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 quarterly period ended June 29, 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 No. 33-47577
HAMPSHIRE GROUP, LIMITED
------------------------
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 06-0967107
-------- ----------
(State of Incorporation) (I.R.S. Employer Identification No.)
215 COMMERCE BOULEVARD
ANDERSON, SOUTH CAROLINA 29621
------------------------------
(Address, Including Zip Code, of Registrant's Principal Executive Offices)
(Registrant's Telephone Number, Including Area Code) (864) 225-6232
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Title of Each Class Number of Shares Outstanding
Of Securities August 2, 1996
---------------------------- ----------------------------
Common Stock, $.10 Par Value 3,821,321
1
<PAGE>
HAMPSHIRE GROUP, LIMITED AND SUBSIDIARIES
INDEX TO FORM 10-Q
June 29, 1996
PART I - FINANCIAL INFORMATION
Page
------
Item 1 - Financial Statements
Consolidated Balance Sheet as of June 29, 1996, July 1, 1995
and December 31, 1995 3 - 4
Consolidated Statement of Operations for the three months
and six months ended June 29, 1996 and July 1, 1995 5
Consolidated Statement of Cash Flows for the six months
ended June 29, 1996 and July 1, 1995 6
Consolidated Statement of Changes in Common Stockholders'
Equity for the six months ended June 29, 1996 7
Notes to Consolidated Financial Statements 7 - 9
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 10 - 12
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 13
Item 4 - Submission of Matters to a Vote of Security Holders 13
Item 6 - Exhibits and Reports on Form 8-K 13
Signature Page 14
2
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
HAMPSHIRE GROUP, LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands, except share data)
ASSETS
<CAPTION>
June 29, July 1, Dec. 31,
1996 1995 1995
-------- ------- --------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents .............. $ 776 $ 597 $10,034
Accounts receivable trade - net ........ 13,827 9,122 16,761
Other receivables ...................... 766 398 722
Inventories ............................ 33,281 24,822 19,380
Deferred tax asset ..................... 409 216 409
Other current assets ................... 512 692 235
------- ------- -------
Total current assets ............... 49,571 35,847 47,541
Property, plant and equipment - net ........ 13,968 8,307 13,469
Deferred tax asset ......................... 962 1,157 962
Intangible assets - net .................... 4,073 2,364 4,320
Other assets ............................... 111 197 146
------- ------- -------
$68,685 $47,872 $66,438
======= ======= =======
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
3
<PAGE>
<TABLE>
HAMPSHIRE GROUP, LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands, except share data)
LIABILITIES, REDEEMABLE PREFERRED STOCK
AND COMMON STOCKHOLDERS' EQUITY
<CAPTION>
June 29, July 1, Dec. 31,
1996 1995 1995
-------- ------- --------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Current liabilities:
Borrowings under lines of credit ..... $ 8,385 $ 1,585 -
Current portion of long-term debt .... 2,399 1,534 $ 2,627
Notes payable to related parties ..... 375 - 2,125
Accounts payable ..................... 4,862 4,361 4,714
Accrued liabilities .................. 7,103 5,658 8,400
------- ------- -------
Total current liabilities .......... 23,124 13,138 17,866
Long-term debt ........................... 7,423 6,189 8,590
Notes payable to related parties ......... 1,252 500 1,625
------- ------- -------
Total liabilities .................. 31,799 19,827 28,081
------- ------- -------
Redeemable, convertible preferred stock,
at redemption value:
Series A ............................. 1,550 - 1,550
Series D ............................. 1,744 2,052 2,052
------- ------- -------
Total preferred stock .............. 3,294 2,052 3,602
------- ------- -------
Common stockholders' equity:
Common stock, 3,871,321, 3,530,124 and
3,771,624 shares issued and 3,821,321,
3,530,124 and 3,771,624 outstanding .. 387 353 377
Additional paid-in capital ........... 23,605 21,210 22,979
Treasury stock ....................... (583) - -
Retained earnings .................... 10,183 4,430 11,399
------- ------- -------
Total common stockholders' equity .. 33,592 25,993 34,755
------- ------- -------
$68,685 $47,872 $66,438
======= ======= =======
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
4
<PAGE>
<TABLE>
HAMPSHIRE GROUP, LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
<CAPTION>
Three months ended Six months ended
------------------- -------------------
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
-------- ------- -------- -------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net sales .......................... $21,243 $13,580 $47,673 $27,691
Cost of goods sold ................. 17,495 10,329 39,047 21,408
------- ------- ------- -------
Gross profit ................... 3,748 3,251 8,626 6,283
Commission revenue ................. 284 222 325 295
------- ------- ------- -------
4,032 3,473 8,951 6,578
Selling, general and
administrative expenses ........ 4,405 3,709 9,586 7,024
------- ------- ------- -------
Loss from operations ........... (373) (236) (635) (446)
Interest expense ................... (243) (154) (522) (309)
Interest income .................... 23 41 135 182
Other .............................. (14) 365 (19) 372
------- ------- ------- -------
Income (loss) before income taxes .. (607) 16 (1,041) (201)
Provision (benefit) for income taxes (10) 78 82 129
------- ------- ------- -------
Net loss ........................... (597) (62) (1,123) (330)
Preferred dividend requirements .... (45) (31) (93) (62)
------- ------- ------- -------
Net loss applicable to common stock ($ 642) ($ 93) ($ 1,216) ($ 392)
======= ======= ======= =======
Loss per common share .............. ($ .17) ($ .03) ($ .32) ($ .11)
======= ======= ======= =======
Weighted average number of
shares outstanding ............ 3,755 3,534 3,753 3,532
======= ======= ======= =======
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
5
<PAGE>
<TABLE>
HAMPSHIRE GROUP, LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
<CAPTION>
Six months ended
-------------------
June 29, July 1,
1996 1995
-------- -------
<S> <C> <C>
Cash flows from operating activities:
Net loss ............................................ ($ 1,123) ($ 330)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization ..................... 1,915 1,230
Gain on sale of assets ............................ (4) (52)
Net change in operating assets and liabilities,
net of effects of acquired businesses:
Receivables .................................... 2,892 1,540
Inventories .................................... (13,901) (13,537)
Other current assets ........................... (111) (435)
Accounts payable ............................... 150 1,811
Accrued liabilities ............................ (1,296) 94
Other .......................................... 50 -
------- -------
Net cash used in operating activities ............... (11,428) (9,679)
------- -------
Cash flows from investing activities:
Capital expenditures ................................ (2,359) (1,507)
Proceeds from sales of property and equipment ....... 10 852
Cash used for business acquisitions ................. - (2,084)
------- -------
Net cash used in investing activities ............ (2,349) (2,739)
------- -------
Cash flows from financing activities:
Net borrowings under lines of credit ................ 8,385 1,558
Proceeds from issuance of long-term debt ............ - 1,790
Repayment of related party debt ..................... (2,123) -
Repayment of long-term debt ......................... (1,395) (983)
Treasury stock purchased ............................ (583) -
Proceeds from issuance of common stock .............. 636 -
Redemption of preferred stock ....................... (308) -
Payment of preferred stock dividends ................ (93) (62)
------- -------
Net cash provided by financing activities ......... 4,519 2,303
------- -------
Net decrease in cash and cash equivalents ............. (9,258) (10,115)
Cash and cash equivalents at beginning of period ...... 10,034 10,712
------- -------
Cash and cash equivalents at end of period ............ $ 776 $ 597
======= =======
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
6
<PAGE>
<TABLE>
HAMPSHIRE GROUP, LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES
IN COMMON STOCKHOLDERS' EQUITY
(In thousands, except share data)
(Unaudited)
<CAPTION>
Additional
Common Stock Paid-In Retained Treasury
Shares Amount Capital Earnings Stock Total
------ ------- ------- -------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1995 .. 3,771,624 $377 $22,979 $11,399 - $34,755
Shares issued under
Stock Option Plan .. 99,697 10 626 - - 636
Purchase of
treasury stock ..... (50,000) - - - ($583) (583)
Net loss for the period - - - (1,123) - (1,123)
Dividends on
preferred stock..... - - - (93) - (93)
--------- ---- ------- ------- ---- -------
Balance at
June 29, 1996 ...... 3,821,321 $387 $23,605 $10,183 ($583) $33,592
========= ==== ======= ======= ==== =======
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
- ------------------------------------------------------------------------------
HAMPSHIRE GROUP, LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the Company and
its subsidiaries. All significant intercompany accounts and transactions have
been eliminated in consolidation.
In the opinion of the management of the Company, the unaudited consolidated
financial statements contain all adjustments, consisting only of normal
recurring adjustments, necessary for a fair statement of the results for the
interim periods presented. The results of operations for interim periods are not
indicative of the results that may be expected for a full year due to the
seasonality of the business. These interim consolidated financial statements
should be read in conjunction with the consolidated financial statements and
notes thereto for the year ended December 31, 1995, included in the Company's
Annual Report on Form 10-K.
Net loss per share is computed by dividing net loss applicable to common
stock by the weighted average number of common and dilutive common equivalent
shares outstanding during the period. Conversion of the convertible preferred
stock into common stock has been assumed only if such conversions are dilutive.
Certain accounts previously reported have been reclassified to conform to
classifications used in 1996.
</TABLE>
7
<PAGE>
INVENTORIES
A summary of inventories by component is as follows:
(In thousands)
June 29, July 1, Dec. 31,
1996 1995 1995
-------- -------- --------
Finished goods .................. $23,461 $18,681 $10,954
Work-in-progress ................ 8,751 6,594 7,341
Raw materials and supplies ...... 5,428 3,621 5,082
------- ------- -------
37,640 28,896 23,377
Less-LIFO reserve .............. (4,359) (4,074) (3,997)
------- ------- -------
Net inventories ........... $33,281 $24,822 $19,380
======= ======= =======
ACQUISITION
In October 1995, The Winona Knitting Mills, Inc. (Winona), principally a
private-label manufacturer of better men's sweaters, was merged with the Company
in exchange for approximately $500,000 in cash, $2,287,000 in short-term
obligations, $1,250,000 in long-term debt, 124,000 shares of convertible
preferred stock valued at $1,550,000 and 240,000 restricted shares of the
Company's common stock valued at $1,785,000. Additionally, payments of up to
$1,333,000 are contingent upon the future financial performance of the acquired
business for the years 1996 through 1998. Such payments will be made one-half
cash and one-half restricted common stock of the Company. In connection with the
acquisition, the Company recorded goodwill in the amount of $2,288,000.
Had the acquisition of Winona been consummated as of January 1, 1995, the
Company's unaudited consolidated pro forma results of operations would have been
as follows:
(in thousands, except per share data)
Three months ended Six months ended
-------------------- --------------------
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
(Actual) (Pro Forma) (Actual) (Pro Forma)
------- --------- -------- ---------
Net sales .................... $21,243 $18,985 $47,673 $35,117
======= ======= ======= =======
Net loss applicable to
common stock ............... ($642) ($1,098) ($1,216) ($2,277)
==== ====== ====== ======
Net loss per share ........... ($.17) ($.29) ($.32) ($.60)
==== ==== ==== ====
8
<PAGE>
REVOLVING CREDIT FACILITY
The Company has renewed its principal credit facility for its subsidiaries
through March 30, 1997. This facility, which is limited to $25 million in the
aggregate, makes available to the Company $21 million in revolving credit and
$6.5 million in letters of credit. Advances under the revolving credit line are
limited to the lesser of (i) the sum of 85% of the eligible accounts receivable
plus a seasonal over-advance, not to exceed $6 million, during the period March
1 to October 31, or (ii) $21 million.
Loans under the facility, at the option of the Company, bear interest at a
variable rate of prime or a fixed rate based on the bank's cost of funds. The
loans are secured by accounts receivable of the subsidiaries and are guaranteed
by the Company. Letters of credit issued under the facility are secured by the
inventory shipped pursuant to the letter of credit.
The Company also has other credit facilities which in the aggregate allow the
Company to borrow an additional $9.5 million of which $4.5 million is limited to
use for international letters of credit.
STOCK OPTION AND PURCHASE PLANS
In February 1996, pursuant to the Hampshire Group, Limited 1992 Stock Option
Plan, the Company granted to certain key employees options to acquire 34,966
shares of the Company's common stock at a price of $11.00 per share, the fair
market value as of the date of the grant. Also the Company granted to its Chief
Executive Officer options to acquire 7,500 shares of the Company's common stock
at a price of $12.10 per share, which was 110 percent of the fair market value
as of the date of the grant. The options vest 25% annually beginning December
31, 1996.
CAPITALIZATION
The Company is obligated to redeem the Series D Convertible Preferred Stock in
twenty equal quarterly installments commencing April 1, 1996. During March 1996,
the Company redeemed the three installments due in 1996.
In March and June 1996, respectively, the Company purchased 25,000 shares
(50,000 total) of its common stock in the market. This purchase was made as part
of a plan to repurchase up to 100,000 shares of its stock to be used primarily
to fund certain employee benefit plans.
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
BUSINESS SEGMENT DATA
Set forth below are the Company's results of operations by business segment for
the three months and six months ended June 29, 1996 and July 1, 1995.
(In thousands)
Three months ended Six months ended
-------------------- --------------------
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
------- --------- -------- ---------
Net sales:
Sweaters ............ $13,696 $ 7,105 $34,431 $16,445
Hosiery ............. 7,547 6,475 13,242 11,246
------- ------- ------- -------
$21,243 $13,580 $47,673 $27,691
======= ======= ======= =======
Gross profit:
Sweaters ............ $ 2,480 $ 2,152 $ 6,467 $ 4,601
Hosiery ............. 1,268 1,099 2,159 1,682
------- ------- ------- -------
$ 3,748 $ 3,251 $ 8,626 $ 6,283
======= ======= ======= =======
Commission revenue:
Sweaters ............ $ 284 $ 222 $ 325 $ 295
======= ======= ======= =======
Operating profit (loss):
Sweaters ............ ($ 293) ($ 99) ($ 202) $ 179
Hosiery ............. 342 225 389 69
------- ------- ------- -------
49 126 187 248
Less - Corporate expenses (422) (362) (822) (694)
------- ------- ------- -------
Loss from operations .... ($ 373) ($ 236) ($ 635) ($ 446)
======= ======= ======= =======
RESULTS OF OPERATIONS
Three Months Ended June 29, 1996 Compared With Three Months Ended July 1, 1995.
- ------------------------------------------------------------------------------
The Company's net sales for the quarter ended June 29, 1996 were $21,243,000 as
compared with $13,580,000 for the quarter ended July 1, 1995. The increase of
$7,663,000 was primarily attributable to sales of the recently acquired sweater
business.
Sweater segment net sales were $13,696,000 as compared with $7,105,000.
Approximately 77.0% of the increase was attributable to sales from the recently
acquired sweater business. Of the remaining 23.0%, approximately 17.0% was due
to volume increases and approximately 6.0% was due to a shift in mix to higher
priced items.
The hosiery segment net sales were $7,547,000 as compared to $6,475,000. The
increase was mainly attributable to a unit volume increase of 16.1%.
10
<PAGE>
Gross profit increased to $3,748,000 compared with $3,251,000. As a percentage
of net sales, gross profit was 17.6% as compared to 23.9% for the same period in
1995. The decrease in gross margin, as a percentage of net sales, was
principally due to lower margins on sales of the recently acquired sweater
business.
Sweater segment gross profit increased by $328,000. As a percentage of net
sales, gross profit was 18.1% versus 30.3 %. The reduction, as a percentage of
net sales, was primarily due to lower gross margins on sales of the recently
acquired sweater business and effects of production expansion in the existing
business.
Hosiery segment gross profit increased $169,000 from the same period last year.
As a percentage of net sales, gross profit decreased 0.2% due to a shift in
product mix to lower margin items.
Segue (America) Limited, a subsidiary of Hampshire Designers, Inc., acts as
agent for certain of its customers in arranging for the importation of sweaters
for which it receives commission revenue which totaled $284,000 and $222,000 for
1996 and 1995, respectively.
Selling, general and administrative expenses were $4,405,000 compared with
$3,709,000. The increase of $696,000 was due principally to increases in fixed
expenses and selling commissions arising from the recently acquired sweater
business.
Loss from operations totaled $373,000 compared with a loss of $236,000 for the
same period in 1995. The loss was primarily the result of lower margins on sales
of the recently acquired sweater business.
Interest expense increased by $89,000. The increase was principally attributable
to short-term borrowings under the revolving credit facilities.
Six Months Ended June 29, 1996 Compared With Six Months Ended July 1, 1995.
- --------------------------------------------------------------------------
The Company's net sales in the six months ended June 29, 1996 were $47,673,000,
as compared with $27,691,000 for the six months ended July 1, 1995. The increase
of $19,982,000 was primarily attributable to sales of both the recently acquired
sweater business and to increased sales of the existing business.
Sweater segment net sales were $34,431,000 as compared to $16,445,000.
Approximately 59.0% of the increase was attributable to sales from the recently
acquired sweater business. Of the remaining 41.0%, approximately 27.0% was due
to volume increases and approximately 14.0% was due to a shift in mix to higher
priced items.
The Hosiery segment net sales increased to $13,242,000 as compared to
$11,246,000. The increase was primarily due to a unit volume increase of 18.5%.
Gross profit increased to $8,626,000 as compared with $6,283,000. As a
percentage of sales, gross profit decreased to 18.1% as compared to 22.7% . The
decrease resulted principally from reduced margins on sales of the recently
acquired sweater business.
Sweater segment gross profit increased by $1,866,000 as compared with the same
period for 1995. As a percentage of net sales, gross profit was 18.8% as
compared to 28.0% . The reduction, as a percentage of sales, was primarily due
to lower gross margins on sales of the acquired sweater business and the effects
of production expansion as previously discussed.
11
<PAGE>
Hosiery segment gross profit increased $477,000 from the same period last year.
The increase was primarily attributable to the 18.5% volume increase which
resulted in improved manufacturing efficiencies. As a percentage of net sales,
gross profit increased to 16.3% of net sales as compared with 15.0% for the six
months ended July 1, 1995.
Selling, general and administrative expenses were $9,586,000 as compared with
$7,024,000. The increase of $2,562,000 was due principally to increases in fixed
expenses and selling commissions generated by the recently acquired sweater
business.
