<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended Commission File Number:
October 2, 1999 0-23234
L.A. T SPORTSWEAR, INC.
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(Exact name of registrant as specified in its charter)
Georgia 58-1724902
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1200 Airport Drive, Ball Ground, Georgia 30107
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (770) 479-1877
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Not applicable
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(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date:
Common Stock, without par value 4,202,501 shares
- ------------------------------- -------------------------------
Class Outstanding at November 8, 1999
<PAGE> 2
PART I. FINANCIAL INFORMATION
Item 1: Financial Statements
L.A. T SPORTSWEAR, INC.
BALANCE SHEETS
(In thousands except share data)
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<TABLE>
<CAPTION>
OCTOBER 2, JANUARY 2,
ASSETS 1999 1999
(UNAUDITED)
CURRENT ASSETS:
<S> <C> <C>
Cash $ 1,032 $ 407
Accounts receivable, net 11,030 6,115
Inventories 23,894 23,665
Other current assets 358 919
-------- --------
Total current assets 36,314 31,106
PROPERTY, PLANT AND EQUIPMENT - Net 3,922 3,201
OTHER ASSETS 133 156
-------- --------
$ 40,369 $ 34,463
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 10,997 $ 11,647
Current portion of long-term debt 159 30
Accrued expenses 713 809
-------- --------
Total current liabilities 11,869 12,486
LONG-TERM DEBT 15,826 10,162
OTHER LONG TERM LIABILITIES 123 371
STOCKHOLDERS' EQUITY:
Preferred stock, 5,000,000 shares
authorized; no shares issued
Common Stock, no par value; 25,000,000
shares authorized; 4,200,001 shares
issued and outstanding 10,825 10,825
Paid in capital 3,304 3,304
Accumulated deficit (1,578) (2,685)
-------- --------
Total stockholders' equity 12,551 11,444
-------- --------
$ 40,369 $ 34,463
======== ========
</TABLE>
See notes to unaudited financial statements.
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<PAGE> 3
L.A. T SPORTSWEAR, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
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<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
-------------------------------------------------------
October 2, October 3, October 2, October 3,
1999 1998 1999 1998
(13 weeks) (13 weeks) (39 weeks) (40 weeks)
<S> <C> <C> <C> <C>
NET SALES $ 25,988 $ 22,856 $ 73,720 $ 63,270
COST OF GOODS SOLD 21,968 19,261 61,710 52,989
-------- -------- -------- --------
Gross Profit 4,020 3,595 12,010 10,281
OPERATING EXPENSES 3,150 2,750 9,571 8,092
-------- -------- -------- --------
OPERATING PROFIT 870 845 2,439 2,189
OTHER INCOME (EXPENSE) PRIMARILY
INTEREST (247) (302) (730) (935)
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 623 543 1,709 1,254
PROVISION FOR INCOME TAXES 161 62 602 69
-------- -------- -------- --------
NET INCOME $ 462 $ 481 $ 1,107 $ 1,185
======== ======== ======== ========
BASIC NET INCOME PER SHARE $ 0.11 $ 0.11 $ 0.26 $ 0.28
DILUTED NET INCOME PER SHARE $ 0.11 $ 0.11 $ 0.26 $ 0.28
BASIC WEIGHTED AVERAGE SHARES
OUTSTANDING 4,200 4,200 4,200 4,200
WEIGHTED AVERAGE SHARES
OUTSTANDING ASSUMING DILUTION 4,275 4,228 4,288 4,207
</TABLE>
See notes to unaudited financial statements.
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<PAGE> 4
L.A. T SPORTSWEAR, INC.
