. . . . . . . . . . . . . .
Section 9.09. Reporting Requirements . . . . . . . . . . .
ARTICLE 10. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . .
Section 10.01. Debt. . . . . . . . . . . . . . . . . . . .
Section 10.02. Guaranties, Etc . . . . . . . . . . . . . .
Section 10.03. Liens . . . . . . . . . . . . . . . . . . .
Section 10.04. Leases. . . . . . . . . . . . . . . . . . .
Section 10.05. Investments . . . . . . . . . . . . . . . .
Section 10.06. Dividends . . . . . . . . . . . . . . . . .
Section 10.07. Sale of Assets. . . . . . . . . . . . . . .
Section 10.08. Stock of Subsidiaries, Etc. . . . . . . . .
Section 10.09. Transactions with Affiliates. . . . . . . .
Section 10.10. Mergers, Etc. . . . . . . . . . . . . . . .
Section 10.11. No Activities Leading to
Forfeiture. . . . . . . . . . . . . . . . .
Section 10.12. No modification of Significant
Agreements. . . . . . . . . . . . . . . . .
Section 10.13. Other Negative Pledge Agreements. . . . . .
Section 10.14. Accounts Payable to Trade
Creditors . . . . . . . . . . . . . . . . .
Section 10.15. Change in Fiscal Year . . . . . . . . . . .
ARTICLE 11. FINANCIAL COVENANTS . . . . . . . . . . . . . . . .
Section 11.01. Minimum Subordinated Debt . . . . . . . . .
Section 11.02. Minimum Tangible Net Worth. . . . . . . . .
Section 11.03. Funded Debt to Tangible Net Worth . . . . .
Section 11.04. Net Income. . . . . . . . . . . . . . . . .
Section 11.05. Capital Expenditures. . . . . . . . . . . .
ARTICLE 12. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . .
Section 12.01. Events of Default . . . . . . . . . . . . .
Section 12.02. Remedies. . . . . . . . . . . . . . . . . .
ARTICLE 13. THE AGENTS; RELATIONS AMONG LENDERS AND
BORROWERS . . . . . . . . . . . . . . . . . . . . .
Section 13.01. Appointment, Powers and Immunities
of Agent. . . . . . . . . . . . . . . . . .
Section 13.02. Appointment, Powers and Immunities
of Servicing Agent. . . . . . . . . . . . .
Section 13.03. Reliance by each of the Agent and
the Servicing Agent . . . . . . . . . . . .
Section 13.04. Defaults. . . . . . . . . . . . . . . . . .
Section 13.05. Rights of each of the Agent and
the Servicing Agent as a Lender . . . . . .
Section 13.06. Indemnification of Agents . . . . . . . . .
Section 13.07. Documents . . . . . . . . . . . . . . . . .
Section 13.08. Non-Reliance on the Agents and
Other Lenders . . . . . . . . . . . . . . .
Section 13.09. Failure of Either the Agent or
the Servicing Agent to Act. . . . . . . . .
Section 13.10. Resignation or Removal of Either
the Agent or the Servicing Agent. . . . . .
Section 13.11. Amendments Concerning Agency
Function. . . . . . . . . . . . . . . . . .
Section 13.12. Liability of Each of the Agent
and the Servicing Agent . . . . . . . . . .
Section 13.13. Transfer of Agency Function . . . . . . . .
Section 13.14. Non-Receipt of Funds by the Agent . . . . .
Section 13.15. Withholding Taxes . . . . . . . . . . . . .
Section 13.16. Several Obligations and Rights
of Lenders. . . . . . . . . . . . . . . . .
Section 13.17. Pro Rata Treatment of Loans, Etc. . . . . .
Section 13.18. Sharing of Payments Among Lenders . . . . .
Section 13.19. Application of Proceeds of
Collateral. . . . . . . . . . . . . . . . .
ARTICLE 14. GUARANTY. . . . . . . . . . . . . . . . . . . . . .
Section 14.01. Guaranty. . . . . . . . . . . . . . . . . .
Section 14.02. Guaranty Obligations
Unconditional . . . . . . . . . . . . . . .
Section 14.03. Waivers . . . . . . . . . . . . . . . . . .
Section 14.04. Subrogation . . . . . . . . . . . . . . . .
Section 14.05. Contribution. . . . . . . . . . . . . . . .
Section 14.06. Limitation of Liability . . . . . . . . . .
ARTICLE 15. MISCELLANEOUS . . . . . . . . . . . . . . . . . . .
Section 15.01. Amendments and Waivers. . . . . . . . . . .
Section 15.02. Usury . . . . . . . . . . . . . . . . . . .
Section 15.03. Expenses. . . . . . . . . . . . . . . . . .
Section 15.04. Survival. . . . . . . . . . . . . . . . . .
Section 15.05. Assignment: Participations. . . . . . . . .
Section 15.06. Notices . . . . . . . . . . . . . . . . . .
Section 15.07. Setoff. . . . . . . . . . . . . . . . . . .
Section 15.08. JURISDICTION; IMMUNITIES. . . . . . . . . .
Section 15.09. Table of Contents; Headings . . . . . . . .
Section 15.10. Severability. . . . . . . . . . . . . . . .
Section 15.11. Counterparts. . . . . . . . . . . . . . . .
Section 15.12. Integration . . . . . . . . . . . . . . . .
Section 15.13. GOVERNING LAW . . . . . . . . . . . . . . .
Section 15.14. Confidentiality . . . . . . . . . . . . . .
Section 15.15. Treatment of Certain Information. . . . . .
Section 15.16. Collection of Accounts. . . . . . . . . . .
EXHIBITS
Exhibit A-1 Amended and Restated Revolving Credit Promissory
Note
Exhibit A-2 Amended and Restated Term Loan Promissory Note
Exhibit B Authorization Letter
Exhibit C Amendment to Security Agreement
Exhibit D Lockbox Agreement
Exhibit E Trivest Letter Agreement
Exhibit F Warrant
Exhibit G Flash Report
Exhibit H Confidentiality Agreement
Exhibit I Opinion of Counsel for the Borrower
SCHEDULES
Schedule I Subsidiaries and Other Ownership Interests of
Borrowers
Schedule II Credit Arrangements
Schedule III Hazardous Materials
None of the Exhibits and Schedules listed on page V of the
Amended and Restated Credit Agreement and Guaranty dated as of
March 28, 1996 among the Registrant, Biscayne Apparel
International, Inc., Mackintosh of New England Co. and M&L
International, Inc. and The Chase Manhattan Bank (National
Association) as Agent and Milberg Factors, Inc. as Servicing
Agent filed herewith, are being filed with this document. The
Registrant agrees to supplementally file a copy of any such
Exhibits or Schedules with the Commission upon request.
AMENDED AND RESTATED CREDIT AGREEMENT AND GUARANTY
dated as of March 28, 1996 among Biscayne Apparel, Inc.
("Apparel"), Biscayne Apparel International, Inc. ("BAI"),
Mackintosh of New England Co. ("Mackintosh"), and M&L
International, Inc. ("M&L"), (each a "Borrower" and collectively
the "Borrowers"), each of the lenders which is a signatory hereto
(each a "Lender" and collectively the "Lenders"), The Chase
Manhattan Bank (National Association), as agent for the Lenders
(in such capacity, together with its successors in such capacity,
the "Agent"), and Milberg Factors, Inc., as servicing agent for
the Lenders (in such capacity, together with its successors in
such capacity, the "Servicing Agent").
PRELIMINARY STATEMENTS
1. REFERENCES. Reference is made to the Credit
Agreement dated as of March 16, 1995 among Apparel, BAI,
Mackintosh, M&L, each of the Lenders signatory thereto, and The
Chase Manhattan Bank, N.A., as agent for each of the Lenders
signatory thereto, as heretofore amended (the "1995 Credit
Agreement").
2. AMENDMENT AND RESTATEMENT. To the extent that this
Amended and Restated Credit Agreement and Guaranty amends the
1995 Credit Agreement, the 1995 Credit Agreement is amended, and
to the extent that this Amended and Restated Credit Agreement and
Guaranty restates the 1995 Credit Agreement, the 1995 Credit
Agreement is restated.
The parties hereto agree as follows:
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS.
Section 1.01. DEFINITIONS. As used in this Agreement
the following terms have the following meanings (terms defined in
the singular to have a correlative meaning when used in the
plural and VICE VERSA):
"Account" means, any right to payment for goods sold or
leased or services rendered, regardless of how such right is
evidenced and whether it has been earned by performance, whether
secured or unsecured, now existing or hereafter arising, and the
proceeds thereof.
"Account Debtor" means each Person obligated to make
payment on an Account.
"Affiliate" means, any Person: (a) which directly or
indirectly controls, or is controlled by, or is under common
control with, a Borrower or any of its Subsidiaries; (b) which
directly or indirectly beneficially owns or holds 5% or more of
any class of voting stock of a Borrower or any such Subsidiary;
(c) 5% or more of the voting stock of which is directly or
indirectly beneficially owned or held by a Borrower or such
Subsidiary; or (d) which is a partnership in which a Borrower or
any of its Subsidiaries is a general partner. The term "control"
means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by
contract, or otherwise.
"Agents" means each of the Agent and the Servicing
Agent.
"Agreement" means, this Amended and Restated Credit
Agreement and Guaranty. References to Articles, Sections,
Exhibits, Schedules and the like refer to the Articles, Sections,
Exhibits, Schedules and the like of this Agreement unless
otherwise indicated.
"Amendment to Security Agreements" means the amendment
to each of the Security Agreements in the form of Exhibit C
hereto, to be delivered by the parties thereto under the terms of
this Agreement.
"Amortization Date" means, each of March 31, 1997;
March 31, 1998 and March 31, 1999, provided that if any such day
is not a Banking Day, such day shall be the next succeeding
Banking Day.
"Apparel" means, Biscayne Apparel, Inc.
"Authorization Letter" means, the letter agreement
executed by the Borrowers in the form of Exhibit B.
"BAI" means Biscayne Apparel International, Inc.
"Banking Day" means, any day on which commercial banks
are not authorized or required to close in New York City, New
York; Boston, Massachusetts; and Philadelphia, Pennsylvania and
whenever such day relates to a Eurodollar Loan or notice with
respect to any Eurodollar Loan, a day on which dealings in Dollar
deposits are also carried out in the London interbank market.
"Banks" means each of Chase, Corestates Bank, N.A., The
First National Bank of Boston, NatWest Bank N.A and Milberg.
"Borrower" means, each of Apparel, BAI, M&L, and
Mackintosh.
"Capitalization Expenditures" means, for any period,
the Dollar amount of gross expenditures (including obligations
under Capital Leases) made for fixed assets, real property, plant
and equipment, and all renewals, improvements and replacements
thereto, incurred during such period, all as determined in
accordance with GAAP.
"Capital Lease" means, any lease which has been or
should be capitalized on the books of the lessee in accordance
with GAAP.
"Chase" means, The Chase Manhattan Bank (National
Association).
"Code" means, the Internal Revenue Code of 1986.
"Collateral" means any and all real and personal
property subject to a Lien granted by any of the Security
Documents.
"Collateral Borrowing Base" means an amount equal to
one hundred percent (100%) of Eligible Accounts.
"Commitment(s)" means the Revolving Credit Commitment.
"Consolidated Capital Expenditures" means Capital
Expenditures of Apparel and its Consolidated Subsidiaries, as
determined on a consolidated basis in accordance with GAAP.
"Consolidated Funded Debt" means, Funded Debt of
Apparel and its Consolidated Subsidiaries, as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, for any period, the
net income of Apparel and its Consolidated Subsidiaries, all as
determined in accordance with GAAP.
"Consolidated Subsidiary" means, any Subsidiary whose
accounts are or are required to be consolidated with the accounts
of Apparel in accordance with GAAP.
"Consolidated Tangible Net Worth" means, Tangible Net
Worth of Apparel and its Consolidated Subsidiaries, as determined
on a consolidated basis in accordance with GAAP.
"Credit Facility" means, collectively, the Revolving
Credit Loans, the Term Loans, the Letters of Credit, and the
Letters of Indemnity or any or all of the foregoing, all as the
context may require.
"Debt" means, with respect to any Person:
(a) indebtedness of such Person for borrowed money;
(b) indebtedness for the deferred purchase price of property or
services (except trade payables in the ordinary course of
business); (c) Unfunded Benefit Liabilities of such Person (if
such Person is not a Borrower, determined in a manner analogous
to that of determining Unfunded Benefit Liabilities of the
Borrowers); (d) the face amount of any outstanding letters of
credit issued for the account of such Person; (e) obligations
arising under acceptance facilities; (f) guaranties, endorsements
(other than for collection in the ordinary course of
business) and other contingent obligations to purchase, to
provide funds for payment, to supply funds to invest in any
Person, or otherwise to assure a creditor against loss;
(g) obligations secured by any Lien on property of such Person;
(h) obligations of such Person as lessee under Capital Leases;
and (i) all obligations under any agreement providing for a swap,
ceiling rates, ceiling and floor rates, contingent participation
or other hedging mechanisms with respect to interest payable on
any of the items described above in this definition.
"Default" means, any event which with the giving of
notice or lapse of time, or both, would become an Event of
Default.
"Default Rate" means, with respect to the principal of
any Loan and, to the extent permitted by law, any other amount
payable by the Borrowers under this Agreement or any Note that is
not paid when due (whether at stated maturity, by acceleration or
otherwise), a rate per annum during the period from and including
the due date, to, but excluding the date on which such amount is
paid in full equal to 2% above the Variable Rate as in effect
from time to time plus the Margin (if any) (provided that, if the
amount so in default is principal of a Eurodollar Loan and the
due date thereof is a day other than the last day of the interest
Period therefor, the "Default Rate" for such principal shall be,
for the period from and including the due date and to but
excluding the last day of the Interest Period therefor, 2% above
the interest rate for such Loan as provided in Section 2.14
hereof and, thereafter, the rate provided for above in this
definition).
"Discretionary Overadvance" has the meaning specified
in Section 2.01.
"Dollars" and the sign "$" mean lawful money of the
United States of America.
"Eligible Account" means each Account of a Borrower,
now existing or hereafter arising, which Account met the
following specifications at the time it came into existence and
continues to meet the same until it is collected in full: (a)
shipment of the merchandise or the rendition of services has been
completed; (b) no return, rejection or repossession of the
merchandise has occurred; (c) merchandise or services shall not
have been rejected or disputed by the Account Debtor and there
shall not have been asserted any offset, defense or counterclaim;
(d) it continues to be in full conformity with the
representations and warranties made by the applicable Borrower to
the Lenders with respect thereto; (e) the Servicing Agent is and
continues to be, satisfied with the credit standing of the
Account Debtor in relation to the amount of credit extended; (f)
if the Servicing Agent requests to review documentation related
to an Account, such documentation is in a form satisfactory to
the Servicing Agent; (g) such Account shall not be unpaid more
than 60 days from the due date and such due date is not more than
120 days from the date of issuance of the invoice for such
Account; (h) less than 25% of the unpaid amount of invoices due
from such Account Debtor and its affiliates remain unpaid more
than 60 days from the due date; (i) it is not evidenced by
chattel paper or an instrument of any kind with respect to or in
payment of the Account unless such instrument is duly endorsed to
and in the possession of the Agent or represents a check in
payment of an Account; (j) if the Account Debtor is located
outside of the United States, the goods which gave rise to such
Account were shipped after receipt by the applicable Borrower
from or on behalf of the Account Debtor of an irrevocable letter
of credit, assigned and delivered to the Servicing Agent with a
copy to the Agent and confirmed by a financial institution
acceptable to the Required Lenders and is in form and substance
acceptable to the Servicing Agent payable in the full amount of
the Account in United States dollars at a place of payment
located with the United States; provided, however, that the
Account Debtor may be located outside the United States without
complying with the requirements of this clause (j) if such
Account Debtor is approved by the Servicing Agent in its sole
discretion and if all such Accounts of all such Account Debtors
outstanding at any time are equal to or less than $600,000; (k)
such Account is not subject to any Lien, other than a Lien
granted to the Agent for the benefit of the Lenders; (l) it does
not arise out of transactions with any employee, officer, agent,
director, stockholder or affiliate of any Borrower; (m) it is
payable to the applicable Borrower; (n) it does not arise out of
a bill and hold sale prior to shipment or a sale to any Account
Debtor to whom the applicable Borrower is indebted; (o) it is net
of any returns, discounts, claims, credits and allowances; (p) if
the Account arises out of contracts between the applicable
Borrower and a Governmental Authority, such Borrower has so
notified the Servicing Agent, in writing, prior to the creation
of such Account and, if the Required Lenders so request, there
has been compliance with any governmental notice or approval
requirements, including without limitation, compliance with the
Federal Assignment of Claims Act; provided, however, the Account
Debtor may be a Governmental Authority without complying with the
requirements of this clause (p) with Accounts outstanding at any
time of up to an aggregate maximum amount for all such
Governmental Authorities of $1,000,000; (q) it is a good and
valid Account representing an undisputed bona fide indebtedness
incurred by the Account Debtor therein named, for a fixed sum as
set forth in the invoice relating thereto with respect to an
unconditional sale and delivery upon the stated terms of goods
sold by the applicable Borrower, or work, labor and/or services
rendered by the applicable Borrower; (r) the Account shall have
arisen from the bona fide sale of goods or provision of services,
which goods or services have been provided to an Account Debtor
on an absolute sale basis, are not shipped or delivered or
provided on a consignment, approval, bill and hold, or sale-or-
return basis (in each case except to the extent the goods
provided on such basis are finally sold), are not subject to any
pre-arranged repurchase or return agreement or arrangement that
is effective on the date of determination of eligibility, and the
Account Debtor has not refused to accept or revoked acceptance of
such goods or services; and such sale of goods or provision of
services has been completed in accordance with terms and
provisions contained in any documents related thereto; (s) the
Account Debtor on such Account is not bankrupt, insolvent or no
longer actively engaged in business; (t) the Account is a valid,
legally enforceable obligation of the Account Debtor; (u) the
Account does not arise out of the provisions of trial services or
delivery of samples or trial merchandise to customers or Account
Debtors; and (v) it is otherwise satisfactory to the Required
Lenders as determined in good faith by the Required Lenders in
the reasonable exercise of their discretion.
"Environmental Laws" means, any and all federal, state,
local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or other governmental
restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment including, without
limitation, ambient air, surface water, ground water, or land, or
otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes.
"ERISA" means, the Employee Retirement Income Security
Act of 1974, as amended from time to time, including any rules
and regulations promulgated thereunder.
"ERISA Affiliate" means, any corporation or trade or
business which is a member of any group of organizations
(i) described in Section 414(b) or (c) of the Code of which a
Borrower is a member, or (ii) solely for purposes of potential
liability under Section 302(c)(11) of ERISA and Section
412(c)(11) of the Code and the lien created under Section 302(f)
of ERISA and Section 412(n) of the Code, described in Section
414(m) or (o) of the Code of which a Borrower is a member.
"Eurodollar Base Rate" means, with respect to any
Interest Period for a Eurodollar Loan, the arithmetic mean, as
calculated by the Agent, of the respective rates per annum
(rounded upwards, if necessary, to the nearest 1/16 of 1%) quoted
at approximately 11:00 a.m. London time by the principal London
branch of the Reference Lender two Banking Days prior to the
first day of such Interest Period for the offering to leading
banks in the London interbank market of Dollar deposits in
immediately available funds, for a period, and in an amount,
comparable to the Interest Period and principal amount of the
Eurodollar Loan which shall be made by such Reference Lender and
outstanding during such Interest Period.
"Eurodollar Loan" means, any Loan when and to the
extent the interest rate therefor is determined on the basis of
the definition of "Eurodollar Base Rate."
"Eurodollar Rate" means, for any Eurodollar Loan for
any Interest Period therefor, a rate per annum (rounded upwards,
if necessary, to the nearest 1/100 of 1%) determined by the Agent
to be equal to the sum of the quotient of (i) the Eurodollar Base
Rate for such Loan for such Interest Period, divided by (ii) one
minus the Reserve Requirement for such Loan for such Interest
Period.
"Event of Default" has the meaning given such term in
Section 12.01.
"Excess Cash Flow" means, for any period, the sum of
Operating Cash Flow minus interest expense; minus state and
federal taxes minus Capital Expenditures made during such period
to the extent permitted hereunder; minus scheduled principal
payments of Funded Debt and without duplication scheduled
payments of Capital Lease obligations; plus (minus) increases
(decreases) in operating current liabilities (excluding short
term indebtedness for borrowed money or the current portion of
Funded Debt), including, but not limited to, changes in accounts
payable, accrued expenses and other current liabilities; minus
(plus) increases (decreases) in operating current assets
(excluding cash and each equivalents), including but not limited
to accounts receivable, inventory and other operating current
assets.
"Facility Documents" means, this Agreement, the Notes,
the Authorization Letter, the Lock Box Agreement, the Security
Documents, and any Letter of Credit application or reimbursement
agreement.
"Federal Funds Rate" means, for any day, the rate per
annum equal to the weighted average of the rates on overnight
federal funds transactions as published by the Federal Reserve
Bank of New York for such day (or for any day that is not a
Banking Day, for the immediately preceding Banking Day).
"First Closing Date" means March 16, 1995.
"Forfeiture Proceeding" means, any action, proceeding
or investigation affecting any of the Borrowers or any of their
Subsidiaries before any court, governmental department,
commission, board, bureau, agency or instrumentality, domestic or
foreign, or the receipt of notice by any such party that any of
them is a suspect in or a target of any governmental inquiry or
investigation, which may result in an indictment of any of them
or the seizure or forfeiture of a material portion of any of
their property.
"Funded Debt" means, the total of the Revolving Credit
Loans and the Term Loans.
"GAAP" means, generally accepted accounting principles
in the United States of America as in effect on December 31,
1994.
"Governmental Authority" means any nation or
government, any state or other political subdivision thereof, and
any entity exercising executive, legislative, judicial,
regulatory or administrative functions or pertaining to
government.
"Grantor" has the meaning given such term in the
Security Documents.
"Guarantor" means, each of Apparel, BAI, M&L, and
Mackintosh to the extent any such entity guarantees the
obligation of any other entity under this Agreement or any other
Facility Document.
"Interest Period" means with respect to any Eurodollar
Loan, the period commencing on the date such Loan is made,
converted from another type of Loan or renewed, as the case may
be, and ending, as the Borrowers may select pursuant to Section
2.07, on the numerically corresponding day in the first, second,
or third calendar month thereafter, provided that each such
Interest Period which commences on the last Banking Day of a
calendar month (or on any day for which there is no numerically
corresponding day in the appropriate subsequent calendar month)
shall end on the last Banking Day of the appropriate calendar
month.
"Law" means any federal, state, local or foreign
statute, law, rule, regulation, ordinance, order, code, policy or
rule of common law, now or hereafter in effect, and in each case
as amended, and any judicial or administrative interpretation
thereof by a Governmental Authority or otherwise, including any
judicial or administrative order, consent decree or judgment.
"Lending Office" means, for each Lender and for each
type of Loan, the lending office of such Lender (or of an
Affiliate of such Lender) designated as such for such type of
Loan on its signature page hereof or such other office of such
Lender (or of an Affiliate of such Lender) as such Lender may
from time to time specify to the Agent and the Borrowers as the
office by which its Loans of such type are to be made and
maintained.
"Letter of Credit" has the meaning specified in Section
3.01.
"Letter of Indemnity" has the meaning specified in
Section 4.01.
"Lien" means, any lien (statutory or otherwise),
security interest, mortgage, deed of trust, priority, pledge,
charge, conditional sale, title retention agreement, financing
lease or other encumbrance or similar right of others, or any
agreement to give any of the foregoing.
"Loan" means, the Revolving Credit Loans or Term Loans,
or both, all as the context may require.
"Lock Box Account" means the account(s) established and
maintained pursuant to the Lock Box Agreement.
"Lock Box Agreement" means the Lock Box Agreement in
the form of Exhibit D to be delivered by each Borrower under the
terms of this Agreement.
"M&L" means M&L International, Inc.
"Mackintosh" means Mackintosh of New England Co.
"Margin" means, (1) with respect to the Revolving
Credit Loans (a) with respect to that portion of the Revolving
Credit Loans which are equal to or less than the Collateral
Borrowing Base, 1% (100 basis points), and (b) with respect to
that portion of the Revolving Credit Loans which are greater than
the Collateral Borrowing Base, 1.25% (one hundred twenty-five
basis points), and (2) with respect to the Term Loans (a) which
are Variable Rate Loans, 2% (two hundred basis points), and (b)
which are Eurodollar Loans, 4.5% (four hundred fifty basis
points.
"Milberg" means Milberg Factors, Inc.
"Multiemployer Plan" means, a Plan defined as such in
Section 3(37) of ERISA to which contributions have been made by
the Borrowers or any ERISA Affiliate and which is covered by
Title IV of ERISA.
"Note" means, a promissory note of the Borrowers in the
form of Exhibit A-1 and A-2 hereto evidencing the Loans owed to a
Lender hereunder.
"Original Banks" means each of Chase, Corestates Bank,
N.A., The First National Bank of Boston, and NatWest Bank N.A.
"Outstanding Letter of Credit Obligations" means, at
any time, an amount equal to the sum, without duplication, of (1)
the aggregate unused face amount of all outstanding Letters of
Credit, (2) the aggregate amount of all unreimbursed obligations
on the Letters of Credit, (3) the aggregate amount of all
overdrafts created to satisfy any of the foregoing obligations,
and (4) any Letter of Credit fee due and payable.