Loss from operations totaled $635,000 as compared with a loss of $446,000 for
the same period in 1995. The primary reason for the increase was lower margins
on sales as previously mentioned.
Interest expense increased by $213,000. The overall increase was attributable to
increased short-term borrowings under the revolving credit facilities.
Income tax expense for each of the periods presented represents the estimated
state income tax on taxable earnings and the income taxes on the earnings of the
Puerto Rican subsidiary.
SEASONALITY
Approximately two-thirds of net sales of the Company occur in the last half of
the year with the sweater segment sales being more seasonal than the hosiery
segment.
LIQUIDITY AND CAPITAL RESOURCES
The primary liquidity and capital requirements of the Company relate to funding
of the working capital needs to support the buildup in inventories and accounts
receivable which reach their maximum requirements in the third quarter,
servicing long-term debt and funding capital expenditures for machinery and
equipment. The primary sources to meet the liquidity and capital requirements
include funds generated by operations, revolving credit lines and long-term
equipment financing.
Net cash used in operations for the six months ended June 29, 1996 totaled
$11,428,000 of which the primary use was to build inventory for shipments later
in the year.
Capital expenditures for 1996 are planned to be about $3,000,000, of which
$2,359,000 has been expended through June 29, 1996. The planned expenditures are
primarily for manufacturing equipment, facility improvements and the expansion
of the sweater distribution center.
The net cash provided by financing activities for the six months ended June 29,
1996 was $4,519,000. The primary source of funds consisted of net borrowings
totaling $8,385,000 under the Company's revolving credit facilities. The primary
usage of funds was to repay $3,518,000 of debt. Other uses were the redemption
of preferred stock and the purchase of common stock as more fully discussed in
the Notes to the Consolidated Financial Statements. The Company also has the
availability to issue up to $11,000,000 in letters of credit of which $5,070,000
was outstanding.
Management of the Company believes that cash flow from operations and borrowings
under its credit lines will provide adequate resources to meet capital
requirements and operational needs for the foreseeable future.
12
<PAGE>
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
The Company is from time to time involved in litigation incidental to the
conduct of its business. The Company believes that no currently pending
litigation to which it is a party will have a material adverse effect on its
consolidated financial condition or results of operations.
Item 4 - Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Stockholders held on May 15, 1996, pursuant to the
Notice of Annual Meeting of Stockholders and Proxy Statement dated April 15,
1996:
1) Each of the six nominees standing for reelection (Ludwig Kuttner,
Herbert Elish, Michael C. Jackson, Harvey L. Sperry, Eugene Warsaw and Peter W.
Woodworth) were elected as Directors of the Company. Messrs. Kuttner, Elish,
Warsaw, and Woodworth each had 3,513,209 votes FOR, 0 votes AGAINST and 0 votes
WITHHELD; Messrs. Jackson and Sperry each had 3,512,342 votes FOR, 867 votes
AGAINST and 0 votes WITHHELD.
2) The ratification of the appointment of Price Waterhouse, LLP as
independent public accountants for the Company for the year ending December 31,
1996 was approved 3,001,223 votes FOR, 481,386 votes AGAINST, and 30,600 votes
ABSTAINED.
Item 6 - Exhibits and Reports on Form 8-K
a) Exhibits
Exhibit No. Description
---------- -----------------------------------------------------
(10)(H)(10) Fourth Amended and Restated Loan Agreement between
Hampshire Designers, Inc. and NatWest Bank N.A. dated
as of March 31, 1996
(10)(P)(1) Revolving Line of Credit Agreement between Banco Popular
and Glamourette Fashion Mills, Inc. dated May 23, 1996.
(10)(S) Revolving Line of Credit Agreement between
Merchants National Bank and Hampshire Group, Limited
dated April 1, 1996.
(10)(T) Amendment to Credit Agreement between MTB and
Segue (America) Limited dated June 19, 1996.
(11) Statement Re Computation of Income (Loss) per share
(27) Financial Data Schedule
b) Reports on Form 8-K Filed During the Quarter
There were no reports filed on Form 8-K during the three month period
ended June 29, 1996.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HAMPSHIRE GROUP, LIMITED
(Registrant)
Date: August 9, 1996 /s/ Ludwig Kuttner
--------------------- -----------------------------
Ludwig Kuttner
President and
Chief Executive Officer
Date: August 9, 1996 /s/ Charles W. Clayton
--------------------- -----------------------------
Vice President, Secretary,
Treasurer, Chief Financial Officer
and Principal Accounting Office
14
<TABLE>
EXHIBIT 11
HAMPSHIRE GROUP, LIMITED AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF LOSS PER SHARE
(In thousands, except per share data)
<CAPTION>
Three months ended Six months ended
-------------------- --------------------
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
------- --------- -------- ---------
<S> <C> <C> <C> <C>
Weighted average number of
common and common equivalent
shares outstanding:
Common stock ................ 3,755 3,530 3,753 3,530
Accrued shares earned under
Directors' and Executives'
Stock Purchase Plan........ - 4 - 2
----- ----- ----- ------
3,755 3,534 3,753 3,532
===== ===== ===== =====
Net loss ...................... ($597) ($62) ($1,123) ($330)
Less - preferred dividend
requirements ................ (45) (31) (93) (62)
---- --- ------ ----
Net loss applicable to
common stock ................ ($642) ($93) ($1,216) ($392)
==== === ====== ====
Net loss per share applicable
to common stock ............. ($.17) ($.03) ($.32) ($.11)
==== ==== ==== ====
</TABLE>
1
EXHIBIT (10)(H)(10)
NatWest Bank N.A.
1133 Avenue of the Americas
New York, NY 10036
NatWest Bank
FOURTH AMENDED AND RESTATED LOAN AGREEMENT
------------------------------------------
FOURTH AMENDED AND RESTATED LOAN AGREEMENT, dated as of March 31, 1996, by and
among HAMPSHIRE DESIGNERS, INC., a Delaware corporation with a place of business
at 215 Commerce Blvd. Anderson South Carolina 29621 (the "Borrower") and NATWEST
BANK N.A. (formerly National Westminster Bank USA), a national banking
association with a place of business at 1133 Avenue of the Americas, 39th Floor,
New York, New York 10036 (the "Bank").
WHEREAS the Borrower and the Bank are parties to a Third Amended and Restated
Loan Agreement dated as of March 31, 1995 (as so, the "Loan agreement");
WHEREAS, the Hampshire Group has completed a corporate reorganization pursuant
to which (i) effective as of July 1, 1995 Hampshire Designers, Inc. merged with
and into Hampshire Hosiery, Inc. and, as the surviving corporation, Hampshire
Hosiery, Inc. changed its name to Hampshire Designers, Inc. (hereinafter
referred to as the "Borrower"), (ii) effective as of December 26, 1995, H. G.
Knitwear merged with and into Segue (America) Limited ("Segue"); and (iii)
effective as of Oct. 10, 1995, the The Winona Knitting Mills, Inc. was acquired
and merged into Hampshire Group, Limited and the operations of The Winona
Knitting Mills, Inc. continue as a division of the Borrower,
WHEREAS, as a result of such restructuring, the operations of the former
Hampshire Designers, Inc. continue as the Hampshire Designers Division
("Designers") of the Borrower, the operations of the former Hampshire Hosiery,
Inc. continue as the Hampshire Hosiery Division ("Hosiery") of the Borrower, and
the operations of The Winona Knitting Mills, Inc. ("Winona") continue as a
division of the Borrower;
WHEREAS, the parties hereto now desire to amend and restate in its entirety the
Loan Agreement as herein provided in order to, among other things, reflect the
new corporate structure.
NOW, THEREFORE, IT IS AGREED THAT THE LOAN AGREEMENT IS AMENDED AND RESTATED IN
ITS ENTIRETY AS FOLLOWS:
SECTION 1. AMOUNT AND TERMS.
l.l.A. WORKING CAPITAL LINE. Subject to and upon the terms and conditions
herein set forth, including (without limitation) the definitions contained in
Section 12, at any time or from time to time on or before the termination of
this Agreement, subject to the limitations contained in Section 1.1.B, the Bank
shall extend a working capital credit facility (the "Working Capital Line") for
short-term loans (referred to as "Loans") and Letters of Credit.
l.l.B. LIMITATIONS OF LINE OF CREDIT. Except as otherwise permitted or
limited by the Bank from time to time, the aggregate amount of (i) Loans
outstanding at any time to the Borrower shall not exceed the lesser of
$25,000,000 or the Total Borrowing Base (the "Working Capital Line Limit"); (ii)
Letters of Credit outstanding at any time issued for the account of the Borrower
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shall not exceed $6,500,000; (iii) Loans and Letters of Credit outstanding at
any time with respect to Designers individually shall not exceed $20,000,000;
(iv) Loans outstanding at any time with respect to Designers individually shall
not exceed $16,000,000; provided, however, that of the Loans and Letters of
Credit available with respect to Designers, not more than $2,000,000 of the
proceeds thereof shall be available to San Francisco Knitworks, Inc.
("Knitworks") not more than $4,000,000 of the proceeds thereof shall be
available to Segue, and not more than $3,000,000 of the proceeds thereof shall
be available to Winona. (v) Letters of Credit outstanding at any time issued for
the account of Designers individually shall not exceed $6,000,000; provided,
however, that of the Letters of Credit available with respect to Designers, not
more than $3,000,000 thereof shall be available to Segue (vi) Loans and Letters
of Credit outstanding with respect to Hosiery individually shall not exceed
$5,000,000; (vii) Loans outstanding at any time with respect to Hosiery
individually shall not exceed $5,000,000; (and any working capital needs of
Hosiery in excess thereof, during the term hereof, shall be funded from
intercompany advances of Designers); and (viii) Letters of Credit outstanding at
any time issued for the account of Hosiery individually shall not exceed
$500,000.
l.l.C. NOTES AND ADDITIONAL MATTERS RELATIVE TO LETTERS OF CREDIT.
(a) Loans under the Working Capital Line shall mature, subject to
earlier acceleration, on the Maturity Date, and shall be evidenced by, and be
repayable with interest in accordance with the terms of, one promissory note for
the Borrower payable to the order of the Bank, in form and substance
substantially as set forth in Exhibit 1.1.C (the "Note"), which Note shall be
dated as of March 31, l996, shall be duly executed by the Borrower and shall
replace the existing Notes of the Borrower's constituent corporations (but to
the extent of the current principal balance thereof presently outstanding shall
represent the same indebtedness). The Note is in the maximum principal amount of
$25,000,000. and is subject to payment and prepayment as provided in Section 2.
(b) (i) Letters of Credit shall be issued only to facilitate the
purchase of goods in transactions involving the importation, exportation or
domestic shipment of such goods.
(ii) The Borrower agrees to pay for the issuance of each Letter
of Credit and all the Bank's standard fees and commissions routinely charged in
connection therewith.
(iii) In the event the Bank makes payment to the beneficiary
of any Letter of Credit in accordance with the terms thereof, the Borrower
agrees to reimburse the Bank therefor on the same day such payment is made.
(iv) With respect to each Letter of Credit the Borrower, shall
execute, and each such Letter of Credit shall be further governed by the
provisions of, the Bank's standard form of Application for Irrevocable Letter of
Credit (to the extent any inconsistency exists between such Application(s) and
this Agreement, such Application(s) shall govern).
(v) Notwithstanding anything to the contrary contained herein
the Borrower may cause the Bank to issue Letters of Credit for the account of
the Borrower, which may be for the particular account of its divisions, Hosiery
or Designers, up to the limits set forth in Section l.lB (v)and (viii) above,
or its subsidiary Segue; provided however, that Letters of Credit issued for the
account of Segue individually shall not exceed $3,000,000.
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1.1.D. INTEREST.
(a) Definitions. For purposes of this Section 1.1.D., unless the context
otherwise requires, the following terms shall have the following meanings:
(i) "Fixed Rate" shall mean for any Loans requested by Borrower
and for any Interest Period a fixed rate of interest is quoted by the Bank to
Borrower, if requested by Borrower in accordance with subparagraph (c) hereof
which fixed rate shall be determined in the sole discretion of the Bank by
reference to such factors and considerations as the Bank shall deem relevant;
provided, that Borrower shall be entitled to request a fixed rate of interest
for any portion of the Loans less than $1,000,000. While the Bank will
endeavor to quote a Fixed Rate if requested by a Borrower, the Bank reserves the
right not to quote such a Rate, in which event such Borrower's request shall be
treated as a request for the Prime-Based Rate.
(ii) "Fixed Rate Interest Period" shall mean an Interest Period
during which all or a portion (in excess of $1,000,000 in principal amount) of
Loans under either Note bears interest at the Fixed Rate.
(iii) "Interest Period" shall mean with respect to a Fixed Rate
Interest Period, any period of days which is agreeable to the Bank (in each
case, as selected by Borrower and as determined to be available by the Bank
pursuant to subparagraph (c) of this Section 1.1.D.), and with respect to a
Prime-Based Rate Interest Period, a period continuing from day to day until
terminated by such Borrower, such termination to be effective three (3) business
days after the selection of a Fixed Rate Interest Period in accordance with
subparagraph (c) of this Section 1.1.D. At any one time all Loans under the Note
may be subject to the Prime-Based Rate Interest Period, or all Loans under the
Note may be subject to one or more Fixed Rate Interest Periods, or some Loans
may be subject to the Prime-Based Rate Interest Period and other Loans may be
subject to one or more Fixed Rate Interest Periods. The first Interest Period
under the Note shall commence when the Loan with respect thereto is first
advanced by the Bank and thereafter each Interest Period with respect to any
Loans shall commence on the last day of the immediately preceding Interest
Period with respect to such Loans; provided, that any Interest Period which
would otherwise end on a day which is not a business day shall end on the next
succeeding business day; and provided, further however, that any Interest Period
which commences prior to the Maturity Date and would otherwise end thereafter
shall end on the Maturity Date; and provided, further, however, that Interest
Periods in respect of overdue principal shall be of such durations as the Bank
may select.
(iv) "Interest Renegotiation Date" shall mean the last day of
any Interest Period.
(v) "Prime-Based Rate" shall mean a fluctuating interest rate
equal to the Prime Rate in effect from time to time.
(vi) "Prime Rate" shall mean the rate of interest established
from time to time by the Bank as its "prime rate" whether or not such rate is
the best rate available at the Bank.
(vii) "Prime-Based Rate Interest Period" shall mean an Interest
Period during which all or a portion of the Loans bear interest at the
Prime-Based Rate.
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(b) Interest Rates. Loans shall bear interest on the unpaid principal
balance thereof from the date thereof in respect of each Interest Period at a
rate per annum equal to (i) the Prime-Based Rate, in the case of Loans subject
to the Prime-Based Rate Interest Period (which Loans shall at times be referred
to as "Prime-Based Loans"), or (ii) the Fixed Rate applicable to such Loans, in
the case of Loans subject to a Fixed Rate Interest Period (which Loans shall at
times be referred to as "Fixed Rate Loans"). Interest on the Loans shall be
payable monthly on the first day of each month commencing April 1, 1996, on the
Maturity Date and thereafter on demand. After any stated or any accelerated
maturity of Loans hereunder, Prime-Based Loans shall bear interest (computed
daily) at a rate of 2% per annum in excess of the rate applicable to Prime-Based
Loans and Fixed Rate Loans shall bear interest (computed daily) at a rate of 2%
per annum in excess of the rate applicable to such Fixed Rate Loan until the
expiration of the Fixed Rate Interest Period applicable to such Fixed Rate Loan,
at which time the Loan will automatically be converted into a Prime-Based Loan
and until paid shall bear interest at a rate of 2% per annum in excess of the
rate applicable to Prime-Based Loans, in each case payable on demand. In no
event shall interest payable hereunder be in excess of the maximum rate of
interest permitted under applicable law. Interest shall be calculated on the
basis of actual days elapsed over a 360-day
year.
(c) Selection of Interest Periods. (i) The first Interest Period under
the Note shall commence on the date hereof, shall be a Prime-Based Rate Interest
Period and shall continue with respect to the Borrower until a date three (3)
business days after notification by Borrower to the Bank of the selection of the
next succeeding Interest Period under such Notes.
(ii) By no later than 10:00 a.m. (New York time) on the day
three (3) business days prior to each Interest Renegotiation Date, the Borrower
shall deliver to the Bank a written or telephonic request (confirmed in writing)
for a quote for a Fixed Rate specifying the principal amount o
Loans to be subject thereto and a proposed duration therefor; provided, however
that the Bank in its sole discretion may, but shall be under no obligation to,
accept such notice the same day of the requested Loan, in such case the interest
rate may not be the same as would be if the Bank were afforded three days'
notice, it being understood that the Bank's index for determining each such rate
may vary depending on the number of days' advance notice it receives. The Bank
shall use its best efforts to furnish such Borrower not later than 11:30 a.m.
(New York time) on the same business day as the date of such request, a quote of
the Fixed Rate for the Loans and the duration proposed by such Borrower. By no
later than 3:00 p.m. (New York time) on the same business day as the date of
such request such Borrower shall specify to the Bank whether the next succeeding
Interest Period for such Loans is to be a Prime-Based Rate Interest Period or a
Fixed Rate Interest Period; provided, that if the Bank shall determine (which
determination shall be conclusive and binding upon such Borrower) that it is
unable for any reason to quote a Fixed Rate or that the duration of the Interest
Period designated by such Borrower is unacceptable, the Bank shall so notify
such Borrower and the Interest Period designated for such Loans shall
automatically be a Prime-Based Rate Interest Period. Each designation of, and
selection of the Loans applicable to and the duration of, an Interest Period by
a Borrower shall be irrevocable and effective upon the acknowledgment and
acceptance by the Bank. If a Borrower shall fail to designate, or in the case of
a Fixed Rate Interest Period to select the principal amount of Loans applicable
to or duration of, an Interest Period as provided above, such Interest Period
shall automatically be a Prime-Based Rate Interest Period. Promptly after the
establishment of the Prime-Based Rate or Fixed Rate, as the case may be, for any
Interest Period, the Bank shall notify such Borrower and the rate set forth in
such notification shall be conclusive absent manifest error.