STATEMENTS OF CASH FLOW (UNAUDITED)
(IN THOUSANDS)
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<TABLE>
<CAPTION>
NINE MONTHS ENDED
------------------------
OCTOBER 2, OCTOBER 3,
1999 1998
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 1,107 $ 1,185
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization 430 406
Provision for doubtful account 156 0
Gain on sale of fixed assets 0 43
Changes in assets and liabilities providing (using) cash:
Accounts receivable (5,071) (2,892)
Inventories (229) (2,413)
Accounts payable (650) 4,411
Accrued expenses (96) 238
Other 303 7
------- -------
Net cash (used in) provided by operating activities (4,050) 985
INVESTING ACTIVITIES:
Purchase of property, plant and equipment (1,120) (61)
Proceeds from sale of assets 1 23
------- -------
Net cash used in investing activities (1,119) (38)
FINANCING ACTIVITIES:
Borrowings under line of credit, net 5,411 (478)
Payments of long-term borrowings (34) (17)
Proceeds from long term borrowings 417 0
------- -------
Net cash provided by (used in) financing activities 5,794 (495)
------- -------
NET CHANGE IN CASH 625 452
CASH, BEGINNING OF PERIOD 407 177
------- -------
CASH, END OF PERIOD $ 1,032 $ 629
======= =======
</TABLE>
SEE NOTES TO UNAUDITED FINANCIAL STATEMENTS.
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<PAGE> 5
L.A. T SPORTSWEAR, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
QUARTERS ENDED OCTOBER 2, 1999 AND OCTOBER 3, 1998
1. ORGANIZATION AND BASIS OF PRESENTATION
L.A. T Sportswear, Inc. (The "Company") distributes and manufactures
sportswear principally for the imprinted garment industry. The Company
manufactures certain of its products and also purchases merchandise from
national sportswear manufacturers for distribution currently through six
distribution facilities across the United States. The Company's customers are
principally domestic retailers in the imprintable and decorable sportswear
industry. Accordingly, the Company operates in one business segment.
The accompanying unaudited financial statements of the Company have been
prepared in accordance with generally accepted accounting principles for interim
financial information, the instructions for Form 10-Q, and Regulation S-X. These
financial statements should be read in conjunction with the financial statements
and notes thereto included in the Company's Annual Report on Form 10-K filed
with the Securities and Exchange Commission for the year ended January 2, 1999.
In the opinion of management, all adjustments (which include only normal
recurring adjustments) considered necessary for a fair presentation of interim
results have been included. The results of operations for the nine months ended
October 2, 1999 are not necessarily indicative of the operating results for the
full year.
2. INVENTORIES
Inventories consisted of the following (in thousands):
<TABLE>
<CAPTION>
October 2, January 2,
1999 1999
<S> <C> <C>
Raw materials $ 949 $ 952
Work-in-process 742 476
Finished goods 24,091 23,745
Reserves (1,888) (1,508)
-------- --------
$ 23,894 $ 23,665
======== ========
</TABLE>
3. LONG-TERM DEBT
The Company maintains a credit facility with a bank. At October 2, 1999 the
credit facility, as amended, (i) provides for maximum borrowings of $17 million
(subject to certain collateral restrictions based on eligible receivables,
inventories and fixed assets), (ii) expires on April 30, 2002 and (iii) bears
interest for 1999 at the prime rate plus .25% (subject to repricing annually
thereafter). The facility is secured by substantially all the Company's assets.
As of October 2, 1999, the Company had borrowings totaling approximately $14.5
million outstanding under the credit facility and availability to borrow $2.4
million.
4. NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("FAS 133"), was issued in June
1998. Statement of Financial Accounting Standards No. 137, "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
of FASB Statement No. 133", was issued in June 1999, deferring the effective
date of FAS 133 from June 15, 1999 to June 15, 2000 for all fiscal quarters of
fiscal years beginning after June 15, 2000. The Company has not yet completed
its evaluation of the effect of this standard on its financial statements.
However, at this time the Company does not expect FAS 133 to have a material
effect on its financial position, results of operations, cash flows or financial
statement disclosures.
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<PAGE> 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the components
of the Company's statements of operations expressed as a percentage of net
sales.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
----------------------- -----------------------
OCTOBER 2, OCTOBER 3, OCTOBER 2, OCTOBER 3,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of goods sold 84.5 84.3 83.7 83.8
----- ----- ----- -----
Gross profit 15.5 15.7 16.3 16.2
Operating expenses 12.1 12.0 13.0 12.8
----- ----- ----- -----
Operating profit 3.4 3.7 3.3 3.4
Other income (expense) primarily interest (1.0) (1.3) (1.0) (1.4)
----- ----- ----- -----
Income before income taxes 2.4 2.4 2.3 2.0
Provision for income taxes 0.6 0.3 0.8 0.1
----- ----- ----- -----
Net income 1.8% 2.1% 1.5% 1.9%
===== ===== ===== =====
</TABLE>
Third Quarter of 1999 Compared to Third Quarter of 1998
The Company's net sales increased approximately $3.1 million, or 13.7%, to
$26.0 million in the third quarter of 1999 from $22.9 million in the third
quarter of 1998. The increase in net sales was attributable, in large part, to
the continued positive effect of the national sales program, which focuses on
the Company employing its own national sales force as opposed to using outside
sales representatives.