"Outstanding Total Debt Obligations" means, at any
time, an amount equal to the sum of (a) the Outstanding Working
Capital Obligations, plus (b) the aggregate principal amount of
the outstanding Term Loans.
"Outstanding Working Capital Obligations" means, at any
time an amount equal to the sum, without duplication, of (a) the
aggregate principal amount of all outstanding Revolving Credit
Loans, (b) the aggregate unused face amount of, and all
unreimbursed obligations on, Letters of Credit, and (c) the
outstanding amount of all outstanding overdrafts created to
satisfy any of the foregoing (all reductions in overdrafts shall
first be applied to reduce overdrafts created to satisfy
obligations other than the obligations listed above).
"Participation" has the meaning specified in Section
5.01.
"PGBC" means, the Pension Benefit Guaranty Corporation
and any entity succeeding to any or all of its functions under
ERISA.
"Person" means, an individual, partnership,
corporation, business trust, joint stock company, trust,
unincorporated association, joint venture, governmental authority
or other entity of whatever nature.
"Plan" means, any employee benefit or other plan
established or maintained, or to which contributions have been
made, by the Borrowers or any ERISA Affiliate and which is
covered by Title IV of ERISA, other than a Multiemployer Plan.
"Prime Rate" means, that rate of interest from time to
time announced by the Reference Lender at its principal office as
its prime commercial lending rate.
"Principal Office" means, the principal office of the
Agent, presently located at 1 Chase Manhattan Plaza, New York,
New York 10081.
"Pro Rata Share" means (1) with respect to each
Lender's Revolving Credit Commitment, a fraction, the numerator
of which is such Lender's portion of the Revolving Credit
Commitments and the denominator of which is the total of all
Lenders' portions of the Revolving Credit Commitments, and (2)
with respect to each payment on the Loans, a fraction the
numerator of which is the outstanding principal amount of all
such Loans owed to such Lender and the denominator of which is
the outstanding principal amount of all such Loans owed to all
Lenders.
"Reconciliation Report" has the meaning specified in
Section 2.06.
"Reference Lender" means, The Chase Manhattan Bank
(National Association).
"Regulation D" means, Regulation D of the Board of
Governors of the Federal Reserve System.
"Regulation U" means, Regulation U of the Board of
Governors of the Federal Reserve System.
"Regulatory Change" means, with respect to any Lender,
any change after the date of this Agreement in United States
federal, state, municipal or foreign laws or regulations
(including without limitation Regulation D) or the adoption or
making after such date of any interpretations, directives or
requests applying to a class of lenders including such Lender of
or under any United States, federal, state, municipal or foreign
laws or regulations (whether or not having the force of law) by
any court or governmental or monetary authority charged with the
interpretation or administration thereof.
"Required Lenders" means, at any time while no Loans
are outstanding, Lenders having at least 66 and 2/3% of the
aggregate amount of the Revolving Credit Commitments and, at any
time while Loans are outstanding, Lenders holding at least 66 and
2/3% of the aggregate principal amount of the Loans.
"Reserve Requirement" means, for any Interest Period
for any Eurodollar Loan for any Interest Period therefor, the
daily average maximum rate at which reserves (including any
marginal, supplemental or emergency reserves) are required to be
maintained during such Interest Period under Regulation D by
member banks of the Federal Reserve System in New York City with
deposits exceeding $1,000,000,000 against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without
limiting the effect of the foregoing, the Reserve Requirement
shall reflect any other reserves required to be maintained by
such member banks by reason of any Regulatory Change against
(i) any category of liabilities which includes deposits by
reference to which the Eurodollar Base Rate for Eurodollar Loans
is to be determined as provided in the definition of "Eurodollar
Base Rate" in this Section 1.01 or (ii) any category of
extensions of credit or other assets which include Eurodollar
Loans.
"Revolving Credit Commitment" means, with respect to
each Lender, the obligation of such Lender to make its Revolving
Credit Loans under this Agreement in the aggregate principal
amount following, as such amount may be reduced or otherwise
modified from time to time:
The Chase Manhattan Bank, N.A.: $10,625,000;
The First National Bank of Boston: $10,625,000;
CoreStates Bank, N.A.: $10,625,000;
NatWest Bank N.A.: $10,625,000;
Milberg Factors, Inc. $ 7,500,000
Total: $50,000,000.
"Revolving Credit Facility" means the Revolving Credit
Loans made available to the Borrowers pursuant to the terms of
this Agreement.
"Revolving Credit Loan" has the meaning specified in
Section 2.01.
"Revolving Credit Loans Borrowing Base" means at any
time an amount equal to the total of (1) the Collateral Borrowing
Base, and to the extent the amount is a positive number plus, and
to the extent the number is a negative number minus the integer
of (2) the Revolving Credit Loans Permitted Overadvance. In
other words, as of each month end for which there is a negative
number for the Revolving Credit Permitted Overadvance (Month
End), the aggregate principal amount of outstanding Revolving
Credit Loans must be equal to or less than the Collateral
Borrowing Base less the amount of such Revolving Credit Loans
Permitted Overadvance (Month End).
"Revolving Credit Loans Permitted Overadvance" means
(1) on all days other than the last day of a month, the
applicable Revolving Credit Loans Permitted Overadvance (During
the Month), and (2) on the last day of a calendar month the
applicable Revolving Credit Loans Permitted Overadvance (End of
Month), provided, that, either or both such amounts may be
increased by the amount of any Discretionary Overadvance.
"Revolving Credit Loans Permitted Overadvance (During
the Month)" means the amount specified below for each day during
the month specified below other than the last day of the
applicable month:
[CAPTION]
<TABLE>
<S> <C>
Month Amount
January $ 0
February $ 0
March $ 5,750,000
April $ 10,000,000
May $ 12,500,000
June $ 14,750,000
July $ 13,750,000
August $ 11,000,000
September $ 4,000,000
October $ 0
November $ 0
December $ 0
</TABLE>
"Revolving Credit Loans Permitted Overadvance (Month
End)" means the amounts specified below for the last day of the
month specified below:
[CAPTION]
<TABLE>
<S> <C>
Month Amount
January ($ 9,000,000)
February ($ 7,500,000)
March $ 5,500,000
April $ 9,750,000
May $ 11,500,000
June $ 11,500,000
July $ 8,500,000
August $ 1,500,000
September ($ 2,500,000)
October ($ 7,500,000)
November ($10,000,000)
December ($11,000,000)
</TABLE>
For purposes of this definition, the numbers set forth above in
parenthesis are negative numbers.
"Revolving Credit Termination Date" means, March 31,
1997; provided that if such date is not a Banking Day, such date
shall be the next succeeding Banking Day (or, if such next
succeeding Banking Day falls in the next calendar month, the next
preceding Banking Day).
"Second Closing Date" means March 28, 1996.
"Security Agreements" means the Security Agreement
(Apparel), the Security Agreement (BAI), the Security Agreement
(M&L), and the Security Agreement (Mackintosh).
"Security Agreement (Apparel)" means, the security
agreement delivered by Apparel on the First Closing Date, as
amended by the Amendment to Security Agreement delivered by
Apparel on the Second Closing Date under the terms of this
Agreement.
"Security Agreement (BAI)" means, the security
agreement delivered by BAI on the First Closing Date, as amended
by the Amendment to Security Agreement delivered by BAI on the
Second Closing Date under the terms of this Agreement.
"Security Agreement (M&L)" means, the security
agreement delivered by M&L on the First Closing Date, as amended
by the Amendment to Security Agreement delivered by M&L on the
Second Closing Date under the terms of this Agreement.
"Security Agreement (Mackintosh)" means, the security
agreement delivered by Mackintosh on the First Closing Date, as
amended by the Amendment to Security Agreement delivered by
Mackintosh on the Second Closing Date under the terms of this
Agreement.
"Servicing Agent Account" means an account designated
by the Servicing Agent which is maintained at the Agent.
"Servicing Agent Funding Amounts" has the meaning
specified in Section 2.06.
"Security Documents" means, each of the Security
Agreements and the Trademark Assignments.
"Significant Agreement" means, each of, (a) the amended
and restated management agreement between Apparel and Trivest,
Inc. dated as of November 30, 1994; (b) the Indenture to First
Union National Bank of Florida dated as of December 5, 1989;
(c) the license agreement dated September 16, 1994 between M & L
International, Inc. and Oshkosh B'Gosh, Inc.; and (d) any other
agreement which would, should a Borrower fail to receive the
benefits thereof, have a material adverse effect upon the
business, operations or prospects of the Borrowers.
"Subordinated Debt" means all debt evidenced by the
Subordinated Notes.
"Subordinated Notes" means the 13% Subordinated Notes
of Apparel (formerly known as Biscayne Holdings, Inc.) due
December 15, 1999.
"Subsidiary" means, with respect to any Person, any
corporation or other entity of which at least a majority of the
securities or other ownership interests having ordinary voting
power (absolutely or contingently) for the election of directors
or other persons performing similar functions are at the time
owned directly or indirectly by such Person, except that the
following shall not be treated as a Subsidiary of any Borrower
(a) Hartwell Sports, Inc., unless the Borrowers shall directly
have a majority ownership of the voting rights, and (b) the
foreign and inactive subsidiaries shown on Schedule I.
"Tangible Net Worth" means, with respect to any Person,
at any date of determination thereof, the excess of total assets
of such Person over total liabilities of such Person, excluding,
however, from the determination of total assets: all intangible
assets including without limitation, non compete contracts,
employment contracts, capitalized deferred or prepaid transaction
or acquisition cost, capitalized interest, debt discount and
expenses, goodwill, patents, trademarks, copyrights, franchise,
license and other intangible assets, all as determined in
accordance with GAAP.
"Term Loan" means, with respect to each Lender, the
amount specified below for such Lender:
[CAPTION]
<TABLE>
<S> <C>
The Chase Manhattan Bank, N.A.: $1,328,125;
The First National Bank of Boston: $1,328,125;
CoreStates Bank, N.A.: $1,328,125;
NatWest Bank N.A.: $1,328,125;
Milberg Factors, Inc. $ 937,500;
Total: $6,250,000.
</TABLE>
"Third Party" means: any Person holding Subordinated
Debt; or any other Person responsible for or providing credit
support for the obligations of the Borrowers under the Facility
Documents.
"Trademark Assignments" means, the Security Agreement
and Mortgage Trademarks delivered by each of BAI and M&L on the
First Closing Date under the terms of this Agreement.
"Trivest Letter Agreement" means the Letter Agreement
substantially in the form of Exhibit E hereto, delivered by
Trivest, Inc. under the terms of this Agreement.
"Unfunded Benefit Liabilities" means, with respect to
any Plan, the amount (if any) by which the present value of all
benefit liabilities (within the meaning of Section 4001(a)(16) of
ERISA) under the Plan exceeds the fair market value of all Plan
assets allocable to such benefit liabilities, as determined on
the most recent valuation date of the Plan and in accordance with
the provisions of ERISA for calculating the potential liability
of a Borrower or any ERISA Affiliate under Title IV of ERISA.
"Uniform Customs and Practice" means, with respect to
any Letter of Credit, the Uniform Customs and Practice for
Documentary Credits (1993 Revision) International Chamber of
Commerce Publication 500, or any subsequent revision adhered to
by Chase on the date such Letter of Credit is issued.
"Variable Rate" means, for any day, the higher of
(a) the Federal Funds Rate for such day plus 1/2 of 1% and
(b) the Prime Rate for such day.
"Variable Rate Loan" means, any Loan when and to the
extent the interest rate for such Loan is determined in relation
to the Variable Rate.
"Warrant" means the warrant substantially in the form
of Exhibit F hereto, delivered by Apparel under the terms of this
Agreement.
"Working Capital Borrowing Base" means at any time an
amount equal to the total of (1) the Collateral Borrowing Base,
and to the extent the amount is a positive number plus, and to
the extent the number is a negative number minus the integer of
(2) the Working Capital Permitted Overadvance. In other words,
as of each month end for which there is a negative number for the
Working Capital Permitted Overadvance (Month End), the aggregate
principal and face amount of the Outstanding Working Capital
Obligations must be equal to or less than the Collateral
Borrowing Base less the amount of such Working Capital Permitted
Overadvance (Month End).
"Working Capital Permitted Overadvance" means (1) on
all days during a calendar month other than the last day of such
month, the applicable Working Capital Permitted Overadvance
(During the Month), and (2) on the last day of a calendar month
the applicable Working Capital Permitted Overadvance (End of
Month), provided, that, either or both such amounts may be
increased by the amount of any Discretionary Overadvance.
"Working Capital Permitted Overadvance (During the Month)"
means the amounts specified below for each day during the month
specified below other than the last day of the applicable month:
[CAPTION]
<TABLE>
<S> <C>
Month Amount
January $ 0
February $ 0
March $ 21,400,000
April $ 28,600,000
May $ 34,000,000
June $ 36,700,000
July $ 32,900,000
August $ 25,500,000
September $ 11,200,000
October $ 4,000,000
November $ 0
December $ 0
</TABLE>
"Working Capital Permitted Overadvance (Month End)"
means, the amounts specified below for the last day of the month
specified below:
[CAPTION]
<TABLE>
<S> <C>
Month Amount
January $ (1,500,000)
February $ 2,500,000
March $ 21,200,000
April $ 28,400,000
May $ 33,500,000
June $ 33,500,000
July $ 27,700,000
August $ 15,900,000
September $ 4,700,000
October $ 0
November ($ 2,800,000)
December ($ 4,600,000)
</TABLE>
For purposes of this definition, the numbers set forth above in
parentheses are negative numbers.
Section 1.02. ACCOUNTING TERMS. All accounting terms
not specifically defined herein shall be construed in accordance
with GAAP, and all financial data required to be delivered
hereunder shall be prepared in accordance with GAAP.
Section 1.03. RULES OF CONSTRUCTION. When used in
this Agreement: (1) "or" is not exclusive; (2) a reference to a
Law includes any amendment or modification to such Law; (3) a
reference to a Person includes its permitted successors and
permitted assigns; and (4) a reference to an agreement,
instrument or document shall include such agreement, instrument
or document as the same may be amended, modified or supplemented
from time to time in accordance with its terms and as permitted
by the Facility Documents.
ARTICLE 2. THE LOANS.
Section 2.01 REVOLVING CREDIT LOANS. Subject to the
terms and conditions of this Agreement, each of the Lenders
severally agrees to make loans (the "Revolving Credit Loans") pro
rata according to each Lender's Pro Rata Share of the Revolving
Credit Commitment, to the Borrowers from time to time from and
including the First Closing Date to and including the Revolving
Credit Termination Date, provided that (i) the amount of each
Lender's Revolving Credit Loans outstanding at any time does not
exceed such Lender's Revolving Credit Commitment, (ii) the amount
of the Revolving Credit Loans outstanding at any time does not
exceed the Revolving Credit Loans Borrowing Base, (iii) the
amount of the Revolving Credit Loans outstanding at any time does
not exceed the Revolving Credit Commitment less the Outstanding
Letter of Credit Obligations, and (iv) the amount of the
Outstanding Working Capital Obligations outstanding at any time
does not exceed the Working Capital Borrowing Base.
Notwithstanding the foregoing, the Borrowers may
request that the Lenders make, and the Lenders may in their sole
and absolute discretion agree to make, Revolving Credit Loans
where after giving effect to such Loans the Borrowers would not
be in compliance with items (ii), (iii) and (iv) in the proviso
above. Based upon instructions given by all of the Lenders to
the Servicing Agent, the Servicing Agent may agree that such
Revolving Credit Loans will be made up to an amount specified to
the Servicing Agent by all of the Lenders. However, the
Borrowers agree that making of any such Revolving Credit Loans
does not mean that the Lenders are required to make such Loans in
the future. For purposes of this Agreement, the term
"Discretionary Overadvance" means the amount of the Revolving
Credit Loans authorized by the Servicing Agent in accordance with
the first sentence of this paragraph. The Borrowers agree that,
notwithstanding any other provision of this Agreement, the
portion of the Revolving Credit Loans which are Discretionary
Overadvances are due and payable on demand.
The Revolving Credit Loans will be outstanding as Variable Rate
Loans.
Section 2.02. TERM LOANS. Each of the Lenders
acknowledges that the Term Loan was made under and in accordance
with the terms of the 1995 Credit Agreement and the Term Loan is
outstanding on the Second Closing Date.
The Term Loan shall be due and payable in four installments, on
each Amortization Date as follows
[CAPTION]
<TABLE>
<S> <C>
Date Amount
March 31, 1997 $1,750,000
March 31, 1998 $2,000,000
March 31, 1999 $2,500,000
</TABLE>
The Term Loan will be outstanding as either Variable Rate Loans,
or Eurodollar Loans (each a "type" of Loan). Each type of Loan
of each Lender shall be made and maintained at such Lender's
Lending Office for such type of Loan.
Section 2.03. THE NOTES. The Loans of each Lender
shall be evidenced by promissory Notes in favor of such Lender in
the form of Exhibits A-1 and A-2, dated the Second Closing Date,
duly completed and executed by the Borrowers.
Section 2.04. PURPOSE. On and after the Second
Closing Date, the Borrowers shall use the proceeds of the
Revolving Credit Loans for working capital. The proceeds of the
Term Loans were used to repay Debt incurred in connection with
the acquisition of M&L by Apparel. Such proceeds shall not be
used for the purpose, whether immediate, incidental or ultimate,
of purchasing or carrying "margin stock" within the meaning of
Regulation U.
Section 2.05. BORROWING PROCEDURES. Until two (2)
Banking Days after the Servicing Agent gives notice to the
Borrowers and the Lenders in accordance with Section 2.06 that
such Servicing Agent will no longer provide Servicing Agent
Funding Amounts, the applicable Borrower shall give the Servicing
Agent notice of each borrowing of a Revolving Credit Loan to be
made hereunder as provided in Section 2.11. Not later than 2:00
p.m. New York City time on the date of such borrowing, each
Lender shall, through its Lending Office and subject to the
conditions of this Agreement, make the amount of the Loan to be
made by it on such day available to the Borrower through the
Servicing Agent's advancing of funds on behalf of such Lender as
provided for in Section 2.06. The amount to be received by the
applicable Borrower from the Servicing Agent shall, subject to
the conditions of this Agreement, be made available to the
applicable Borrower, in immediately available funds, by the
Servicing Agent crediting an account of such Borrower designated
by such Borrower and maintained with the Agent at the Principal
Office.
On and after the third Banking Day after the Servicing
Agent gives notice to the Borrowers and the Lenders in accordance
with Section 2.06 that such Servicing Agent will no longer
provide Servicing Agent Funding Amounts, the applicable Borrower
shall give the Agent notice of each borrowing of a Revolving
Credit Loan to be made hereunder as provided in Section 2.11. Not
later than 2:00 p.m. New York City time on the date of such
borrowing, each Lender shall, through its Lending Office and
subject to the conditions of this Agreement, make the amount of
the Loan to be made by it on such day available to the Borrower
by delivering such funds to the Agent at the Principal Office and
in immediately available funds for the account of the applicable
Borrower. The amount to be received by the applicable Borrower
from the Agent shall, subject to the conditions of this
Agreement, be made available to the applicable Borrower, in
immediately available funds, by the Agent crediting an account of
such Borrower designated by such Borrower and maintained with the
Agent at the Principal Office.
Section 2.06. Funding of Revolving Credit Loans by
Servicing Agent. Until two (2) Banking Days after the Servicing
Agent gives notice to the Borrowers and the Lenders in accordance
with this Section that the Servicing Agent will no longer provide
Servicing Agent Funding Amounts, the Servicing Agent and each of
the Lenders hereby agree that the Servicing Agent will fund each
such Lender's Revolving Credit Loans on behalf of and for the
account of each such Lender, including, without limitation,
Revolving Credit Loans made to satisfy reimbursement obligations
to be paid under Letters of Credit; provided, however, that if
the Servicing Agent shall receive prior written notice from a
Lender, it will not fund such Revolving Credit Loans on behalf of
such Lender. All Revolving Credit Loans so funded by the
Servicing Agent are hereinafter referred to as the "Servicing
Agent Funding Amounts". Notwithstanding anything to the contrary
in this Agreement, the Lenders agree that the Servicing Agent
shall apply all payments of Revolving Credit Loans against all
the Servicing Agent Funding Amounts and then against the
remainder of the Revolving Credit Loans, regardless of whether
the payment is from any Borrower or any Guarantor or through
realization upon Collateral.
At any time upon two (2) Banking Days prior written
notice to each of the Borrowers and each of the Lenders the
Servicing Agent may, in its sole discretion, terminate its
agreement with the Lenders to provide Servicing Agent Funding
Amounts on behalf of each of the Lenders.
The Servicing Agent hereby agrees promptly to notify
each Lender of each of the following (whether the Servicing Agent
was so advised orally or in writing): (1) a Lender has told the
Servicing Agent to no longer fund Servicing Agent Funding Amounts
on behalf of such Lender; (2) a Lender has notified the Servicing
Agent that it believes or has reason to believe that a Borrower
is not able to fulfill at the time it requests a Revolving Credit
Loan, Letter of Credit or Letter of Indemnity any of the
conditions precedent set forth in Article 7; and (3) a Lender
advises the Servicing Agent that there is or may be an
outstanding Default or Event of Default. The Lenders acknowledge
and agree that the foregoing is not intended to apply to internal
communications within Milberg when it is acting both as Servicing
Agent and Lender.
Each of the Lenders agrees promptly to notify each of
the other Lenders if: (1) it has told the Servicing Agent to no
longer fund Servicing Agent Funding Amounts on its behalf; (2) it
has notified the Servicing Agent that it believes or has reason
to believe that a Borrower is not able to fulfill any of the
conditions precedent in Article 7 at the time it requests a
Revolving Credit Loan, Letter of Credit or Letter of Indemnity,
or (3) it advises the Servicing Agent that there is or may be an
outstanding Default or Event of Default.
On a weekly basis, the Servicing Agent shall deliver to
each of the Lenders a reconciliation report ("Reconciliation
Report") showing, for the period since the last Reconciliation
Report (i) the aggregate Servicing Agent Funding Amounts
attributable to each Lender, (ii) the aggregate amount of all
collections and prepayments of the Revolving Credit Loans, and
(iii) the aggregate principal amount outstanding under the
Revolving Credit Facilities. In each such Reconciliation Report,
the Servicing Agent will credit against amounts payable by each
of the Lenders in respect of any new Servicing Agent Funding
Amounts attributable to such Lender therein reported, the amount
of all credits or other collections attributable to such Lender
therein reported. If the Servicing Agent Funding Amounts
attributable to a Lender exceeds the credits or other collections
attributable to such Lender, the deficiency will forthwith be
delivered by wire transfer by such Lender to the Servicing Agent
and if the credits or other collections attributable to such
Lender exceed the Servicing Agent Funding Amounts attributable to
such Lender, the excess will forthwith be delivered by wire
transfer by the Servicing Agent to such Lender.
Each of the Lenders agrees that its Pro Rata Share of
the Servicing Agent Funding Amounts will be funded on behalf of
and for the account of such Lender, and shall be reimbursed by
such Lender to the Servicing Agent on demand. The Servicing
Agent and each of the Lenders agree that to the extent the
Servicing Agent Funding Amount for such Lender is a positive
amount for a day that such Lender will pay the Servicing Agent
for advancing funds on Lender's behalf an amount equal to the
rate of interest the Borrowers are required to pay on the
Servicing Agent Funding Amount provided by the Servicing Agent
for such Lender. The Servicing Agent and each of the Lenders
agree that to the extent the Servicing Agent Funding Amount for
such Lender is a negative amount for a day that the Servicing
Agent will pay such Lender an amount equal to the rate of
interest the Borrowers would be required to pay on such Lender's
Revolving Credit Loans in an amount equal to the integer of such
negative amount. For purposes of this calculation the Servicing
Agent Funding Amount is negative to the extent that, by reason of
a payment or prepayment of the Revolving Credit Loans through the
Servicing Agent Account pursuant to Sections 2.07, 2.08 or 2.12
or otherwise, on any day the outstanding Revolving Credit Loans
are less than the outstanding Revolving Credit Loans as of the
most recent date the Servicing Agent and the Lenders reconciled
their positions in accordance with the prior paragraph. The
Servicing Agent and the Lenders agree that notwithstanding that
the Servicing Agent may advance funds to a Borrower for the
account of a Lender that the Lender is entitled to all interest
due and owing from all Borrowers on such Revolving Credit Loans.
The Servicing Agent will not fund a Revolving Credit
Loan to a Borrower on behalf of any Lender (other than amounts
required to be paid under Letters of Credit or Letters of
Indemnity) if the Servicing Agent has actual knowledge that at
the time of making such Revolving Credit Loan and after giving
effect to such Revolving Credit Loan, the amount of the Revolving
Credit Loans exceeds the Revolving Credit Commitment, the amount
of the Outstanding Working Capital Obligations exceeds the
Working Capital Borrowing Base, or the amount of the Revolving
Credit Loans exceeds the Revolving Credit Loans Borrowing Base.