1.2. DISBURSEMENT. Loans shall be disbursed by the Bank from its office at
1133 Avenue of the Americas, New York, New York 10036.
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SECTION 2. PAYMENTS AND PREPAYMENTS OF LOANS.
2.1. MANDATORY PAYMENTS. If at any time the aggregate outstanding Loans and
Letters of Credit to Borrower exceed the Working Capital Line Limit, Borrower
shall pay such excess to the Bank together with accrued interest thereon and
amounts payable pursuant to Section 2.4 hereof.
2.2. OPTIONAL PREPAYMENTS. Subject to Section 2.4 the Borrower shall have
the right from time to time to prepay the outstanding Loans in part or in whole.
Upon the giving of notice of prepayment, the amount therein specified to be
prepaid shall be due and payable on the date therein specified for such
prepayment, together with accrued interest thereon to such date.
2.3. PROCEDURES FOR PAYMENTS. All payments by the Borrower to the Bank
shall be made at 1133 Avenue of the America, New York, New York 10036 in
immediately available funds and in lawful money of the United States or may be
made by a charge to the demand deposit account of the Borrower and its
applicable subsidiaries and divisions maintained with the Bank.
2.4 FUNDING LOSSES. The Borrower shall indemnify the Bank and hold the Bank
harmless against any loss or expense incurred by it as a result of any payment
of principal of the Loans to Borrower, or any portion thereof, bearing interest
at a Fixed Rate on a date other than the last day of the Fixed Rate Interest
Period applicable thereto or as a result of any prepayment of principal on
account of the applicable Note, whether such loss or expense arises by reason of
the liquidation or reemployment of deposits or other funds acquired by the Bank
to fund or maintain the Loans to the Borrower or otherwise. The Bank shall
certify to the Borrower the amount of, and the basis of determination of, the
loss or expense so incurred (which certification shall be conclusive in the
absence of arithmetical error).
SECTION 3. SECURITY AND GUARANTEES.
As security for and to guarantee the full and timely payment of the Obligations,
whether now existing or hereafter arising:
3.1. SECURITY AGREEMENT. Each of the Borrower, Knitworks and Segue shall
execute and deliver to the Bank, its respective security agreement(s). The
Borrower, Knitworks, and Segue, (Borrower, Knitworks and Segue are also referred
to herein individually as a "Grantor" and collectively as the "Grantors") shall
execute a sufficient quantity of financing statements pursuant to the Uniform
Commercial Code, in form and substance satisfactory to the Bank, granting the
Bank a first priority perfected security interest in all Grantors accounts
receivable and imported inventory shipped under or pursuant to or in connection
with Letters of Credit issued by the Bank, such collateral to include that of
Designers, Hosiery, Knitworks, Winona and Segue. Each Grantor also agrees to
execute additional financing statements as may be required by the Bank from time
to time.
3.2. GUARANTEES. The Borrower has caused a guaranty to be duly executed and
delivered to the Bank, by each of Hampshire Group, Limited ("HGL"), Glamourette
Fashion Mills, Inc. ("Glamourette"), Knitworks, and Segue (each individually
referred to herein as a "Guarantor" and collectively as the "Guarantors") of all
the obligations to the Bank. The Borrower has also executed and delivered
guarantees of all the Obligations of Segue and Knitworks to the Bank. Each of
the foregoing guarantees is secured by the collateral described in the security
agreement executed by such Guarantor.
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3.3. FILING AND RECORDING. Each Grantor shall, at its cost and expense, cause
all instruments and documents given as security pursuant to this Agreement to be
duly recorded and/or filed or otherwise perfected in all places necessary, in
the opinion of the Bank, to perfect and protect the lien or security interest of
the Bank in the property covered thereby. Each Grantor, to the extent permitted
by law, hereby authorizes the Bank to file any financing statement or amendment
thereto in respect of any security interest created pursuant to this Agreement
which may at any time be required or which, in the opinion of the Bank, may at
any time be desirable although the same may have been executed only by the Bank
or, at the option of the Bank, to sign such financing statement or amendment on
behalf of such Grantor and file the same, and such Grantor hereby irrevocably
designates the Bank, its agents, representatives and designees as agents and
attorneys-in-fact for such Grantor for this purpose. In the event that any
re-recording or refiling thereof (or the filing of any statements of amendment,
continuation or assignment of any financing statement) is required to protect
and preserve such lien or security interest, each Grantor shall, at its cost and
expense, cause the same to be recorded and/or refiled at the time and in the
manner requested by the Bank.
SECTION 4. CONDITIONS PRECEDENT TO BORROWING.
The commitment of the Bank to make any Loans to the Borrower or to issue any
Letter of Credit for the account of the Borrower (or for the account of any
Guarantor with the written consent of the Borrower) shall be subject to the
satisfaction in full of the following conditions precedent:
4.1. FINANCIAL STATUS. At the time of each extension of credit hereunder, there
shall have been no material adverse change in the business, operations,
properties, assets or financial condition of the Borrower or any Guarantor from
the financial condition reflected on the consolidated financial statements of
HGL as at December 31, l995.
4.2. QUALIFICATION. At the time of each extension of credit hereunder, the
Borrower and each Guarantor shall be duly qualified as a foreign corporation in
good standing in each jurisdiction in which the nature of its business or
ownership or use of property requires such qualification.
4.3. SECURITY AND GUARANTY INSTRUMENTS. At the time of each extension of credit
hereunder (a) the Bank shall have received all the instruments and documents
then required to be delivered pursuant to Section 3 or any other provision of
this Agreement or pursuant to the instruments and documents referred to in
Section 3 or any other provision of this Agreement and the same shall be in full
force and effect and (b) the Bank shall have received all necessary consents
relating thereto from third parties so that the same shall be valid and not
result in any violation of any agreement running in favor of such third party.
4.4. CORRECTNESS OF WARRANTIES. At the time of each extension of credit
hereunder, all representations and warranties contained herein, or otherwise
made to the Bank in connection herewith or therewith, shall be true and correct
with the same effect as though such representations and warranties had been made
on and as of the date of such extension of credit.
4.5. NO EVENT OF DEFAULT. At the time of each extension of credit hereunder,
there shall exist no Event of Default as defined in Section 9 and no
condition, event or act which, with notice or lapse of time, or both, would
constitute an Event of Default.
4.6. NOTE. At the time of the first borrowing hereunder, the Bank shall have
received a Note from the Borrower, duly completed, executed and delivered.
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4.7. PROCEEDINGS; RECEIPT OF DOCUMENTS. At the time of each extension of credit
hereunder, all corporate and legal proceedings and all documents and instruments
in connection with each extension of credit and pursuant to Sections 3 and 4
shall be satisfactory in form and substance to the Bank and the Bank shall have
received all information and copies of all documents, including records of
corporate proceedings, which the Bank may have requested in connection
therewith, such documents where requested by the Bank to be certified by
appropriate corporate or governmental authorities.
SECTION 5. USE OF PROCEEDS.
Subject to the limits set forth in Sections l.lB and 1.1.C. (b)(v), the Borrower
agrees that the proceeds of all Loans hereunder shall be applied solely for the
Borrower's own working capital purposes; provided, however, that Borrower may
downstream, or cause the Bank to advance directly, to Designers, Hosiery, Segue
and Winona and Knitworks, up to $16MM, $5MM, $4MM, $3MM and $2MM respectively,
of the proceeds of Designers' Loans hereunder, to be applied solely for the
working capital purposes of each, as the case may be.
SECTION 6. CERTAIN AFFIRMATIVE COVENANTS.
The Borrower covenants and agrees that, until the Obligations are paid in full
and this Agreement is terminated, unless specifically waived by the Bank in
writing:
6.1. FINANCIAL STATEMENTS AND OTHER INFORMATION. The Borrower shall furnish
to the Bank:
(a) as soon as practicable and in any event within 60 days after the
last day of each of the first three fiscal quarters of each fiscal year of HGL,
an unaudited consolidated and consolidating balance sheet of the Borrower and of
each Guarantor and its Subsidiaries, a consolidated and consolidating statement
of income and surplus account of the Borrower and of each Guarantor and its
Subsidiaries, and a consolidated statement of changes in financial position of
the Borrower and each Guarantor and its Subsidiaries for the quarter then ended,
all in reasonable detail and certified by the chief financial or accounting
officer of the Borrower and of each Guarantor to be true and correct in all
material respects, subject to normal recurring year-end audit adjustments, and
to have been prepared in accordance with generally accepted accounting
principles consistently maintained by the Borrower and Guarantor;
(b)as soon as practicable and in any event within 120 days after the close
of each fiscal year of HGL, a consolidated and consolidating balance sheet of
the Borrower and of each Guarantor and its Subsidiaries, a consolidated and
consolidating statement of income and surplus account of the Borrower and of
each Guarantor and its Subsidiaries, and a consolidated statement of changes in
financial position of the Borrower and of each Guarantor and its Subsidiaries,
as at the end of and for the fiscal year just closed, setting forth the
corresponding figures of the previous fiscal year in comparative form, all in
reasonable detail and with respect to the consolidated statements certified
(without any qualification or exception deemed material by the Bank) by Price
Waterhouse or other independent public accountants satisfactory to the Bank and
with respect to all other statements certified by the applicable companies chief
financial or accounting officer as having been prepared in accordance with
generally accepted accounting principals consistently applied; and concurrently
with such financial statements, a written statement signed by such independent
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accountants and chief financial or accounting officer, as the case may be, to
the effect that, in making the examination necessary for their certification of
such financial statements, they have not obtained any knowledge of the existence
of any Event of Default or other act, condition or event which, with the giving
of notice or lapse of time, or both, as specified in Section 9, would constitute
an Event of Default, or, if such independent accountants or officers shall have
obtained from such examination any such knowledge, they shall disclose in such
written statement the Event of Default or other act, condition or event and the
nature thereof, it being understood, however, that such independent accountants
shall be under no liability, directly or indirectly, to anyone for failure to
obtain knowledge of any such Event of Default or act, condition or event;
(c) Intentionally Omitted;
(d) as soon as practicable and in any event within 30 days after the
close of each month, a receivables aging for such month separately for the
Borrower, Segue and Knitworks in such detail as the Bank may reasonably request;
(e) as soon as practicable and in any event within 30 days of the close
of each month, a monthly borrowing base certificate substantially in the form of
Exhibit 6.1(e) hereto;
(f) promptly upon the commencement thereof, written notice of any
litigation, including arbitrations, where the amount claimed exceeds $500,000
and of any proceedings before any governmental agency which would, if
successful, materially affect the Borrower or any Guarantor or any of its
Subsidiaries; and
(g) with reasonable promptness, such other information respecting the
business, operations and financial condition of HGL and/or the Borrower or any
of their Subsidiaries as the Bank may from time to time request.
6.2. INSPECTION BY BANK. The Borrower and each Guarantor shall allow, and shall
cause each of its Subsidiaries to allow, any representative of the Bank
(including any participant in the loans made hereunder) to visit and inspect any
of the properties of such Borrower, Guarantor or any Subsidiary, to examine the
books of account and other records and files of such Borrower, Guarantor or any
Subsidiary, to make copies thereof and to discuss the affairs, business,
finances and accounts of such Borrower, Guarantor or any Subsidiary with their
respective officers and employees, all at such reasonable times and as often as
the Bank may reasonably request.
6.3. FURTHER ASSURANCES. The Borrower and each Guarantor shall, at its cost and
expense, upon request of the Bank, duly execute and deliver, or cause to be duly
executed and delivered, to the Bank such further instruments and do and cause to
be done such further acts as may be necessary or proper in the opinion of the
Bank to carry out more effectually the provisions and purposes of this
Agreement.
SECTION 7. CERTAIN NEGATIVE COVENANTS.
The Borrower and each Guarantor covenants and agrees that, until the Obligations
are paid in full and this Agreement is terminated either on the Maturity Date or
in writing, neither Borrower nor any Guarantor shall, without the prior written
consent of the Bank:
7.1. COMPROMISE OF RECEIVABLES. Compromise or adjust any of the Receivables
(or extend the time for payment thereof) or grant any discounts, allowances or
credits thereon, other than in the normal course of business.
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7.2. ACQUISITIONS. Purchase, lease or otherwise acquire all or any substantial
part of the business, properties or assets of any person during the term of this
Agreement; except, provided that no Event of Default exists or is continuing,
(ii) the Borrower or any Guarantor may enter into no more than one (1)
acquisition of any person in the same line of business during the term of this
agreement, provided that the consideration given for such acquisition does not
exceed $3,000,000., with the cash portion of such acquisition not to exceed
$1,000,000.
7.3. OTHER INDEBTEDNESS. Incur any indebtedness for borrowed money except for
(i) indebtedness reflected on the Borrower's audited financial statements
furnished to the Bank dated December 31, 1995, (ii) purchase money indebtedness
incurred in the purchase of fixed assets within the limitations of Section 7.5
hereof and (iii) $3,000,000 owing to Merchants National Bank of Minnesota (iv)
$2,000,000 owing to Banco Popular, Puerto Rico (v) indebtedness owing to the
Bank.
7.4. CONTINGENT OBLIGATIONS. Except for obligations owing to the Bank, assume,
endorse, be or become liable for or guarantee the obligations of any person
excluding the endorsement of negotiable instruments for deposit or collection
in the ordinary course of business.
7.5. EXPENDITURES, STOCK TRANSACTIONS AND ADVANCES. (i) Incur with respect to
the Borrowers, Guarantors and Subsidiaries, in the aggregate, capital
expenditures or equipment lease obligations in any fiscal year in excess of
$3,000,000, (ii) acquire the capital stock or assets of any other business,
(iii) purchase any of its outstanding stock or (iv) lend or advance credit,
property or money to any Guarantor or any other person other than as permitted
under Section 7.2 and 7.7 of this Agreement.
7.6. NEGATIVE PLEDGE. Permit the mortgage or pledge of, or creation of a
security interest in, any of its assets other than those in favor of the Bank.
7.7 PAYMENTS TO HGL. During any fiscal year, permit the total of the sum of all
payments, distributions or dividends paid by the Borrower to HGL (excluding,
however, distributions in the ordinary course of business for operating expenses
and payment of management fees) during such fiscal year, plus the sum of all
loans or advances of money, credit or property made by the Borrower to HGL (net
of any repayments by HGL) during such fiscal year, to exceed the Borrowers' net
income (as determined in accordance with generally accepted accounting
principles consistently applied) for such fiscal year; provided, however, that
this covenant shall not restrict or include within its calculations the
repayment to HGL by the Borrower of loans or advances that were made by HGL only
to the extent such loans or advances are not or have not been subordinated to
the Bank.
7.8 FINANCIAL REQUIREMENTS. Permit:
(a) the consolidated Effective Net Worth of HGL and all its subsidiaries at
any time to be less than $25,000,000; and
(b) the consolidated Working Capital of HGL and all its subsidiaries at any
time to be less than $22,500,000.
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7.9 Intentionally Omitted.
SECTION 8. Intentionally Omitted.
SECTION 9. DEFAULTS AND REMEDIES.
9.1. EVENTS OF DEFAULT. If any one or more of the following events (herein
called "Events of Default") shall occur for any reason whatsoever (and whether
such occurrence shall be voluntary or involuntary or come about or be effected
by operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any administrative or
governmental body), that is to say:
(a) if default shall be made in the due and punctual payment of the
principal of the Note, when and as the same shall become due and payable whether
by maturity, acceleration or otherwise, or should any other amount payable
hereunder not be paid when such amount shall have become due and payable,
including, without limitation, amounts necessary to reimburse the Bank for a
draw under a Letter of Credit; or
(b) if default shall be made in the due and punctual payment of any
installment of interest on either Note, when and as such interest installment
shall become due and payable and such default shall have continued for five
days; or
(c) if default shall be made in the performance or observance of, or
shall occur under, any covenant, agreement or provision contained in Section 3,
6, 7, 8 or 11 of this Agreement or in any instrument or document evidencing or
creating any obligation, lien or security interest in favor of the Bank or
delivered to the Bank in connection with or pursuant to this Agreement or any
Obligation or if this Agreement or any such instrument or document shall
terminate, be terminable or be terminated or become void or unenforceable for
any reason whatsoever without the written consent of the Bank; or
(d) if default by the Borrower, any Guarantor or any Subsidiary shall be
made in the performance or observance of any other covenant, agreement or
provision contained in this Agreement and such default shall have continued for
a period of 10 days; or
(e) intentionally omitted;
(f) if any representation, warranty or other statement of fact given
herein or in any writing, certificate, report or statement at any time furnished
to the Bank pursuant to or in connection with this Agreement, or any Guarantee,
shall be false or misleading in any material respect when given or repeated; or
(g) if the Borrower, any Guarantor or any Subsidiary shall be unable to
pay its debts generally as they become due, file a petition to take advantage of
any insolvency act; make an assignment for the benefit of its creditors;
commence a proceeding for the appointment of a receiver, trustee, liquidator or
conservator of itself or of a whole or any substantial part of its property;
file a petition or answer seeking reorganization or arrangement or similar
relief under the Federal bankruptcy laws or any other applicable law or statute
of the United States of America or any state; or
(h) if a court of competent jurisdiction shall enter an order, judgment
or decree appointing a receiver, trustee, liquidator or conservator of the
Borrower, any Guarantor or any Subsidiary, or of the whole or any substantial
part of its respective properties, or approve a petition filed against the
Borrower, any Guarantor or any Subsidiary, seeking reorganization or arrangement
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or similar relief under the Federal bankruptcy laws or any other applicable law
or statute of the United States of America or any state; or if, under the
provisions of any other law for the relief or aid of debtors, a court of
competent jurisdiction shall assume custody or control of the Borrower, any
Guarantor or any Subsidiary, or of the whole or any substantial part of their
respective properties; or if there is commenced against the Borrower, any
Guarantor or any Subsidiary, any proceeding for any of the foregoing relief and
such proceeding or petition remains undismissed for a period of 30 days; or if
the Borrower, any Guarantor or any Subsidiary, by any act indicates its consent
to or approval of any such proceeding or petition; or
(i) if any judgment aggregating, with other outstanding judgments, in
excess of $50,000 is rendered against the Borrower, any Guarantor or any
Subsidiary, or if any attachment, injunction or execution is issued against any
Collateral or against any of its or their other property having an aggregate
value in excess of $50,000, and in each case remains unpaid, unstayed or
undismissed for a period of 30 days; or
(j) if the Borrower, any Guarantor or any Subsidiary, shall suspend the
operation of a segment material to the operation of its business as presently
conducted; or
(k) if the Borrower, any Guarantor or any Subsidiary shall (i) default
under any other agreement, instrument or obligation made with or in favor of or
owing to the Bank or (ii) default in any payment of any indebtedness for
borrowed money (other than the Notes) beyond the period of grace, if any,
provided in the instrument or agreement under which such indebtedness was
created; or (iii) default in the observance or performance of any other
agreement or condition relating to any indebtedness described in subpart "(ii)"
above or contained in any instrument or agreement evidencing, securing or
relating thereto or any other event shall occur or condition exist, the effect
of which default or other event or condition is to cause or permit the holder or
holders of the indebtedness described in subpart "(ii)" above (or a trustee or
agent on behalf of such holder or holders) to cause such indebtedness to become
due prior to its stated maturity,
(A) either or both of the following actions may be taken: (i) the Bank may,
at its option, declare any obligation to lend hereunder terminated, whereupon
such obligation to make further loans hereunder shall terminate immediately, and
(ii) the Bank may, at its option, declare the Note and any or all other
Obligations to be due and payable, and the same, and all interest accrued
thereon, shall forthwith become due and payable without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived,
anything contained herein or in any instrument evidencing the Obligations to the
contrary notwithstanding;
(B) the Bank shall have all rights and remedies of a mortgagee, a secured
party under the Uniform Commercial Code and otherwise, including, without
limitation, the right to foreclose the security interest granted under the
Security Agreements or herein by any available judicial procedure and/or to take
possession of any or all of the Collateral, the other security for the
Obligations and the books and records relating thereto with or without judicial
process; for the purposes of the preceding sentence, the Bank may, so far as the
Borrower can give authority therefor, enter upon any or all of the premises
where any of the Collateral, such other security or books or records may be
situated and take possession and remove the same therefrom; and
(C) the Bank shall have the right in its sole discretion to determine which
rights, security, liens, security interests or remedies it shall at any time
pursue, relinquish, subordinate, modify or take any other action with respect
thereto, without in any way modifying or affecting any of them or any of the
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Bank's rights hereunder; and any moneys, deposits, Receivables, balances, or
other property of either or both Borrower which may come into the Bank's hands
at any time or in any manner, may be retained by the Bank and applied to any of
the Obligations.