The Company's gross profit increased approximately $425,000, or 11.8% to
$4.0 million for the third quarter of 1999 from $3.6 million in the third
quarter of 1998. The increase in gross profit resulted from the increase in net
sales and an increase in gross profit margin on manufactured products. However,
as a percentage of net sales, gross profit decreased to 15.5% in the third
quarter of 1999 from 15.7% in the third quarter of 1998 due to a greater
increase in distribution product sales, which have a lower gross margin than
manufactured product sales.
Operating expenses increased approximately $400,000, or 14.5% to $3.2
million in the third quarter of 1999 from $2.8 million in the third quarter of
1998. The increase in operating expenses was due primarily to increased selling
costs associated with the national sales program, increased distribution costs,
and to costs associated with the purchase of a new computer system which
includes training, data conversion costs and other non-capitalized costs. As a
percentage of net sales, operating expenses increased to 12.1% in the third
quarter of 1999 from 12.0% in the third quarter of 1998.
As a result of the increase in net sales and gross profit, operating profit
increased approximately $25,000, or 3.0%, to $870,000 in the third quarter of
1999 from $845,000 in the third quarter of 1998. As a percentage of net sales,
operating profit decreased to 3.4% in the third quarter of 1999 from 3.7% in the
third quarter of 1998.
Other income (expense), which consists principally of interest expense,
decreased approximately $55,000, or 18.2%, to $(247,000) in the third quarter of
1999 from $(302,000) in the third quarter of 1998. The decrease was primarily
due to lower interest rates under the Company's credit facility, which more than
offset
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<PAGE> 7
increased borrowings. Other income (expense) as a percentage of net sales
decreased to (1.0)% in the third quarter of 1999, from (1.3)% in the third
quarter of 1998.
As a result, income before income taxes increased approximately $80,000, or
14.7% to $623,000 in the third quarter of 1999 from $543,000 in the third
quarter of 1998. Income before income taxes as a percentage of net sales
remained constant at 2.4%.
The Company recorded an income tax provision of $161,000 in the third
quarter of 1999. In 1998, only a small income tax provision of $62,000 was
recorded due to the use of net operating loss carryforwards to offset most of
the 1998 taxable income.
As a result of the increased income tax provision, net income decreased
$19,000, or 4.0%, to $462,000 in the third quarter of 1999 from $481,000 in the
third quarter of 1998. As a percentage of net sales, net income decreased to
1.8% in the third quarter of 1999 from 2.1% in the third quarter of 1998.
First Nine Months of 1999 Compared to First Nine Months of 1998
The Company's net sales increased approximately $10.4 million, or 16.5%, to
$73.7 million in the first nine months of 1999 from $63.3 million in the first
nine months of 1998. The increase in net sales was attributable, in large part,
to the continued positive effect of the national sales program, which focuses on
the Company employing its own national sales force as opposed to using outside
sales representatives.
The Company's gross profit increased approximately $1.7 million, or 16.8%,
to $12.0 million for the first nine months of 1999 from $10.3 million in the
first nine months of 1998. As a percentage of net sales, gross profit increased
to 16.3% in the first nine months of 1999 from 16.2% in the first nine months of
1998. The increase in gross profit is attributable to the increase in net sales
and an increase in gross profit margins on manufactured products.
Operating expenses increased approximately $1.5 million, or 18.3%, to $9.6
million in the first nine months of 1999 from $8.1 million in the first nine
months of 1998. The increase in operating expenses is due primarily to increased
selling costs associated with the national sales program, increased distribution
costs, and to costs associated with the purchase of a new computer system which
includes training, data conversion costs and other non-capitalized costs. As a
percentage of net sales, operating expenses increased to 13.0% in the first nine
months of 1999 from 12.8% in the first nine months of 1998.