For purposes of this paragraph and Section 2.17, the Collateral
Borrowing Base, the Working Capital Borrowing Base, and the
Revolving Credit Loans Borrowing Base shall be conclusively
determined by the Servicing Agent in its sole discretion, and,
without limiting the generality of the foregoing, (i) the
Servicing Agent may in its sole discretion (but shall not be
obligated to) assume that all Accounts designated by the
Borrowers as Eligible Accounts are Eligible Accounts (other than
an Account as to which the Servicing Agent, as a result of its
normal verification process, has actual knowledge that such
Account is not an Eligible Account), (ii) to the extent that the
definition of Eligible Account permits the Required Lenders to
make any determination as to the eligibility of Accounts, the
Servicing Agent may in its sole discretion (but shall not be
obligated to) make such determinations; (iii) the Servicing Agent
shall bear no responsibility for the appropriate determination of
any adjustment to the Collateral Borrowing Base, the Working
Capital Borrowing Base or the Revolving Credit Loans Borrowing
Base resulting from returns of merchandise, deductions, or other
claims or setoffs made by any customers of any of the Borrowers
or any other disputes, chargebacks or similar adjustments or any
subsequent credit deterioration of an Account Debtor, and (iv)
the Servicing Agent shall not be responsible for accounting for
Letters of Credit unless the Servicing Agent shall have received
written notice of all outstanding Letters of Credit and all
requested Letters of Credit.
With respect to all Revolving Credit Loans, on behalf
of and for the account of any Borrower funded by the Servicing
Agent pursuant to this Section, each Lender is only responsible
for its Pro Rata Share of such Revolving Credit Loans.
Section 2.07. PREPAYMENTS AND CONVERSIONS. The
Borrowers shall have the right to make prepayments of principal
of any Loan at any time or from time to time; provided that: (a)
except as provided in Section 2.12, the applicable Borrower shall
give both Agents notice of each such prepayment as provided in
Section 2.11, and (b) prepayments of the Term Loan can only be
made on the last day of the applicable Interest Period (except as
provided in Section 2.08) and shall be applied to the
installments of principal in the inverse order of their
maturities. Prepayments of the Term Loan may not be reborrowed.
The Borrowers shall have the right to make or convert
one type of Term Loans into another type, at any time or from
time to time; provided that: (a) the applicable Borrower shall
give the Agent notice of each such conversion as provided in
Section 2.11; (b) Eurodollar Loans may be prepaid or converted
only on the last day of an Interest Period for such Loans and, in
the case of conversion to a Eurodollar Loan, only if no Default
or Event of Default is then continuing.
Any such prepayment of the Term Loan shall include all
accrued interest to the date of such prepayment on the amount so
prepaid.
Section 2.08. MANDATORY PREPAYMENTS. (a) To the
extent that (i) the Outstanding Working Capital Obligations shall
at any time exceed the lesser of (A) the Revolving Credit
Commitment or (B) the then effective Working Capital Borrowing
Base or (ii) the Revolving Credit Loans shall at any time exceed
the then effective Revolving Credit Loans Borrowing Base, the
Borrowers shall within one (1) day after becoming aware of such
excess prepay the Outstanding Working Capital Obligations or the
Revolving Credit Loans, as the case may be, in the amount of such
excess.
(b) Within ten (10) days after the availability of the
quarterly financial statements for March 31 required to be
delivered pursuant to Section 9.09(b) but in any event not later
than June 1 of each year, the Borrowers shall prepay the Term
Loans in an amount equal to 50% of the amount of the Excess Cash
Flow for 12 month period ended March 31 of such year. The
prepayment under this subsection shall be applied 50% to the
scheduled installments of principal in the inverse order of
maturity and 50% to the next scheduled installment of principal.
(c) Within five (5) Banking Days of receipt by Apparel
of any cash proceeds (including any cash received by way of
deferred payment pursuant to a note receivable or otherwise)
remaining after deducting all reasonable costs of and cash taxes
related to the sale or redemption of stock of Hartwell Sports,
Inc., Apparel shall prepay the Revolving Credit Loans in an
amount equal to one hundred percent (100%) of such proceeds.
(d) Within ten (10) Banking Days of receipt by any
Borrower of any cash proceeds (including any cash received by way
of deferred payment pursuant to a note receivable or otherwise)
remaining after deducting all reasonable costs of a sale,
transfer or other disposition from the sale, transfer or other
disposition of any equity interest in or assets (other than
inventory disposed of in the ordinary course of business) of any
Person owned by such Borrower, such Borrower shall first prepay
the Revolving Credit Loans in an amount equal to the first
$100,000 of such proceeds, second prepay the Term Loans in an
amount equal to one hundred percent (100%) of such proceeds and
such prepayments shall be applied in inverse order of maturity,
and third, after the Revolving Credit Loans have been prepaid in
an amount equal to $100,000 and the Term Loans are repaid in full
prepay the Revolving Credit Loans and reduce the Revolving Credit
Commitment in an amount equal to the remaining proceeds.
(e) Within five (5) days of receipt by any Borrower of
any tax refund, such Borrower shall prepay the Revolving Credit
Loans in an amount equal to one hundred percent (100%) of the
amount of such tax refund.
(f) Any prepayment of the Term Loan under this Section
shall include all accrued interest to the date of such prepayment
on the amount so prepaid as well as any and all compensation
required to be paid in accordance with Section 6.05.
(g) Except as specifically set forth at the end of
clause (d) above, any prepayment of the Revolving Credit Loans
under this Section shall not reduce the amount of the Revolving
Credit Commitment.
The mandatory prepayments required under subsection (a) shall be
applied as follows: first, to unreimbursed drawings under Letters
of Credit, second, to Revolving Loans outstanding, third to
unreimbursed drawings under Letters of Indemnity, and fourth to
be held as cash collateral for the Borrowers' obligations under
the Facility Documents.
Section 2.09. INTEREST PERIODS; RENEWALS. (a) In the
case of each Eurodollar Loan, the Borrowers shall select an
Interest Period (provided no Default of Event of Default is then
continuing) of any duration in accordance with the definition of
Interest Period in Section 1.01, subject to the following
limitations: (i) no Interest Period on the Term Loans may extend
beyond an Amortization Date unless, after giving effect thereto,
the aggregate principal amount of the Eurodollar Loans having
Interest Periods which end after such Amortization Date shall be
equal to or less than the principal amount to be outstanding
hereunder after such Amortization Date; (ii) notwithstanding
clause (i) above, no Interest Period shall have a duration less
than one month, and if any such proposed Interest Period would
otherwise be for a shorter period, such Interest Period shall not
be available; (iii) if an Interest Period would end on a day
which is not a Banking Day, such Interest Period shall be
extended to the next Banking Day, unless, such Banking Day would
fall in the next calendar month in which event such Interest
Period shall end on the immediately preceding Banking Day; and
(iv) no more than twelve Interest Periods of each Lender may be
outstanding at any one time.
(b) Upon notice to the Agent as provided in Section
2.11, the Borrowers may (provided no Default of Event of Default
is then continuing) renew any Eurodollar Loan on the last day of
the Interest Period therefor as the same type of Loan with an
Interest Period of the same or different duration in accordance
with the limitations provided above and in Section 2.07. If the
Borrowers shall fail to give notice to the Agent of such a
renewal, such Eurodollar Loan shall automatically become a
Variable Rate Loan on the last day of the current Interest
Period; provided that the foregoing shall not prevent the
conversion of any type of Eurodollar Loan into another type of
Loans in accordance with Section 2.07.
Section 2.10. CHANGES OF REVOLVING CREDIT COMMITMENTS.
The Borrowers shall have the right to reduce or terminate the
amount of unused Revolving Credit Commitments at any time or from
time to time, provided that: (a) the Borrowers shall give notice
of each such reduction or termination to both the Agents as
provided in Section 2.11; and (b) each partial reduction shall be
in an aggregate amount at least equal to $1,000,000; provided,
further, that the Revolving Credit Commitment cannot be reduced
to zero unless the Term Loan has been prepaid in full. The
Revolving Credit Commitments once reduced or terminated may not
be reinstated. Notwithstanding any other provision of this
Agreement, the Revolving Credit Commitments shall automatically
be reduced in an amount equal to the principal amount of all
mandatory prepayments of the Revolving Credit Loans in accordance
with the provisions of Section 2.08(d).
Section 2.11. CERTAIN NOTICES. Notices by the
Borrowers to the Servicing Agent of each borrowing pursuant to
Section 2.05 shall be irrevocable and shall be effective only if
received by the Servicing Agent not later than 11:00 a.m. (New
York time) on the Banking Day of the requested Revolving Credit
Loan. Notices by the Borrowers of each prepayment pursuant to
Section 2.07 or 2.08 and each reduction or termination of the
Revolving Credit Commitments pursuant to Section 2.10 shall be
irrevocable and shall be effective only if received by both
Agents not later than 12:00 noon New York time one Banking Day
prior thereto (except for notice of prepayments which may be
given on the same Banking Day); and (b) in the case of reductions
or termination of the Revolving Credit Commitments, given not
later than 12:00 noon three Banking Days prior thereto. Each
such notice shall specify the Loans to be borrowed or prepaid,
the amount thereof, and the date of the borrowing or prepayment.
Each such notice of reduction or termination shall specify the
amount of the Revolving Credit Commitments to be reduced or
terminated. Notices by the Borrowers to the Agent of each
conversion pursuant to Section 2.06, 2.07 and each renewal
pursuant to Section 2.09, shall be irrevocable and shall be
effective only if received by both Agents not later than 12:00
noon New York time four Banking Days prior thereto. Each such
notice shall specify the Loans to be converted or renewed and the
amount (subject to Section 2.13) and type of the Loans to be
converted, or renewed (and, in the case of a conversion, the type
of Loans to result from such conversion and, the Interest Period
therefor) and the date of the conversion or renewal (which shall
be a Banking Day). The applicable Agent shall promptly notify
the Lenders of the contents of each such notice. Notice to both
Agents of termination or reduction of the Revolving Credit
Commitments shall be in writing signed by all the Borrowers.
Section 2.12. COLLECTION OF ACCOUNTS. Each Borrower
will direct that all of its customers remit all of their payments
on any and all Accounts owed to such Borrower to the Lock Box
Account. In addition, any payments on any Accounts received
directly by a Borrower shall be remitted by such Borrower to the
Lock Box Account. At the close of business on each Banking Day,
the Agent will transfer all collected funds in the Lock Box
Account to the Servicing Agent Account and on the following
Banking Day, the Servicing Agent will apply all such funds
(i) first, to the payment of any amounts owed or due to the
Servicing Agent under this Agreement (including, without
limitation, any fees, costs and expenses to which the Servicing
Agent is entitled under this Agreement) and (ii) thereafter, to
the prepayment of the Revolving Credit Loans.
Section 2.13. MINIMUM AMOUNTS. Prepayments or
conversions which result in the prepayment or conversion of all
Loans of a particular type, or conversions made pursuant to
Section 6.04, shall be in an amount at least equal to $2,000,000
in the aggregate for all Lenders for Eurodollar Loans
(borrowings, prepayments, conversions or renewals of or into
Loans, having different Interest Periods at the same time
hereunder to be deemed separate borrowings, prepayments,
conversions and renewals for the purposes of the foregoing, one
for each type of Interest Period).
Section 2.14. INTEREST. (a) Interest shall accrue on
the outstanding and unpaid principal amount of each Loan for the
period from and including the date of such Loan to but excluding
the date such Loan is due at the following rates per annum: (i)
for a Variable Rate Loan, a variable rate per annum equal to the
Variable Rate plus the Margin, or (ii) for a Eurodollar Loan, a
fixed rate equal to the Eurodollar Rate plus the Margin. Any
overdraft created in connection with satisfying any of the
Outstanding Working Capital Obligations shall bear interest at
the Default Rate. If the principal amount of any Loan and any
other amount payable by any Borrower hereunder or under the Notes
shall not be paid when due (at stated maturity, by acceleration
or otherwise), interest shall accrue on such amount to the
fullest extent permitted by Law from and including such due date
to but excluding the date such amount is paid in full at the
Default Rate.
(b) The interest rate on each Variable Rate Loan shall
change when the Variable Rate changes and interest on each such
Loan shall be calculated on the basis of a year of 360 for the
actual number of days elapsed. Interest on each Eurodollar Loan
shall be calculated on the basis of a year of 360 days for the
actual number of days elapsed. Promptly after the determination
of any interest rate provided for herein or any change therein,
the Agent shall notify the Borrowers and the Lenders.
(c) Accrued interest shall be due and payable in
arrears upon any payment of principal or conversion (with respect
to the Term Loan only), and (i) for each Variable Rate Loan, on
the last day of each month, commencing the first such date after
such Loan and (ii) for each Eurodollar Loan, on the last day of
the Interest Period with respect thereto; provided that interest
accruing at the Default Rate shall be due and payable from time
to time on demand of the Agent.
(d) For purposes of this Agreement, each advance made
as part of the Servicing Agent Funding Amount is a Revolving
Credit Loan and as such shall be subject to the terms and
provisions contained herein, including but limited to the terms
and provisions of this Section 2.14.
Section 2.15. FEES. (a) The Borrowers shall pay on
the Second Closing Date to the Agent for the account of the
Lenders (other than Milberg) a non-refundable fee equal to One
Hundred Fifty Thousand Dollars ($150,000). Each such Lender
shall be entitled to twenty-five percent (25%) of such fee.
(b) The Borrowers shall pay to the Agent as
compensation for its services hereunder as Agent a non-refundable
agency fee in the amount of $50,000 per annum. This agency fee
shall be due and payable on the First Closing Date and on each
anniversary thereof during the term of this Agreement.
(c) The Borrowers shall pay the following fees to the
Servicing Agent as compensation for its services hereunder as
Servicing Agent: (i) a non-refundable annual fee in the amount of
Fifty Thousand Dollars ($50,000), due and payable on the Second
Closing Date and on each anniversary thereof during the term of
this Agreement; and (ii) unless and until the Servicing Agent has
resigned or been removed in accordance with Section 13.10, an
additional fee in the amount of two-tenths of one percent (.20%)
of the gross sales less discounts of all of the Borrowers, due
and payable as such sales are made. The minimum aggregate
additional fee payable under clause (ii) for each year of this
Agreement shall be One Hundred Seventy-Five Thousand Dollars
($175,000), which, to the extent of any deficiency based on gross
sales less discounts (calculated on a cumulative basis, assuming
a minimum rate of Fourteen Thousand Five Hundred Eighty-Three
Dollars ($14,583) per month) shall be due and payable on the last
day of each month.
Section 2.16. PAYMENTS GENERALLY. All payments of the
Revolving Credit Loans on a date other than the Revolving Credit
Termination Date shall be made in Dollars in immediately
available funds not later than 11:00 am. New York City time (each
such payment made after such time on such date to be deemed made
on the next succeeding Banking Day) to the Servicing Agent
Account, and all such payments shall be for the account of the
Lenders. All payments under this Agreement on the Term Loans or
of the Revolving Credit Loan on the Revolving Credit Termination
Date shall be made in Dollars in immediately available funds not
later than 11:00 a.m. New York City time on the relevant dates
specified above (each such payment made after such time on such
due date to be deemed to have been made on the next succeeding
Banking Day) to the Agent's account number 900-9-000002
maintained at the Principal Office for the account of the
applicable Lending Office of each Lender. The Servicing Agent,
the Agent, or any Lender for whose account any such payment is to
be made, may (but shall not be obligated to) debit the amount of
any such payment which is not made by such time to any ordinary
deposit account of any Borrower with the Agent or such Lender, as
the case may be, and any Lender so doing shall promptly notify
both Agents. Except for payments of the Revolving Credit Loans
with the proceeds of Accounts of the Borrowers, the applicable
Borrower shall, at the time of making each payment under this
Agreement or the Notes, specify to the applicable Agent the
principal or other amount payable by the Borrowers under this
Agreement or the Notes to which such payment is to be applied
(and in the event that it fails to so specify, or if a Default or
Event of Default has occurred and is continuing, the Agent may
apply such payment as it may elect in its sole discretion
(subject to Section 13.17)). If the due date of any payment
under this Agreement or the Notes would otherwise fall on a day
which is not a Banking Day, such date shall be extended to the
next succeeding Banking Day and interest shall be payable for any
principal so extended for the period of such extension. Each
payment received by the Agent hereunder or under any Note for the
account of a Lender shall be remitted promptly (not later than
3:00 p.m. on the day received, if received prior to 11:00 a.m.)
to such Lender, in immediately available funds. Each payment
received by the Servicing Agent hereunder or under any Revolving
Credit Note for the account of a Lender shall be remitted to such
Lender, in immediately available funds, in accordance with the
provisions of Section 2.06.
Section 2.17. ADMINISTRATION AND SERVICING. The
Servicing Agent shall on behalf of the Lenders perform the
following servicing and administrative activities with respect to
the Revolving Credit Facility:
(a) on days on which the Servicing Agent receives
notice of a requested borrowing of a Revolving Credit Loan or
notice of a requested issuance or amendment of a Letter of
Credit, calculate (based upon the most recent information
available to the Servicing Agent) the Collateral Borrowing Base,
the Working Capital Borrowing Base, and the Revolving Credit
Loans Borrowing Base based on information provided to it by the
Borrowers (and on which the Servicing Agent is hereby authorized
to rely) and subject to and in accordance with the final sentence
of the seventh paragraph of Section 2.06;
(b) on days on which the Servicing Agent receives
notice of a requested borrowing of a Revolving Credit Loan
calculate whether after the making of such Revolving Credit Loan,
the aggregate principal amount of the Revolving Credit Loans
exceed the Revolving Credit Loans Borrowing Base (as calculated
pursuant to paragraph (a) above) or the Outstanding Working
Capital Obligations will exceed the Working Capital Borrowing
Base (as calculated pursuant to paragraph (a) above);
(c) on days on which the Servicing Agent receives
notice of a requested issuance or amendment of a Letter of
Credit, calculate, whether after the issuance or amendment of
such Letter of Credit, the Outstanding Working Capital
Obligations will exceed the Working Capital Borrowing Base (as
calculated pursuant to paragraph (a) above);
(d) no less frequently than twice each week, issue a
status report of the Borrowers' Accounts to each Lender based
upon the most recent sales and cash receipts journals provided by
the Borrowers to the Servicing Agent;
(e) upon notice to the Servicing Agent of any
Borrower's request for the issuance of a Letter of Credit for its
account request information from such Borrower as to the amount
and timing of orders that are to be filled with the goods to be
imported under such Letter of Credit;
(f) collect payments due to each of the Lenders under
the Revolving Credit Facility, and remit same to the appropriate
Lender in accordance with Section 2.06;
(g) notify each of the Lenders as to Revolving Credit
Loans to be made by each of the Lenders to or for the benefit of
any of the Borrowers pursuant to the Revolving Credit Facility;
(h) maintain complete and accurate books and records
relating to its activities hereunder, including, without
limitation, records of Revolving Credit Loans made and of
collections made and remittances thereof to each of the Lenders;
and
(i) from time to time, in accordance with its usual
business practice and on a sample basis only, send requests to
customers of the Borrowers for verification of invoices that are
in an amount exceeding a specified amount determined by the
Servicing Agent (it being understood, however, that the Servicing
Agent will not send such requests to customers that customarily
do not respond to requests for verification). All determinations
under this clause (i) shall be made by the Servicing Agent in its
sole discretion.
Section 2.18. ADJUSTMENTS TO EXISTING LOANS AND
PARTICIPATIONS. On the Second Closing Date each of the Original
Banks agrees to and hereby does assign to Milberg (without
recourse or warranty except as provided for herein) a portion of
its Loans and Participations so that after giving effect to all
such assignments and assumptions that all Lenders hold on the
Second Closing Date their respective Pro Rata Share of the Loans
and Participations. The parties hereto agree that after making
all the assignments and assumptions noted above that all such
Loans are continuations of the Loans (as defined in the 1995
Credit Agreement). In addition, to facilitate the assignments
and assumptions set forth in this Section, each Borrower agrees,
notwithstanding any of the other terms and provisions of this
Agreement, to pay to the Original Banks on the Second Closing
Date (1) all accrued and unpaid interest on its respective Loans
and (2) all commitment fees provided for in Section 2.13(a) of
the 1995 Credit Agreement accrued and unpaid as of the Second
Closing Date.
ARTICLE 3. LETTERS OF CREDIT.
Section 3.01. LETTERS OF CREDIT. Chase agrees, on the
terms and conditions hereinafter set forth, to issue trade
letters of credit ("Letters of Credit") for the account of any
Borrower, from time to time during the period from the Closing
Date to the Revolving Credit Termination Date with an aggregate
face amount of all outstanding Letters of Credit not to exceed at
any time the least of: (a) the Revolving Credit Commitment;
(b) the Revolving Credit Commitment minus the Revolving Credit
Loans and minus all unreimbursed obligations on Letters of Credit
and minus any and all overdrafts created as a result of or in
connection with the satisfaction of a reimbursement obligation
under a Letter of Credit; or (c) the Working Capital Borrowing
Base minus the Revolving Credit Loans and minus all unreimbursed
obligations on Letters of Credit and minus any and all overdrafts
created as a result of or in connection with the satisfaction of
a reimbursement obligation under a Letter of Credit; provided
that Chase will not be required to issue a Letter of Credit with
an expiration date more than 180 days from the date of issuance
of such Letter of Credit; provided; further that Chase will not
be required to issue a Letter of Credit with a maturity date
later than May 31, 1997; provided; further, that Chase will not
be required to issue a Letter of Credit with a maturity date
between April 1, 1997 and May 31, 1997 if after giving effect to
the issuance thereof the aggregate face amount of all Letters of
Credit issued by Chase with a maturity date between April 1, 1997
and May 31, 1997 is equal to or greater than Eleven Million
Dollars ($11,000,000); finally, Chase will not be required to
issue any Letter of Credit which permits the beneficiary of such
Letter of Credit to make a drawing under such Letter of Credit
without the presentation of documents or documents of title where
the aggregate unused face amount of all such Letters of Credit
outstanding at any time is greater than One Hundred Fifty
Thousand Dollars ($150,000).
Any Letter of Credit issued by Chase for the account of any
Borrower and outstanding as of either the First or Second Closing
Date shall be a Letter of Credit.
Notwithstanding any other provision of this Agreement, each
amendment to a Letter of Credit shall be deemed to be and treated
as and subject to the provisions of this Agreement that apply to
the issuance of a new Letter of Credit.
Section 3.02. REIMBURSEMENT OBLIGATION. The
applicable Borrower will pay Chase, on demand at Chase's
Principal Office, in immediately available funds, the amount
required to reimburse Chase in respect of Chase's payment of each
instrument under a Letter of Credit. If reimbursed within two
(2) Business Days after the Borrower is obligated to reimburse
Chase, then such reimbursement shall be made with interest at the
rate of interest on Revolving Credit Loans (plus the Margin) from
the date of Chase's payment of such instrument to the date of the
applicable Borrower's reimbursement of Chase, and if reimbursed
thereafter, such reimbursement shall be made with interest at the
Default Rate on Revolving Credit Loans from the date of Chase's
payment of such instrument to the date of reimbursement. If any
instrument is payable in a foreign currency, such reimbursement
shall be in United States currency at Chase's selling rate for
cable transfers to the place of payment of the instrument current
on the date of payment or of Chase's settlement of its
obligation, as Chase may require. If, for any cause, on the date
of payment or settlement, as the case may be, there is no selling
rate or other rate of exchange generally current in New York for
effecting such transfers, the applicable Borrower will pay Chase
on demand an amount in United States currency equivalent to
Chase's actual cost of settlement of its obligation however or
whenever Chase shall make such settlement, with interest at the
Variable Rate plus the Margin for Revolving Credit Loans from the
date of settlement to the date of payment. Each Borrower will
comply with all governmental exchange regulations now or
hereafter applicable to each Letter of Credit or instrument or
payments related thereto and will pay Chase, on demand, in
Dollars, such amount as Chase may be or may have been required to
expend on account of such regulations. Chase may debit or direct
any other Lender, the Agent, or the Servicing Agent to debit any
account or accounts maintained by such Borrower with any office
of Chase or any other Lender.
Section 3.03. PAYMENT OF COMMISSIONS, EXPENSES AND
INTEREST. Each Borrower will pay Chase, on demand, Chase's
commission and all charges, costs, and expenses paid or incurred
by Chase in connection with any Letter of Credit or Letter of
Indemnity, and interest where chargeable, including fees and
charges of counsel in connection with the preparation,
performance, or enforcement of this Agreement or any Letter of
Credit or Letter of Indemnity. Unless otherwise agreed:
(b) commissions payable hereunder shall be at the rate
customarily charged by Chase at the time in like circumstances;
(c) interest payable under Article 3 on amounts not
paid when due shall be at the lesser of (i) the maximum rate
permissible under applicable Law or (ii) the Variable Rate plus
the Margin for Revolving Credit Loans; and
(d) in addition to commissions, fees and amounts
otherwise payable with respect to the issuance of the Letter of
Credit, the applicable Borrower shall pay to Chase or any Lender
on demand such amounts as Chase or such Lender in its sole
discretion determines are necessary to compensate it for any cost
attributable to its issuing or having outstanding such Letter of
Credit or a participation in such Letter of Credit resulting from
the application of any law or regulation applicable to Chase or
such Lender regarding any reserve, assessment, capital adequacy
or similar requirements relating to letters of credit or their
participation therein or the reimbursement agreements with
respect thereto or to similar liabilities or assets of Chase or
such Lender whether existing at the time of issuance of the
Letter of Credit or adopted thereafter. Each Borrower
acknowledges that there may be various methods of allocating
costs to the Letter of Credit and agrees that Chase's or such
Lender's allocation for purposes of determining the costs
referred to above shall be conclusive and binding upon such
Borrower provided such allocation is made in good faith.
In addition to any and all of Chase's customary issuance
fees and other expenses to be paid by each Borrower to Chase for
its own account with respect to a Letter of Credit and Letters of
Indemnity, the applicable Borrower shall, monthly in arrears, pay
Chase for the account of the Lenders, a fee equal to the greater
of: (a) one-quarter of one percent (1/4%) of the opening amount
or the amount of any increase, of each Letter of Credit; or
(b) with respect to opening of a letter of credit, One Hundred
Twenty Five Dollars ($125).