9.2. SUITS FOR ENFORCEMENT. In case any one or more Events of Default shall
occur and be continuing, the Bank may proceed to protect and enforce its rights
or remedies either by suit in equity or by action at law, or both, whether for
the specific performance of any covenant, agreement or other provision contained
herein or in any document or instrument delivered in connection with or pursuant
to this Agreement, or to enforce the payment of the Obligations or any other
legal or equitable right or remedy.
9.3. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein conferred upon
the Bank is intended to be exclusive of any other right or remedy contained
herein or in any instrument or document delivered in connection with or pursuant
to this Agreement, and every such right or remedy shall be cumulative and shall
be in addition to every other such right or remedy contained herein and therein
or now or hereafter existing at law or in equity or by statute, or otherwise.
9.4. RIGHTS AND REMEDIES NOT WAIVED. No course of dealing between either or both
Borrower and the Bank or any failure or delay on the part of the Bank in
exercising any rights or remedies hereunder shall operate as a waiver of any
rights or remedies of the Bank and no single or partial exercise of any rights
or remedies hereunder shall operate as a waiver or preclude the exercise of any
other rights or remedies hereunder.
SECTION 10. REPRESENTATIONS AND WARRANTIES.
In order to induce the Bank to enter into this Agreement, to extend the Working
Capital Line as herein provided for and to make extensions of credit hereunder,
the Borrower makes the following representations and warranties, all of which
shall survive the execution and delivery of this Agreement, and shall be deemed
repeated and confirmed with respect to each Receivable and/or other item of
Collateral as it is created or otherwise acquired and upon the request for, and
the making of, each extension of credit:
10.1. CORPORATE STATUS OF THE BORROWER. Schedule 10.1 annexed hereto correctly
sets forth the Subsidiaries of the Borrower and the outstanding capitalization
and ownership of the stock of each Borrower. The Borrower, each Guarantor and
each Subsidiary is a duly organized and validly existing corporation and in good
standing under the laws of its jurisdiction of incorporation and in all other
jurisdictions where the nature of its business or ownership or use of property
requires such qualification.
10.2. CORPORATE POWER AND AUTHORITY. The Borrower has the corporate power to
borrow and to execute, deliver and carry out the terms and provisions of this
Agreement and all instruments and documents delivered by it pursuant to this
Agreement, and the Borrower has taken or caused to be taken all necessary
corporate action (including, but not limited to, the obtaining of any consent of
stockholders required by law or by the Certificate of Incorporation or By-Laws
of such Borrower) to authorize the execution, delivery and performance of this
Agreement, the borrowings hereunder and the execution, delivery and performance
of the instruments and documents delivered by it pursuant to this Agreement. The
Borrower has all requisite corporate power and authority to own its properties
and to transact the business in which it is now engaged or presently proposes to
be engaged.
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10.3. NO VIOLATION OF AGREEMENTS. The Borrower is not in default under any
indenture, mortgage, deed of trust, agreement or other instrument to which it is
a party or by which it may be bound. Neither the execution and delivery of this
Agreement or any of the instruments and documents to be delivered pursuant to
this Agreement, nor the consummation of the transactions herein and therein
contemplated, nor compliance with the provisions hereof or thereof will violate
any law or regulation, or any order or decree of any court or governmental
instrumentality, or will conflict with, or result in the breach of, or
constitute a default under, any indenture, mortgage, deed of trust, agreement or
other instrument to which the Borrower is a party or by which it may be bound,
or, except as contemplated under this Agreement, result in the creation or
imposition of any lien, charge or encumbrance upon any property of either
Borrower thereunder, or violate any provision of the Certificate of
Incorporation, By-Laws or any preferred stock provisions of the Borrower.
10.4. NO LITIGATION. Except as set forth in Schedule 10.4 annexed hereto, there
are no actions, suits or proceedings (nor any basis therefor) pending, or to the
knowledge of either Borrower threatened, against or affecting either Borrower
before any court, arbitrator or governmental or administrative body or agency
which challenge the validity or propriety of the transactions contemplated under
this Agreement or the documents, instruments, agreements executed or delivered
in connection herewith, therewith or related thereto, or which might result in
any material adverse change in the business, operations, properties, assets or
financial condition of either Borrower. Neither Borrower nor any Subsidiary is
or shall be at any time in default under any applicable statute, rule, order,
decree or regulation of any court, arbitrator or governmental body or agency
having jurisdiction over such Borrower or any Subsidiary, which default might
result in any material adverse change in the business, operations, properties,
assets or financial condition of either Borrower.
10.5. GOOD TITLE TO PROPERTIES. Each Grantor has good and marketable title to
all its properties and assets, subject to no liens, mortgages, pledges, security
interests, encumbrances or charges of any kind, except as set forth on Schedule
10.5 hereof or except such as would be permitted under Section 7.7 of the
Insurance Company Agreement when it was last in effect.
10.6. FINANCIAL STATEMENTS AND CONDITION. The balance sheet of the Borrower and
HGL on a consolidated basis as at December 31, 1995 including the related
schedules and notes, heretofore delivered to the Bank, is true and correct and
presents fairly the pro forma financial position of the Borrower as at the date
of such balance sheet. The Borrower, as of the date hereof, has no direct or
contingent liabilities which are not provided for or reflected in such balance
sheet or referred to in the notes thereto. Such financial statement has been
prepared in accordance with generally accepted accounting principles. Each
fiscal year of the Borrower ends on December 31.
10.7. TRADEMARKS, PATENTS, ETC. The Borrower possesses all the trademarks,
trade names, copyrights, patents, licenses, or rights in any thereof, adequate
for the conduct of its business as now conducted and presently proposed to be
conducted, without conflict with the material rights or claimed rights of
others.
10.8. TAX LIABILITY. The Borrower has filed all tax returns which are required
to be filed, except those being contested in good faith by appropriate
proceedings for which adequate reserves are held, and has paid all taxes which
have become due pursuant to such returns or pursuant to any assessment received
by it.
10.9. GOVERNMENTAL ACTION. No action of, or filing with, any governmental or
public body or authority (other than normal reporting requirements or filing
under the provisions of Section 3) is required to authorize, or is otherwise
required in connection with, the execution, delivery and performance of this
Agreement or any of the instruments or documents to be delivered pursuant to
this Agreement, except such as have been made.
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10.10. DISCLOSURE. Neither the Schedules hereto, nor the financial statements
referred to in Section 10.6, nor any certificate, statement, report or other
document furnished to the Bank by either Borrower in connection herewith or in
connection with any transaction contemplated hereby, nor this Agreement,
contains, at the time furnished, any untrue statement of a material fact or
omits to state any material fact necessary in order to make the statements
contained therein not misleading.
10.11. REGULATION U. The Borrower does not own any "margin stock" as such term
is defined in Regulation U, as amended (12 C.F.R. Part 221), of the Board. The
proceeds of the extensions of credit made pursuant to the terms of this
Agreement will be used by the Borrower only for the purposes set forth in
Section 5 hereof. None of the proceeds will be used, directly or indirectly, for
the purpose of purchasing or carrying any margin stock or for the purpose of
reducing or retiring any Indebtedness which was originally incurred to purchase
or carry margin stock or for any other purpose which might constitute any of the
Loans or Letters of Credit under this Agreement a "purpose credit" within the
meaning of said Regulation U or Regulation X (12 C.F.R. Part 224) of the Board.
Neither Borrower nor any Guarantor or Subsidiary nor any agent acting in its or
on their behalf has taken or will take any action which might cause this
Agreement or any of the documents or instruments delivered pursuant hereto to
violate any regulation of the Board or to violate the Securities Exchange Act of
1934.
10.12. INVESTMENT COMPANY. The Borrower is not an "investment company," or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940, as amended (15 U.S.C. Section 80a-l, et seq.). The making of the Loans and
Letters of Credit by the Bank, the application of the proceeds and repayment
thereof by the Borrower and the performance of the transactions contemplated by
this Agreement will not violate any provision of said Act, or any rule,
regulation or order issued by the Securities and Exchange Commission thereunder.
10.13. EMPLOYEE BENEFIT PLANS.
(1) None of the employee benefit plans maintained at any time by the
Borrower or the trusts created thereunder has engaged in a prohibited
transaction which could subject any such employee benefit plan or trust to a
material tax or penalty or prohibited transaction imposed under Code Section
4975 or ERISA;
(2) None of the employee benefit plans which are employee pension
benefit plans or the trusts created thereunder has been terminated, except as
set forth on Schedule 10.13 hereto; nor has any such employee benefit plan of
the Borrower incurred any liability to the Pension Benefit Guaranty Corporation
established pursuant to ERISA, other than for required insurance premiums which
have been paid when due, or incurred any accumulated funding deficiency, whether
or not waived; nor has there been any reportable event, or other event or
condition, which presents a risk of termination of any such employee benefit
plan by such Pension Benefit Guaranty Corporation;
(3) The present value of all accrued benefits under the employee benefit
plans which are employee pension benefit plans did not, as of the most recent
valuation date, exceed by an amount greater than $50,000 of the then current
value of the assets of such employee benefit plans allocable to such accrued
benefits;
(4) The making of Loans and issuing of Letters of Credit by the Bank
provided for in Section 1 will not involve any prohibited transaction;
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(5) There has been no withdrawal liability incurred with respect to any
multi-employer pension plan of either Borrower;
(6) As used in this Section 10.13, the terms "employee benefit plan,"
"employee pension benefit plan," "accumulated funding deficiency," "reportable
event," and "accrued benefits" shall have the respective meanings assigned to
them in ERISA, and the term "prohibited transaction" shall have
the meaning assigned to it in Code Section 4975 and ERISA.
SECTION 11. MANAGEMENT, COLLECTION AND STATUS OF RECEIVABLES AND OTHER
COLLATERAL.
11.1. COLLECTION OF RECEIVABLES; MANAGEMENT OF COLLATERAL.
(a) Unless an Event of Default shall be continuing, the Grantors shall,
at their own cost and expense and subject to the continuing security interest
therein held by the Bank, collect and otherwise enforce all amounts paid on or
otherwise received with respect to Receivables. Upon the occurrence of an Event
of Default and for so long as such or any other Event of Default shall be
continuing, the Bank shall have the right to send notice of assignment and/or
notice of the Bank's security interest in any and all Customers or any third
party holding or otherwise concerned with any of the Collateral, and thereafter
the Bank shall have the sole right to collect the Receivables and/or take
possession of the Collateral and the books and records relating thereto.
(b) Upon the occurrence of an Event of Default and for so long as such or
any other Event of Default shall be continuing, the Bank shall have the right to
receive, endorse, assign and/or deliver in its name or the name of any Grantor
any and all checks, drafts and other instruments for the payment of money
relating to the Receivables, and the Grantors hereby waive notice of
presentment, protest and non-payment of any instrument so endorsed. Each Grantor
hereby constitutes the Bank or its designee as such Grantor's attorney-in fact
with power while an Event of Default is continuing (i) to endorse the Grantor's
name upon any notes, acceptances, checks, drafts, money orders or other
evidences of payment or Collateral that may come into the Bank's possession; to
sign the Grantor's name on any invoice or bill of lading relating to any of the
Receivables, drafts against Customers, assignments and verifications of
Receivables and notices to Customers; (ii) to send verifications of Receivables;
(iii) to notify the Post Office authorities to change the address for delivery
of mail addressed to the Borrower to such address as the Bank may designate; and
(iv) to do all other acts and things necessary to carry out this Agreement and
the Security Agreements. All acts of said attorney or designee are hereby
ratified and approved, and said attorney or designee shall not be liable for any
acts of omission or commission (other than acts of gross negligence or willful
misconduct), nor for any error of judgment or mistake of fact or law; this power
being coupled with an interest is irrevocable until the Maturity Date and
thereafter as long as any extension of credit is owing by either Borrower or any
Guarantor to the Bank. The Bank may, while an Event of Default is continuing,
(i) sue upon or otherwise collect, extend the time of payment of, or compromise
or settle for cash, credit or otherwise upon any terms, any of the Receivables
or any securities, instruments or insurance applicable thereto and/or release
the obligor thereon and (ii) accept the return of the goods represented by any
of the Receivables, without notice to or consent by any Grantor, all without
discharging or in any way affecting the Borrowers' liability hereunder or any
Guarantor's liabilities under its Guaranty.
(c) Nothing herein contained shall be construed to constitute the
Grantors as agent of the Bank for any purpose whatsoever, and the Bank shall not
be responsible or liable for any shortage, discrepancy, damage, loss or
destruction of any part of the Collateral wherever the same may be located and
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regardless of the cause thereof. The Bank shall not, under any circumstances or
in any event whatsoever, have any liability for any error or omission or delay
of any kind occurring in the settlement, collection or payment of any of the
Receivables or any instrument received in payment thereof or for any damage
resulting therefrom (other than from acts of gross negligence or willful
misconduct). The Bank does not by anything herein or in any assignment or
otherwise, assume any Grantor's obligations under any contract or agreement
assigned to the Bank, and the Bank shall not be responsible in any way for the
performance by any Grantor of any of the terms and conditions thereof.
(d) If any of the Receivables includes a charge for any tax payable to
any governmental tax authority, the Bank is hereby authorized in its discretion,
and while an Event of Default is continuing, to pay the amount thereof to the
proper taxing authority for the applicable Borrower's account and to charge the
applicable Borrower's account therefor. Each Grantor shall, while an Event of
Default is continuing, notify the Bank if any Receivables include any tax due to
any such taxing authority and in the absence of such notice, the Bank shall have
the right to retain the full proceeds of such Receivables and shall not be
liable for any taxes that may be due from any Grantor by reason of the sale and
delivery creating such Receivables.
11.2. STATUS OF RECEIVABLES AND COLLATERAL. With respect to Receivables at the
time a Receivable becomes subject to the Bank's security interest the applicable
Grantor represents and warrants to the Bank (which representations and
warranties shall survive the Receivable becoming subject to such security
interest): (a) such Receivable shall be a good and valid account representing an
undisputed bona fide indebtedness incurred or an amount indisputably owed by the
Customer therein named, for a fixed sum as set forth in the invoice relating
thereto with respect to an absolute sale and delivery upon the specified terms
of goods sold by the applicable Grantor, or work, labor and/or services
theretofore rendered by the applicable Grantor; (b) such Receivable is not and
shall not be subject to any defense, offset, counterclaim, discount or allowance
except as may be stated in the copy of the invoice delivered by the applicable
Grantor to the Bank or discounts and allowances as may be customary in the
business in which the applicable Grantor is now engaged, and each Receivable
will be paid in full when due; (c) no agreement under which any deduction or
offset of any kind, other than normal trade discounts, may be granted or shall
have been made by the applicable Grantor at or before the time such Receivable
is created; (d) all documents and agreements relating to such Receivable shall
be true and correct and in all respects what they purport to be: (e) all
signatures and endorsements that appear on such documents and agreements shall
be genuine and all signatories and endorsers shall have full capacity to
contract; (f) none of the transactions underlying or giving rise to such
Receivable shall violate any applicable state or federal laws or regulations,
and all documents relating to such Receivable shall be legally sufficient under
such laws or regulations and shall be legally enforceable in accordance with
their terms; and (g) each Customer, guarantor or endorser with respect to such
Receivable is solvent and will continue to be fully able to pay such Receivable
when due. The Borrower will immediately notify the Bank if any Receivable in
excess of $50,000 shall arise out of contracts with the United States or any
department, agency, or instrumentality thereof, and will execute any instruments
and take any steps required by the Bank in order that all moneys due or to
become due under any such contract shall be assigned to the Bank and notice
thereof given to the Government under the Federal Assignment of Claims Act. Each
Grantor will, immediately upon learning thereof, report to the Bank any
reclamation, return or repossession of goods in excess of $50,000, all claims or
disputes in excess of $50,000 asserted by any Customer or other obligor, and any
other matters affecting the value, enforceability or collectability of any
Receivable. No Grantor is, nor shall be, entitled to pledge the Bank's credit on
any purchases or for any purpose whatsoever.