As a result of the increase in net sales and gross profit, operating profit
increased approximately $250,000, or 11.4%, to approximately $2.4 million in the
first nine months of 1999 from $2.2 million in the first nine months of 1998. As
a percentage of net sales, operating profit decreased slightly to 3.3% in the
first nine months of 1999 from 3.4% in the first nine months of 1998.
Other income (expense), which consists principally of interest expense,
decreased approximately $205,000, or 21.9%, to $(730,000) in the first nine
months of 1999 from $(935,000) in the first nine months of 1998, primarily due
to lower interest rates under the Company's credit facility, which more than
offset increased borrowings. Other income (expense) as a percentage of net sales
decreased to (1.0)% in the first nine months of 1999 from (1.4)% in the first
nine months of 1998.
As a result of the above factors, income before income taxes increased
approximately $455,000, or 36.3% to $1.7 million in the first nine months of
1999 compared to $1.3 million in the first nine months of 1998. Income before
income taxes as a percentage of net sales increased to 2.3% in the first nine
months of 1999 from 2.0% in the first nine months of 1998.
The Company recorded an income tax provision of $602,000 in the first nine
months of 1999. In the first nine months of 1998, only a small income tax
provision of $69,000 was recorded due to the use of net operating loss
carryforwards to offset most of the 1998 taxable income.
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<PAGE> 8
As a result of the increased income tax provision, net income decreased
$78,000 or 6.6%, to $1.1 million in the first nine months of 1999 from $1.2
million in the first nine months of 1998. As a percentage of net sales, net
income decreased to 1.5% in the first nine months of 1999 from 1.9% in the first
nine months of 1998.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operations was approximately $4.1 million for the first
nine months of 1999 compared to net cash provided by operations of $985,000 in
the first nine months of 1998. Net cash used in operations in the first nine
months of 1999 was primarily the result of increased accounts receivable
balances.
The Company maintains a credit facility with a bank. At October 2, 1999 the
credit facility, as amended, (i) provides for maximum borrowings of $17 million
(subject to certain collateral restrictions based on eligible receivables,
inventories and fixed assets), (ii) expires on April 30, 2002 and (iii) bears
interest for 1999 at the prime rate plus .25% (subject to repricing annually
thereafter). The facility is secured by substantially all the Company's assets.
As of November 8, 1999, the Company had borrowings totaling $12.3 million
outstanding under the credit facility and availability to borrow $4.6 million.
The Company's ability to fund its working capital and capital expenditure
requirements, make interest payments and meet its other cash requirements
depends, among other things, on internally generated funds and the continued
availability of and compliance with the terms of its credit facility. Management
believes that internally generated funds and funds available from the Company's
line of credit will be sufficient to meet the Company's capital requirements and
operating needs for the next twelve months. However, if there is a significant
reduction of internally generated funds or the Company is unable to meet the
financial covenants contained in the credit facility, as amended, the Company
may require additional funds from outside financing sources. In such event,
there can be no assurance that the Company will be able to obtain such funding
as and when required or on acceptable terms.
YEAR 2000 READINESS
The Company's year 2000 state of readiness has been divided into three
areas: (1) the distribution division's information technology system, (2) the
manufacturing division's information technology system and (3) other items which
include non-information technology systems.
The Company's distribution division (which accounted for approximately 80% of
the Company's sales volume in 1998) utilizes a distribution package known as
VICS (Vertically Integrated Computer Systems) that runs on an IBM RS6000
computer. The distribution division's package is year 2000 compliant according
to certifications by both IBM and the VICS software vendor. The Company
conducted basic tests of its own to assure itself that mission critical features
are in fact year 2000 compliant.
The Company's manufacturing division (which accounted for approximately 20%
of the Company's sales volume in 1998) converted to a year 2000 compliant
manufacturing software package known as AIC (Applied Intelligence Corporation)
that runs on an IBM AS400 computer in July 1999. The cost of the new system was
approximately $450,000, which includes the Company's commitment of internal
resources.