Section 3.04. PROPER DRAWING; CHASE'S HONORING. Chase
shall accept or pay conforming drawings presented to it on or
before the expiration date set forth in the related application.
Except insofar as written instructions expressly to the contrary
are received by it prior to the issuance of a Letter of Credit:
(a) Chase may honor the related instrument(s) in an
amount or amounts not exceeding the amount of such Letter of
Credit, although shipment(s) in excess of the quantity called for
under such Letter of Credit are made, and
(b) Chase may honor, as complying with the terms of
such Letter of Credit and of the Application relating to it, any
instrument or other document otherwise in conformity signed or
issued by a person purporting to be an administrator, executor,
trustee in bankruptcy, debtor in possession, assignee for the
benefit of creditors, liquidator, receiver or other legal
representative of the party authorized under such Letter of
Credit to draw or issue such instruments or other documents.
Section 3.05. AMENDMENT, CHANGE, MODIFICATION, NO
WAIVER. In the event of any amendment, change or modification,
with the consent of the applicable Borrower, relating to a Letter
of Credit or any instruments or documents called for thereunder,
including waiver of noncompliance of any such instruments or
documents with the terms of such Letter of Credit, this Agreement
shall be binding upon such Borrower with regard to such Letter of
Credit as so amended, changed, or modified, and to any action
taken by Chase or any of its correspondents relating thereto. No
amendment, change, waiver, or modification to which Chase has
consented shall be deemed to mean that Chase will consent or has
consented to any other or subsequent request to amend, change,
modify or waive a term of such Letter of Credit. Chase shall not
be deemed to have waived any of its rights hereunder, unless
Chase or its authorized agent shall have signed such waiver in
writing. No such waiver, unless expressly stated therein, shall
be effective as to any transaction which occurs subsequent to the
date of such waiver, nor as to any continuance of a breach after
such waiver.
Section 3.06. U.C.P.; AGREEMENTS AND ACKNOWLEDGMENTS;
INDEMNIFICATION. The Uniform Customs and Practice shall be
binding on each Borrower and Chase, except to the extent it is
otherwise expressly agreed. It is also agreed that:
(a) user(s) of a Letter of Credit shall not be deemed
agents of Chase;
(b) none of Chase, its affiliates, Subsidiaries, or
its correspondents shall be responsible for
(i) failure of any instrument to bear any
reference to the related Letter of Credit or inadequate
reference in any instrument to such Letter of Credit,
or failure of any document (other than documents
expressly required to be presented under such Letter of
Credit) to accompany any instrument at negotiation, or
failure of any person to note the amount of any
instrument on the reverse of a Letter of Credit, or to
surrender or take up a Letter of Credit or to forward
documents apart from instruments as required by the
terms of such Letter of Credit, each of which
provisions, if contained in a Letter of Credit itself,
it is agreed may be waived by Chase; or
(ii) errors, omissions, interruptions or delays in
transmission, or delivery of any message, by mail,
telex, cable, telegraph, wireless or other
teletransmission or by oral instructions, whether or
not they may be in cipher;
(c) Chase shall not be responsible for any act, error,
neglect or default, omission, insolvency or failure in business
of any of its correspondents;
(d) the occurrence of any one or more of the
contingencies or events referred to in the Uniform Customs and
Practice or in the preceding clauses of subparagraphs (i) and
(ii) shall not affect, impair, or prevent the vesting of any of
Chase's rights or powers hereunder or the Borrowers' obligation
to make payment;
(e) each Borrower will promptly examine:
(i) any copy of a Letter of Credit; and of any
amendments thereof sent to it by Chase; and
(ii) all instruments and documents delivered to it
from time to time, and, in the event of any claim of
noncompliance with such Borrower's Instructions or other
irregularity, such Borrower will immediately notify Chase thereof
in writing, the Borrowers being conclusively deemed to have
waived any such claim against Chase and its correspondents unless
such notice is given as aforesaid;
(f) any action, inaction or omission on the part of
Chase or any of its correspondents, under or in connection with a
Letter of Credit or the related instruments, documents or
property, if in good faith, shall be binding upon the applicable
Borrower and shall not place Chase or any of its correspondents
under any liability to such Borrower; and
(g) in the event that Chase shall preassign a letter
of credit number or numbers to any Borrower, such Borrower shall
keep such number(s) confidential and shall not disclose any such
number to any Person until the Letter of Credit to which such
number relates has been approved by Chase.
Each Borrower agrees to hold Chase, the other Lenders,
their officers, directors, and employees, each of their
affiliates and Subsidiaries, and their correspondents indemnified
and harmless against any and all claims, loss, liability or
damage, including reasonable counsel fees, howsoever arising from
or in connection with any Letter of Credit or any application,
including, without limitation, any such claim, loss, liability or
damage arising out of any transfer, sale, delivery, surrender or
endorsement of any document at any time(s) held by Chase, the
Lenders, or any of their affiliates or Subsidiaries, or held for
the account of any one of them by any correspondent of any of
them, or arising out of any action for injunctive or other
judicial or administrative relief arising out of or in connection
with any Letter of Credit and affecting, directly or indirectly,
Chase, the Lenders or such Affiliate or Subsidiary.
Section 3.07. LICENSES; INSURANCE; REGULATIONS. Each
Borrower will procure promptly any necessary import, export or
other licenses for the import, export or shipping of the property
shipped under or pursuant to or in connection with each Letter of
Credit, and will comply with all foreign and domestic
governmental regulations in regard to the shipment of such
property or the financing thereof, and will furnish such
certificates in that respect as Chase may at any time(s) require,
and will keep such property adequately covered by insurance in
amounts, against risks and with companies satisfactory to Chase,
and will assign the policies or certificates of insurance to
Chase as Agent for the Benefit of the Lenders, or will make the
loss or adjustment, if any, payable to Chase, at Chase's option,
and will furnish Chase, on its demand, with evidence of
acceptance by the insurers of such assignment. Should the
insurance upon such property for any reason be unsatisfactory to
Chase, Chase may, at the Borrowers' expense, obtain insurance
satisfactory to Chase.
Each Application for a Letter of Credit hereunder shall
constitute the warranty and certification by the applicable
Borrower that no shipment or payment to be made in connection
with such Letter of Credit violates or will violate any United
States export, currency control, or other regulations.
Section 3.08. ADDITIONAL SECURITY. If a temporary
restraining order or an injunction (preliminary or permanent) or
any similar order is issued in connection with any Lender of
Credit or any instrument or documents relating thereto, which
order, injunction, or similar order may apply, directly or
indirectly, to Chase, the applicable Borrower shall, on demand,
deliver, convey, transfer, or assign to the Agent additional
security of a value and character satisfactory to Chase, or make
such payment as Chase may require.
Section 3.09. CONTINUING RIGHTS AND OBLIGATIONS.
Chase's rights and the rights of any other Lender hereunder shall
continue unimpaired, and each Borrower shall be and remain
obligated in accordance with the terms and provisions hereof,
notwithstanding the release and/or substitution of any property
which may be held as Collateral at any time(s), or of any rights
or interest therein. No delay, extension of time, renewal,
compromise or other indulgence which may occur or be granted by
Chase shall impair Chase's or any Lender's rights or powers
hereunder.
Section 3.10. INSTRUCTIONS; NO LIABILITY.
Instructions may be honored by Chase when received from anyone
purporting to be an authorized person. Each Borrower may furnish
Chase with written confirmation of any such instruction, but
Chase's responsibility with respect to any instruction shall not
be affected by its failure to receive such confirmation or the
content thereof. Chase shall have no responsibility to notify
the applicable Borrower of any discrepancies between such
Borrower's instructions and its written confirmation, and in the
event of any such discrepancy, the original instruction shall
govern. Chase shall be fully protected in, and shall incur no
liability to any Borrower for, acting upon any Instructions or
any oral, written, telephone, teleprocess, electronic, or other
amendments thereto which Chase in good faith believes to have
been given by any authorized person, and in no event shall Chase
be liable for special, consequential, or punitive damages. Chase
may, at its option, use any means of verifying any Instruction
received by it. Chase also may, at its option, refuse to act
upon any instruction or other communication or any part thereof,
without incurring any responsibility for any loss, liability or
expense arising out of such refusal. All such authorizations and
instructions shall continue in full force and effect unless Chase
may elect to act upon additional instructions delivered to it by
the applicable Borrower prior to the issuance of a Letter of
Credit in reliance upon the original instructions.
Section 3.11. AMENDED AGREEMENT. In the event that
Chase shall revise its standard reimbursement agreement executed
by each applicant for a Letter of Credit, each Borrower shall
execute and deliver to Chase an amendment to this Agreement
incorporating such changes, promptly upon request therefor from
Chase. No such amendment which would adversely affect the rights
or benefits of the Lenders, shall be made without the consent of
all the Lenders.
Section 3.12. CHASE MICRO L/C. Each Borrower and the
Lenders recognize that certain terms and provisions of this
Agreement assume that the Borrowers are utilizing the Chase Micro
L/C product and procedures in connection with the Letters of
Credit. Notwithstanding anything in this Agreement to the
contrary, unless the Chase Micro L/C is in effect all letters of
credit issued by Chase for the account of any Borrower will be
Letters of Credit issued under and subject to the terms of this
Agreement. To the extent the applications or procedures for
issuance of such Letters of Credit are different from those set
forth in this Agreement, each Borrower agrees to comply with the
terms of such applications and the required procedures. To the
extent the terms (including, without limitation, terms with
respect to fees and reimbursement obligations) of any such
agreement conflict with the terms of this Agreement, the terms of
this Agreement shall govern.
Section 3.13. BILLS OF LADING. All bills of lading
will be consigned to the Borrowers or to Chase; provided that, at
the direction of the Required Lenders the Borrower must assign
all bills of lading in its possession to Chase and all new bills
of lading shall be consigned to Chase.
Section 3.14. USE OF LOANS. Notwithstanding any
provision contained in this Agreement to the contrary, each
Lender may make a Revolving Credit Loan to repay in whole or in
part any amount required to be paid pursuant to this Article 3,
including but not limited to the repayment of a reimbursement
obligation.
ARTICLE 4. LETTERS OF INDEMNITY.
Section 4.01. LETTERS OF INDEMNITY. The Borrowers
recognize and agree that none of the Agent, the Servicing Agent,
or any of the Lenders has any commitment or obligation to issue
letters of indemnity, steamship guaranties, air way releases
and/or similar undertakings (a "Letter of Indemnity") hereunder
and that the issuance of any such Letter of Indemnity is in the
sole discretion of Chase. Chase may in its sole discretion and
from time to time during the period from the Closing Date to the
Termination Date issue Letters of Indemnity for the benefit of
the Borrowers, provided (a) the Letter of Indemnity covers goods
imported by the applicable Borrower under a Letter of Credit,
(b) the aggregate amount, as determined in accordance with
Chase's policies and procedures, of Letters of Indemnity
outstanding at any time shall not exceed Seven Hundred Fifty
Thousand Dollars ($750,000), and (c) such Letters of Indemnity
shall be in addition to Chase's Revolving Credit Commitment.
Section 4.02. REIMBURSEMENT AGREEMENT. On demand the
Borrowers shall pay, or reimburse Chase in cash for, the amount
of any and all payments made or required to be made by Chase to
any Person as a result of, arising out of, pursuant to, or based
upon, the issuance and delivery of a Letter of Indemnity.
In addition, at Chase's request, the Borrowers shall
defend (through counsel reasonably acceptable to Chase) or assist
Chase in defending any action, suit, or proceeding brought
against Chase with respect to a Letter of Indemnity, and on
demand shall pay, or reimburse Chase in cash for, the amount of
any and all costs, judgments (including special and consequential
damages), settlement, and expenses (including attorney fees) with
respect thereto. Chase shall have the right, in its sole
discretion and without notice to or the consent of the Borrowers,
to determine the reasonableness of any claim or demand for
payment and the amount of any payment (including payments in
settlement of any claim).
Section 4.03. AUTHORIZATION. Chase is authorized to
accept and/or pay any and all drafts presented in connection
with, or drawn under any Letter of Credit issued by Chase for the
account of the applicable Borrower with respect to any goods
related to a Letter of Indemnity, whether or not documents
complying with the terms of any such draft or credit are
received, with the same effect as though documents in full and
exact compliance were received.
Section 4.04. DELIVERY OF REQUIRED DOCUMENTATION. The
applicable Borrower shall use its best efforts to deliver or
cause to be delivered to Chase all required documents related to
any goods with respect to which Chase shall issue and deliver a
Letter of Indemnity. Chase is authorized to retain an original
of each bill of lading or other title document which is delivered
to Chase in connection with any goods with respect to which Chase
has issued and delivered a Letter of Indemnity. The applicable
Borrower shall, upon delivery to an air or marine carrier of all
required documents related to goods with respect to which Chase
issued and delivered a Letter of Indemnity, assist Chase in
obtaining any requested releases of Chase's obligations under
such Letter of Indemnity.
Section 4.05. CONTINUING OBLIGATIONS. The obligations
of the Borrowers under this Article 4 shall be continuing. Chase
may continue to act in reliance hereon until the receipt by Chase
of written notice from the Borrowers not to extend further
accommodation hereunder. No such notice, however, shall release
the Borrowers from any of their obligations hereunder with
respect to any Letter of Indemnity which was issued and delivered
by Chase prior to receipt of such notice.
Section 4.06. INSTRUCTIONS. Chase is authorized to
accept and rely upon any written instructions given on behalf of
the Borrowers by any officer or employee authorized by or in
accordance with an appropriate resolution delivered to Chase in
connection herewith (such employee or officer being an
"Authorized Officer"). In addition, Chase is authorized to
accept and rely upon any instructions received by telephone,
telex, TWX, facsimile transmission or bank wire which Chase
believes in good faith to have been given by or on behalf of an
Authorized Officer. Chase shall incur no liability to the
Borrowers or otherwise as a result of any act or omission of
Chase pursuant to such instructions. All instructions delivered
to Chase by telephone shall be confirmed by the Borrowers
promptly thereafter in writing. Chase, however, shall have no
liability to the Borrowers for acting pursuant to telephone
instructions even though it fails to receive such written
confirmation or thereafter receives any inconsistent written
confirmation.
Section 4.07. FEES. The Borrowers agree to pay to
Chase for its own account its standard fees and charges as in
effect from time to time related to the issuance and delivery of
Letters of Indemnity.
ARTICLE 5. PARTICIPATIONS.
Section 5.01. SALE AND PURCHASE OF PARTICIPATIONS.
Each Lender hereby irrevocably and unconditionally agrees to
purchase, and Chase hereby agrees to sell and transfer to each
Lender, an undivided fractional interest (a "Participation")
equal to such Lender's Pro Rata Share in (a) each Letter of
Credit upon issuance thereof and each draw thereunder upon such
drawing and the obligations of the Borrowers in respect of each
such Letter of Credit under this Agreement; and (b) each Letter
of Indemnity upon issuance thereof and each draw thereunder upon
such drawing and the obligations of the Borrowers in respect of
each such Letter of Indemnity under this Agreement.
Section 5.02. PARTICIPATION IN FEES AND COLLATERAL;
RELATIONSHIP. Each Lender will be entitled to receive only the
portions of the Letter of Credit fees paid by the Borrowers to
Chase for the account of the Lenders under Section 3.03. Chase
shall pay each Lender its share of each Letter of Credit Fee, in
arrears promptly after the end of each month.
In addition to the foregoing, each Lender hereby
purchases, and Chase hereby sells to each Lender, an undivided
fractional interest equal to such Lender's Pro Rata Share in the
Facility Documents, as well as all additional security
specifically assigned to Chase to secure the Letters of Credit,
and the Letters of Indemnity, as the case may be.
The relationship between Chase (in its capacity as
seller of Participations pursuant to this Article 5) and each
Lender (in its capacity as purchaser of Participations pursuant
to this Article 5) is and shall be that of a purchaser and seller
of a property interest and not a creditor-debtor relationship or
joint venture. Chase (in its capacity as seller of
Participations pursuant to this Article 5) shall owe each Lender
(in its capacity as purchaser of Participations pursuant to this
Article 5) no duty except as specifically set forth in this
Article 5.
Section 5.03. PROCEDURES. Whenever a draw shall be
made under a Letter of Credit or a Letter of Indemnity and the
Borrowers shall fail to reimburse Chase therefor in accordance
with this Agreement, Chase will promptly notify each Lender
regarding such draw or payment as follows: (a) the date of such
draw or payment; and (b) the amount of such draw or payment.
Although Chase shall be responsible for paying each such draw or
payment on each Letter of Credit or Letter of Indemnity, as the
case may be, each Lender shall bear its Pro Rata Share of the
credit risk associated with each such draw or payment.
Accordingly, in the event that the amount of any such draw or
payment is not paid in full by or on behalf of the Borrowers when
required in accordance with the terms of this Agreement, for any
reason, Chase shall give prompt notice by telephone (promptly
confirmed in writing) or telex to each Lender of such event.
Upon receipt of such telephone or telex notice, each Lender shall
cause to be transmitted to Chase, to the account set forth below
an amount in immediately available funds equivalent to its Pro
Rata Share of such draw or payment in such manner to ensure that
such funds are received by Chase, and available to Chase by 3:00
p.m., New York time, on the date demand therefor was made by
Chase to each Lender (if demand was made by 12:00 noon, New York
time) or by 10:00 a.m., New York time, on the Banking Day
following the date demand therefor was made (if demand was made
after 12:00 noon, New York City time).
ABA No: 0210002
Chase Account No.: 900-9-000374
Reference: Import LC Department
Chase Address: New York Agency
Chase Metrotech Center
Brooklyn, New York 11245
Section 5.04. COLLECTIONS AND REMITTANCES. Whenever
Chase receives any payment, interest, reimbursement, collection,
or recovery on account of a Letter of Credit or Letter of
Indemnity whether from the Borrower, any collateral, or
otherwise, it shall allocate such receipts as follows:
(a) First, to the payment of taxes, assessments,
insurance premiums, or for similar purposes as required by the
Letter of Credit or Letter of Indemnity, as the case may be, or
any other Loan Document, and, if previously paid by Chase, such
sums shall be retained by Chase; and
(b) In the event any Borrower fails to reimburse Chase
for any draw under a Letter of Credit or Letter of Indemnity, as
the case may be, when due and Chase receives a payment of or on
account of such defaulted amount as to which a Lender has paid
Chase the amount of its Pro Rata Share pursuant to Section 5.04,
that portion of the amount received shall be allocated between
each such Lender and Chase pro rata, with each such Lender's
percentage of the principal amount based on its Pro Rata Share
and with each such Lender's portion of the interest and fees on
its Pro Rata Share based upon the amounts set forth above.
After Chase receives a payment on account of a Letter
of Credit or Letter of Indemnity, as the case may be, and makes
the allocations required by the preceding paragraph, it shall
give notice to each Lender not later than 11:30 a.m., New York
time, by telephone and promptly remit to each Lender (or credit
to the Lender's account with Chase, if any) the amount to which
each such Lender is entitled; provided, however, that Chase may
retain and deduct from such payment to any such Lender any amount
owed Chase by such Lender pursuant to this Article 5.
If any payment received by Chase and distributed or
credited to a Lender is later rescinded or is otherwise returned
by Chase for whatever reason (including, without limitation,
settlement of an alleged claim), each such Lender, upon demand by
Chase, shall immediately pay to Chase such Lender's Pro Rata
Share of the amount so returned. The covenants contained in this
paragraph shall survive the termination of this Agreement.
Section 5.05. ADMINISTRATION STANDARD OF CARE. Chase
will administer each Letter of Credit or Letter of Indemnity in
the ordinary course of business and in accordance with its usual
practices, modified from time to time as it deems appropriate
under the circumstances. Except as expressly set forth in the
second paragraph of this Section 5.05, Chase shall be entitled to
use its discretion in taking or refraining from taking any
actions in connection with any of the foregoing as if it were the
sole party involved in any of the foregoing and no Participations
existed.
Notwithstanding the provisions of the first paragraph
of this Section 5.05, Chase agrees that it will not knowingly
take any of the following actions without the written consent of
each Lender: (a) waive any default by the Borrowers involving
the payment of money to Chase pursuant to any of the Letters of
Credit or Letters of Indemnity; (b) extend the time of payment of
the fees to be paid for account of the Lenders pursuant to
Section 3.03 with respect to any of the Letters of Credit; (c)
extend the expiry date of any Letter of Credit after the
Revolving Credit Termination Date; or (d) reduce the fees charged
on the Letters of Credit below the amount required to be paid to
Chase or to the Lenders pursuant to the terms of this Article 5.
Chase shall be fully justified in failing or refusing to take any
action under any of the Facility Documents unless it shall first
receive such advice or concurrence of the Lenders as Chase shall
deem appropriate.
Each Lender acknowledges that its Participations
hereunder are without recourse to Chase and that each such Lender
expressly assumes all risk of loss in connection with its
Participation in the Letters of Credit and Letters of Indemnity,
as if such Lender had directly provided such Letters of Credit
and Letters of Indemnity. Chase shall have no liability, express
or implied, for any action taken or omitted to be taken by Chase
or for any failure or delay in exercising any right or power
possessed by Chase under any of the Facility Documents except for
actual losses, if any, suffered by any Lender that are
proximately caused either by Chase's gross negligence or by
Chase's willful misconduct. Without limiting the foregoing,
Chase (a) may consult with legal counsel, independent public
accountants, appraisers, and other experts, selected by Chase,
and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such
persons, (b) shall be entitled to rely on, and shall incur no
liability by acting upon, any conversation, notice, consent,
certificate, statement, order, or any document or other writing
(including, without limitation, telegraph, telex, telecopy, TWX,
or other telecommunication device) believed by Chase to be
genuine and correct and to have been signed, sent, or made by the
proper person, (c) makes no warranty or representation of any
kind of character relating to the Borrowers or the Collateral,
and shall not be responsible for any warranty or representation
made in or in connection with any of the Facility Documents,
(d) makes no warranty or representation as to, and shall not be
responsible for the correctness as to form, the due execution,
legality, validity, enforceability, genuineness, sufficiency, or
collectability of any of the Facility Documents, for any failure
by any Borrower or any Person to perform its obligations
thereunder, for any Borrower's use of the proceeds therefrom, or
for the preservation of the Collateral or the loss, depreciation,
or release thereof, (e) makes no warranty or representation as
to, and assumes no responsibility for, the authenticity,
validity, accuracy, or completeness of any notice, financial
statement, or other document or information received by Chase or
any Lender in connection with, or otherwise referred to in, any
of the Facility Documents, and (f) shall not be required to make
any inquiry concerning the observance or performance of any
agreement contained in, or conditions of, any of the Facility
Documents, or to inspect the property, books, or records of the
Borrowers or any Person.
Any Lender may lend money to, accept deposits from, and
generally engage in any kind of business with the Borrowers as
freely as though no Participations had been granted to a Lender.
ARTICLE 6. YIELD PROTECTION; ILLEGALITY; ETC.
Section 6.01. ADDITIONAL COSTS. (a) The Borrowers
shall pay directly to each Lender from time to time on demand
such amounts as such Lender may determine to be necessary to
compensate it for any costs which such Lender determines are
attributable to its making or maintaining any Eurodollar Loans
under this Agreement or its Notes or its obligation to make any
such Loans hereunder, or any reduction in any amount receivable
by such Lender hereunder in respect of any such Loans or such
obligation (such increases in costs and reductions in amounts
receivable being herein called "Additional Costs"), resulting
from any Regulatory Change which: (i) changes the basis of
taxation of any amounts payable to such Lender under this
Agreement or its Notes in respect of any of such Loans (other
than taxes imposed on the overall net income of such Lender or of
its Lending Office for any of such Loans by the jurisdiction in
which such Lender has its principal office or such Lending
Office); or (ii) imposes or modifies any reserve, special
deposit, deposit insurance or assessment, minimum capital,
capital ratio or similar requirements relating to any extensions
of credit or other assets of, or any deposits with or other
liabilities of, such Lender (including any of such Loans or any
deposits referred to in the definition of "Eurodollar Base Rate"
in Section 1.01); or (iii) imposes any other condition affecting
this Agreement or its Notes (or any of such extensions of credit
or liabilities). Each Lender will notify the Borrowers of any
event occurring after the date of this Agreement which will
entitle such Lender to compensation pursuant to this Section 6.01
(a) as promptly as practicable after it obtains knowledge thereof
and determines to request such compensation. If any Lender
requests compensation from the Borrowers under this Section
6.01(a), or under Section 6.01(c), the Borrowers may, by notice
to such Lender (with a copy to the Agent), require that such
Lender's Loans of the type with respect to which such
compensation is requested be converted in accordance with Section
6.04.
(b) Without limiting the effect of the foregoing
provisions of this Section 6.01, in the event that, by reason of
any Regulatory Change, any Lender either (i) incurs Additional
Costs based on or measured by the excess above a specified level
of the amount of a category of deposits or other liabilities of
such Lender which includes deposits by reference to which the
interest rate on Eurodollar Loans is determined as provided in
this Agreement or a category of extensions of credit or other
assets of such Lender which includes Eurodollar Loans or (ii)
becomes subject to restrictions on the amount of such a category
of liabilities or assets which it may hold, then, if such Lender
so elects by notice to the Borrowers (with a copy to the Agent),
the obligation of such Lender to make or renew, and to convert
Loans of any other type into, Loans of such type hereunder shall
be suspended until the date such Regulatory Change ceases to be
in effect (and all Loans of such type held by such Lender then
outstanding shall be converted in accordance with Section 6.04).