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SECTION 12. DEFINITIONS.
For all purposes of this Agreement, unless the context otherwise requires:
"Code Section 4975" shall mean, at any date, Section 4975 of the Internal
Revenue Code of 1954, as the same shall be in effect at such date.
"Collateral" shall have the meaning set forth in the Security Agreements.
"Customer" with respect to a Grantor shall mean and include the account debtor
or obligor with respect to any of the Receivables and/or the prospective
purchaser with respect to any contract right, and/or any party who enters into
or proposes to enter into any contract or other arrangement with such Grantor,
pursuant to which such Grantor is to deliver any personal property or perform
any services.
"Effective Net Worth" shall mean the total of all assets appearing on a balance
sheet prepared in accordance with generally accepted accounting principles for
HGL and its Subsidiaries on a consolidated basis, after deducting therefrom
(without duplication of deductions):
(i) any write-up in the book carrying value of any asset resulting
from a revaluation thereof subsequent to December 31, 1995;
(ii) all reserves, including but not limited to reserves for
liabilities, fixed or contingent, deferred income taxes, obsolescence,
depletion, insurance, and inventory valuation, which are not deducted
from assets;
(iii) the amount, if any, at which shares of treasury stock of the
Borrower or a Subsidiary appear on the asset side of such balance sheet;
(iv) all Indebtedness of the Borrower and its Subsidiaries (after
eliminating inter-company items); and
(v) the book value of all assets which would be treated as intangibles
under generally accepted accounting principles, including, without limitation,
goodwill, trademarks, trade names, patents, copyrights and licenses; and after
adding thereto any indebtedness of the Borrower and its Subsidiaries which has
been completely subordinated to the Borrower's obligations to the Bank on terms
satisfactory to the Bank.
"Eligible Accounts" with respect to a Grantor shall mean Receivables created by
such Grantor in the ordinary course of business arising out of the sale of goods
or rendition of services by such Grantor, which are and at all times shall
continue to be acceptable to the Bank in all respects. Standards of eligibility
may be fixed and revised from time to time solely by the Bank in the exercise of
its reasonable business judgment. In determining eligibility, the Bank may, but
need not, rely on agings, reports and schedules of Receivables furnished by the
Grantor, but reliance by the Bank thereon from time to time shall not be deemed
to limit the Bank's right to revise standards of eligibility at any time as to
both present and future Receivables. In general, a Receivable shall not be
deemed eligible unless: (a) the Customer on such Receivable is and at all times
continues to be acceptable to the Bank and in no event may a Customer be an
affiliate or Subsidiary of any Grantor, (b) such Receivable complies in all
respects with the representations, covenants and warranties set forth in Section
11.2 hereof, (c) such Receivable is no older than 60 days from its due date or
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120 days from its invoice date whichever is less, and (d) with respect to Winona
such Receivable is not subject to a factoring agreement.
"ERISA" shall mean, at any date, the Employee Retirement Income Security Act of
1974 and the regulations thereunder, all as the same shall be in effect at such
date.
"Event of Default" shall have the meaning set forth in Section 9.1 hereof.
"Glamourette" shall have the meaning set forth in Section 3.2 hereof.
"Grantor(s)" shall have the meaning set forth in Section 3.1 hereof.
"Guarantors" shall have the meaning set forth in Section 3.2 hereof.
"Guarantees" shall mean the guarantees of each Guarantor executed and delivered
pursuant to Section 3.2 hereof, as amended, modified, supplemented or replaced
from time to time.
"HGL" shall have the meaning set forth in Section 3.2 hereof.
"Indebtedness" shall mean all items which, in accordance with generally accepted
principles of accounting, would be included in determining total liabilities as
shown on the liability side of a balance sheet as at the date Indebtedness is to
be determined and, in any event, shall include (without duplication) letters of
credit and all obligations relating thereto, any liability secured by any
mortgage, pledge, lien or security interest on property owned or acquired,
whether or not such liability shall have been assumed, and guarantees,
endorsements (other than for collection in the ordinary course of business) and
other contingent obligations in respect of the obligations of others.
"Knitworks" shall have the meaning set forth in Section 3.1 hereof.
"Letter of Credit" or "Letters of Credit" shall mean documentary letters of
credit issued by the Bank pursuant to the terms of this Agreement, which Letters
of Credit shall expire not more than 180 days after issuance.
"Loans" shall have the meaning set forth in Section 1.1.A hereof.
"Maturity Date" shall mean March 31, l997.
"Net Amount of Eligible Accounts" with respect to a Grantor shall mean the gross
amount of its Eligible Accounts less sales, excise or similar taxes and less
returns, discounts, claims, credits and allowances of any nature at any time
issued, owing, granted, outstanding, available or claimed.
"Net Income" shall mean the consolidated net income (or loss) of the applicable
Borrower and its Subsidiaries determined in accordance with generally accepted
accounting principles.
"Note" shall have the meanings set forth in Section 1.1.C hereof.
"Obligations" shall mean any and all sums owing under the Note and all other
obligations, direct or contingent, joint, several or independent, of the
Borrower now or hereafter existing, due or to become due to, or held or to be
held by the Bank, whether created directly or acquired by assignment or
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otherwise including, without limitation, any arising under this Agreement.
"Participant" shall mean The Chase Manhattan Bank, N.A., its successors and
permitted assigns under its Participation Agreement, dated as of March 31, 1995,
as the same may be amended from time to time.
A "person" shall include an individual, a corporation, an association, a joint
stock company, a business trust, a partnership, a joint venture, an
unincorporated organization, or a government or any agency or political
subdivision thereof.
"Prime Rate" shall have the meaning set forth in Section 1.1.D hereof.
"Receivables" shall have the meaning set forth in the Security Agreements.
"Security Agreements" shall mean the security agreements executed and delivered
pursuant to Section 3.1 and Section 3.2 hereof, as amended, modified,
supplemented or replaced from time to time.
"Subsidiary" shall mean any corporation organized under the laws of any state of
the United States or the District of Columbia and conducting a majority of its
business and having a majority of its assets within the United States, at least
50% of those outstanding stock of all classes (other than directors' qualifying
shares, if any) is at the time owned by HGL, the Borrower, any Guarantor and/or
one or more Subsidiaries.
"Total Borrowing Base" shall mean 85% of the Net Amount of Eligible Accounts of
Designers, Hosiery, Knitworks, Segue and Winona in the aggregate, plus the
lesser of (x) 45% of the aggregate inventory of Designers, Hosiery, Knitworks,
Segue and Winona valued in a manner consistent with the preparation of HGL's
consolidated audited financial statements and (y) for any period (prior to the
Maturity Date) (A) commencing March 1 and ending October 31, $6,000,000; and (B)
commencing November 1 and ending February 28 (or 29, as the case may be), zero.
"Working Capital" shall mean the amount by which consolidated current
assets of HGL and its Subsidiaries (determined in accordance with generally
accepted accounting principles) exceed consolidated current liabilities of HGL
and its Subsidiaries (determined in accordance with generally accepted
accounting principles).
"Working Capital Line" shall have the meaning set forth in Section 1.1.A hereof.
"Working Capital Line Limit" shall have the meaning set forth in Section 1.1.B
hereof.
Each term defined in Articles 1 or 9 of the Uniform Commercial Code shall have
the meaning given therein unless otherwise defined herein.
SECTION 13. MISCELLANEOUS.
13.1. COLLECTION COSTS. In the event that the Bank or the Participant shall
attempt to collect, enforce, protect, maintain, preserve or foreclose its
interests with respect to this Agreement, or any Obligation, or any Receivable,
or the lien or security interest in any other Collateral or any other security
for any Obligation or under any instrument or document delivered pursuant to
19
<PAGE>
this Agreement, or in connection with any Obligation, or to protect the rights
of any holder or holders with respect thereto, the Borrowers shall pay all of
the costs and expenses of such collection, enforcement or protection, including
reasonable attorneys' fees, which amounts shall be part of the Obligations and
shall bear interest at the rate provided in Section l.l.D, and the Bank or the
Participant may take judgment for all such amounts.
13.2. MODIFICATION AND WAIVER. No modification or waiver of any provision of
this Agreement and no consent by the Bank to any departure therefrom by the
Borrower shall be effective unless such modification or waiver shall be in
writing and signed by a duly authorized officer of the Bank, and the same shall
then be effective only for the period and on the conditions and for the specific
instances and purposes specified in such writing. No notice to or demand on
Borrower in any case shall entitle Borrower to any other or further notice or
demand in similar or other circumstances. No delay or omission on the Bank's
part in exercising any right, remedy or option shall operate as a waiver of such
or any other right, remedy or option or of any default.
13.3. NEW YORK LAW. This Agreement shall be construed in accordance with
and governed by the laws of the State of New York, applicable to contracts made
and to be performed in such State.
13.4. NOTICES AND ADDRESSES. The Borrower shall give the Bank written
notice of each location at which records are kept and the location of the
Borrower's chief executive office. Except as such notice is given, all such
records and offices shall be located at the addresses set forth on Schedule 13.4
hereto. All notices, requests, demands or other communications provided for
herein shall be in writing and shall be deemed to have been given when sent by
registered or certified mail, return receipt requested, addressed, as the case
may be, to NatWest Bank N.A. at 1133 Avenue of the Americas, New York, New York
10036 (Attention: Cynthia E. Sachs) or to Borrower at 215 Commerce Boulevard,
Anderson, South Carolina 29621 (Attention: Mr. Charles W. Clayton).
13.5. FEES AND EXPENSES. Whether or not any extension of credit is made
hereunder, the Borrower shall pay all out-of-pocket expenses incurred by the
Bank and the Participant in connection with the transactions contemplated
hereunder, including but not limited to appraisal fees, legal fees (including
all related costs of in-house counsel), audit fees, search and filing fees.
13.6. STAMP OR OTHER TAX. Should any stamp or excise tax become payable in
respect of this Agreement, the Obligations or any modification hereof or
thereof, on a joint and several basis, the Borrower shall pay the same
(including interest and penalties, if any) and shall hold the Bank harmless with
respect thereto.
13.7. WAIVER OF JURY TRIAL, SET-OFF AND COUNTERCLAIM. The Borrower hereby waives
trial by jury and the right to interpose any set-off or counterclaim, in any
litigation in any court with respect to, in connection with, or arising out of
this Agreement or the Obligations, or any instrument or document delivered
pursuant to this Agreement or the Obligations, or the validity, protection,
interpretation, collection or enforcement thereof, or any other claim or dispute
howsoever arising, between either or both Borrower and the Bank.
13.8. TERMINATION OF AGREEMENT. This Agreement shall continue in full force and
effect until the Maturity Date. The Bank shall have the right to terminate this
Agreement immediately upon the occurrence of an Event of Default under Section
9. The termination of this Agreement shall not affect any rights of the Borrower
or the Bank, or any obligation of the Borrower or the Bank to the other, arising
prior to the effective date of such termination, and the provisions hereof shall
continue to be fully operative until all transactions entered into, rights
20
<PAGE>
created or Obligations incurred prior to such termination have been fully
disposed of, satisfied, paid, concluded or liquidated. Upon the termination of
this Agreement, all Obligations shall be due and payable without notice or
demand. The security interest, lien and rights granted to the Bank under the
Security Agreements and hereunder shall continue in full force and effect,
notwithstanding the termination of this Agreement or the fact that either or
both Borrowers' accounts may from time to time be temporarily in a credit
position, until all of the Obligations have been paid in full after the
termination hereof or the Borrower have furnished the Bank with an
indemnification satisfactory to the Bank with respect thereto. All
representations, warranties, covenants, waivers and agreements contained herein
shall survive termination hereof unless otherwise provided.
13.9. CAPTIONS. The captions of the various sections and paragraphs of this
Agreement have been inserted only for the purposes of convenience; such captions
are not a part of this Agreement and shall not be deemed in any manner to
modify, explain, enlarge or restrict any of the provisions of this Agreement.
13.10. LIEN: SET OFF BY BANK. The Borrower hereby grants to the Bank and the
Participant a continuing lien for all Obligations upon any and all moneys,
securities and other property of such Borrower and the proceeds thereof, now or
hereafter held or received by or in transit to, the Bank or the Participant from
or for such Borrower, whether for safekeeping, custody, pledge, transmission,
collection or otherwise, and also upon any and all deposits (general or special)
and credits of such Borrower with, and any and all claims of such Borrower
against, the Bank or the Participant, at any time existing. During the
continuance of any Event of Default, each of the Bank and the Participant is
hereby authorized at any time and from time to time, without notice to such
Borrower, to set off to the extent permitted by law, appropriate and apply any
or all Collateral (or any such moneys, securities and other property held or
received by or in transit to the Participant) against all Obligations, whether
now existing or hereafter arising.
13.11. PAYMENT DUE ON HOLIDAY. Whenever any payment to be made hereunder shall
become due and payable on a Saturday, Sunday or a legal holiday under the laws
of the State of New York, such payment shall be made in the next succeeding
business day and such extension of time shall in such case be included in
computing interest on such payment.
13.12. SERVICE OF PROCESS. The Borrower hereby irrevocably consents to the
jurisdiction of the courts of the State of New York and of any Federal Court
located in such State in connection with any action or proceeding arising out of
or relating to this Agreement, all or any of the Obligations, or any document or
instrument delivered pursuant to or in connection with this Agreement. In any
such litigation the Borrower waives personal service of any summons, complaint
or other process and agrees that the service thereof may be made by certified or
registered mail, return receipt requested, directed to such Borrower at its
address set forth in Section 13.4. Within 30 days after such mailing, the
Borrower shall appear, answer or move in respect of such summons, complaint or
other process. Should such Borrower fail to appear or answer within said 30 day
period, such Borrower shall be deemed in default and judgment may be entered by
the Bank against such Borrower for the amount as demanded in any summons,
complaint or other process so served.
13.13. WAIVER AND PROTEST. The Borrower waives notice of non-payment of any of
the Obligations, demand, presentment, protest and notice thereof with respect to
any and all instruments, notice of acceptance hereof, notice of loans and
advances made, credit extended, Collateral received or delivered, or any other
action taken in reliance hereon, and all other demands and notices of any
description, except such as are expressly provided for herein.
21
<PAGE>
13.14. BENEFIT OF AGREEMENT. This Agreement shall be binding upon and inure
to the benefit of the Borrower and the Bank and their respective successors and
assigns, except that the obligation of the Bank to make loans hereunder shall
not inure to the benefit of any successors and assigns of Borrower.
13.15. COUNTERPARTS. This Agreement may be executed by the parties hereto
individually or in any combination, in one or more counterparts, each of which
shall be an original and all of which shall together constitute one and the same
agreement.
13.16. RELEASE OF LIENS. Upon the termination of this Agreement and the
payment in full of the Obligations, the Bank shall release its security interest
in the Collateral as required by applicable law.
13.17. AMENDMENT AND RESTATEMENT. This Agreement amends and restates and
replaces in its entirety the facility represented by the Loan Agreement (the
"Original Facility"), provided, however, that any letters of credit which were
issued under the Original Facility or under any other facility made available to
the Borrower by the Bank and which are now outstanding, and any application
and/or reimbursement agreement with respect to such letters of credit, as well
as any notes (unless specifically replaced), security agreements and all other
documents delivered in connection with the Original Facility shall not be
terminated and shall be deemed for purposes of this Agreement to have been made,
under and pursuant to this Agreement and subject to the terms and conditions
hereof.
22
<PAGE>
IN WITNESS WHEREOF, the Borrower and the Bank have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
HAMPSHIRE DESIGNERS, INC.
By: /s/ Charles W. Clayton
- -------------------------------------
Name: Charles W. Clayton
Title: Vice President
NATWEST BANK N.A.
By: /s/ Cynthia E. Sachs
- -------------------------------------
Name: Cynthia E. Sachs
Title: Vice President
Accepted and Agreed with respect to Sections 3, 11 and as otherwise applicable:
SAN FRANCISCO KNITWORKS, INC.
By: /s/ Charles W. Clayton
- -------------------------------------
Name: Charles W. Clayton
Title: Vice President/Treasurer
SEGUE (AMERICA) LIMITED
By: /s/ Charles W. Clayton
- -------------------------------------
Name: Charles W. Clayton
Title: Vice President/Treasurer
Each of the Guarantors indicated below hereby consents to this Fourth
Amended and Restated Loan Agreement and reaffirms its continuing liability under
its respective Guarantee in respect thereof or the documents contemplated
thereby and all the documents, instruments and agreements executed pursuant
thereto or in connection therewith, without offset, defense or counterclaim (any
such offset, defense or counterclaim as may exist being hereby irrevocably
waived by such Guarantor), and hereby confirms and agrees that, on and after the
effective date of this Fourth Amended and Restated Loan Agreement, each
reference in such Guarantee to "the Loan Agreement", "thereunder", "thereof" or
words of like import referring to the Loan Agreement shall mean and be a
reference to this Fourth Amended and Restated Loan Agreement.
HAMPSHIRE GROUP, LTD.
By: /s/ Charles W. Clayton
- -------------------------------------
Name: Charles W. Clayton
Title: Vice President
23
<PAGE>
GLAMOURETTE FASHION MILLS, INC.
By: /s/ Charles W. Clayton
- -------------------------------------
Name: Charles W. Clayton
Title: Vice President/Treasurer
SAN FRANCISCO KNITWORKS, INC.