Other items which include non-information technology systems are being
tested and upgraded as needed. Included in the non-information technology
systems are the Company's personal computers and applications, telephone
systems, manufacturing equipment, security systems, and other non-crucial items.
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<PAGE> 9
The Company has a substantial amount of personal computers and software
applications. Many of the personal computers were replaced as part of the
manufacturing division's new computer system. In order to make the other
personal computers and software applications year 2000 compliant, the Company
has installed a new network communication package which has tied most of the
Company's personal computers and software applications together. The Company
will upgrade all non-compliant personal computers and install the latest
versions of year 2000 compliant applications throughout the network. Specialized
applications not used Company wide will be upgraded as necessary. The cost of
the network was approximately $101,000 and the project is completed.
The Company has received certification that its primary telephone systems
are year 2000 compliant, with the exception of the voice mail and call
accounting applications for two of the manufacturing division locations. The
Company does not plan to upgrade the call accounting applications, and is still
reviewing options for the voice mail systems.
The manufacturing division utilizes a computerized Lectra Systems(R)
marking and grading system which is crucial to the manufacturing operations.
Lectra Systems(R) completed a year 2000 upgrade during the second quarter of
1999 and the Company installed the upgrade during the third quarter of 1999 and
believes that this system is now year 2000 compliant.
Other non-information technology systems such as security systems, copiers
and other non-essential items are being assessed for year 2000 compliance. The
Company is contacting vendors of these items either by mail or through internet
access to determine their compliance status. No time frame or estimated cost has
been established to bring these non-essential items year 2000 compliant.
The costs of major year 2000 projects have been included in the current
operating budget. The majority of the costs have been capitalized with the
exception of software data conversion costs and training costs. The funds to
finance these projects have come from the Company's cash flows from operations
and line of credit.
The Company has issued certification requests to all major vendors and
customers as well as to its primary bank seeking assurance that they will be
year 2000 compliant. The Company is evaluating the responses received from
vendors and customers and continues to monitor the progress of these third
parties in becoming year 2000 compliant. At this time the Company has no
contingency plans to address problems if third parties are not compliant or if
any of the Company's systems ultimately prove not to be compliant.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
No response is required to this item.
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<PAGE> 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. The following exhibits are filed with this
report:
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<S> <C> <C>
10.28.1 - Lease Extension, dated June 21, 1999, between
the Company and Sunbeam Properties, Inc.
10.32.1 - Second Amendment to Lease Agreement, dated July 15, 1999, between the Company
and 1998 Augustus Partners, L.P. (formally John W. Rooker)
10.40.5 - Fourth Amendment to Loan and Security
Agreement, dated April 20, 1999, by and between
the Company and Mellon Bank, N.A.
10.40.6 - Fifth Amendment to Loan and Security
Agreement, dated July 28, 1999, by and between
the Company and Mellon Bank, N.A.
27 - Financial Data Schedule (for SEC use only).
</TABLE>
(b) Reports on Form 8-K. No report on Form 8-K was
filed during the quarter ended October 2, 1999.
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<PAGE> 11
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.
L.A. T SPORTSWEAR, INC.
Dated: November 9, 1999 By: /s/ Isador E. Mitzner
---------------------------
Isador E. Mitzner, Chairman
and Chief Executive Officer
Dated: November 9, 1999 By: /s/ John F. Hankinson
--------------------------
John F. Hankinson
Chief Financial Officer
<PAGE> 1
EXHIBIT 10.28.1
LEASE EXTENSION
We, the undersigned, hereby agree to renew and extend that Lease
between SUNBEAM PROPERTIES, INC. (Lessor) and L.A.T. SPORTSWEAR, INC. d/b/a Full
Line Distributors (Lessee) on property located at 3350 Executive Way, Miramar,
Florida, for an additional Five (5) Year Period, commencing January 1, 2000 and
ending on December 31, 2004. The monthly rent is to be as follows:
$15,018.67 per month plus State Sales Tax from January 1, 2000 thru
December 31, 2001;
$16,213.33 per month plus State Sales Tax from January 1, 2002 thru
December 31, 2004.
Said amounts shall be paid in advance on the first day of each month
and are in addition to all other payments to be made by Lessee under the Lease
including but not limited to Lessee's Proportionate Share of Expenses as
described in Paragraph 28 of the Lease.