(c) Without limiting the effect of the foregoing
provisions of this Section 6.01 (but without duplication), the
Borrowers shall pay directly to each Lender from time to time on
request such amounts as such Lender may determine to be necessary
to compensate such Lender for any costs which it determines are
attributable to the maintenance by it or any of its Affiliates
pursuant to any law or regulation of any jurisdiction or any
interpretation, directive or request (whether or not having the
force of law and whether in effect on the date of this Agreement
or thereafter) of any court or governmental or monetary authority
of capital in respect of its Loans or participation in Letters of
Credit hereunder or its obligation to make Loans hereunder (such
compensation to include, without limitation, an amount equal to
any reduction in return on assets or equity of such Lender or
such Affiliates to a level below that which it could have
achieved but for such law, regulation, interpretation, directive
or request). Each Lender will notify the Borrowers if it is
entitled to compensation pursuant to this Section 6.01(c) as
promptly as practicable after it determines to request such
compensation.
(d) Determinations and allocations by a Lender for
purposes of this Section 6.01 of the effect of any Regulatory
Change pursuant to subsections (a) or (b), or of the effect of
capital maintained pursuant to subsection (c), on its costs of
making or maintaining Loans or its obligation to make Loans, or
on amounts receivable by, or the rate of return to, it in respect
of Loans or such obligation, and of the additional amounts
required to compensate such Lender under this Section 6.01, shall
be conclusive, provided that such determinations and allocations
are made on a reasonable basis.
Section 6.02. LIMITATION ON TYPES OF LOANS. Anything
herein to the contrary notwithstanding, if:
(a) the Agent determines (which determination shall be
conclusive) that quotations of interest rates for the relevant
deposits referred to in the definition of "Eurodollar Base Rate"
in Section 1.01 are not being provided in the relevant amounts or
for the relevant maturities for purposes of determining the rate
of interest for any type of Eurodollar Loans as provided in this
Agreement; or
(b) the Required Lenders determine (which
determination shall be conclusive) and notify the Agent that the
relevant rates of interest referred to in the definition of
"Eurodollar Base Rate" in Section 1.01 upon the basis of which
the rate of interest for any type of Eurodollar Loans is to be
determined do not adequately cover the cost to the Lenders of
making or maintaining such Loans;
then the Agent shall give the Borrowers and each Lender prompt
notice thereof, and so long as such condition remains in effect,
the Lenders shall be under no obligation to make or renew Loans
of such type or to convert Loans of any other type into Loans of
such type and the Borrowers shall, on the last day(s) of the then
current Interest Period(s) for the outstanding Loans of the
affected type, either prepay such Loans or convert such Loans
into another type of Loans in accordance with Section 2.06.
Section 6.03. ILLEGALITY. Notwithstanding any other
provision in this Agreement, in the event that it becomes
unlawful for any Lender or its Lending Office to (a) honor its
obligation to make or renew Eurodollar Loans hereunder or convert
Loans of any type into Loans of such type, or (b) maintain
Eurodollar Loans hereunder, then such Lender shall promptly
notify the Borrowers thereof (with a copy to the Agent) and such
Lender's obligation to make or renew Eurodollar Loans and to
convert other types of Loans into Loans of such type hereunder
shall be suspended until such time as such Lender may again make,
renew, or convert and maintain such affected Loans and such
Lender's outstanding Eurodollar Loans, as the case may be, shall
be converted in accordance with Section 6.04.
Section 6.04. CERTAIN CONVERSIONS PURSUANT TO SECTIONS
6.01 AND 6.03. If the Loans of any Lender of a particular type
(Loans of such type being herein called "Affected Loans" and such
type being herein called the "Affected Type") are to be converted
pursuant to Section 6.01 or 6.03, such Lender's Affected Loans
shall be automatically converted into Variable Rate Loans on the
last day(s) of the then current Interest Period(s) for the
Affected Loans (or, in the case of a conversion required by
Section 6.01(b) or 6.03, on such earlier date as such Lender may
specify to the Borrowers with a copy to the Agent) and, unless
and until such Lender gives notice as provided below that the
circumstances specified in Section 6.01 or 6.03 which gave rise
to such conversion no longer exist:
(a) to the extent that such Lender's Affected Loans
have been so converted, all payments and prepayments of principal
which would otherwise be applied to such Lender's Affected Loans
shall be applied instead to its Variable Rate Loans;
(b) all Loans which would otherwise be made or renewed
by such Lender as Loans of the Affected Type shall be made
instead as Variable Rate Loans and all Loans of such Lender which
would otherwise be converted into Loans of this Affected Type
shall be converted instead into (or shall remain as) Variable
Rate Loans; and
(c) if Loans of other Lenders of the Affected Type are
subsequently converted into Loans of another type (other than
Variable Rate Loans), such Lender's Variable Rate Loans shall be
automatically converted on the conversion date into Loans of such
other type to the extent necessary so that, after giving effect
thereto, all Loans held by such Lender and the Lenders whose
Loans are so converted are held pro rata (as to principal
amounts, types and interest Periods) in accordance with their
respective Commitments.
If such Lender gives notice to the Borrowers (with a
copy to the Agent) that the circumstances specified in Section
6.01 or 6.03 which gave rise to the conversion of such Lender's
Affected Loans pursuant to this Section 6.04 no longer exist
(which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Loans of the Affected Type are
outstanding, such Lender's Variable Rate Loans shall be
automatically converted, on the first day(s) of the next
succeeding Interest Period(s) for such outstanding Loans of the
Affected Type to the extent necessary so that, after giving
effect thereto, all Loans held by the Lenders holding Loans of
the Affected Type and by such Lender are held pro rata (as to
principal amounts, types and Interest Periods) in accordance with
their respective Commitments.
Section 6.05. CERTAIN COMPENSATION. The Borrowers
shall pay to the Agent for the account of each Lender, upon the
request of such Lender through the Agent, such amount or amounts
as shall be sufficient (in the reasonable opinion of such Lender)
to compensate it for any loss, cost or expense which such Lender
determines is attributable to:
(a) any payment, prepayment, conversion or renewal of
a Eurodollar Loan made by such Lender on a date other than the
last day of an Interest Period for such Loan (whether by reason
of acceleration or otherwise); or
(b) any failure by the Borrowers to borrow, convert
into or renew a Eurodollar Loan to be made, converted into or
renewed by such Lender on the date specified therefor in the
relevant notice under Section 2.05, 2.07 or 2.09, as the case may
be.
Without limiting the foregoing, such compensation shall
include an amount equal to the excess, if any, of: (i) the
amount of interest which otherwise would have accrued on the
principal amount so paid, prepaid, converted or renewed or not
borrowed, converted or renewed for the period from and including
the date of such payment, prepayment or conversion or failure to
borrow, convert or renew to but excluding the last day of the
then current Interest Period for such Loan (or, in the case of a
failure to borrow, convert or renew, to but excluding the last
day of the Interest Period for such Loan which would have
commenced on the date specified therefor in the relevant notice)
at the applicable rate of interest for such Loan provided for
herein; over (ii) the amount of interest (as reasonably
determined by such Lender) such Lender would have bid on the date
of such prepayment or failure, in the London interbank market for
Dollar deposits for amounts comparable to such principal amount
and maturities comparable to such period. A determination of any
Lender as to the amounts payable pursuant to this Section 6.05
shall be conclusive absent manifest error.
ARTICLE 7. CONDITIONS PRECEDENT.
Section 7.01. CONDITIONS PRECEDENT TO THE
EFFECTIVENESS OF THIS AGREEMENT AND THE INITIAL USE OF A CREDIT
FACILITY ON OR AFTER THE SECOND CLOSING DATE. The obligations of
the Lenders on or after the Second Closing Date to make the
Revolving Credit Loans, or of Chase to issue a Letter of Credit,
are subject to the condition precedent that the Agent shall have
received, with copies to each Lender, on or before the Second
Closing Date, each of the following, in form and substance
satisfactory to the Lenders, the Agent, the Servicing Agent and
its counsel:
(a) the Notes duly executed by the Borrowers;
(b) the Authorization Letter duly executed by the
Borrowers;
(c) good standing certificates for each Borrower,
dated reasonably near the Second Closing Date, from the Secretary
of State (or other appropriate official) of the jurisdiction of
incorporation of each Borrower certifying as to due incorporation
and good standing of such Borrower and certificates dated
reasonably near the Second Closing Date, from the Secretary of
State (or other appropriate official) of each other jurisdiction
where such Borrower is required to be qualified to conduct
business, certifying that such Borrower is qualified to do
business in such jurisdiction;
(d) the execution and delivery of the Amendment to the
Security Agreements by the appropriate parties thereto together
with duly executed financing statements (UCC-1 and UCC-3) to be
filed under the Uniform Commercial Code of all jurisdictions
necessary or, in the opinion of the Agent or any Lender,
desirable to perfect the security interest created by the
Security Agreement;
(e) the execution and delivery of the Warrant by
Apparel;
(f) the execution and delivery of the Lock Box
Agreement by each of the Borrowers;
(g) a certificate of the Secretary or Assistant
Secretary of each Borrower, dated the Second Closing Date,
attesting to all corporate action taken by each Borrower
including resolutions of its Board of Directors authorizing the
execution, delivery and performance of the Facility Documents to
which it is a party and each other document to be delivered
pursuant to this Agreement;
(h) a certificate of the Secretary or Assistant
Secretary of each Borrower, dated the Second Closing Date,
certifying the names and true signatures of the officers of such
Borrower authorized to sign the Facility Documents to which it is
a party and the other documents to be delivered by such Borrower
under this Agreement;
(i) a certificate of a duly authorized officer of each
Borrower, dated the Second Closing Date, stating that the
representations and warranties in Article 8 are true and correct
on such date as though made on and as of such date and that no
event has occurred and is continuing which constitutes a Default
or Event of Default;
(j) a favorable opinion of counsel for the Borrowers,
dated the Second Closing Date, in substantially the form of
Exhibit I hereto and as to such other matters as the Agent, the
Servicing Agent or any Lender may reasonably request;
(k) an analysis of the inventory and accounts
receivable of each Borrower, satisfactory to the Lenders,
prepared by M.R. Weiser & Co. or another accounting firm
acceptable to the Lenders;
(l) delivery of the management prepared consolidated
and consolidating balance sheet, statement of operations and
statements of cash flow of Apparel and its consolidated
Subsidiaries as at December 31, 1995, prepared in connection with
the Borrowers' annual audit, and such financial statements do not
show results materially different from the projections supplied
to the Lenders by the Borrowers;
(m) a borrowing base certificate (calculated as of the
Second Closing Date) in form and substance satisfactory to the
Required Lenders;
(n) the Servicing Agent shall be prepared to perform
its duties under this Agreement;
(o) the execution and delivery of the Trivest Letter
Agreement; and
(p) a copy of each Significant Agreement.
Section 7.02. ADDITIONAL CONDITIONS PRECEDENT. The
obligations of the Lenders to provide any Revolving Credit Loan,
or of Chase to issue a Letter of Credit, on or after the Second
Closing Date, shall be subject to further conditions precedent
that on the date of providing such Credit Facility:
(a) after the making of such Revolving Credit Loan or
issuance of such Letter of Credit (i) the Revolving Credit Loans
shall be, and shall reasonably be expected to continue to be
through the time period that any outstanding Letters of Credit
may be drawn upon (based upon projections prepared by the
Borrowers and provided to the Lenders that are in form and
substance satisfactory to the Required Lenders) equal to or less
than the lesser of (A) the Revolving Credit Loan Borrowing Base,
and (B) the Revolving Credit Commitment, and (ii) the Outstanding
Working Capital Obligations shall be and shall reasonably be
expected to continue to be through the time period that any
outstanding Letters of Credit may be drawn upon (based upon
projections prepared by the Borrowers and provided to the Lenders
that are in form and substance satisfactory to the Required
Lenders) equal to or less than the lesser of (A) the Working
Capital Borrowing Base and (B) the Revolving Credit Commitment;
(b) in the case of a Letter of Credit, there shall be
orders for goods to be imported under such Letter of Credit in an
aggregate amount and on terms satisfactory to the Required
Lenders;
(c) the following statements shall be true:
(i) the representations and warranties contained
herein and in the Security Documents, are true and
correct in all material respects on and as of the date
of making such Revolving Credit Loans or issuance of
such Letter of Credit as though made on and as of such
date; and
(ii) no Default or Event of Default has occurred
and is continuing, or would result from such Loans or
issuing such Letter of Credit, as the case may be; and
(d) the Agent or Servicing Agent shall have received
such approvals, opinions or documents as either of such Agents or
any Lender may reasonably request.
Section 7.03. DEEMED REPRESENTATIONS. Each request
for a Revolving Credit Loan, or Letter of Credit hereunder and
acceptance by the Borrowers of the proceeds of such Loan or the
issuance of such Letter, as the case may be, shall constitute a
representation and warranty that, except to the extent that they
relate expressly to a given date, the statements contained in
Section 7.02(a), (b) and (c) are true and correct in all material
respects both on the date of such request and, unless the
Borrowers otherwise notify both the Agent and the Servicing Agent
prior to such borrowing or issuance, as of the date of such
borrowing or issuance, as the case may be.
ARTICLE 8. REPRESENTATIONS AND WARRANTIES.
Each Borrower hereby represents and warrants that:
Section 8.01. INCORPORATION, GOOD STANDING AND DUE
QUALIFICATION. Each Borrower and its Subsidiaries is duly
incorporated, validly existing and in good standing under the
laws 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 or proposed to be 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.
Section 8.02. CORPORATE POWER AND AUTHORITY; NO
CONFLICTS. The execution, delivery and performance by each
Borrower of the Facility Documents to which it is a party have
been duly authorized by all necessary corporate action and do not
and will not: (a) require any consent or approval of its
stockholders; (b) contravene its charter or by-laws; (c) violate
any provision of, or require any filing other than the filing of
the financing statements contemplated by the Security Agreement),
registration, consent or approval under, any law, rule,
regulation (including, without limitation, Regulation U), order,
writ, judgment, injunction, decree, determination or award
presently in effect having applicability to such Borrower or any
of its Subsidiaries or Affiliates; (d) result in a breach of or
constitute a default or require any consent under any indenture
or loan or credit agreement or any other agreement, lease or
instrument to which such Borrower is a party or by which it or
its properties may be bound or affected; (e) result in, or
require, the creation or imposition of any Lien (other than as
created under the Security Agreement or the Trademark
Assignment), upon or with respect to any of the properties now
owned or hereafter acquired by such Borrower; or (f) cause such
Borrower (or any Subsidiary or Affiliate, as the case may be) to
be in default under any such law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award or any such
indenture, agreement, lease or instrument.
Section 8.03. LEGALLY ENFORCEABLE AGREEMENTS. Each
Facility Document to which a Borrower is a party is, or when
delivered under this Agreement will be, a legal, valid and
binding obligation of such Borrower enforceable against such
Borrower in accordance with its terms, except to the extent that
such enforcement may be limited by applicable bankruptcy,
insolvency and other similar laws affecting creditors' rights
generally.
Section 8.04. LITIGATION. There are no actions, suits
or proceedings pending or, to the knowledge of any Borrower,
threatened, against or affecting such Borrower or any of its
Subsidiaries before any court, governmental agency or arbitrator,
which may, in any one case or in the aggregate, materially
adversely affect the financial condition, operations, properties
or business of such Borrower or any such Subsidiary or of the
ability of such Borrower to perform its obligations under the
Facility Documents to which it is a party.
Section 8.05. FINANCIAL STATEMENTS. The consolidated
and consolidating balance sheet of Apparel and its consolidated
subsidiaries as at December 31, 1994, and the related
consolidated and consolidating statement of operations and
statements of cash flows and changes in stockholders' equity of
Apparel and its consolidated subsidiaries for the fiscal year
then ended, and the accompanying footnotes, and as to the
consolidated statements, together with the opinion thereon, of
Coopers & Lybrand, independent certified public accountants, and
the annual consolidated and consolidating balance sheet of
Apparel and its consolidated subsidiaries as at December 31, 1995
and the related consolidated and consolidating statement of
operations and statements of cash flows for the twelve month
period then ended, copies of which have been furnished to each of
the Lenders, are complete and correct and fairly present the
financial condition of Apparel and its consolidated subsidiaries
as at such dates and the results of the operations of Apparel and
its consolidated subsidiaries for the periods covered by such
statements, all in accordance with GAAP consistently applied.
There are no liabilities of Apparel or any of its consolidated
subsidiaries, fixed or contingent, which are material but are not
reflected in the financial statements or in the notes thereto
(except as set forth in Schedule II), other than liabilities
arising in the ordinary course of business since December 31,
1995. No information, exhibit or report furnished by any
Borrower to the Lenders in connection with the negotiation of
this Agreement contained any material misstatement of fact or
omitted to state a material fact or any fact necessary to make
the statements contained therein not materially misleading.
Since December 31, 1995, there has been no material adverse
change in the condition (financial or otherwise), business,
operations or prospects of any of the Borrowers or any of their
Subsidiaries.
Section 8.06. OWNERSHIP AND LIENS. Each of the
Borrowers and its Subsidiaries has title to, or valid leasehold
interests in, all of its properties and assets, real and
personal, including the properties and assets, and leasehold
interests reflected in the financial statements referred to in
Section 8.05 (other than any properties or assets disposed of in
the ordinary course of business), and none of the properties and
assets owned by such Borrower or any of its Subsidiaries and none
of its leasehold interests is subject to any Lien, except as
disclosed in such financial statements or as may be permitted
hereunder and except for the Lien created by the Security
Agreement and Trademark Assignments.
Section 8.07. TAXES. Each of the Borrowers and its
Subsidiaries has filed all federal and state income tax returns
required to be filed and has paid all taxes, assessments and
governmental charges and levies thereon to be due, including
interest and penalties where the failure to pay would have a
material adverse effect on the Borrowers' business, operations or
prospects. There has been no audit of the federal income tax
liability of any of the Borrowers since the taxable year ended
1991.
Section 8.08. ERISA. Each Plan, and, to the best
knowledge of the Borrowers, each Multiemployer Plan, is in
compliance in all material respects with, and has been
administered in all material respects in compliance with, the
applicable provisions of ERISA, the Code and any other applicable
Federal or state law, and no event or condition is occurring or
exists concerning which the Borrowers would be under an
obligation to furnish a report to the Agent in accordance with
Section 9.09(h) hereof. As of the most recent valuation date for
each Plan, each Plan was "fully funded," which for purposes of
this Section 8.08 shall mean that the fair market value of the
assets of the Plan is not less than the present value of the
accrued benefits of all participants in the Plan, computed on a
Plan termination basis. To the best knowledge of the Borrowers,
no Plan has ceased being fully funded as of the date these
representations are made with respect to any Loan under this
Agreement.
Section 8.09. SUBSIDIARIES AND OWNERSHIP OF STOCK.
Schedule I is a complete and accurate list of the subsidiaries of
each of the Borrowers and each other Person in which the
Borrowers owned an equity interest, showing the jurisdiction of
incorporation or organization of each Person and showing the
percentage of such Borrower's ownership of the outstanding stock
or other interest of each such Person. All of the outstanding
capital stock or other interest of each such Person owned by any
Borrower has been validly issued, is fully paid and nonassessable
and is owned by such Borrower free and clear of all Liens.
Section 8.10. CREDIT ARRANGEMENTS. Schedule II is a
complete and correct list of all credit agreements, indentures,
purchase agreements, guaranties, Capital Leases and other
investments, agreements and arrangements presently in effect
providing for or relating to extensions of credit (including
agreements and arrangements for the issuance of letters of credit
or for acceptance financing) in respect of which the Borrowers or
any of their Subsidiaries is in any manner directly or
contingently obligated; and the maximum principal or face amounts
of the credit in question, outstanding and which can be
outstanding, are correctly stated, and all Liens of any nature
given or agreed to be given as security therefor are correctly
described or indicated in such Schedule.
Section 8.11. OPERATION OF BUSINESS. Each of the
Borrowers and their Subsidiaries possesses all licenses, permits,
franchises, patents, copyrights, trademarks and trade names, or
rights thereto, necessary to conduct its business substantially
as now conducted and as presently proposed to be conducted, and
to the best of their knowledge none of the Borrowers nor any of
their Subsidiaries is in violation of any valid rights of others
with respect to any of the foregoing.
Section 8.12. HAZARDOUS MATERIALS. The Borrowers and
each of their Subsidiaries have obtained all permits, licenses
and other authorizations which are required under all
Environmental Laws, except to the extent failure to have any such
permit, license or authorization would not have a material
adverse effect on the consolidated financial condition,
operations, business or prospects of the Borrowers and the
Consolidated Subsidiaries. Each Borrower and each of its
Subsidiaries are in compliance with the terms and conditions of
all such permits, licenses and authorizations, and are also in
compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations schedules and
timetables contained in any applicable Environmental Law or in
any regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved
thereunder, except to the extent failure to comply would not have
a material adverse effect on the consolidated financial
condition, operations, business or prospects of such Borrower.
In addition, except as set forth in Schedule III
hereto:
(a) No notice, notification, demand, request for
information, citation, summons or order has been issued, no
complaint has been filed, no penalty has been assessed and no
investigation or review is pending or threatened by any
governmental or other entity with respect to any alleged failure
by any Borrower or any of its Subsidiaries to have any permit,
license or authorization required in connection with the conduct
of the business of such Borrower or any of its Subsidiaries or
with respect to any generation, treatment, storage, recycling,
transportation, release or disposal, or any release as defined in
42 U.S.C. Section 9601(22) ("Release"), of any substance
regulated under Environmental Laws ("Hazardous Materials")
generated by such Borrower or any of its Subsidiaries.
(b) None of the Borrowers nor any of their
Subsidiaries has handled any Hazardous Material, other than as a
generator, on any property now or previously owned or leased by
any Borrower or any of their Subsidiaries to an extent that it
has, or may reasonably be expected to have, a material adverse
effect on the consolidated financial condition, operations,
business or prospects of such Borrower; and
(i) no polychlorinated biphenyl is or has been
present at any property now or previously owned or
leased by the Borrowers or any of their Subsidiaries;
(ii) no asbestos is or has been present at any
property now or previously owned or leased by the
Borrowers or any of their Subsidiaries;
(iii) there are no underground storage tanks
for Hazardous Materials, active or abandoned, at any
property now or previously owned or leased by the
Borrowers or any of their Subsidiaries; and
(iv) no Hazardous Materials have been Released, in
a reportable quantity, where such a quantity has been
established by statute, ordinance, rule, regulation or
order, at, on or under any property now or previously
owned by the Borrowers or any of their Subsidiaries.
(c) None of the Borrowers nor any of their
Subsidiaries has transported or arranged for the transportation
of any Hazardous Material to any location which is listed on the
National Priorities List under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended
("CERCLA") listed for possible inclusion on the National
Priorities List by the Environmental Protection Agency in the
Comprehensive Environmental Response and Liability Information
System as provided by 40 C.F.R. Section 300.5 ("CERCLIS") or on
any similar state list or which is the subject of federal, state
or local enforcement actions or other investigations which may
lead to claims against any Borrower or any of its Subsidiaries
for clean-up costs, remedial work, damages to natural resources
or for personal injury claims, including, but not limited to,
claims under CERCLA.
(d) No Hazardous Material generated by the Borrowers
or any of their Subsidiaries has been recycled, treated, stored,
disposed of or released by any Borrower or any of its
Subsidiaries at any location other than those listed in Schedule
III hereto.
(e) No oral or written notification of a Release of a
Hazardous Material has been filed by or on behalf of any Borrower
or any of its Subsidiaries and no property now or previously
owned or leased by any Borrower or any of its Subsidiaries is
listed or proposed for listing on the National Priorities List
promulgated pursuant to CERCLA, on CERCLIS or on any similar
state list of sites requiring investigation or clean-up.
(f) There are no Liens arising under or pursuant to
any Environmental Laws on any of the real property or properties
owned or leased by the Borrowers or any of their Subsidiaries,
and no government actions have been taken or are in process which
could subject any of such properties to such Liens and none of
the Borrowers nor any of their Subsidiaries would be required to
place any notice or restriction relating to the presence of
Hazardous Materials at any property owned by it in any deed to
such property.
(g) There have been no environmental investigations,
studies, audits, tests, reviews or other analyses conducted by or
which are in the possession of the Borrowers or any of their
Subsidiaries in relation to any property or facility now or
previously owned or leased by the Borrowers or any of their
Subsidiaries which have not been made available to the Lenders.
Section 8.13. NO DEFAULT ON OUTSTANDING JUDGMENTS OR
ORDERS. Each of the Borrowers and its Subsidiaries has satisfied
all judgments applicable to them and none of the Borrowers nor
any of their Subsidiaries is in default with respect to any
judgment, writ, injunction or decree of any court, arbitrator or
federal, state, municipal or other governmental authority,
commission, board, bureau, agency or instrumentality, domestic or
foreign.
Section 8.14. NO DEFAULTS ON OTHER AGREEMENTS. None
of the Borrowers nor any of their Subsidiaries is a party to any
indenture, loan or credit agreement or any lease or other
agreement or instrument or subject to any charter or corporate
restriction which could have a material adverse effect on the
business, properties, assets, operations or conditions, financial
or otherwise, of such Borrower or any of its Subsidiaries, or the
ability of such Borrower to carry out its obligations under the
Facility Documents to which it is a party. None of the Borrowers
nor any of their Subsidiaries is in default in any respect in the
performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement or instrument
material to its business to which it is a party, except for
defaults which would not have a material adverse effect on the
business, properties, assets, operations or conditions, financial
or otherwise, of such Borrower or any of its Subsidiaries.