By: /s/ Charles W. Clayton
- -------------------------------------
Name: Charles W. Clayton
Title: Vice President/Treasurer
SEGUE (AMERICA) LIMITED
By: /s/ Charles W. Clayton
- -------------------------------------
Name: Charles W. Clayton
Title: Vice President/Treasurer
HAMPSHIRE DESIGNERS, INC. as guarantor of the
obligations of Segue and Knitworks to the Bank
By: /s/ Charles W. Clayton
- -------------------------------------
Name: Charles W. Clayton
Title: Vice President/Treasurer
24
<PAGE>
EXHIBIT 1.1.C
FORM OF NOTES
- -----------------------
25
<PAGE>
PROMISSORY NOTE
---------------
$21,000,000 New York, New York
As of March 31, 1996
FOR VALUE RECEIVED, Hampshire Designers, Inc., a Delaware corporation
with an office 215 Commerce Boulevard, Anderson, South Carolina 29621 (the
"Debtor"), hereby promises to pay to the order of NatWest Bank N.A., a national
banking association (the "Payee"), at its offices located at 1133
Avenue of the Americas, New York, New York, or at such other place as the Payee
or any holder hereof may from time to time designate, on the Maturity Date (as
defined in the Loan Agreement defined below), or earlier as hereinafter referred
to, the principal sum of Twenty-One Million and 00/100 Dollars ($21,000,000) (or
such lesser principal sum as may be indicated as outstanding on the grid sheet
attached hereto), in lawful money of the United States, and to pay interest in
like money at said office or place from the date hereof on the unpaid principal
balance hereof from time to time outstanding in accordance with the provisions
of the Loan Agreement (as defined below). In no event shall the rate of interest
hereunder exceed the maximum interest rate permitted by applicable law.
This Note is in replacement of and substitution for the two promissory
notes dated as of March 31, 1995 by the Debtor's two constituent corporations
(Hampshire Designers, Inc. in the principal amount of $16,000,000 and Hampshire
Hosiery, Inc. in the principal amount of $5,000,000), and, to the extent of any
outstanding principal amount, evidences the same indebtedness incurred
thereunder.
This Note is referred to in the Loan Agreement and is secured by a
Continuing General Security Agreement dated March 31, 1996 (as amended,
modified, supplemented or replaced from time to time, the "Security Agreement")
by the Debtor in favor of the Payee and covering certain collateral (the
"Collateral") all as more particularly described and provided therein, and is
entitled to the benefits thereof. Reference is made to the Loan Agreement and
the Security Agreement for certain rights of the Payee hereunder, including,
without limitation, the right of the Payee to accelerate the principal balance
hereunder and interest hereon upon the occurrence of an "Event of Default" as
defined in the Loan Agreement.
The Payee is hereby authorized to enter on the grid sheet attached hereto
all loans made by the Payee to the Debtor pursuant to the Fourth Amended and
Restated Loan Agreement dated as of March 31, 1996 (as amended, modified or
supplemented from time to time, the "Loan Agreement") among the Payee, and the
Debtor and all repayments of principal hereunder, which entries, in the absence
of manifest error, shall be conclusive and binding on the Debtor; provided,
however, that the failure of the Payee to make any such entries shall not
relieve the Debtor from paying any amount due hereunder, nor affect the Payee's
recognition of any repayment of principal.
Whenever any payment to be made hereunder shall become due and payable
on a Saturday, Sunday or a legal holiday under the laws of the State of New
York, such payment shall be made on the next succeeding business day and such
extension of time shall in such case be included in computing interest on such
payment.
The Debtor hereby waives diligence, demand, presentment, protest and
notice of any kind, and assents to extensions of the time of payment, release,
surrender or substitution of security, or forbearance or other indulgence,
without notice.
26
<PAGE>
This Note shall be subject to payment and prepayment as provided in
Section 2 of the Loan Agreement.
This Note may not be changed, modified or terminated orally, but only by
an agreement in writing signed by the party to be charged.
In the event the Payee or any holder hereof shall refer this Note to an
attorney for collection, the Debtor agrees to pay, in addition to unpaid
principal and interest, all the costs and expenses incurred in attempting or
effecting collection hereunder, including reasonable attorney's fees, whether or
not suit is instituted.
In the event of any litigation with respect to any of the Obligations (as
such term is defined in the Security Agreement) or Collateral, the Debtor waives
the right to a trial by jury. The Debtor hereby irrevocably consents to the
jurisdiction of the courts of the State of New York and of any Federal court
located in such State in connection with any action or proceeding arising out of
or relating to any Obligation or Collateral. In any such litigation, the Debtor
waives personal service of any summons, complaint or other process and agrees
that the service thereof may be made by certified or registered mail directed to
the Debtor at its address set forth herein. Within 30 days after such mailing,
the Debtor shall appear, answer or move in respect of such summons, complaint or
other process. Should the Debtor fail to appear or answer within said 30-day
period, the Debtor shall be deemed in default and judgment may be entered by the
Payee against the Debtor for the amount as demanded in any summons, complaint or
other process so served. This Note, the other Obligations and the Collateral
shall be governed by and construed in accordance with the laws of the State of
New York, and shall be binding upon the heirs, executors, administrators,
successors and assigns of the Debtor and inure to the benefit of the Payee, its
successors, endorsees and assigns. If any term or provision of this Note shall
be held invalid, illegal or unenforceable the validity of all other terms and
provisions hereof shall in no way be affected thereby.
HAMPSHIRE DESIGNERS, INC.
By: /s/ Charles W. Clayton
- ---------------------------
Name: Charles W. Clayton
Title: Vice President
27
EXHIBIT (10)(P)(1)
BANCO POPULAR DE PUERTO RICO
PO BOX 362708
SAN JUAN, PUERTO RICO 00936-2708
TELEFONOS (809) 765-9800, 751-9800
May 23, 1996
REVISED
Mr. Luis R. Hernandez
VP, Finance and Administration
Glamourette Fashion Mills, Inc.
P.O. Box 557
Quebradillas, P.R. 00678-1557
Dear Mr. Hernandez:
We are pleased to confirm that Banco Popular de Puerto Rico ("the: Bank") has
approved credit facilities in the name of Glamourette Fashion Mills, Inc. ("the
Borrower"), subject to Borrower's credit and economic conditions remaining
essentially unchanged, and substantially upon the terms and conditions outlined
below:
Facility 1:
- -----------
Amount: $2,000,000
Type: Revolving line of credit facility
Purpose: Increased working capital needs due to projected increase in
production
Repayment: Advances will be evidenced by short term notes up to 180 days
on a revolving basis. An annual clean up period during the
months of February through April must be effected. The facility
is renewable on an annual basis.
Pricing: Interest rate to be charged will be calculated based on the
effective cost of 936 funds to the Bank plus 1.50%. In the event
that the use of the facility is not deemed as an "Eligible
Activity" as amended or supplemented from time to time, or in
the event that 936 funds are no longer available to the Bank,
outstandings would be priced at Floating New York Prime Rate.
Upon an event of default, the default rate shall be set at Prime
Rate plus 2.0%. Interest on the outstanding balance will be paid
monthly in arrears on a 360 days basis.
1
<PAGE>
Facility 2:
- ----------
Amount: $600,000
Type: Five Year Term Loan
Purpose: To finance the acquisition of machinery and equipment related
to the upcoming expansion to the plant.
Repayment: Sixty equal consecutive monthly principal payments of $10,000
plus interest.
Pricing: Interest rate to be charged will be calculated based on the
Bank's 90 days effective cost of 936 funds plus 2.00% in
repricing periods of 90 days. In the event that the use of the
facility is not deemed as an "Eligible Activity" as amended or
supplemented from time to time, or in the event that 936 funds
are no longer available to the Bank, outstandings would be
priced at Floating New York Prime Rate plus 0.5%. Upon an
event of default, the default rate shall be set at Prime Rate
plus 2.0%. Interest on the outstanding balance will be paid
monthly in arrears on a 360 days basis.
Bank Fee: One half of one percent on the total amount of the facility
payable at closing.
Collateral: Chattel mortgage over the machinery and equipment being
financed. Existing chattel mortgages remain in full force
and effect on a deficiency basis.
Guarantees: Continuous and Unlimited Guarantees from Hampshire Designers,
Inc. and Hampshire Group Limited.
General Security:
- -----------------
Borrower shall maintain a multi-peril insurance, by a financially sound and
reputable company, to include inventory in sufficient amounts to insure
replacement, with the Bank noted as first mortgage lender loss payee. This
policy shall not expire prior to the maturity of all the debt.
Affirmative/Negative Covenants:
- ------------------------------
Standard negative and affirmative covenants usually found in our loan agreements
for this type of financing to include those stipulated in previous loan
agreements between the Borrower and the Bank.
Events of Default:
- ------------------
Including, but not limited to, the standard events of default usually found in
our loan agreements for this type of financing, including material adverse
change provisions, payment and covenant defaults, breaches representation,
restrictions on sale or encumbering of stock of Borrower and change of
ownership.
2
<PAGE>
Financial Covenants:
- --------------------
1. Provide annual audited financial statements within 120 days of fiscal year-
end and quarterly financials within 60 days of quarter end.
2. Provide annual audited consolidated and consolidating financial statements of
Hampshire Group Limited within 120 days after close of fiscal year and
quarterly unaudited consolidated and consolidating statements within 60 days
after quarter end.
3. Provide any other information (financial or non-financial) regarding the
Borrower's business affairs that the Bank may reasonably request and
considers relevant to the credit.
4. Maintain a Net Worth of $8,500M at all times. Net Worth being defined as
Total Assets minus Total Liabilities.
5. Not let Leverage Ratio exceed 0.5:1.0 at any given time. The Leverage ratio
being defined as Total Liabilities divided by Net Worth.
6. Not declare and/or pay dividends in excess of 100% of its Net Income for
every fiscal year, non-cumulative, with final determination of net income
not later than March 31 of the following year. Dividends can be declared if
they are used to pay down accounts receivable due from parent. Preferred
stock dividends are permitted only up to a maximum of $250M or 4% of net
income, whichever is lower.
7. Management fees not to exceed present levels.
8. Intercompany receivables not to exceed 150 days.
Conditions Precedent:
- ---------------------
Prior to the execution of the loan documents, the Bank shall have received each
of the following, in form and substance satisfactory to the Bank:
1. A copy of the Borrower's Certificate of Incorporation.
2. Invoice and description of all equipment to be financed.
3. Certified copies of all corporate action taken by Borrower, including
resolutions of its Board of Directors, authorizing the execution, delivery
and performance of the loan documents.
4. A certificate of the Secretary or Assistant Secretary of the Borrower
certifying the names and true signatures of the officers authorized to sign
the loan documents.
5. A certificate evidencing insurance policy with the Bank as first mortgagee/
loss payee.
Other Terms and Conditions:
- ---------------------------
1. In consideration for the facility herein delineated, Borrower will commit
while indebted to Banco Popular de Puerto Rico to maintain its main
depository accounts with the Bank.
2. Borrower must certify that the proceeds of the loans will be used in Puerto
Rico and in such manner as to meet the requirements of eligible activities
as per Regulations 5105 and any amendments thereon.
3. Documents acceptable to the bank, including, without limitation, Loan or
Financing Agreement and Chattel Mortgage.
3
<PAGE>
4. Execution of Master Promissory Note for the line of Credit and Promissory
Note for the Term Loan.
5. Borrower to pay a prepayment penalty of 1.0% should it prepay either totally
or partially the notes with funds borrowed from another financial
institution.
6. Right of set-off.
All terms and conditions stipulated on previous Loan/Financing Agreements remain
in full force and effect.
We appreciate the opportunity you have given us to meet your needs, and we
sincerely look forward to further working with you. If any questions arise from
your review of this letter, please do not hesitate to call us at 765-9800, ext.
5905.
Upon concurrence with the terms and conditions delineated herein, kindly
acknowledge your acceptance by signing this letter on the space provided and
returning it to us on or before May 28, 1996, date this commitment expires.
Cordially,
/s/ Sylma Suarez
- -------------------------------------------------
Assistant Vice President
Corporate Banking Division
Agreed and Accepted:
GLAMOURETTE FASHION MILLS, INC.
By: /s/ Luis R. Hernandez
- -------------------------------------------------
Name: Luis R. Hernandez
- -------------------------------------------------
Title: Vice President Finance and Administration
- -------------------------------------------------
Date: May 30, 1996
- -------------------------------------------------
4
<PAGE>
MASTER PROMISSORY NOTE
060-7177/ For Various Notes
FOR VALUE RECEIVED the undersigned, jointly, severally and in solido,
promise to pay on demand to the order of BANCO POPULAR DE PUERTO RICO
(hereinafter called the "Bank") at its main office or at such other place as the
Bank my designate, the principal amount then outstanding hereunder, shown on the
reverse hereof or on attachments hereto not exceeding **TWO MILLION Dollars
($2,000,000.00), lawful money of the United States of America, together with
interest on all unpaid principal amount from time to time outstanding, computed
on a (check one) ___ 365-day, __X__ 360-day, simple interest basis and
actual days elapsed, payable monthly on the twenty-fifth (25th) day of each
month and on the date of payment in full, at the Fixed Rate or at the Index Rate
or at the Cash Collateral Rate as designated below (check and complete one):
_____ Fixed Rate. The unpaid principal shall bear interest at the rate o
% per annum; provided, however, that in case of any event of
default under this note, the unpaid principal shall, thereafter until
paid, bear interest at the rate of % per annum.
_____ Index Rate. Floating with the interest rate referred to as the "prime
rate" as (check one):
_____ published in general-circulation newspapers such as The Wall
Street Journal; provided that in the event of more than one such
published rate on any given date, the highest of such rates
shall apply.
_____ define by the interest Rates and Finance Charges Regulation
Board of Puerto Rico.
The designated reference checked above is hereinafter called the
"Index Rate". The unpaid principal shall bear interest at a
floating rate per annum equal to the sum of the Index Rate plus
%; provided, however that in case of any event of default
under this note, the unpaid principal shall thereafter until
paid, bear interest at a floating rate per annum equal to the
sum of the Inde Rate plus %. Changes in the interest rate shall
be effective upon the effective date of any change in the Index
Rate; provided, however, that the rate of interest shall not be
less than % per annum at all times, nor more than % per annum
absent of default. We recognize and fully understand that the
rate of interest herein provided is not necessarily the lowest
rate of interest charged by the Bank and that credits may be
granted by the Bank at rates above, at, and below, the Index
Rate.
_____ Cash Collateral Rate. The unpaid principal amounts from time to time
outstanding under this note shall bear interest at the rate per annum
equal to the sum of (a) the interest rate paid by the Bank from time
to time on the time deposit pledged as security for the payment of all
unpaid amounts under this note, including all renewals of said
deposit, plus (b) _______ %. Upon the effective date of any change in
the interest rate paid by the Bank on the pledged time deposit and all
renewals thereof, ________________ corresponding changes shall be
effective simultaneously in the interest rate on the unpaid principal
balance of this note.
5
<PAGE>
The Bank shall record on the reverse hereof or on attachments hereto all
advances and repayments of principal and the principal balance from time to time
outstanding. Each such record of any advance hereunder shall be conclusive
evidence that the advance was made to the undersigned. Advances hereunder may be
made at any time and from time to time, notwithstanding that from time to time
there may be no principal balance outstanding hereunder. The Bank in accepting
this note incur no obligation to make any advance.
In the event of commencement of legal action to enforce payment of this
note, we agree to pay, jointly, severally and in solido, all cost, expenses and
disbursements arising from such process plus attorney's fees of ten percent
(10%) of the total indebtedness was outstanding hereunder.
We agree that the Bank may, at its option, at any time and from time to
time, reduce or cancel the amount owing under this note by setting off and
charging the indebtedness, or any part thereof, against any obligation of the
Bank with the undersigned, or any of them for deposits or otherwise. We waive
notice of nonpayment, presentment, demand for payment, and protest.
In support of any "due diligence" requirement under regulations of the
Treasury Department of Puerto Rico that may be applicable to us or to our use of
the funds advanced hereunder, we agree, affirm and warrant that we will use said
funds only for "eligible activities" as defined in such regulations and as
represented by us to the Bank.
The use of the plural in this note shall be understood as singular if
the same is singed by only one person.
Quebradillas, Puerto Rico, this 17th day of June, 1996.
- -------------- -------------- ---------- -------------------
GLAMOURETTE FASHION MILLS, INC.
BASED ON 936 funds up to 180 DAYS TO BE NEGOTIATED AT TIME OF DISBURSEMENT.
/s/ Luis R. Hernandez
- --------------------------
LUIS R. HERNANDEZ,
VICE PRESIDENT FINANCE
AND ADMINISTRATION
6
EXHIBIT (10)(S)
MERCHANTS NATIONAL BANK
102 East 3rd Street
Post Office Box 248
Winona Minnesota 55987-0248
(507) 457-1100
"Lender"
COMMERCIAL/AGRICULTURAL REVOLVING OR
DRAW NOTE-VARIABLE RATE
Borrower: Hampshire Group, Limited
Address: 215 Commerce Blvd.
P. O. Box 2667
Anderson, SC 29621
Identification No.: 06-0967107
Officer Initials: 007
Interest Rate: Variable
Principal Amount/Credit Limit:$3,000,000.00
Funding/Agreement Date: 04/01/96
Maturity Date: 04/01/97
Customer Number: WINONAKMOO
Loan Number: 994267298
PROMISE TO PAY
For value received, Borrower promises to pay to the order of Lender indicated
above the principal amount of THREE MILLION AND NO/100 Dollars ($3,000,000.00)
or, if less, the aggregate unpaid principal amount of all loans or advances made
by the Lender to the Borrower, plus interest on the unpaid principal balance at
the rate and in the manner described below. All amounts received by Lender shall
be applied first to late payment charges and expenses, then to accrued interest,
and then to principal or in any other order as determined by Lender, in Lender's
sole discretion, as permitted by law.
INTEREST RATE: This Note has a variable rate feature. Interest on the Note
may change from time to time if the Index Rate identified below changes.
Interest shall be computed on the basis of 360 days per year. Interest on this
Note shall be calculated at a variable rate equal to * percent ( * %) per annum
* the Index Rate. The initial Index Rate is currently * percent (* %) per annum.
The initial interest rate on this Note shall be * percent (* %) per annum. Any
change in the interest rate resulting from a change in the Index Rate will be
effective on: SEE ATTACHED INTEREST RATE OPTION SCHEDULE
INDEX RATE: The Index Rate for this Note shall be: WALL STREET PRIME OR 90
DAY TREASURY BILL - SEE ATTACHED INTEREST OPTION RATE SCHEDULE
MINIMUM RATE/MAXIMUM RATE: The minimum interest rate on this Note shall be
n/a percent (n/a%) per annum. The maximum interest rate on this Note shall not
exceed TWENTY-ONE AND 750/1000 percent ( 21.750 %) per annum or the maximum
interest rate Lender is permitted to charge by law, whichever is less.