Lessee and Lessor each represent to the other that no broker and/or
consultant other than J.S. Hudgins Company, is due a commission, fee or other
sum which is now or in the future may be due and payable with regard to leasing,
acquisition or other such matters related to the Demised Premises.
The security deposit in the amount of $15,000.00 shall continue to be
held under this Lease.
All other terms and conditions of the Lease will remain unchanged and
in full force and effect.
LESSOR: SUNBEAM PROPERTIES, INC.
/s/ Ana Cardenas By: /s/ Andrew L.Ansin
- ------------------ -------------------------------
Witness Sign Name Andrew L. Ansin, Vice President
Ana Cardenas 6-29-99
- ------------------ ------------------------------------
Witness Print Name Date
/s/ Roger Metcalf
- ------------------
Witness Sign Name
Roger Metcalf
- ------------------
Witness Print Name
LESSEE: L.A.T. SPORTSWEAR, INC.
/s/ John Hankinson By: /s/ Isador E. Mitzner
- ------------------ -------------------------------
Witness Sign name Isador E. Mitzner, CEO
John Hankinson 6-21-99
- ------------------ ------------------------------------
Witness Print Name Date
/s/ Dawn Trahan
- ------------------
Witness Sign name
Dawn Trahan
- ------------------
Witness Print Name
<PAGE> 1
EXHIBIT 10.32.1
STATE OF GEORGIA
COUNTY OF GWINNETT
SECOND AMENDMENT TO LEASE AGREEMENT
THIS SECOND AMENDMENT TO LEASE AGREEMENT (the "Second Amendment") is
made as of this 15th day of July, 1999 by and between 1998 AUGUSTUS PARTNERS, L.
P. (hereinafter referred to as "Landlord") and L. A. T. SPORTSWEAR, INC. DBA
FULL LINE DISTRIBUTORS (hereinafter referred to as "Tenant").
W I T N E S S E T H:
WHEREAS, Landlord and Tenant have previously entered into a Lease
Agreement (the "Lease") dated October 17, 1994, and First Amendment to Lease
dated May 26, 1995, covering premises consisting of 70,000 square feet of
office/warehouse space located at 2650 Button Gwinnett Drive, Doraville,
Gwinnett County, Georgia (the "Premises"), which Lease is fully incorporated
herein and made a part hereof by reference; and
WHEREAS, Landlord and Tenant have mutually agreed to amend the Lease to
provide that the term of the Lease shall be more specifically and accurately
stated;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements recited hereinafter, it is agreed as follows:
1.
Terms used herein which are defined in the Lease shall have the same
meaning ascribed to them in the Lease.
2.
The lease is hereby amended to delete the words "JOHN W. ROOKER"
wherever they may appear in said Lease and to substitute in lieu thereof the
words 1998 AUGUSTUS PARTNERS, L.P. All of the parties by their signatures
hereinbelow hereby consent and agree to this modification of said Lease. 1998
AUGUSTUS PARTNERS, L.P. hereby agrees to bound under all of the terms,
conditions and covenants of said Lease as to the Landlord,
3.
Article 2 of the Lease, "Term", shall be amended to provide that the
term of the Lease shall be extended for two (2) years commencing on January 1,
2000 and expiring on December 31, 2002.
4.
Article 3 of the Lease, "Rental", shall be amended to provide for
additional monthly rental in the amount of Sixteen Thousand Four Hundred Fifty
Dollars and no/100 ($16,450.00) per month and payable promptly on the first day
of each month, in advance, commencing on January 1, 2000.
5.
Tenant shall have a right of refusal for the adjoining space(s).
Landlord agrees to notify Tenant of the upcoming vacancy and also at time the
space becomes available Tenant should notify Landlord of his intent to lease the
space within five (5) working days of the notification.
<PAGE> 2
6.
Tenant shall have the option to renew this lease for an additional
three (3) years at a rate of $17,500.00 per month. To exercise this option
Tenant shall provide Landlord with a prior written notice of One Hundred Eighty
Days (180) before the expiration of this lease agreement.
7.