Section 8.15. LABOR DISPUTES AND ACTS OF GOD. Neither
the business nor the properties of any of the Borrowers or of any
of their Subsidiaries are affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm,
hail, earthquake, embargo, act of God or of the public enemy or
other casualty (whether or not covered by insurance) materially
and adversely affecting such business or properties or the
operation of any of the Borrowers or such Subsidiaries.
Section 8.16. GOVERNMENTAL REGULATION. None of the
Borrowers nor any of their Subsidiaries is subject to regulation
under the Public Utility Holding Company Act of 1935, the
Investment Company Act of 1940, the Interstate Commerce Act, the
Federal Power Act or any statute or regulation limiting its
ability to incur indebtedness for money borrowed as contemplated
hereby.
Section 8.17. PARTNERSHIPS. None of the Borrowers nor
any of their Subsidiaries is a general partner in any
partnership.
Section 8.18. NO FORFEITURE. None of the Borrowers
nor any of their Subsidiaries or Affiliates is engaged in or
proposes to be engaged in the conduct of any business or activity
which could result in a Forfeiture Proceeding and no Forfeiture
Proceeding against any of them is pending or to the best of their
knowledge, threatened.
Section 8.19. SOLVENCY.
(a) The present fair saleable value of the assets of
the Borrowers and their Subsidiaries after giving effect to all
the transactions contemplated by the Facility Documents and the
funding of the Revolving Credit Commitments hereunder exceeds the
amount that will be required to be paid on or in respect of the
existing debts and other liabilities (including contingent
liabilities) of the Borrowers and their Subsidiaries as they
mature.
(b) The property of the Borrowers does not constitute
unreasonably small capital for the Borrowers to carry out their
business as now conducted and as proposed to be conducted
including the capital needs of the Borrowers.
(c) The Borrowers do not intend to, nor do they
believe they will, incur debts beyond their ability to pay such
debts as they mature (taking into account the timing and amounts
of cash to be received by them, and of amounts to be payable on
or in respect of debt of the Borrowers). The cash available to
the Borrowers after taking into account all other anticipated
uses of the cash of the Borrowers, is anticipated to be
sufficient to pay all such amounts on or in respect of debt of
the Borrowers when such amounts are required to be paid.
(d) No Borrower believes that final judgments against
it in actions for money damages will be rendered at a time when,
or in an amount such that, such judgment will be unable to be
satisfied promptly in accordance with its terms (taking into
account the maximum reasonable amount of such judgments in any
such actions and the earliest reasonable time at which such
judgments might be rendered). The cash available to the
Borrowers after taking into account all other anticipated uses of
the cash of the Borrowers (including the payments on or in
respect of debt referred to in paragraph (c) of this Section
8.19) is anticipated to be sufficient to pay all such judgments
promptly in accordance with their terms.
ARTICLE 9. AFFIRMATIVE COVENANTS.
So long as any of the Loans shall remain unpaid or any
Outstanding Working Capital Obligation shall remain outstanding
or any Lender shall have a Revolving Credit Commitment under this
Agreement, or any amount is owing by any Borrower to any Lender
hereunder or under any other Facility Document, each Borrower
shall:
Section 9.01. MAINTENANCE OF EXISTENCE. Preserve and
maintain, and cause each of its Subsidiaries to preserve and
maintain, its corporate existence and good standing in the
jurisdiction of its incorporation, and qualify and remain
qualified, and cause each of its Subsidiaries to qualify and
remain qualified, as a foreign corporation in each jurisdiction
in which such qualification is required.
Section 9.02. CONDUCT OF BUSINESS. Continue, and
cause each of its Subsidiaries to continue, to engage in an
efficient and economical manner in a business of the same general
type as conducted by it on the date of this Agreement.
Section 9.03. MAINTENANCE OF PROPERTIES. Maintain,
keep and preserve, and cause each of its Subsidiaries to
maintain, keep and preserve, all of its properties, (tangible and
intangible) necessary or useful in the proper conduct of its
business in good working order and condition, ordinary wear and
tear excepted.
Section 9.04. MAINTENANCE OF RECORDS. Keep, and cause
each of its Subsidiaries to keep, adequate records and books of
account, in which complete entries will be made (except as to
Subsidiaries domiciled outside the United States) in accordance
with GAAP, reflecting all financial transactions of such Borrower
and its Subsidiaries.
Section 9.05. MAINTENANCE OF INSURANCE. Maintain, and
cause each of its Subsidiaries to maintain, insurance with
financially sound and reputable insurance companies or
associations, reasonably acceptable to the Required Lenders, in
such amounts and covering such risks as are usually carried by
companies engaged in the same or a similar business and similarly
situated, which insurance may provide for reasonable
deductibility from coverage thereof.
Section 9.06. COMPLIANCE WITH LAWS. Comply, and cause
each of its Subsidiaries to comply, in all material respects with
all applicable laws, rules, regulations and orders, such
compliance to include, without limitation, paying before the same
become delinquent all taxes, assessments and governmental charges
imposed upon it or upon its property, except to the extent such
are being contested in good faith by appropriate proceedings and
for which appropriate reserves have been established.
Section 9.07. RIGHT OF INSPECTION. At any reasonable
time and from time to time upon reasonable notice, permit the
Agent, the Servicing Agent or any Lender or any agent or
representative thereof, to examine and make copies and abstracts
from the records and books of account of, and visit the
properties of, such Borrower and any of its Subsidiaries, and to
discuss the affairs. finances and accounts of such Borrower and
any such Subsidiary with any of their respective officers and
directors and such Borrower's independent accountants.
Section 9.08. ASSET BASED AUDIT. From time to time,
upon reasonable notice, at the request of the Required Lenders
(but absent a Default or Event of Default, not more often than
once every fiscal year), permit an asset based audit to be
performed at the Borrowers' expense, and at any time at the
request of any Lender at such Lender's expense.
Section 9.09. REPORTING REQUIREMENTS. Furnish
directly to each of the Lenders (or as otherwise specifically
provided for below):
(a) as soon as available and in any event within 90
days after the end of each fiscal year of Apparel, a consolidated
and consolidating balance sheet of Apparel and its consolidated
subsidiaries as of the end of such fiscal year and a consolidated
and consolidating statement of operations and statements of cash
flows and changes in stockholders' equity of Apparel and its
consolidated subsidiaries for such fiscal year, all in reasonable
detail (including all operating divisions of the Borrowers) and
stating in comparative form the respective consolidated figures
for the corresponding date and period in the prior fiscal year,
and with respect to the consolidated financial statements
accompanied by an opinion thereon acceptable to the Agent and
each of the Lenders by Coopers & Lybrand or other independent
certified public accountants of national standing selected by
Apparel, which opinion shall state that said financial statements
fairly present the consolidated financial condition and results
of operations of Apparel and its consolidated subsidiaries as at
the end of, and for, such fiscal year in accordance with
generally accepted accounting principles then in effect;
provided, however, if there is a change in generally accepted
accounting principles after December 31, 1994, which affects the
presentation of the financial statements noted above in this
Section 9.09(a), then, in addition to the financial statements
required above, Apparel will furnish to each Lender all
adjustments to such financial statements required under this
Section 9.09(a) that would be required if they were prepared in
accordance with GAAP at the same time it provides the financial
statements noted above in this Section 9.09(a);
(b) as soon as available and in any event within 45
days after the end of each of the first three quarters of each
fiscal year of Apparel, a consolidated and consolidating balance
sheet of Apparel and its consolidated subsidiaries as of the end
of such quarter and a consolidated and consolidating statement
and statements of cash flows, of Apparel and its consolidated
subsidiaries for the period commencing at the end of the previous
fiscal year and ending with the end of such quarter, all in
reasonable detail (including all operating divisions of the
Borrowers) and stating in comparative form the respective
consolidated figures for the corresponding date and period in the
previous fiscal year and all prepared in accordance with GAAP and
certified by the chief financial officer of Apparel (subject to
standard year-end audit adjustments); provided, however, if there
is a change in generally accepted accounting principles after
December 31, 1994, which affects the presentation of the
financial statements noted above in this Section 9.09(b), then,
in addition to the financial statements required above, Apparel
will furnish to each Lender all adjustments to such financial
statements required under this Section 9.09(b) that would be
required if they were prepared in accordance with GAAP at the
same time it provides the financial statements noted above in
this Section 9.09(b);
(c) as soon as available and in any event within 60
days after the end of each January, 45 days after the end of each
February, and 30 days after the end of each other month of the
calendar year, a consolidated and consolidating balance sheet of
Apparel and its consolidated subsidiaries as of the end of such
month and a consolidated and consolidating statement of
operations and statements of cash flows, of Apparel and its
consolidated subsidiaries for such month and for the period
commencing at the end of the previous fiscal year and ending with
the end of such month, all in reasonable detail (including all
operating divisions of the Borrowers) and all prepared in
accordance with GAAP and certified by the chief financial officer
of Apparel (subject to standard year-end audit adjustments);
provided, however, if there is a change in generally accepted
accounting principles after December 31, 1994, which affects the
presentation of the financial statements noted above in this
Section 9.09(c), then, in addition to the financial statements
required above, Apparel will furnish to each Lender all
adjustments to such financial statements required under this
Section 9.09(c) that would be required if they were prepared in
accordance with GAAP at the same time it provides the financial
statements noted above in this Section 9.09(c);
(d) promptly upon receipt thereof, copies of any
reports submitted to the Borrowers or any of their Subsidiaries
by independent certified public accountants in connection with
examination of the financial statements of Apparel or any such
Subsidiary made by such accountants or in connection with any
analysis of the Borrower's operations and business practices;
(e) simultaneously with the delivery of the financial
statements referred to above, a certificate of the chief
financial officer of Apparel (i) certifying that to the best of
his knowledge no Default or Event of Default has occurred and is
continuing or, if a Default or Event of Default has occurred and
is continuing, a statement as to the nature thereof and the
action which is proposed to be taken with respect thereto, and
(ii) with respect to the financial statements under Section
9.09(a) with computations demonstrating compliance with the
covenants contained in Article 11;
(f) promptly after the commencement thereof, notice of
all actions, suits, and proceedings before any court or
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting any Borrower or
any of its Subsidiaries which, if determined adversely to such
Borrower or such Subsidiary, could have a material adverse effect
on the financial condition, properties, or operations of such
Borrower or such Subsidiary;
(g) as soon as possible and in any event within 5 days
after the occurrence of each Default or Event of Default a
written notice setting forth the details of such Default or Event
of Default and to the extent practicable the action which is
proposed to be taken by the Borrowers with respect thereto;
(h) as soon as possible, and in any event within ten
days after any Borrower knows or has reason to know that any of
the events or conditions specified below with respect to any Plan
or Multiemployer Plan have occurred or exist, a statement signed
by a senior financial officer of such Borrower setting forth
details respecting such event or condition and the action, if
any, which such Borrower or its ERISA Affiliate proposes to take
with respect thereto (and a copy of any report or notice required
to be filed with or given to PBGC by such Borrower or an ERISA
Affiliate with respect to such event or condition):
(i) any reportable event, as defined in Section
4043(b) of ERISA, with respect to a Plan, as to which
PBGC has not by regulation waived the requirement of
Section 4043(a) of ERISA that it be notified within 30
days of the occurrence of such event (provided that a
failure to meet the minimum funding standard of Section
412 of the Code or Section 302 of ERISA including,
without limitation, the failure to make on or before
its due date a required installment under Section
412(m) of the Code or Section 302(e) of ERISA, shall be
a reportable event regardless of the issuance of any
waivers in accordance with Section 412(d) of the Code)
and any request for a waiver under Section 412(d) of
the Code for any Plan;
(ii) the distribution under Section 4041 of ERISA
of a notice of intent to terminate any Plan or any
action taken by a Borrower or an ERISA Affiliate to
terminate any Plan;
(iii) the institution by PBGC of proceedings
under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Plan,
or the receipt by a Borrower or any ERISA Affiliate of
a notice from a Multiemployer Plan that such action has
been taken by PBGC with respect to such Multiemployer
Plan;
(iv) the complete or partial withdrawal from a
Multiemployer Plan by a Borrower or any ERISA Affiliate
that results in liability under Section 4201 or 4204 of
ERISA (including the obligation to satisfy secondary
liability as a result of a purchaser default) or the
receipt of a Borrower or any ERISA Affiliate of notice
from a Multiemployer Plan that it is in reorganization
or insolvency pursuant to Section 4241 or 4245 of ERISA
or that it intends to terminate or has terminated under
Section 4041A of ERISA;
(v) the institution of a proceeding by a
fiduciary or any Multiemployer Plan against a Borrower
or any ERISA Affiliate to enforce Section 515 of ERISA,
which proceeding is not dismissed within 30 days;
(vi) the adoption of an amendment to any Plan that
pursuant to Section 401(a)(29) of the Code or Section
307 of ERISA would result in the loss of tax-exempt
status of the trust of which such Plan is a part if a
Borrower or an ERISA Affiliate fails to timely provide
security to the Plan in accordance with the provisions
of said Sections;
(vii) any event or circumstance exists which
may reasonably be expected to constitute grounds for a
Borrower or any ERISA Affiliate to incur liability
under Title IV of ERISA or under Sections 412(c)(11) or
412(n) of the Code with respect to any Plan; and
(viii) the Unfunded Benefit Liabilities of one
or more Plans increase after the date of this Agreement
in an amount which is material in relation to the
financial condition of the Borrowers;
(i) promptly after the request of any Lender, copies
of each annual report filed pursuant to Section 104 of ERISA with
respect to each Plan (including, to the extent required by
Section 104 of ERISA, the related financial and actuarial
statements and opinions and other supporting statements,
certifications, schedules and information referred to in Section
103) and each annual report filed with respect to each Plan under
Section 4065 of ERISA; PROVIDED, HOWEVER, that in the case of a
Multiemployer Plan, such annual reports shall be furnished only
if they are available to a Borrower or an ERISA Affiliate;
(j) promptly after the furnishing thereof, copies of
any statement or report furnished to any other party pursuant to
the terms of any indenture, loan or credit or similar agreement
and not otherwise required to be furnished to the Lenders
pursuant to any other clause of this Section 9.09;
(k) promptly after the sending or filing thereof,
copies of all proxy statements, financial statements and reports
which any Borrower or any of its Subsidiaries sends to its
stockholders, and copies of all regular, periodic and special
reports, and all registration statements which Apparel files with
the Securities and Exchange Commission or any governmental
authority which may be substituted therefor, or with any national
securities exchange;
(l) promptly after the commencement thereof or
promptly after any Borrower knows of the commencement or threat
thereof, notice of any Forfeiture Proceeding;
(m) as soon as available and in any event not later
than 15 days after the end of each fiscal quarter (or if
requested by any Lender in writing, within 15 days after the end
of each month), a detailed aging report with respect to the
Accounts of each Borrower, in form satisfactory to the Servicing
Agent and the Required Lenders;
(n) as soon as available and in any event by July 31,
1996 with respect to the second fiscal quarter of Apparel and by
October 30, 1996 with respect to the third fiscal quarter of
Apparel, a written summary of the status of the items provided
for in the preliminary business plan dated February 6, 1996 for
Apparel and its consolidated subsidiaries which was prepared by
Apparel and Carl Marx Consulting Group Company; provided, that,
in connection with the delivery of such written summary Apparel
shall be available and shall arrange for Carl Marx Consulting
Group Company (or another consulting firm acceptable to the
Required Lenders in their sole discretion) to be available to the
Lenders to respond to questions any Lender may have with respect
to such written summary;
(o) as soon as available and in any event within 5
days of each month, commencing with a report for April, 1996 to
be delivered on or before May 5, 1996, an "availability to sell"
report for each Borrower and each division of each Borrower other
than for Varon, in form satisfactory to the Servicing Agent and
the Required Lenders;
(p) commencing with the reasonable request of the
Servicing Agent, an "availability to sell" report for Varon, in
form and substance satisfactory to the Servicing Agent and the
Required Lenders;
(q) as soon as available and in any event not later
than 10 days prior to the end of each month, commencing with a
projection for the three (3) month period of May, June and July
1996 to be delivered on or before April 20, 1996, a consolidating
three (3) month cash flow projection of Apparel and its
consolidated subsidiaries, including, without limitation, sales,
collections, cash requirements, accounts receivable balance,
inventory balance, and accounts payable balance of Apparel and
its consolidated subsidiaries for the following three months;
(r) each week, the Borrowers shall provide to the
Servicing Agent a detailed open item aging report with respect to
the Accounts of the Borrowers, showing aggregate current Accounts
by operating unit and aging in 30 day increments, in form
satisfactory to the Servicing Agent and the Required Lenders;
(s) each week, internally prepared "flash" reports
substantially in the form attached hereto as Exhibit F, certified
by the chief financial officer of Apparel;
(t) from time to time at the request of the Servicing
Agent or any Lender, but not less frequently than twice each
week, the Borrowers shall provide to the Servicing Agent (i)
sales journals describing all Accounts created by the Borrowers,
by operating unit, in form and substance satisfactory to the
Required Lenders and the Servicing Agent; and (ii) cash receipts
journals, in form and substance satisfactory to the Required
Lenders and the Servicing Agent;
(u) not later than December 31 of each fiscal year, a
budget for the succeeding fiscal year, in form and substance
satisfactory to the Required Lenders;
(v) simultaneously with the delivery of the annual
financial statements referred to above, and within 60 days of any
material changes in coverage, copies of certificates of insurance
from each insurance carrier evidencing the coverage required by
Section 9.05;
(w) promptly after June 30, 1996, but in no event
later than July 15, 1996, information in form and substance
satisfactory to the Required Lenders showing for the Andy Johns
division of BAI the total amount of goods shipped during the
period from January 1, 1996 to June 30, 1996 and the total amount
of all open unshipped orders as of June 30, 1996 with a delivery
date on or before December 31, 1996;
(x) as soon as available and in any event within 20
days of the Second Closing Date, updated insurance certificates
for each of the Borrowers in form and substance satisfactory to
the Required Lenders;
(y) such other information or documents respecting the
condition, assets or operations, financial or otherwise, of the
Borrowers or any of their Subsidiaries as the Agent, the
Servicing Agent or any Lender may from time to time reasonably
request.
ARTICLE 10. NEGATIVE COVENANTS.
So long as any of the Loans shall remain unpaid or any
Outstanding Working Capital Obligation shall remain outstanding
or any Lender shall have a Revolving Credit Commitment under this
Agreement, or any amount is owing by any Borrower to any Lender
hereunder or under any other Facility Document, none of the
Borrowers shall:
Section 10.01. DEBT. Create, incur, assume or suffer
to exist, or permit any of its Subsidiaries to create, incur,
assume or suffer to exist, any Debt, except:
(a) Debt of such Borrower under this Agreement or the
Notes;
(b) Debt described in Schedule II, but no renewals,
extensions or refinancings thereof;
(c) the Subordinated Debt and any other Debt of the
Borrowers subordinated on terms satisfactory to the Lenders to
the Borrowers' obligations under this Agreement and the Notes;
(d) Debt of the Borrowers to any other Borrower or a
Subsidiary or of any Subsidiary to the Borrowers or another such
Subsidiary:
(e) Debt, including Capital Leases, of the Borrowers
or any such Subsidiary secured by purchase money Liens or Liens
in connection with Capital Leases permitted by Section 10.03(i).
Section 10.02. GUARANTIES, ETC. Assume, guarantee,
endorse or otherwise be or become directly or contingently
responsible or liable, or permit any of its Subsidiaries to
assume, guarantee, endorse or otherwise be or become directly or
indirectly responsible or liable (including, but not limited to,
an agreement to purchase any obligation, stock, assets, goods or
services or to supply or advance any funds, asset, goods or
services, or an agreement to maintain or cause such Person to
maintain a minimum working capital or net worth or otherwise to
assure the creditors of any Person against loss), for the
obligations of any Person, except: (a) guaranties by
endorsement of negotiable instruments for deposit or collection
or similar transactions in the ordinary course of business; and
(b) guaranties of domestic suppliers of the Borrowers, not
exceeding One Million Dollars ($1,000,000) in the aggregate,
given in connection with the purchase of raw materials.
Section 10.03. LIENS. Create, incur, assume or suffer
to exist, or permit any of its Subsidiaries to create, incur,
assume or suffer to exist, any Lien, upon or with respect to any
of its properties, now owned or hereafter acquired, except:
(a) Liens in favor of the Agent on behalf of the
Lenders securing the Loans hereunder;
(b) Liens for taxes or assessments or other government
charges or levies if not yet due and payable or if due and
payable if they are being contested in good faith by appropriate
proceedings and for which appropriate reserves are maintained;
(c) Liens imposed by law, such as mechanic's,
materialmen's, landlord's, warehousemen's and carrier's Liens,
and other similar Liens, securing obligations incurred in the
ordinary course of business which are not past due for more than
45 days, or which are being contested in good faith by
appropriate proceedings and for which appropriate reserves have
been established;
(d) Liens under workmen's compensation, unemployment
insurance, social security or similar legislation (other than
ERISA);
(e) Liens, deposits or pledges to secure the
performance of bids, tenders, contracts (other than contracts for
the payment of money), leases (permitted under the terms of this
Agreement), public or statutory obligations, surety, stay,
appeal, indemnity, performance or other similar bonds, or other
similar obligations arising in the ordinary course of business;
(f) judgment and other similar Liens arising in
connection with court proceedings; provided that the execution or
other enforcement of such Liens is effectively stayed and the
claims secured thereby are being actively contested in good faith
and by appropriate proceedings;
(g) easements, rights-of-way, restrictions and other
similar encumbrances which, in the aggregate, do not materially
interfere with the occupation, use and enjoyment by the Borrowers
or any such Subsidiary of the property or assets encumbered
thereby in the normal course of its business or materially impair
the value of the property subject thereto;
(h) Liens securing obligations of such a Subsidiary to
a Borrower or another such Subsidiary; or
(i) purchase money Liens on any property hereafter
acquired or the assumption of any Lien on property existing at
the time of such acquisition, or a Lien incurred in connection
with any conditional sale or other title retention agreement or a
Capital Lease; provided that:
(i) any property subject to any of the foregoing
is acquired by a Borrower or any such Subsidiary in the
ordinary course of its business and the Lien on any
such property is created contemporaneously with or in
existence at the time of, such acquisition;
(ii) the obligation secured by any Lien so
created, assumed or existing shall not exceed 100% of
the lesser of cost or fair market value as of the time
of acquisition of the property covered thereby to such
Borrower or such Subsidiary acquiring the same;
(iii) each such Lien shall attach only to the
property so acquired and fixed improvements thereon;
and
(iv) the obligations secured by such Lien are
permitted by the provisions of Sections 10.01 and
11.01.
Section 10.04. LEASES. Create, incur, assume or
suffer to exist, or permit any of its Subsidiaries to create,
incur, assume or suffer to exist, any obligation as lessee for
the rental or hire of any real or personal property, except:
(a) leases existing on the date of this Agreement and any
extensions or renewals thereof; (b) leases (other than Capital
Leases) which do not in the aggregate require the Borrowers to
make payments (including taxes, insurance, maintenance and
similar expense which the Borrowers are required to pay under the
terms of any lease) in any fiscal year of the Borrowers in excess
of $2,500,000; and (c) Capital Leases permitted by Section 10.01.
Section 10.05. INVESTMENTS. Make, or permit any of
its Subsidiaries to make, any loan or advance to any Person or
purchase or otherwise acquire, or permit any such Subsidiary to
purchase or otherwise acquire, any capital stock, assets,
obligations or other securities of, make any capital contribution
to, or otherwise invest in, or acquire any interest in, any
Person, except: (a) direct obligations of the United States of
America or any agency thereof with maturities of one year or less
from the date of acquisition; (b) commercial paper of a domestic
issuer rated at least "A-1" by Standard & Poor's Corporation or
"P-1" by Moody's Investors Service, Inc.; (c) certificates of
deposit with maturities of one year or less from the date of
acquisition issued by any commercial bank operating within the
United States of America having capital and surplus in excess of
$100,000,000; (d) for stock, obligations or securities received
in settlement of debts (created in the ordinary course of
business) owing to the Borrower or any such Subsidiary;
(e) advances by M & L International, Inc. to M & L International
(H.K.) Ltd. not exceeding $750,000 outstanding at any time; and
(f) Apparel may make an investment of up to $500,000 in Amy
Industries de Honduras, S.A. de C.V.
Section 10.06. DIVIDENDS. Declare or pay any
dividends, purchase, redeem, retire or otherwise acquire for
value any of its capital stock now or hereafter outstanding, or
make any distribution of assets to its stockholders as such
whether in cash, assets or in obligations of such Borrower, or
allocate or otherwise set apart any sum for the payment of any
dividend or distribution on, or for the purchase, redemption or
retirement of any shares of its capital stock, or make any other
distribution by reduction of capital or otherwise in respect of
any shares of its capital stock or permit any of its Subsidiaries
to purchase or otherwise acquire for value any stock of such
Borrower or another such Subsidiary, except that a Borrower may
declare and deliver dividends and make distributions payable
solely in its common stock.
Section 10.07. SALE OF ASSETS. Sell, lease, assign,
transfer or otherwise dispose of, or permit any of its
Subsidiaries to sell, lease, assign, transfer or otherwise
dispose of, any of its now owned or hereafter acquired assets
(including, without limitation, shares of stock and indebtedness
of such Subsidiaries, receivables and leasehold interests),
except: (a) for inventory disposed of in the ordinary course of
business; (b) the sale or other disposition of assets no longer
used or useful in the conduct of its business; (c) that any such
Subsidiary may sell, lease, assign, or otherwise transfer its
assets to a Borrower; and (d) the sale or redemption of stock of
Hartwell Sports, Inc. owned by Apparel.