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POST-MATURITY RATE: X If checked, this loan is for a binding commitment of
at least $100,000.00 and after maturity, due to scheduled maturity or
acceleration, past due amounts shall bear interest at the lesser of: THE
INTEREST RATE AT THE TIME OF MATURITY , or the maximum interest rate Lender is
permitted to charge by law.
PAYMENT SCHEDULE: Borrower shall pay the principal and interest according
to the following schedule:
INTEREST ONLY PAYMENTS BEGINNING MAY 1, 1996 AND CONTINUING AT MONTHLY TIME
INTERVALS THEREAFTER. A FINAL PAYMENT OF THE UNPAID PRINCIPAL BALANCE PLUS
ACCRUED INTEREST IS DUE AND PAYABLE ON APRIL 1, 1997.
All payments will be made to Lender at its address described above and in
lawful currency of the United States of America.
RENEWAL: If checked _____ this Note is a renewal of loan number____, and is not
in payment of that Note.
SECURITY: To secure the payment and performance of obligations incurred under
this Note, Borrower grants Lender a security interest in and pledges and assigns
to Lender all of Borrower's rights, title, and interest, in all monies,
instruments, savings, checking and other deposit accounts of Borrower's,
(excluding IRA, Keogh and trust accounts and deposits subject to tax penalties
if so assigned) that are now or in the future in Lender's custody or control.
Upon default, and to the extent permitted by applicable law, Lender may exercise
any or all of its right or remedies as a secured party with respect to such
property which rights and remedies shall be in addition to all other rights and
remedies granted to Lender including, without limitation, Lender's common law
right of set off. [ ] If checked, the obligations under this Note are also
secured by a lien and/or security interest in the property described in the
documents executed in connection with this Note as well as any other property
designated as security now or in the future.
PREPAYMENT: This Note may be prepaid in part or in full on or before its
maturity date. If this Note contains more than one installment, all prepayments
will be credited as determined by Lender and as permitted by law. If this Note
is prepaid in full, there will be: X No prepayment penalty. ______ A
prepayment penalty of ____% of the principal prepaid.
LATE PAYMENT CHARGE: If a payment is received more than 10 days late, Borrower
will be charged a late payment charge of 5.00% of the unpaid late installment.
REVOLVING OR DRAW FEATURE: X This Note possesses a revolving feature, Upon
satisfaction of the conditions set forth in this Note, Borrower shall be
entitled to borrow up to the full principal amount of the Note and to repay and
reborrow from time to time during the term of this Note. _____ This Note
possesses a draw feature. Upon satisfaction of the conditions set forth in this
Note, Borrower shall be entitled to make one or more draws under this Note. The
aggregate amount of such draws shall not exceed the full principal amount of
this Note.
Lender shall maintain a record of the amounts loaned to and repaid by Borrower
under this Note. The aggregate unpaid principal amount sown on such record shall
be rebuttable presumptive evidence of the principal amount owing and unpaid on
this Note. The Lender's failure to record the date and amount of any loan or
2
<PAGE>
advance shall not limit or otherwise affect the obligations of the Borrower
under this Note to repay the principal amount of the loans or advances together
with all interest accruing thereon. Lender shall not be obligated to provide
Borrower with a copy of the record on a periodic basis. Borrower shall be
entitled to inspect or obtain a copy of the record during Lender's business
hours.
*CONDITIONS FOR ADVANCES: If there is no default under this Note, Borrower
shall be entitled to borrow monies or make draws under this Note (subject to
the limitations described above) under the following conditions:
THE CUSTOMER HAS THE FOLLOWING INTEREST RATE OPTIONS PER ADVANCE:
1. WALL STREET PRIME FLOATING
2. 90 DAY TREASURY BILL PLUS 300 BASIS POINTS FLOATING
SEE ATTACHED INTEREST RATE OPTION SCHEDULE
BORROWER ACKNOWLEDGES THAT BORROWER HAS READ, UNDERSTANDS, AND AGREES TO THE
TERMS AND CONDITIONS OF THIS NOTE INCLUDING THE PROVISIONS ON THE REVERSE SIDE.
BORROWER ACKNOWLEDGES RECEIPT OF AN EXACT COPY OF THIS NOTE.
NOTE DATE: APRIL 1, 1996
BORROWER: HAMPSHIRE GROUP, LIMITED BORROWER:
/s/ Charles W. Clayton, Vice President
- -------------------------------------- -------------------------------
BORROWER: BORROWER:
- -------------------------------------- --------------------------------
BORROWER: BORROWER:
- -------------------------------------- --------------------------------
3
<PAGE>
TERMS AND CONDITIONS
1. DEFAULT: Borrower will be in default under this Note in the event that
Borrower or any guarantor or any other third party: (a) fails to make any
payment on this Note or any other indebtedness to Lender when due: (b) fails to
perform any obligation or breaches any warranty or covenant to Lender contained
in this Note or any other present or future written agreement regarding this or
any indebtedness of Borrower to Lender; (c) provides or causes any false or
misleading signature or representation to be provided to Lender: (d) allows the
collateral securing this Note (if any) to be lost, stolen, destroyed, damaged in
any material respect, or subjected to seizure or confiscation; (e) permits the
entry or service of any garnishment, judgment, tax levy, attachment or lien
against Borrower, any guarantor, or any of their property or the Collateral; (f)
dies, becomes legally incompetent, is dissolved or terminated, ceases to operate
its business, becomes insolvent, makes an assignment for the benefit of ____
creditors, fails to pay debts as they become due, or becomes the subject of any
bankruptcy, insolvency or debtor rehabilitation proceeding: or (g) causes Lender
to deem itself insecure for any reason, or Lender, for any reason, in good faith
deems itself insecure.
2. RIGHTS OF LENDER ON DEFAULT: If there is a default under this Note,
Lender will be entitled to exercise one or more of the following remedies
without notice or demand (except as required by law): (a) to cease making
additional advances under this Note: (b) to declare the principal amount plus
accrued interest under this Note and all other present and future obligations of
Borrower immediately due and payable in full; (c) to collect the outstanding
obligations of Borrower with or without resorting to judicial process; (d) to
take possession of any collateral in any manner permitted by law; (e) to require
Borrower to deliver and make available to Lender any collateral at a place
reasonably convenient to Borrower and Lender; (f) to sell, lease or otherwise
dispose of any collateral and collect any deficiency balance with or without
resorting to legal process; (g) to set-off Borrower's obligations against any
amounts due to Borrower including, but not limited to monies, instruments, and
deposit accounts maintained with Lender; and (h) to exercise all other rights
available to Lender under any other written agreement or applicable law.
Lender's rights are cumulative and may be exercised together, separately, and in
any order. Lender's remedies under this paragraph are in addition to those
available at common law, including, but not limited to, the right of set-off.
3. DEMAND FEATURE: If this Note contains a demand feature, Lender's right
to demand payment, at any time, and from time to time, shall be in Lender's sole
and absolute discretion, whether or not any default has occurred.
4. FINANCIAL INFORMATION: Borrower will provide Lender with current
financial statements and other financial information (including, but not limited
to, balance sheets and profit and loss statements) upon request.
5. MODIFICATION AND WAIVER: The modification or waiver of any of Borrower's
obligations or Lender's rights under this Note must be contained in a writing
signed by Lender. Lender may perform any of Borrower's obligations or delay or
fail to exercise any of its rights without causing a waiver of those obligations
or rights. A waiver on one occasion will not constitute a waiver on any other
occasion. Borrower's obligations under this Note shall not be affected if Lender
amends, compromises, exchanges, fails to exercise, impairs or releases any of
the obligations belonging to any co-borrower or guarantor or any of its rights
against any co-borrower, guarantor or collateral.
6. SEVERABILITY AND INTEREST LIMITATION: If any provision of this Note is
invalid, illegal or unenforceable, the validity, legality. and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
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<PAGE>
Notwithstanding anything contained in this Note to the contrary, in no event
shall interest accrue under this Note, before or after maturity, at a rate in
excess of the highest rate permitted by applicable law, and if interest
(including any charge or fee held to be interest by a court of competent
jurisdiction) in excess thereof be paid, any excess shall constitute a payment
of, and be applied to, the principal balance hereof, and if the principal
balance has been fully paid, then such interest shall be repaid to the Borrower.
7. ASSIGNMENT: Borrower will not be entitled to assign any of its rights,
remedies or obligations described in this Note without the prior written consent
of Lender which may be withheld by Lender in its sole discretion. Lender will be
entitled to assign some or all of its rights and remedies described in this Note
without notice to or the prior consent of Borrower in any manner.
8. NOTICE: Any notice or other communication to be provided to Borrower or
Lender under this Note shall be in writing and sent to the parties at the
addresses described in this Note or such other address as the parties may
designate in writing from time to time.
9. APPLICABLE LAW: This Note shall be governed by the laws of the state
indicated in Lender's address. Borrower consents to the jurisdiction and venue
of any court located in the state indicated in Lender's address in the event of
any legal proceeding pertaining to the negotiation, execution, performance or
enforcement of any term or condition contained in this Note or any related loan
document and agrees not to commence or seek to remove such legal proceeding in
or to a different court.
10. COLLECTION COSTS: If Lender hires an attorney to assist in collecting
any amount due or enforcing any right or remedy under this Note, Borrower
agrees to pay Lender's attorney's fees, to the extent permitted by applicable
law, and collection costs.
11. RETURNED CHECK: if a check for payment is returned to Lender for any
reason, Lender will charge an additional fee of $15.00.
12. MISCELLANEOUS: This Note is being executed for commercial/agricultural
purposes. Borrower and Lender agree that time is of the essence. Borrower waives
presentment, demand for payment, notice of dishonor and protest. If Lender
obtains a judgment for any amount due under this Note interest will accrue on
the judgment at the judgment rate of interest permitted by law. All references
to Borrower in this Note shall include all of the parties signing this Note. If
there is more than one Borrower, their obligations will be joint and several.
This Note and any related documents represent the complete and integrated
understanding between Borrower and Lender pertaining to the terms and conditions
of those documents.
13. JURY TRIAL WAIVER: BORROWER HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN
ANY CIVIL ACTION ARISING OUT OF, OR BASED UPON, THIS NOTE OR THE COLLATERAL
SECURING THIS NOTE.
14. ADDITIONAL TERMS: PURPOSE: LINE OF CREDIT
5
<PAGE>
CORPORATE RESOLUTION
The undersigned Clerk/Secretary/Assistant Clerk/Secretary of Hampshire
Group, Limited ("Company"), a corporation duly organized and existing under the
laws of the State of Delaware hereby certifies that, X at a meeting of the Board
of Directors of the Company duly called and held at 1372 Broadway, City of New
York, County of New York, State of New York on February 7, 1996, at which
meeting a quorum was continuously present; ___ pursuant to a unanimous written
consent of all members of the Board of Directors the following resolutions were
unanimously adopted, are now in full force and effect and have not been modified
or rescinded in any manner:
RESOLVED that any _____________________ ( ________________) of the
following persons:
_____ President _____ any Assistant Treasurer
__X__ any Vice President _____ Clerk/Secretary
_____ any Assistant Vice President __X__ any Assistant Clerk/Secretary
__X__ Treasurer _____ Other
(collectively "Authorized Party") is authorized and empowered to perform one or
more of the following actions (if checked) with Merchants National Bank
("Lender"); for and on behalf of the Company and on such terms and conditions as
any Authorized Party may deem advisable in his sole discretion (The execution of
any agreement, document or instrument shall constitute a conclusive presumption
that the terms, covenants and conditions of said documents so signed are agreed
to by and binding on the Company):
__X__ Open and maintain any safety deposit boxes, lock boxes and escrow,
savings, checking, depository, or other accounts;
__X__ Assign, negotiate, endorse and deposit in and to such boxes and accounts
any checks, drafts, notes and other instruments and funds payable to or
belonging to the Company.
__X__ Withdraw any funds or draw, sign and deliver in the name of the Company
any check or draft against funds of the Company in such boxes or accounts;
_____ Implement additional depository and funds transfer services
(including, but no limited to, facsimile signature authorizations, wire transfer
agreements, automated clearing house agreements, and payroll deposit programs);
__X__ Obtain one or more loan or other forms of financing in any amount from the
Lender (including, but not limited to, a $ _______ promissory note or line of
credit);
__X__ Guaranty the present and future obligations of any third party to the
Lender (including, but not limited to, the obligations of );
FURTHER RESOLVED, that with respect to the foregoing guaranty, the Board of
Directors of the Company hereby determine that such guaranty may reasonably be
expected to benefit, directly or indirectly, the Company.
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<PAGE>
_____ Assign for security purposes, pledge, hypothecate, mortgage, or grant
to the Lender a lien, security interest, or other encumbrance upon any of the
Company's personal or real property (including, but not limited to, the
assignments for security purposes, pledges, hypothecations, mortgages, deeds of
trust, liens, security interests and encumbrances contained in the loan
documents pertaining to the promissory note, line of credit, or guaranty
described above);
__X__ Endorse to the Lender any checks, drafts, notes, or other instruments
payable to the Company;
__X__ Appoint the Lender as the Company's attorney-in-fact for any purpose
(including, but not limited to, endorsing any checks, drafts, notes or other
instruments payable to the Company);
__X__ Assign, convey, sell, lease, or otherwise transfer to the Lender or
any third party any of the Company's personal or real property; and
__X__ Execute any document (including, but not limited to, facsimile
signature authorization agreements, wire transfer agreements, automated
clearinghouse agreements, payroll deposit agreements, line of credit agreements,
promissory notes, security agreements, assignments for security purposes,
mortgages, deeds of trust, assignments of rents, guaranties, powers of attorney,
and waivers) and take or refrain from taking any action on behalf of the
Company.
FURTHER RESOLVED, that any of the foregoing or related activities taken by any
Authorized Party prior to the adoption of the preceding resolutions are hereby
ratified and declared to be binding obligations of the Company in a full and
complete manner;
FURTHER RESOLVED, that the authority and power of any Authorized Party as
provided in the preceding resolutions will continue in full force and effect
until the Board of Directors of the Company adopt a resolution amending,
modifying or revoking one or more of the preceding resolutions and a certified
copy of the properly executed resolution is received by the Lender via certified
mail; and
FURTHER RESOLVED, that the Clerk/Secretary or any Assistant Clerk/Secretary of
the Company is authorized to certify the adoption of the foregoing resolutions
to the Lender, the continuing effect of theses resolutions, and the incumbency
of the various parties authorized to exercise the rights in theses resolutions
from time to time.
The undersigned Clerk/Secretary/Assistant Clerk/Secretary certifies that the
following persons are duly elected officers or otherwise authorized to act on
behalf of the Company in the capacities set forth below and that the following
original signatures are genuine in all respects:
NAME TITLE SIGNATURE
--------- -------- -----------------
Charles W. Clayton V.P., Secretary/Treasurer /s/ Charles W. Clayton
- ----------------------- -------------------------- ------------------------
William E. Kennedy, Jr. Asst. Secretary /s/ William E. Kennedy, Jr.
- ----------------------- -------------------------- -------------------------
- ----------------------- -------------------------- -------------------------
7
<PAGE>
INTEREST RATE OPTION SCHEDULE
INTEREST RATE OPTION 1:
Interest shall be calculated at a variable rate equal to no/100 percent (100%)
per annum over the Index Rate. The initial Index Rate on this note shall be
eight and 25/100 percent (8.25%) per annum. Any change in the Index Rate will be
effective on the date the Index Rate changes.
INTEREST RATE OPTION 2:
Interest shall be calculated at a variable rate equal to 3/100 percent (3.00%)
per annum over the Index Rate. The initial Index Rate on this note shall be four
and 99/100 (4.99%) per annum. Any change in the interest rate resulting from a
change in the Index Rate will be effective on Thursday of each week with the
rate in effect on that day.
8
EXHIBIT (10)(S)
MERCHANTS NATIONAL BANK
102 East 3rd Street
Post Office Box 248
Winona Minnesota 55987-0248
COMMERCIAL CONTINUING GUARANTY (UNLIMITED)
GUARANTOR: HAMPSHIRE DESIGNERS, INC.
ADDRESS: 1372 BROADWAY 20TH FLOOR
NEW YORK, NY 10018
IDENTIFICATION NO.: 06-0961174
BORROWER: HAMPSHIRE GROUP, LIMITED
ADDRESS: 215 COMMERCE BLVD.
P.O. BOX 2667
ANDERSON SC 29621
IDENTIFICATION NO.: 06-0967107
1. CONSIDERATION. This Guaranty is being executed to induce Lender
indicated above to enter into one or more loans or other financial
accommodations with or on behalf of Borrower.
2. GUARANTY. Guarantor hereby unconditionally guarantees the prompt and
full payment and performance of Borrower's present and future, joint and/or
several, direct and indirect, absolute and contingent, express and implied,
indebtedness, liabilities, obligations and covenants (cumulatively
"Obligations") to Lender. Guarantor's Obligations under this Guaranty shall be
unlimited and shall include all present or future Obligations between Borrower
and Lender (for whatever purpose), together with all interest and all of
Lender's expenses and costs, incurred in connection with the Obligations,
including any amendments, extensions, modifications, renewals, replacements or
substitutions thereto.
3. ABSOLUTE AND CONTINUING NATURE OF GUARANTY. Guarantor's obligations
under this Guaranty are absolute and continuing and shall not be affected or
impaired if Lender amends, renews, extends, compromises, exchanges, fails to
exercise, impairs or releases any of the obligations belonging to any Borrower,
Co-guarantor or third party or any of Lender's rights against any Borrower,
Co-guarantor, third party, or collateral. In addition, Guarantor's Obligations
under this Guaranty shall not be affected or impaired by the death,
incompetency, termination, dissolution, insolvency, business cessation, or other
financial deterioration of any Borrower, Guarantor, or third party.
4. DIRECT AND UNCONDITIONAL NATURE OF GUARANTY. Guarantor's Obligations
under this Guaranty are direct and unconditional and may be enforced without
requiring Lender to exercise, enforce, or exhaust any right or remedy against
any Borrower, Co-guarantor, third party, or collateral.
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5. WAIVER OF NOTICE. Guarantor hereby waives notice of the acceptance of
this Guaranty; notice of present and future extensions of credit and other
financial accommodations by Lender to any Borrower; notice of the obtaining or
release of any guaranty, assignment, or other security for any of the
Obligations notice of presentment for payment, demand, protest, dishonor,
default, and nonpayment pertaining to the Obligations and this Guaranty and all
other notices and demands pertaining to the Obligations and this Guaranty as
permitted by law.
6. WAIVER OF JURY TRIAL. LENDER AND GUARANTOR KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT TO
ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONJUNCTION WITH THE
PROMISSORY NOTE, THIS GUARANTY AND ANY OTHER AGREEMENT CONTEMPLATED TO BE
EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EITHER PARTY. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR LENDER MAKING THE LOAN EVIDENCED BY THE
PROMISSORY NOTE.
7. DEFAULT. Guarantor shall be in default under this Guaranty in the
event that any Borrower or Guarantor:
(a) fails to pay any amount under this Guaranty or any other
indebtedness to Lender when due (whether such amount is due by
acceleration or otherwise); (b) fails to perform any obligation
or breaches any warranty or covenant to Lender contained in this
Guaranty or any other present or future written agreement; (c)
provides or causes any false or misleading signature or
representation to be provided to Lender; (d) allows any
collateral for the Obligations or this Guaranty to be destroyed,
lost or stolen, or damaged in any material respect; (e) permits
the entry or service of any garnishment, judgment, tax levy,
attachment or lien against Borrower, Guarantor, or any of their
property or the Collateral; (f) dies, becomes legally
incompetent, is dissolved or terminated, ceases to operate its
business, becomes insolvent, makes an assignment for the benefit
of creditors, or becomes the subject of any bankruptcy,
insolvency or debtor rehabilitation proceeding; or (g) causes
Lender to deem itself insecure in good faith for any reason.
8. RIGHTS OF LENDER ON DEFAULT. If there is a default under this
Guaranty, Lender shall be entitled to exercise one or more of the following
remedies without notice or demand (except as required by law):
(a) to declare Guarantor's Obligations under this Guaranty
immediately due and payable in full;
(b) to collect the outstanding obligations under this Guaranty with
or without resorting to judicial process;
(c) to set-off Guarantor's Obligations under this Guaranty against
any amounts due to Guarantor including, but not limited to,
monies, instruments, and deposit accounts maintained with Lender;
and (d) to exercise all other rights available to Lender under
any other written agreement or applicable law.
Lender's rights are cumulative and may be exercised together, separately, and in
any order.
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10. WAIVER OF DEFENSES. The Guarantor waives all defenses, claims, and
discharges of Borrower or any other third party pertaining to the Obligations,
except the defense of payment in full. The Guarantor will not assert against the
Lender any defense of waiver, release, discharge in bankruptcy, statute of
limitations res judicata, statute of frauds, anti-deficiency statute, fraud,
incapacity, illegality or unenforceability which may be available to Borrower or
any third party, whether or not on account of a related transaction. The
Guarantor agrees that the Guarantor shall be liable for any deficiency remaining
after foreclosure of any mortgage or security interest securing the Obligations,
whether or not the liability of Borrower or any other third party for the
deficiency is discharged by statute or judicial decision.
GUARANTOR ACKNOWLEDGES GUARANTOR HAS READ, UNDERSTANDS, AND AGREES TO THE TERMS
AND CONDITIONS OF THIS AGREEMENT INCLUDING THE TERMS AND CONDITIONS ON THE
REVERSE SIDE. GUARANTOR HAS EXECUTED THIS AGREEMENT WITH THE INTENT TO BE
LEGALLY BOUND. GUARANTOR ACKNOWLEDGES RECEIPT OF AN EXACT COPY OF THIS
AGREEMENT.
DATED: APRIL 1, 1996
GUARANTOR: HAMPSHIRE DESIGNERS, INC. GUARANTOR:
/s/ Charles W. Clayton, Vice President
- -------------------------------------- ------------------------------------
GUARANTOR: GUARANTOR:
- -------------------------------------- -------------------------------------
GUARANTOR: GUARANTOR:
- -------------------------------------- -------------------------------------
10. SUBORDINATION. The payment of any present or future indebtedness of
Borrower to Guarantor will be postponed and subordinated to the payment in full
of any present or future indebtedness of Borrower to Lender during the term of
this Agreement. In the event that Guarantor receives any monies, instruments, or
other remittances to be applied against Borrower's obligations to Guarantor,
Guarantor will hold these funds in trust for Lender and immediately endorse or
assign (if necessary) and deliver these monies, instruments and other
remittances to Lender. Guarantor agrees that Lender shall be preferred to
Guarantor in any assignment for the benefit of Borrower's creditors in any
bankruptcy, insolvency, liquidation, or reorganization proceeding commenced by
or against Borrower in any federal or state court.
11. INDEPENDENT INVESTIGATION. Guarantor's execution and delivery to
Lender of this Guaranty is based solely upon Guarantor's independent
investigation of Borrower's financial condition and not upon any written or oral
representation of Lender in any manner. Guarantor assumes full responsibility
for obtaining any additional information regarding Borrower's financial
condition and Lender shall not be required to furnish Guarantor with any
information of any kind regarding Borrower's financial condition.
3
<PAGE>
12. ACCEPTANCE OF RISKS. Guarantor acknowledges the absolute and
continuing nature of this Guaranty and voluntarily accepts the full range of
risks associated herewith including, but not limited to, the risk that
Borrower's financial condition shall deteriorate or the risk that Borrower shall
incur additional Obligations to Lender in the future.
13. SUBROGATION. The Guarantor hereby irrevocably waives and releases
the Borrower from all "claims" (as defined in Section 101(5) of the Bankruptcy
Code) to which the Guarantor is or would, at any time, be entitled by virtue of
its obligations under this Guaranty, including, without limitation, any right of
subrogation (whether contractual, under Section 509 of the Bankruptcy Code or
otherwise), reimbursement, contribution, exoneration or similar right against
the Borrower.
14. APPLICATION OF PAYMENTS. Lender will be entitled to apply any
payments or other monies received from Borrower, any third party, or any
collateral against Borrower's present and future obligations to Lender in any
order.
15. TERMINATION. This Guaranty shall remain in full force and effect
until Lender executes and delivers to Guarantor a written release thereof.
Notwithstanding the foregoing, Guarantor shall be entitled to terminate any
guaranty as to Borrower's future Obligations to Lender following any anniversary
of this Guaranty by providing Lender with ten (10) or more days' written notice
of such termination by hand-delivery or certified mail. Notice shall be deemed
given when received by Lender. Such notice of termination shall not affect or
impair any of the agreements and obligations of the Guarantor under this
Agreement with respect to any of the obligations existing prior to the time of
actual receipt of such notice by Lender, any extensions or renewals thereof, and
any interest on any of the foregoing.
16. ASSIGNMENT. Guarantor shall not be entitled to assign any of its
rights or obligations described in this Guaranty without Lender's prior written
consent which may be withheld by Lender in its sole discretion. Lender shall be
entitled to assign some or all of its rights and remedies described in this
Guaranty without notice to or the prior consent of Guarantor in any manner.
Unless the Lender shall otherwise consent in writing, the Lender shall have an
unimpaired right prior and superior to that of any assignee, to enforce this
Guaranty for the benefit of the Lender, as to those Obligations that the Lender
has not assigned.
17. MODIFICATION AND WAIVER. The modification or waiver of any of
Guarantor's obligations or Lender's rights under this Guaranty must be contained
in a writing signed by Lender. Lender may delay in exercising or fail to
exercise any of its rights without causing a waiver of those rights. A waiver on
one occasion shall not constitute a waiver on any other occasion.
18. SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon and
inure to the benefit of Guarantor and Lender and their respective successors,
assigns, trustees, receivers, administrators, personal representatives,
legatees, and devisees.
19. NOTICE. Any notice or other communication to be provided under
this Guaranty shall be in writing and sent to the parties at the addresses
described in this Guaranty or such other addresses as the parties may designate
in writing from time to time.
20. SEVERABILITY. If any provision of this Guaranty violates the law
or is unenforceable, the rest of the Guaranty shall remain valid.
4
<PAGE>
21. APPLICABLE LAW. This Guaranty shall be governed by the laws of
the state indicated in Lender's address. Guarantor consents to the jurisdiction
and venue of any court located in such state in the event of any legal
proceeding under this Guaranty.
22. COLLECTION COSTS. Lender hires an attorney to assist in
collecting any amount due or enforcing any right or remedy under this Guaranty,
Guarantor agrees to pay Lender's attorneys' fees, legal expenses and other costs
as permitted by law.
23. REPRESENTATIONS OF GUARANTOR. Guarantor acknowledges receipt of
reasonably equivalent value in consideration for the execution of this Guaranty
and represents that, after giving effect to this Guaranty, the fair market value
of Guarantor's assets exceeds Guarantor's total liabilities, including
contingent, subordinate and unliquidated liabilities, that Guarantor has
sufficient cash flow to meet debts as they mature, and that Guarantor does not
have unreasonably small capital.
24. MISCELLANEOUS. This Guaranty is executed in connection with a
commercial loan. Guarantor will provide Lender with a current financial
statement upon request. All references to Guarantor in this Guaranty shall
include all entities or persons signing this Guaranty. If there is more than one
Guarantor, their obligations shall be joint and several. This Guaranty and any
related documents represent the complete and integrated understanding between
Guarantor and Lender pertaining to the terms and conditions of those documents.
25. ADDITIONAL TERMS. THIS GUARANTY SHALL EXPIRE ON APRIL 1, 1997.
5
<PAGE>
CORPORATE RESOLUTION
The undersigned Clerk/Secretary/Assistant Clerk/Secretary of Hampshire
Designers, Inc. ("Company"), a corporation duly organized and existing under the
laws of the State of Delaware hereby certifies that, __X__ at a meeting of the
Board of Directors of the Company duly called and held at 1372 Broadway, City of
New York, County of New York, State of New York on February 7, 1996, at which
meeting a quorum was continuously present ____ pursuant to a unanimous written
consent of all members of the Board of Directors the following resolutions were
unanimously adopted, are now in full force and effect and have not been modified
or rescinded in any manner:
RESOLVED that any _____________________ ( ________________) of the
following persons:
_____ President _____ any Assistant Treasurer
__X__ any Vice President _____ Clerk/Secretary
_____ any Assistant Vice President __X__ any Assistant Clerk/Secretary
__X__ Treasurer _____ Other
(collectively "Authorized Party") is authorized and empowered to perform one or
more of the following actions (if checked) with Merchants National Bank
("Lender"); for and on behalf of the Company and on such terms and conditions as
any Authorized Party may deem advisable in his sole discretion (The execution of
any agreement, document or instrument shall constitute a conclusive presumption
that the terms, covenants and conditions of said documents so signed are agreed
to by and binding on the Company):
__X__ Open and maintain any safety deposit boxes, lock boxes and escrow,
savings, checking, depository, or other accounts;
__X__ Assign, negotiate, endorse and deposit in and to such boxes and accounts
any checks, drafts, notes and other instruments and funds payable to or
belonging to the Company.
__X__ Withdraw any funds or draw, sign and deliver in the name of the Company
any check or draft against funds of the Company in such boxes or accounts;
_____ Implement additional depository and funds transfer services (including,
but no limited to, facsimile signature authorizations, wire transfer agreements,
automated clearing house agreements, and payroll deposit programs);
__X__ Obtain one or more loans or other forms of financing in any amount from
the Lender (including, but not limited to, a $ _______ promissory note or line
of credit);
__X__ Guaranty the present and future obligations of any third party to the
Lender (including, but not limited to, the obligations of
);
FURTHER RESOLVED, that with respect to the foregoing guaranty, the Board of
Directors of the Company hereby determine that such guaranty may reasonably be
expected to benefit, directly or indirectly, the Company.
6
<PAGE>
__X__ Assign for security purposes, pledge, hypothecate, mortgage, or grant
to the Lender a lien, security interest, or other encumbrance upon any of the
Company's personal or real property (including, but not limited to, the
assignments for security purposes, pledges, hypothecations, mortgages, deeds of
trust, liens, security interests and encumbrances contained in the loan
documents pertaining to the promissory note, line of credit, or guaranty
described above);
__X__ Endorse to the Lender any checks, drafts, notes, or other instruments
payable to the Company;
__X__ Appoint the Lender as the Company's attorney-in-fact for any purpose
(including, but not limited to, endorsing any checks, drafts, notes or other
instruments payable to the Company);
Assign, convey, sell, lease, or otherwise transfer to the Lender or any
third party any of the Company's personal or real property; and
__X__ Execute any document (including, but not limited to, facsimile signature
authorization agreements, wire transfer agreements, automated clearinghouse
agreements, payroll deposit agreements, line of credit agreements, promissory
notes, security agreements, assignments for security purposes, mortgages deeds
of trust, assignments of rents, guaranties, powers of attorney, and waivers) and
take or refrain from taking any action on behalf of the Company.
FURTHER RESOLVED, that any of the foregoing or related activities taken by any
Authorized Party prior to the adoption of the preceding resolutions are hereby
ratified and declared to be biding obligations of the Company in a full and
complete manner;
FURTHER RESOLVED, that the authority and power of any Authorized Party as
provided in the preceding resolutions will continue in full force and effect
until the Board of Directors of the Company adopt a resolution amending,
modifying or revoking one or more of the preceding resolutions and a certified
copy of the properly executed resolution is received by the Lender via certified
mail; and
FURTHER RESOLVED, that the Clerk/Secretary or any Assistant Clerk/Secretary of
the Company is authorized to certify the adoption of the foregoing resolutions
to the Lender, the continuing effect of theses resolutions, and the incumbency
of the various parties authorized to exercise the rights in theses resolutions
from time to time.
The undersigned Clerk/Secretary/Assistant Cler/Secretary certifies that the
following persons are duly elected officers or otherwise authorized to act on
behalf of the Company in the capacities set forth below and that the following
original signatures are genuine in all respects:
NAME TITLE SIGNATURE
--------- -------- -----------------
Charles W. Clayton V.P., Secretary/Treasurer /s/ Charles W. Clayton
- ----------------------- -------------------------- -----------------------
William E. Kennedy, Jr. Asst. Secretary /s/ William E. Kennedy, Jr.
- ----------------------- -------------------------- --------------------------
- ----------------------- -------------------------- --------------------------
7
EXHIBIT (10)(T)
MTB BANK
90 Broad Street
New York, NY 10004-2290
(212) 858-3300
Fax: 858-3449
June 19, 1996
Segue (America) Limited
c/o Hampshire Group, Limited
215 Commerce Boulevard
Anderson, SC 29621
Attention: Mr. Charles Clayton
Executive Vice President
Dear Mr. Clayton:
Reference is made to the Credit Agreement dated February 15, 1995 executed by
and between Vintage, Inc. (the "Borrower") and MTB Bank (the "Bank") and the
Letter of Credit and Security Agreement, Corporate Guarantee of Hampshire Group,
Limited, and certain related loan documents executed in connection therewith
(collectively, the "Loan Documents"). Capitalized terms used herein and not
defined herein shall have the meaning set forth in the Loan Documents.
AMENDMENTS
1. The reference in Section I(a) to the maximum amount of outstanding L/C's at
any time of $3,000,000 is hereby amended to $4,500,000.
2. The definition of Borrower is hereby amended to read "Segue (America)
Limited".
3. The reference in Section I(d) of the Credit Agreement to the definition of
L/C fees is hereby amended pursuant to the terms of Exhibit A attached hereto
and made a part hereof which supersedes all previous amounts.
4. The reference in Section I(f) of the Credit Agreement to the Termination
Date as February 29, 1996 is hereby amended to read as April 30, 1997.
1
<PAGE>
The Credit Agreement and each of the other Loan Documents is deemed amended to
the extent necessary to give effect to the foregoing and except as so amended,
each remains in full force and in effect in accordance with its terms.
The Corporate Guarantor acknowledges and confirms that the Obligations referred
to in the Corporate Guarantee includes, without limitation, the indebtedness,
liabilities, and the obligations of the Borrower under the Credit Agreement, as
amended hereby.
If the foregoing is acceptable to you, kindly have this letter signed and return
it to MTB Bank, 90 Broad St., New York, New York 10004-2290, Attention:
Mr. Neville Grusd.
Very truly yours,
MTB BANK
/s/ Fredric Tordella
- -----------------------------
By: Fredric Tordella
Title: Chairman of the Board
/s/ Neville Grusd
- -----------------------------
By: Neville Grusd
Title: Chief Lending Officer
Attachment
SEGUE (AMERICA) LIMITED
/s/ Charles W. Clayton
- -----------------------------
By: Charles W. Clayton
Title: Vice President
HAMPSHIRE GROUP, LIMITED
as Corporate Guarantor
/s/ Charles W. Clayton
- -----------------------------
By: Charles W. Clayton
Title: Vice President
2
<PAGE>
EXHIBIT A
1. Opening Commission 1/4 % (Minimum of $125.)
2. Negotiation Commission 1/4%(Minimum of $125.)
3. Amendments $75
4. Air Releases and Steamship Guarantees $100
5. Cables $75 for L/C issuance
$35 for amendments
6. Customary out-of-pocket expenses
i.e. Courier)
3
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED BALANCE SHEETS AND THE CONSOLIDATED STATEMENT OF INCOME
FILED AS PART OF THE QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH QUARTERLY REPORT ON FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-29-1996
<CASH> 776
<SECURITIES> 0
<RECEIVABLES> 16,194
<ALLOWANCES> 2,367
<INVENTORY> 33,281
<CURRENT-ASSETS> 49,571
<PP&E> 32,411
<DEPRECIATION> 18,443
<TOTAL-ASSETS> 68,685
<CURRENT-LIABILITIES> 23,124
<BONDS> 8,675
3,294
0
<COMMON> 387
<OTHER-SE> 33,205
<TOTAL-LIABILITY-AND-EQUITY> 68,685
<SALES> 47,673
<TOTAL-REVENUES> 47,998
<CGS> 39,047
<TOTAL-COSTS> 39,047
<OTHER-EXPENSES> 9,470
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 522
<INCOME-PRETAX> (1,041)
<INCOME-TAX> 82
<INCOME-CONTINUING> (1,123)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,123)
<EPS-PRIMARY> (.17)
<EPS-DILUTED> (.17)
</TABLE>