Section 10.08. STOCK OF SUBSIDIARIES, ETC. Sell or
otherwise dispose of any shares of capital stock of any of its
Subsidiaries, except in connection with a transaction permitted
under Section 10.10, or permit any such Subsidiary to issue any
additional shares of its capital stock, except directors'
qualifying shares.
Section 10.09. TRANSACTIONS WITH AFFILIATES. Enter
into any transaction, including, without limitation, the
purchase, sale or exchange of property or the rendering of any
service, with any Affiliate or permit any of its Subsidiaries to
enter into any transaction, including, without limitation, the
purchase, sale or exchange of property or the rendering of any
service, with any Affiliate, except (a) in the ordinary course of
and pursuant to the reasonable requirements of the Borrowers' or
such Subsidiary's business and upon fair and reasonable terms no
less favorable to the Borrowers or such Subsidiary than would
obtain in a comparable arm's length transaction with a Person not
an Affiliate, (b) payment of fees to Trivest, Inc. pursuant to
the Trivest Letter Agreement, and (c) the sale or redemption of
stock of Hartwell Sports, Inc. owned by Apparel.
Section 10.10. MERGERS, ETC. Merge or consolidate
with, or sell, assign, lease or otherwise dispose of (whether in
one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter
acquired) to, any Person, or acquire all or substantially all of
the assets or the business of any Person (or enter into any
agreement to do any of the foregoing), or permit any of its
Subsidiaries to do so except that: (a) any such Subsidiary may
merge into or transfer assets to a Borrower; (b) any Subsidiary
may merge into or consolidate with or transfer assets to any
other Subsidiary: and (c) any Borrower may merge into or
consolidate with another Borrower.
Section 10.11. NO ACTIVITIES LEADING TO FORFEITURE.
None of the Borrowers nor any of their Subsidiaries or Affiliates
shall engage in the conduct of any business or activity which
could result in a Forfeiture Proceeding.
Section 10.12. NO MODIFICATION OF SIGNIFICANT
AGREEMENTS. Except as set forth in the Trivest Letter Agreement,
none of the Borrowers will amend or agree to modify any
Significant Agreement in any manner which will have a material
adverse effect on such Borrowers rights or benefits thereunder.
Section 10.13. OTHER NEGATIVE PLEDGE AGREEMENTS.
Enter into any agreement with any Person pursuant to which they
agree not to create, incur, assume or suffer to exist, or permit
any of its Subsidiaries to create, incur, assume or suffer to
exist, any Lien, upon or with respect to any of its properties,
now owned or hereafter acquired.
Section 10.14. ACCOUNTS PAYABLE TO TRADE CREDITORS.
Permit accounts payable to trade creditors for goods or services
and current operating liabilities (other than for borrowed money)
to be more than 90 days past due, unless such are being contested
in good faith and by appropriate proceedings;
Section 10.15. CHANGE IN FISCAL YEAR. Change their
fiscal year end from December 31.
ARTICLE 11. FINANCIAL COVENANTS.
So long as any of the Loans shall remain unpaid or any
Outstanding Working Capital Obligation shall remain outstanding
or any Lender shall have a Revolving Credit Commitment under this
Agreement, or any amount is owing by any Borrower to any Lender
hereunder or under any other Facility Document:
Section 11.01. MINIMUM SUBORDINATED DEBT.
Subordinated Debt shall not be less than Six Million Four Hundred
Forty-Three Thousand Five Hundred Dollars ($6,443,500) at any
time.
Section 11.02. MINIMUM TANGIBLE NET WORTH.
Consolidated Tangible Net Worth shall not be less than Thirteen
Million Seven Hundred Fifty Thousand Dollars ($13,750,000) at
December 31, 1996.
Section 11.03. FUNDED DEBT TO TANGIBLE NET WORTH. The
ratio of Consolidated Funded Debt to Consolidated Tangible Net
Worth shall not be more than .80 to 1.00 at December 31, 1996.
Section 11.04. NET INCOME. Net Income shall not be
less than $1.00 for fiscal year ended December 31, 1996.
Section 11.05. CAPITAL EXPENDITURES. The Borrowers
shall not make or permit to be made Consolidated Capital
Expenditures during the period from January 1, 1996 to December
31, 1996 to exceed $750,000.
ARTICLE 12. EVENTS OF DEFAULT.
Section 12.01. EVENTS OF DEFAULT. Any of the
following events shall be an "Event of Default":
(a) any Borrower shall: (i) fail to pay the principal
of any Note as and when due and payable; (ii) fail to pay
interest on any Note or any fee or other amount due hereunder,
including but not limited to a failure to make any mandatory
prepayment as required hereunder, as and when due and payable;
(iii) fail to reimburse Chase on a Letter of Credit or Letter of
Indemnity as and when due and payable;
(b) any representation or warranty made or deemed made
by a Borrower in this Agreement or in any other Facility Document
or by any Guarantor in any Facility Document to which it is a
party or which is contained in any certificate, document,
opinion, financial or other statement furnished at any time under
or in connection with any Facility Document shall prove to have
been incorrect in any material respect on or as of the date made
or deemed made;
(c) any Borrower shall: (i) fail to perform or observe
any term, covenant or agreement contained in Section 2.04,
Section 9.09(a) or (g) or Articles 10 or 11 or in any other
Facility Document; (ii) fail to perform any term covenant or
agreement contained in Section 9.09 other than Section 9.09(a) or
(g), and such failure shall continue for 5 days; or (iii) fail to
perform or observe any term, covenant or agreement on its part to
be performed or observed (other than the obligations specifically
referred to elsewhere in this Section 12.01) and such failure
shall continue for 30 consecutive days;
(d) any Borrower, any Guarantor or any of their
respective Subsidiaries shall: (i) fail to pay any indebtedness,
including but not limited to indebtedness for borrowed money
(other than the payment obligations described in (a) above), of
the Borrowers, such Guarantor or such Subsidiary, as the case may
be, or any interest or premium thereon, when due (whether by
scheduled maturity, required prepayment, acceleration, demand or
otherwise); or (ii) fail to perform or observe any term, covenant
or condition on its part to be performed or observed under any
agreement or instrument relating to any such indebtedness, when
required to be performed or observed, if the effect of such
failure to perform or observe is to accelerate, or to permit the
acceleration of, after the giving of notice or passage of time,
or both, the maturity of such indebtedness, whether or not such
failure to perform or observe shall be waived by the holder of
such indebtedness; or any such indebtedness shall be declared to
be due and payable, or required to be prepaid (other than by a
regularly scheduled required prepayment), prior to the stated
maturity thereof;
(e) any Borrower, any Guarantor or any of their
respective Subsidiaries: (i) shall generally not, or be unable
to, or shall admit in writing its inability to, pay its debts as
such debts become due; or (ii) shall make an assignment for the
benefit of creditors, petition or apply to any tribunal for the
appointment of a custodian, receiver or trustee for it or a
substantial part of its assets; or (iii) shall commence any
proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute
of any jurisdiction, whether now or hereafter in effect; or (iv)
shall have had any such petition or application filed or any such
proceeding shall have been commenced, against it, in which an
adjudication or appointment is made or order for relief is
entered, or which petition, application or proceeding remains
undismissed for a period of 30 days or more; or shall be the
subject of any proceeding under which its assets may be subject
to seizure, forfeiture or divestiture (other than a proceeding in
respect of a Lien permitted under Section 10.03 (b)); or (v) by
any act or omission shall indicate its consent to, approval of or
acquiescence in any such petition, application or proceeding or
order for relief or the appointment of a custodian, receiver or
trustee for all or any substantial part of its property; or (vi)
shall suffer any such custodianship, receivership or trusteeship
to continue undischarged for a period of 30 days or more;
(f) one or more judgments, decrees or orders for the
payment of money in excess of $100,000 in the aggregate shall be
rendered against any Borrower, any Guarantor or any of their
respective Subsidiaries and such judgments, decrees or orders
shall continue unsatisfied and in effect for a period of 45
consecutive days without being vacated, discharged, satisfied or
stayed or bonded pending appeal;
(g) any event or condition shall occur or exist with
respect to any Plan or Multiemployer Plan concerning which any
Borrower is under an obligation to furnish a report to the
Lenders in accordance with Section 9.09(9) hereof and as a result
of such event or condition, together with all other such events
or conditions, any Borrower or any ERISA Affiliate has incurred
or in the opinion of the Lender is reasonably likely to incur a
liability to a Plan, a Multiemployer Plan, the PBGC, or a Section
4042 Trustee (or any combination of the foregoing) which is
material in relation to the financial position of any Borrower;
provided, however, that any such amount shall not be deemed to be
material so long as all such amounts do not exceed in the
aggregate during any consecutive two year period $100,000;
(h) The Unfunded Benefit Liabilities of one or more
Plans have increased after the date of this Agreement in an
amount in excess of $100,000;
(i)(A) any Forfeiture Proceeding shall have been
commenced or the Borrowers shall have given any Lender written
notice of the commencement of any Forfeiture Proceeding as
provided in Section 9.09 (k) or (B) any Lender has a good faith
basis to believe that a Forfeiture Proceeding has been threatened
or commenced;
(j) the Subordinated Notes shall at any time after
their execution and delivery and for any reason cease to be in
full force and effect or shall be declared null and void, or the
validity or enforceability thereof shall be contested by the
holder of such Subordinated Notes, the holder of such
Subordinated Notes shall deny it has any further liability or
obligation thereunder or shall fail to perform its obligations
thereunder or the Subordinated Notes shall be declared due and
payable prior to the stated maturity thereof;
(k) any Security Document shall at any time after its
execution and delivery and for any reason cease: (A) to create a
valid and perfected first priority security interest in and to
the property purported to be subject to such Document; or (B) to
be in full force and effect or shall be declared null and void,
or the validity or enforceability thereof shall be contested by
the Grantor or the Grantor shall deny it has any further
liability or obligation under such Security Document or the
Grantor shall fail to perform any of its obligations thereunder;
(l) any change shall occur in the management of the
Borrowers, including any of their operating divisions, which in
the judgment of the Required Lenders could reasonably be expected
to have a material adverse effect upon the business or prospects
of the Borrowers;
(m) Article 14 shall, at any time after the execution
and delivery of this Agreement and for any reason, cease to be in
full force and effect or shall be declared null and void, or the
validity or enforceability thereof shall be contested by any
Guarantor or any Guarantor shall deny it has any further
liability or obligation under or shall fail to perform its
obligations under Article 14;
(n) if for any reason the Andy Johns division of BAI
has as of June 30, 1996 a total of shipments made during the
period from January 1, 1996 to June 30, 1996 plus open unshipped
orders with a delivery date on or before December 31, 1996 of
less than Twenty-Two Million Two Hundred Thousand Dollars
($22,200,000); or
(o) if for any reason all of the stock of Hartwell
Sports, Inc. owned by Apparel has not been redeemed and paid for
in full in cash by Hartwell Sports, Inc. by April 15, 1996.
Section 12.02. REMEDIES. If any Event of Default
shall occur and be continuing, the Agent shall, upon request of
the Required Lenders, by notice to the Borrowers, (a) declare the
Revolving Credit Commitment to be terminated, whereupon the same
shall forthwith terminate, (b) terminate the obligation of Chase
to issue Letters of Credit, whereupon the same shall forthwith
terminate, (c) declare the outstanding principal of the Notes,
all interest thereon and all other amounts payable under this
Agreement and the Notes to be forthwith due and payable,
whereupon the Notes, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrowers, and (d) require each
Borrower to provide cash collateral in the aggregate amount of
all outstanding Letters of Credit and Letters of Indemnity;
provided that, in the case of an Event of Default referred to in
Section 12.01 (e) above, the Revolving Credit Commitment and the
obligation of Chase to issue Letters of Credit shall be
immediately terminated, and the Notes, all interest thereon and
all other amounts payable under this Agreement shall be
immediately due and payable without notice, presentment, demand,
protest or other formalities of any kind, all of which are hereby
expressly waived by the Borrowers.
ARTICLE 13. THE AGENTS; RELATIONS AMONG LENDERS
AND BORROWERS.
Section 13.01. APPOINTMENT, POWERS AND IMMUNITIES OF
AGENT. Each Lender hereby irrevocably (but subject to removal by
the Required Lenders pursuant to Section 13.10) appoints and
authorizes Chase to act as its Agent hereunder and under any
other Facility Document with such powers as are specifically
delegated to the Agent by the terms of this Agreement and any
other Facility Document, together with such other powers as are
reasonably incidental thereto. The Agent shall have no duties or
responsibilities except those expressly set forth in this
Agreement and any other Facility Document, and shall not by
reason of this Agreement be a trustee for any Lender. The Agent
shall not be responsible to the Lenders for any recitals,
statements, representations or warranties made by the Borrowers
or any officer or official of the Borrowers or any other Person
contained in this Agreement or any other Facility Document, or in
any certificate or other document or instrument referred to or
provided for in, or received by any of them under, this Agreement
or any other Facility Document, or for the value, legality,
validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Facility Document or
any other document or instrument referred to or provided for
herein or therein, for the perfection or priority of any
Collateral for the Loans or for any failure by any Borrower to
perform any of its obligations hereunder or thereunder. The
Agent may employ agents and attorneys-in-fact and shall not be
responsible, except as to money or securities received by it or
its authorized agents, for the negligence or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable
care. Neither the Agent nor any of its directors, officers,
employees or agents shall be liable or responsible for any action
taken or omitted to be taken by it or them hereunder or under any
other Facility Document or in connection herewith or therewith,
except for its or their own gross negligence or willful
misconduct. The Borrowers shall pay any fee agreed to by the
Borrowers and the Agent with respect to the Agent's services
hereunder.
Section 13.02. APPOINTMENT, POWERS AND IMMUNITIES OF
SERVICING AGENT. Each Lender hereby irrevocably (but subject to
removal by the Required Lenders pursuant to Section 13.10)
appoints and authorizes Milberg to act as its Servicing Agent
hereunder and under any other Facility Document with such powers
as are specifically delegated to the Servicing Agent by the terms
of this Agreement and any other Facility Document, together with
such other powers as are reasonably incidental thereto. The
Servicing Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement, and shall not by
reason of this Agreement be a trustee or fiduciary for any
Lender. The Servicing Agent shall not be responsible to the
Lenders for any recitals, statements, representations or
warranties made by the Borrowers or any officer or official of
the Borrowers or any other Person contained in this Agreement or
any other Facility Document, or in any certificate or other
document or instrument referred to or provided for in, or
received by any of them under, this Agreement or any other
Facility Document, or for the value, legality, validity,
effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Facility Document or any other document or
instrument referred to or provided for herein or therein, for the
perfection or priority of any Collateral for the Loans or for any
failure by any Borrower to perform any of its obligations
hereunder or thereunder. The Servicing Agent may employ agents
and attorneys-in-fact and shall not be responsible, except as to
money or securities received by it or its authorized agents, for
the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. Neither
the Servicing Agent nor any of its directors, officers, employees
or agents shall be liable or responsible for any action taken or
omitted to be taken by it or them hereunder or under any other
Facility Document or in connection herewith or therewith, except
for its or their own gross negligence or willful misconduct.
Section 13.03. RELIANCE BY EACH OF THE AGENT AND THE
SERVICING AGENT. Each of the Agent and the Servicing Agent shall
be entitled to rely upon any certification, notice or other
communication (including any thereof by telephone, telex,
telegram or cable) believed by it to be genuine and correct and
to have been signed or sent by or on behalf of the proper Person
or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by such Agent.
Each of the Agent and the Servicing Agent may deem and treat each
Lender as the holder of the Loans made by it for all purposes
hereof unless and until a notice of the assignment or transfer
thereof satisfactory to each of the Agent and the Servicing Agent
signed by such Lender shall have been furnished to such Agent but
neither the Agent nor the Servicing Agent shall be required to
deal with any Person who has acquired a participation in any Loan
from a Lender. As to any matters not expressly provided for by
this Agreement or any other Facility Document, each of the Agent
and the Servicing Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder in accordance
with instructions signed by the Required Lenders, and such
instructions of the Required Lenders and any action taken or
failure to act pursuant thereto shall be binding on all of the
Lenders and any other holder of all or any portion of any Loan.
Section 13.04. DEFAULTS. The Agent shall not be
deemed to have knowledge of the occurrence of a Default or Event
of Default (other than the non-payment of principal of or
interest on the Loans to the extent the same is required to be
paid to the Agent for the account of the Lenders) unless the
Agent has received notice from a Lender or a Borrower specifying
such Default or Event of Default and stating that such notice is
a "Notice of Default". In the event that the Agent receives such
a notice of the occurrence of a Default or Event of Default, the
Agent shall give prompt notice thereof to the Lenders (and shall
give each Lender prompt notice of each such non-payment). The
Agent shall (subject to Section 13.09) take such action with
respect to such Default or Event of Default which is continuing
as shall be directed by the Required Lenders; provided that,
unless and until the Agent shall have received such directions,
the Agent may take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it
shall deem advisable in the best interest of the Lenders; and
provided further that the Agent shall not be required to take any
such action which it determines to be contrary to law.
Section 13.05. RIGHTS OF EACH OF THE AGENT AND THE
SERVICING AGENT AS A LENDER. With respect to its Revolving
Credit Commitment and the Loans made by it, each of the Agent and
the Servicing Agent in its capacity as a Lender hereunder shall
have the same rights and powers hereunder as any other Lender and
may exercise the same as though it were not acting as an Agent,
and the term "Lender" or "Lenders" shall, unless the context
otherwise indicates, include each of the Agent and the Servicing
Agent in its capacity as a Lender. Each of the Agent and the
Servicing Agent and its Affiliates may (without having to account
therefor to any Lender) accept deposits from, lend money to (on a
secured or unsecured basis), and generally engage in any kind of
banking, trust or other business with, the Borrowers (and any of
its Affiliates) as if it were not acting as an Agent, and each of
the Agent and the Servicing Agent may accept fees and other
consideration from the Borrowers for services in connection with
this Agreement or otherwise without having to account for the
same to the Lenders. Although the Agent, the Servicing Agent and
their Affiliates may in the course of such relationships and
relationships with other Persons acquire information about the
Borrowers, their Affiliates and such other Persons, neither the
Agent nor the Servicing Agent shall have a duty to disclose such
information to the Lenders.
Section 13.06. INDEMNIFICATION OF AGENTS. The Lenders
agree to indemnify each of the Agent and the Servicing Agent (to
the extent not reimbursed under Section 15.03 or under the
applicable provisions of any other Facility Document, but without
limiting the obligations of the Borrowers under Section 15.03 or
such provisions), ratably in accordance with the aggregate unpaid
principal amount of the Loans made by the Lenders (without giving
effect to any participations, in all or any portion of such
Loans, sold by them to any other Person) (or, if no Loans are at
the time outstanding, ratably in accordance with their respective
Revolving Credit Commitment), for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted
against either the Agent or the Servicing Agent in any way
relating to or arising out of the performance or non-performance
of such Agent's duties under this Agreement, any other Facility
Document or any other documents contemplated by or referred to
herein or the transactions contemplated hereby or thereby
(including, without limitation, the costs and expenses which the
Borrowers are obligated to pay under Section 15.03 or under the
applicable provisions of any other Facility Document including,
after a Default or Event of Default has occurred, extraordinary
administrative costs and expenses incident to the performance of
its agency duties hereunder) or the enforcement of any of the
terms hereof or thereof or of any such other documents or
instruments; provided that no Lender shall be liable for any of
the foregoing to the extent they arise from the gross negligence
or willful misconduct of the Agent to be indemnified.
Section 13.07. DOCUMENTS. Each of the Agent and the
Servicing Agent will forward to each Lender, promptly after such
Agent's receipt thereof, a copy of each report, notice or other
document required by this Agreement or any other Facility
Document to be delivered to such Agent for the Lenders, other
than reports specified in paragraphs (q) and (s) of Section 9.09.
Section 13.08. NON-RELIANCE ON THE AGENTS AND OTHER
LENDERS. Each Lender agrees that it has, independently and
without reliance on the Agent, the Servicing Agent or any other
Lender, and based on such documents and information as it has
deemed appropriate, made its own credit analysis of the Borrowers
and their Subsidiaries and decision to enter into this Agreement
and that it will, independently and without reliance upon the
Agent, the Servicing Agent or any other Lender, and based on such
documents and information as it shall deem appropriate at the
time, continue to make its own analysis and decisions in taking
or not taking action under this Agreement or any other Facility
Document. Neither the Agent nor the Servicing Agent shall be
required to keep itself informed as to the performance or
observance by the Borrowers of this Agreement or any other
Facility Document or any other document referred to or provided
for herein or therein or to inspect the properties or books of
the Borrowers or any Subsidiary. Except for notices, reports and
other documents and information expressly required to be
furnished to the Lenders by the Agent or the Servicing Agent
hereunder, neither the Agent nor the Servicing Agent shall have
any duty or responsibility to provide any Lender with any credit
or other information concerning the affairs, financial condition
or business of the Borrowers or any Subsidiary (or any of their
Affiliates) which may come into the possession of such Agent or
any of its Affiliates. Neither the Agent nor the Servicing Agent
shall be required to file this Agreement, any other Facility
Document or any document or instrument referred to herein or
therein, for record or give notice of this Agreement, any other
Facility Document or any document or instrument referred to
herein or therein, to anyone.
Section 13.09. FAILURE OF EITHER THE AGENT OR THE
SERVICING AGENT TO ACT. Except for action expressly required of
the Agent or the Servicing Agent hereunder, each of the Agent and
the Servicing Agent shall in all cases be fully justified in
failing or refusing to act hereunder unless it shall have
received further assurances (which may include cash collateral)
of the indemnification obligations of the Lenders under Section
13.04 in respect of any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any
such action.
Section 13.10. RESIGNATION OR REMOVAL OF EITHER THE
AGENT OR THE SERVICING AGENT. Subject to the appointment and
acceptance of a successor Agent as provided below, each of the
Agent and the Servicing Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrowers, and each
of the Agent and the Servicing Agent may be removed at any time
with or without cause by the Required Lenders; provided that (i)
the Borrowers and the other Lenders shall be promptly notified
thereof and (ii) in the case of the removal of the Servicing
Agent by the Required Lenders, upon its request, all Loans made
by the Servicing Agent in its capacity as Lender shall
immediately be repaid in full and the Servicing Agent in its
capacity as Lender shall be released and discharged from its
duties and obligations hereunder. Upon any such resignation or
removal, the Required Lenders shall have the right to appoint a
successor Agent. If no such successor Agent shall have been so
appointed by the Required Lenders and shall have accepted such
appointment within 30 days after such retiring Agent's giving of
notice of resignation or the Required Lenders' removal of such
retiring Agent, then such retiring Agent may, on behalf of the
Lenders, appoint a successor Agent. The Required Lenders or such
retiring Agent, as the case may be, shall upon the appointment of
a successor Agent promptly so notify the Borrowers and the other
Lenders. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation or
removal hereunder as Agent, the provisions of this Article 13
shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as
an Agent.
Section 13.11. AMENDMENTS CONCERNING AGENCY FUNCTION.
Neither the Agent nor the Servicing Agent shall be bound by any
waiver, amendment, supplement or modification of this Agreement
or any other Facility Document which expands its duties or
increases its costs hereunder or thereunder unless it shall have
given its prior consent thereto.
Section 13.12. LIABILITY OF EACH OF THE AGENT AND THE
SERVICING AGENT. The Servicing Agent shall have no liabilities
or responsibilities whatsoever to the Borrowers, it being
understood and agreed that the duties and responsibilities of the
Servicing Agent are intended solely and exclusively for the
benefit of the Lenders. Neither the Agent nor the Servicing
Agent shall have any liabilities or responsibilities to the
Borrowers on account of the failure of any Lender to perform its
obligations hereunder or to any Lender on account of the failure
of any Borrower to perform its obligations hereunder or under any
other Facility Document.
Section 13.13. TRANSFER OF AGENCY FUNCTION. Without
the consent of the Borrowers or any Lender, each of the Agent and
the Servicing Agent may at any time or from time to time transfer
its functions as Agent hereunder to any of its offices wherever
located, provided that such Agent shall promptly notify the
Borrowers and the Lenders thereof.
Section 13.14. NON-RECEIPT OF FUNDS BY THE AGENT.
Unless the Agent shall have been notified by a Lender or a
Borrower (either one as appropriate being the "Payor") prior to
the date on which such Lender is to make payment hereunder to the
Agent of the proceeds of a Loan or a Borrower is to make payment
to the Agent, as the case may be (either such payment being a
"Required Payment"), which notice shall be effective upon
receipt, that the Payor does not intend to make the Required
Payment to the Agent, the Agent may assume that the Required
Payment has been made and may, in reliance upon such assumption
(but shall not be required to), make the amount thereof available
to the intended recipient on such date and, if the Payor has not
in fact made the Required Payment to the Agent, the recipient of
such payment (and, if such recipient is a Borrower and the Payor
Lender fails to pay the amount thereof to the Agent forthwith
upon demand), the Borrowers shall, on demand, repay to the Agent
the amount made available to it together with interest thereon
for the period from the date such amount was so made available by
the Agent until the date the Agent recovers such amount at a rate
per annum equal to the average daily Federal Funds Rate for such
period.
Section 13.15. WITHHOLDING TAXES. Each Lender
represents that it is entitled to receive any payments to be made
to it hereunder without the withholding of any tax and will
furnish to the Agent such forms, certifications, statements and
other documents as the Agent may request from time to time to
evidence such Lender's exemption from the withholding of any tax
imposed by any jurisdiction or to enable the Agent to comply with
any applicable laws or regulations relating thereto. Without
limiting the effect of the foregoing, if any Lender is not
created or organized under the laws of the United States of
America or any state thereof, in the event that the payment of
interest by the Borrowers is treated for U.S. income tax purposes
as derived in whole or in part from sources from within the U.S.,
such Lender will furnish to the Agent Form 4224 or Form 1001 of
the Internal Revenue Service, or such other forms,
certifications, statements or documents, duly executed and
completed by such Lender as evidence of such Lender's exemption
from the withholding of U.S. tax with respect thereto. The Agent
shall not be obligated to make any payments hereunder to such
Lender in respect of any Loan or such Lender's Revolving Credit
Commitment until such Lender shall have furnished to the Agent
the requested form, certification, statement or document and all
successor forms as may be required on the expiration of any of
the foregoing.
Section 13.16. SEVERAL OBLIGATIONS AND RIGHTS OF
LENDERS. The failure of any Lender to make any Loan to be made
by it on the date specified therefor shall not relieve any other
Lender of its obligation to make its Loan on such date, but no
Lender shall be responsible for the failure of any other Lender
to make a Loan to be made by such other Lender. The amounts
payable at any time hereunder to each Lender shall be a separate
and independent debt, and each Lender shall be entitled to
protect and enforce its rights arising out of this Agreement, and
it shall not be necessary for any other Lender to be joined as an
additional party in any proceeding for such purpose.
Section 13.17. PRO RATA TREATMENT OF LOANS, ETC.
Except to the extent otherwise provided: each borrowing under
Sections 2.04 or 2.05 shall be made from the Lenders, each
reduction or termination of the amount of the Revolving Credit
Commitment under Section 2.09 shall be applied to the Revolving
Credit Commitment of the Lenders, and each payment of commitment
fee accruing under Section 2.13 shall be made for the account of
the Lenders, pro rata according to the amounts of their
respective unused Revolving Credit Commitment.
Section 13.18. SHARING OF PAYMENTS AMONG LENDERS. If
a Lender shall obtain payment of any principal of or interest on
any Loan made by it through the exercise of any right of setoff,
banker's lien, counterclaim, or by any other means (including any
payment obtained from or charged against any Third Party), it
shall promptly purchase from the other Lenders participations in
(or, if and to the extent specified by such Lender, direct
interests in) the Loans made by the other Lenders in such
amounts, and make such other adjustments from time to time as
shall be equitable to the end that all the Lenders shall share
the benefit of such payment (net of any expenses which may be
incurred by such Lender in obtaining or preserving such benefit)
pro rata in accordance with the unpaid principal and interest on
the Loans held by each of them. To such end the Lenders shall
make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if such payment is rescinded or
must otherwise be restored. The Borrowers agree that any Lender
so purchasing a participation (or direct interest) in the Loans
made by other Lenders may exercise all rights of setoff, banker's
lien, counterclaim or similar rights with respect to such
participation (or direct interest). Nothing contained herein
shall require any Lender to exercise any such right or shall
affect the right of any Lender to exercise, and retain the
benefits of exercising, any such right with respect to any other
indebtedness of the Borrowers.
Section 13.19. APPLICATION OF PROCEEDS OF COLLATERAL.
Any proceeds received on liquidation of any of the Collateral
under the provisions of the Security Documents shall be applied
after a Default as follows: first, to costs and expenses in
connection with the collection of such amounts; second, to any
unpaid fees under the Facility Documents; third to accrued and
unpaid interest on the Borrowers' obligations under the Facility
Documents; third, to unreimbursed drawings under Letters of
Credit; fourth, to the principal amount of Loans outstanding;
fifth, to the amount of any Letters of Indemnity outstanding; and
sixth, to be held as cash collateral until the Borrowers'
obligations under the Facility Documents have been finally paid
in full and the Lenders shall have no remaining commitment under
any of the Facility Documents.
ARTICLE 14. GUARANTY.
Section 14.01. GUARANTY. Each Guarantor hereby
jointly and severally irrevocably, absolutely and unconditionally
guarantees to each Lender and its successors, endorsees,
transferees and assigns the prompt and complete payment by each
Borrower (other than such Guarantor), as and when due and payable
(whether at stated maturity or by required prepayment,
acceleration, demand or otherwise), of all Outstanding Total Debt
Obligations; and agrees to pay on demand any and all expenses
(including counsel fees and expenses) which may be paid or
incurred by any Lender in collecting any or all of the
Outstanding Total Debt Obligations and/or enforcing any rights
under any of the Facility Documents or under the Outstanding
Total Debt Obligations (the "Guaranty").
Section 14.02. GUARANTY OBLIGATIONS UNCONDITIONAL.
Each Guarantor hereby guarantees that the Outstanding Total Debt
Obligations will be paid strictly in accordance with the terms of
the Facility Documents, regardless of any Law now or hereafter in
effect in any jurisdiction affecting any such terms or the rights
of any Lender with respect thereto. The obligations and
liabilities of each Guarantor under its Guaranty shall be
absolute and unconditional irrespective of: (1) any lack of
validity or enforceability of any of the Outstanding Total Debt
Obligations, any Facility Documents, or any agreement or
instrument relating thereto; (2) any change in the time, manner
or place of payment of, or in any other term in respect of, all
or any of the Outstanding Total Debt Obligations, or any other
amendment or waiver of or consent to any departure from any
Facility Documents or any other documents or instruments executed
in connection with or related to the Outstanding Total Debt
Obligations; (3) any exchange or release of, or non-perfection of
any Lien on or in, any Collateral, or any release or amendment or
waiver of or consent to any departure from any other guaranty,
for all or any of the Outstanding Total Debt Obligations; or
(4) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, any Borrower or any
other guarantor in respect of the Outstanding Total Debt
Obligations or any Guarantor in respect of this Guaranty.
The Guaranty is a continuing guaranty and shall remain
in full force and effect until: (1) the payment in full of all
the Outstanding Total Debt Obligations (after the Revolving
Credit Termination Date), and (2) the payment of the other
expenses to be paid by the Guarantors pursuant hereto. This
Guaranty shall continue to be effective or shall be reinstated,
as the case may be, if at any time any payment, or any part
thereof, of any of the Outstanding Total Debt Obligations are
rescinded or must otherwise be returned by any Lender upon the
insolvency, bankruptcy, dissolution, liquidation or reorganiza-
tion of any Borrower or otherwise, all as though such payment had
not been made.
The obligations and liabilities of each Guarantor under
this Guaranty shall not be conditioned or contingent upon the
pursuit by any Lender or any other Person at any time of any
right or remedy against any Borrower or any other Person which
may be or become liable in respect of all or any part of the
Outstanding Total Debt Obligations or against any Collateral or
security or guarantee therefor or right of setoff with respect
thereto.
Each Guarantor hereby consents that, without the
necessity of any reservation of rights against any Guarantor and
without notice to or further assent by any Guarantor, any demand
for payment of any of the Outstanding Total Debt Obligations made
by any Lender may be rescinded by such Lender and any of the
Outstanding Total Debt Obligations continued after such
rescission.
Section 14.03. WAIVERS. To the extent permitted by
applicable Law, each Guarantor hereby waives: (1) promptness and
diligence; (2) notice of or proof of reliance by any Lender upon
this Guaranty or acceptance of this Guaranty; (3) notice of the
incurrence of any Outstanding Total Debt Obligation or the
renewal, extension or accrual of any Outstanding Total Debt
Obligation; (4) notice of any actions taken by any Lender or any
other party under any Loan Document, or any other agreement or
instrument relating to the Outstanding Total Debt Obligations;
(5) all other notices, demands and protests, and all other
formalities of every kind in connection with the enforcement of
the Outstanding Total Debt Obligations or of the obligations of
any Guarantor hereunder, the omission of or delay in which, but
for the provisions of this Section 14.03, might constitute
grounds for relieving any Guarantor of its obligations hereunder;
and (6) any requirement that any Lender protect, secure, perfect
or insure any Lien on any property subject thereto or exhaust any
right or take any action against any Borrower or any other Person
or any Collateral.
Section 14.04. SUBROGATION. Each Guarantor agrees
that it hereby waives and releases any rights which it may
acquire by way of subrogation under this Guaranty, whether
acquired by any payment made hereunder, by any setoff or
application of funds of such Guarantor by any Lender or
otherwise.
Section 14.05. CONTRIBUTION. Each Guarantor agrees
that it will contribute its proportionate share to any other
Guarantor that makes payment of an Outstanding Total Debt
Obligation guaranteed by such Guarantor under this Agreement.
Section 14.06. LIMITATION OF LIABILITY. The
obligations of each Guarantor under this Article 14 shall (unless
a greater amount can be paid under its applicable Law) be
limited to an aggregate amount equal to the largest amount that
would not render its obligations hereunder subject to avoidance
under Section 548 of the United State Bankruptcy Code or any
comparable provision of any applicable state Law.
ARTICLE 15. MISCELLANEOUS.
Section 15.01. AMENDMENTS AND WAIVERS. Except as
otherwise expressly provided in this Agreement, any provision of
this Agreement may be amended or modified only by an instrument
in writing signed by the Borrowers, the Agent, the Servicing
Agent and the Required Lenders, or by the Borrowers and the Agent
acting with the consent of the Required Lenders and the Servicing
Agent and any provision of this Agreement may be waived by the
Required Lenders or by the Agent acting with the consent of the
Required Lenders; PROVIDED that no amendment, modification or
waiver shall, unless by an instrument signed by all of the
Lenders or by the Agent acting with the consent of all of the
Lenders: (a) increase or extend the term, or extend the time or
waive any requirement for the reduction or termination, of the
Revolving Credit Commitment; (b) extend any date fixed for the
payment of principal of or interest on any Loan or reimbursement
obligation on a Letter of Credit or any fee payable hereunder;
(c) reduce the amount of any payment of principal on any Loan or
the rate at which interest is payable thereon or any fee payable
hereunder; (d) alter the terms of this Section 15.01; (e) amend
the definition of the term "Required Lenders"; (f) waive any of
the documentary conditions precedent set forth in Section 7.01
hereof; (g) release any Borrower or Guarantor from its liability
under any of the Facility Documents; (h) change the percentage
used in determining the Collateral Borrowing Base; or (i) release
any material portion of the Collateral, and PROVIDED, FURTHER,
that any amendment of Article 13 hereof shall require the consent
of both Agents, and any amendment which increases the obligations
of either the Agent or the Servicing Agent hereunder shall
require the consent of such Agent. No failure on the part of the
Agent, the Servicing Agent or any Lender to exercise, and no
delay in exercising, any right hereunder shall operate as a
waiver thereof or preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided
are cumulative and not exclusive of any remedies provided by law.
Section 15.02. USURY. Anything herein to the contrary
notwithstanding, the obligations of the Borrowers under this
Agreement and the Notes shall be subject to the limitation that
payments of interest shall not be required to the extent that
receipt thereof would be contrary to provisions of law applicable
to a Lender limiting rates of interest which may be charged or
collected by such Lender.
Section 15.03. EXPENSES. The Borrowers shall pay the
Agent, the Servicing Agent and the Lenders on demand for all
costs, expenses, and charges (including, without limitation,
costs in connection with the asset based audits under Section
9.08, fees and charges of external legal counsel for the Agent,
the Servicing Agent, and each Lender, costs allocated by their
respective internal legal departments, and reasonable costs and
expenses (including, without limitation, travel and lodging
expenses) relating to any field visits or examinations) incurred
by the Agent, the Servicing Agent, or the Lenders in connection
with the preparation, performance, or enforcement of this
Agreement or the Notes. The Borrowers agree to indemnify the
Agent, the Servicing Agent, and each Lender and their respective
directors, officers, employees, agents and Affiliates from, and
hold each of them harmless against, any and all losses,
liabilities, claims, damages or expenses (each an "Indemnified
Liability") incurred by any of them arising out of or by reason
of any investigation or litigation or other proceedings
(including any threatened investigation or litigation or other
proceedings) relating to or arising out of this Agreement or any
actual or proposed use by the Borrowers or any Subsidiary of the
proceeds of the Loans, including without limitation, the
reasonable fees and disbursements of counsel incurred in
connection with any such investigation or litigation or other
proceedings (but excluding any Indemnified Liability, incurred by
reason of the gross negligence or willful misconduct of the
Person to be indemnified). The Borrowers agree that any
Indemnified Liability will be promptly paid to the Person to be
indemnified upon the written demand of such Person.
Section 15.04. SURVIVAL. The obligations of the
Borrowers under Sections 6.01 and 15.03 shall survive the
repayment of the Loans and the termination of the Revolving
Credit Commitment.
Section 15.05. ASSIGNMENT: PARTICIPATIONS. (a) This
Agreement shall be binding upon, and shall inure to the benefit
of, the Borrowers, the Agents, the Lenders and their respective
successors and assigns, except that the Borrowers may not assign
or transfer their rights or obligations hereunder. Each Lender
may assign, or sell participations in, all or any part of its
commitment or any Loan to a bank or other entity, in which event
(i) in the case of an assignment, upon notice thereof by the
Lender to the Borrowers with a copy to each of the Agent and the
Servicing Agent, the assignee shall have, to the extent of such
assignment (unless otherwise provided therein), the same rights,
benefits and obligations as it would have if it were a Lender
hereunder; and (ii) in the case of a participation, the
participant shall have no rights under the Facility Documents and
all amounts payable by the Borrowers under Article 3 shall be
determined as if such Lender had not sold such participation.
The agreement executed by such Lender in favor of the participant
shall not give the participant the right to require such Lender
to take or omit to take any action hereunder except action
directly relating to (i) the extension of the Revolving Credit
Termination Date, (ii) the extension of a payment date with
respect to any portion of the principal of or interest on any
amount outstanding hereunder allocated to such participant, (iii)
the reduction of the principal amount outstanding hereunder or
(iv) the reduction of the rate of interest payable on such amount
or any amount of fees payable hereunder to a rate or amount, as
the case may be, below that which the participant is entitled to
receive under its agreement with such Lender. Such Lender may
furnish any information concerning the Borrowers in the
possession of such Lender from time to time to assignees and
participants (including prospective assignees and participants);
provided that such Lender shall require any such prospective
assignee or such participant (prospective or otherwise) to agree
in writing to maintain the confidentiality of such information.
In connection with any assignment pursuant to this paragraph (a),
an administrative fee shall be paid to the Agent for processing
such assignment in the amount of $2,500.00.
(b) In addition to the assignments and participations
permitted under paragraph (a) above, any Lender may assign and
pledge all or any portion of its Loans and Notes to (i) any
Affiliate of such Lender or (ii) any Federal Reserve Lender as
collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and any Operating
Circular issued by such Federal Reserve Lender. No such
assignment shall release the assigning Lender from its
obligations hereunder.
Section 15.06. NOTICES. Unless the party to be
notified otherwise notifies the other party in writing as
provided in this Section, and except as otherwise provided in
this Agreement, notices shall be given to each of the Agent and
the Servicing Agent by telephone, confirmed by telex, telecopy or
other writing, and to the Lenders and to the Borrowers by
ordinary mail, independent courier or telex addressed to such
party at its address on the signature page of this Agreement.
Notices shall be effective: (a) if given by mail, 72 hours after
deposit in the mails with first class postage prepaid, addressed
as aforesaid; and (b) if given by telecopy, courier or telex,
when transmitted as aforesaid; provided that notices to the
Agents and the Lenders shall be effective upon receipt. Except
for notices specifically required to be given to or by an
applicable Borrower, notices to or from any Borrower are
effective as if given to or by all Borrowers.
Section 15.07. SETOFF. The Borrowers agree that, in
addition to (and without limitation of) any right of setoff,
banker's lien or counterclaim a Lender may otherwise have, each
Lender shall be entitled, at its option, to offset balances
(general or special, time or demand, provisional or final) held
by it for the account of the Borrowers at any of such Lender's
offices, in Dollars or in any other currency, against any amount
payable by the Borrowers to such Lender under this Agreement or
such Lender's Notes which is not paid when due (regardless of
whether such balances are then due to the Borrowers), in which
case it shall promptly notify the Borrowers and the Agents
thereof; provided that such Lender's failure to give such notice
shall not affect the validity thereof. Payments by the Borrowers
hereunder shall be made without setoff or counterclaim.
Section 15.08. JURISDICTION; IMMUNITIES. (a) THE
BORROWERS HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY
NEW YORK STATE OR UNITED STATES FEDERAL COURT SITTING IN NEW YORK
COUNTY OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE NOTES, AND THE BORROWERS HEREBY
IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR
FEDERAL COURT. THE BORROWERS IRREVOCABLY CONSENT TO THE SERVICE
OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES OF SUCH PROCESS TO THE BORROWERS AT THE
ADDRESSES SPECIFIED IN SECTION 15.06. THE BORROWERS AGREE THAT A
FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON
THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. THE
BORROWERS FURTHER WAIVE ANY OBJECTION TO VENUE IN SUCH STATE AND
ANY OBJECTION TO AN ACTION OR PROCEEDING IN SUCH STATE ON THE
BASIS OF FORUM NON CONVENIENS. THE BORROWERS FURTHER AGREE THAT
ANY ACTION OR PROCEEDING BROUGHT AGAINST EITHER THE AGENT OR THE
SERVICING AGENT SHALL BE BROUGHT ONLY IN NEW YORK STATE OR UNITED
STATES FEDERAL COURT SITTING IN NEW YORK COUNTY. THE BORROWERS
WAIVE ANY RIGHT THEY MAY HAVE TO JURY TRIAL.
(b) Nothing in this Section 15.08 shall affect the
right of the Agent, the Servicing Agent or any Lender to serve
legal process in any other manner permitted by law or affect the
right of the Agent, the Servicing Agent or any Lender to bring
any action or proceeding against any Borrower or its property in
the courts of any other jurisdictions.
(c) To the extent that any Borrower has or hereafter
may acquire any immunity from jurisdiction of any court or from
any legal process (whether from service or notice, attachment
prior to judgment, attachment in aid of execution, execution or
otherwise) with respect to itself or its property, such Borrower
hereby irrevocably waives such immunity in respect of its
obligations under this Agreement and the Notes.
Section 15.09. TABLE OF CONTENTS; HEADINGS. Any table
of contents and the headings and captions hereunder are for
convenience only and shall not affect the interpretation or
construction of this Agreement.
Section 15.10. SEVERABILITY. The provisions of this
Agreement are intended to be severable. If for any reason any
provision of this Agreement shall be held invalid or
unenforceable in whole or in part in any jurisdiction, such
provision shall, as to such jurisdiction, be ineffective to the
extent of such invalidity or unenforceability without in any
manner affecting the validity or enforceability thereof in any
other jurisdiction or the remaining provisions hereof in any
jurisdiction.
Section 15.11. COUNTERPARTS. This Agreement may be
executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument, and any
party hereto may execute this Agreement by signing any such
counterpart.
Section 15.12. INTEGRATION. The Facility Documents
set forth the entire agreement among the parties hereto relating
to the transactions contemplated thereby and supersede any prior
oral or written statements or agreements with respect to such
transactions.
Section 15.13. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
Section 15.14. CONFIDENTIALITY. Each Lender, the
Agent, and the Servicing Agent agrees (on behalf of itself and
each of its Affiliates, directors, officers, employees and
representatives) to use reasonable precautions to keep
confidential, in accordance with safe and sound banking
practices, any non-public information supplied to it by the
Borrowers pursuant to this Agreement which is identified by the
Borrowers as being confidential at the time the same is delivered
to the Lenders or the Agents, provided that nothing herein shall
limit the disclosure of any such information (i) to the extent
required by statute, rule, regulation or judicial process, (ii)
to counsel for any of the Lenders or the Agents, (iii) to bank
examiners, auditors or accountants, (iv) in connection with any
litigation to which any one or more of the Lenders is a party or
(v) to any assignee or participant (or prospective assignee or
participant) so long as such assignee or participant (or
prospective assignee or participant) first executes and delivers
to the respective Lender a Confidentiality Agreement in
substantially the form of Exhibit H hereto; provided, further,
that, unless specifically prohibited by applicable law or court
order, each Lender shall, prior to disclosure thereof, notify the
Borrowers of any request for disclosure of any such non-public
information (x) by any governmental agency or representative
thereof (other than any such request in connection with an
examination of the financial condition of such Lender by such
governmental agency) or (y) pursuant to legal process; and
provided finally that in no event shall any Lender or either the
Agent or the Servicing Agent be obligated or required to return
any materials furnished by the Borrowers.
Section 15.15. TREATMENT OF CERTAIN INFORMATION. Each
Borrower (a) acknowledges that services may be offered or
provided to it (in connection with this Agreement or otherwise)
by each Lender or by one or more of their respective subsidiaries
or Affiliates and (b) acknowledges that any information delivered
to each Lender or its subsidiaries or Affiliates regarding the
Borrowers may be shared among such Lender and such subsidiaries
and Affiliates. This Section 15.16 shall survive the repayment
of the Loans and the termination of the Revolving Credit
Commitment.
Section 15.16. COLLECTION OF ACCOUNTS.
Notwithstanding any provision of any Facility Document, each
Borrower hereby agrees that upon the request of the Required
Lenders, the Required Lenders can require that the Accounts of
each of the Borrowers no longer be collected by the Borrowers,
but, rather by a Person designated by the Required Lenders, such
as the Servicing Agent. In such event such Person will collect
such Accounts in accordance with Section 3.04(b) of each of the
Security Agreements.
[INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
BISCAYNE APPAREL, INC.
By:
Name: Peter Vandenberg,
Jr.
Title: Vice President
Address for Notices:
1373 Broad Street, 3rd Floor
Clifton, N.J. 07458
Attn: Peter Vandenberg, Jr.
With a Copy to:
Trivest, Inc.
2665 S. Bayshore Drive,
Suite 800
Miami, Fl. 33133
Attn: Peter Klein
BISCAYNE APPAREL
INTERNATIONAL, INC.
By:
Name: Peter Vandenberg,
Jr.
Title: Vice President
Address for Notices:
c/o Biscayne Apparel, Inc.
1373 Broad Street, 3rd Floor
Clifton, N.J. 07458
Attn: Peter Vandenberg, Jr.
With a Copy to:
Trivest, Inc.
2665 S. Bayshore Drive,
Suite 800
Miami, Fl. 33133
Attn: Peter Klein
MACKINTOSH OF NEW ENGLAND CO.
By:
Name: Peter Vandenberg,
Jr.
Title: Vice President
Address for Notices:
c/o Biscayne Apparel, Inc.
1373 Broad Street, 3rd Floor
Clifton, N.J. 07458
Attn: Peter Vandenberg, Jr.
With a Copy to:
Trivest, Inc.
2665 S. Bayshore Drive,
Suite 800
Miami, Fl. 33133
Attn: Peter Klein
M&L INTERNATIONAL, INC.
By:
Name: Peter Vandenberg,
Jr.
Title: Vice President
Address for Notices:
c/o Biscayne Apparel, Inc.
1373 Broad Street, 3rd Floor
Clifton, N.J. 07458
Attn: Peter Vandenberg, Jr.
With a Copy to:
Trivest, Inc.
2665 S. Bayshore Drive,
Suite 800
Miami, Fl. 33133
Attn: Peter Klein
AGENT:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By:
Name: Elizabeth Burgess
Title: Vice President
Address for Notices:
New York Agency
4 Chase Metrotech Center
13th Floor
Brooklyn, New York 11245
Telex: 6720516
SERVICING AGENT:
MILBERG FACTORS, INC.
By:
Name: Harold H. Oertell
Title: Secretary/Treasurer
Address for Notices:
99 Park Avenue
New York, New York 10016
Attn: Harold H. Oertell
Telecopier: (212) 661-7063
LENDER:
THE CHASE Manhattan Bank
(NATIONAL ASSOCIATION)
By:
Name: Elizabeth Burgess
Title: Vice President
Lending Office and Address for
Notices:
1 Chase Manhattan Plaza
New York, New York 10081
Attn: Elizabeth Burgess
Telex No(s).:
LENDER:
MILBERG FACTORS, INC.
By:
Name: Harold H. Oertell
Title: Secretary/Treasurer
Address for Notices:
99 Park Avenue
New York, New York 10016
Attn: Harold H. Oertell
Telecopier: (212) 661-7063
LENDER:
CORESTATES BANK, N.A.
By:
Name: Faith A. Boettger
Title: Vice President
Lending Office and Address for
Notices:
FC 1-8-8-12
Broad and Chestnut Streets
PO Box 13866
Philadelphia, PA. 19101
Attn: Faith Boettger or
Jack Ginter
LENDER:
THE FIRST NATIONAL BANK OF
BOSTON
By:
Name: Katherine S. Steiger
Title: Vice President
Lending Office and address for
notices:
100 Federal Street
Boston, Massachusetts 02110
Attn: Katherine S. Steiger
or Kelley Keefe
LENDER:
NATWEST BANK N.A.
By:
Name: Anthony Santoro
Title: Vice President
Lending Office, and Address for
Notices:
1133 Avenue of the Americas
New York, N.Y. 10036
Attention: Anthony Santoro
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<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
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0
0
<COMMON> 107
<OTHER-SE> 18,332
<TOTAL-LIABILITY-AND-EQUITY> 52,009
<SALES> 16,236
<TOTAL-REVENUES> 16,236
<CGS> 12,270
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<INCOME-TAX> (991)
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