Except as modified hereby, all terms and conditions of the Lease shall
continue in full force and effect, and Landlord and Tenant hereby ratify and
confirm the Lease, as amended hereby. As of the date of this Second Amendment;
Landlord and Tenant acknowledge each to the other that, to the best of their
knowledge, no default exists under the Lease.
8.
This Second Amendment to Lease shall bind and inure to the benefit of
Landlord and Tenant and their respective permitted successors and assigns under
the Lease.
9.
This Second Amendment is a Georgia contract and shall be interpreted,
construed and enforced under the laws of the State of Georgia.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Second
Amendment to Lease Agreement under seal as of the date first above written.
Signed, sealed and delivered as to LANDLORD:
Landlord on this 15th day of
July , 1999, 1998 AUGUSTUS PARTNERS, L.P.
- ---------------------------
in the presence of: BY: 1998 WINSTON MANAGEMENT COMPANY, LLC.
GENERAL PARTNER
/s/ Edward Russ
- ---------------------------
Witness
/s/ Diane L. Easton BY: /s/ John W. Rooker
- --------------------------- -----------------------------------
Notary Public John W. Rooker, Member
Commission
Expires: June 8, 2002
------------------
Date Signed: 7-15-99
--------------
Signed, sealed and delivered as to TENANT:
Landlord on this 15th day of L.A.T. SPORTSWEAR, INC. DBA
July , 1999, FULL LINE DISTRIBUTORS
- ---------------------------
in the presence of:
/s/ Edward Russ BY: /s/ Gina Watson McElroy
- --------------------------- -----------------------------------
Witness
/s/ Diane L. Easton Title: Exec. V. P. Operations
- --------------------------- -----------------------------------
Notary Public
(CORPORATE SEAL)
Commission
Expires: June 8, 2002
------------------
Date Signed: 7-15-99
--------------
<PAGE> 1
EXHIBIT 10.40.5
FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
This Fourth Amendment ("Amendment") to Loan and Security Agreement,
dated as of April 20, 1999, among L.A. T SPORTSWEAR, INC. ("Borrower"), MELLON
BANK, N.A., as Agent ("Agent") and MELLON BANK, N.A. ("Mellon") and the
financial institutions now or hereafter a party to the Loan Agreement (as
defined below) and listed on Schedule "A" attached thereto and made a part
thereof (as such Schedule may be amended, modified or replaced from time to
time), in their capacity as lenders (Mellon and the other financial institutions
are individually referred to as "Lender" and collectively as "Lenders").
BACKGROUND
A. On or about April 29, 1996, the parties hereto entered into a
Loan and Security Agreement (as amended, supplemented, or modified from time to
time "Loan Agreement") and related agreements, instruments and documents,
pursuant to which Lenders established a Revolving Credit for the benefit of
Borrower. All capitalized terms used but not defined herein shall have the
meaning given to such term in the Loan Agreement.
B. Borrower and Lenders desire to modify certain terms and
conditions of the Loan Documents as more fully set forth herein.
TERMS AND CONDITIONS
NOW, THEREFORE, with the foregoing background hereinafter incorporated
by reference as if set forth more fully below, the parties hereto, intending to
be legally bound hereby, promise and agree as follows:
1. Section 1 of the Loan Agreement is hereby amended by deleting
the definition of Applicable Base Rate Margin in its entirety and replacing it
with the following:
Applicable Base Rate Margin - The applicable margin based upon
the ratio of Borrower's EBITDA to Interest Expense as of the last day
of the fiscal year then ended for which financial statements have been
delivered pursuant to Section 6.10(a)(i), as set forth below:
<PAGE> 2
<TABLE>
<CAPTION>
Ratio of EBITDA to Interest Expense Margin
- ----------------------------------- ------
<S> <C>
Less than 1.75:1 1.00%
Equal to or greater than 1.75:1 but less than 2.00:1 0.75%
Equal to or greater than 2.00:1 but less than 2.50:1 0.50%
Equal to or greater than 2.50:1 but less than 3.00:1 0.25%
Equal to or greater than 3.00:1 0%
</TABLE>
The above pricing index shall be measured annually and shall be
effective upon receipt of the Fiscal Year End audited financial
statements referenced above. The Applicable Base Rate Margin shall be
one percent (1.00%) per annum if: (i) Borrower fails to maintain a
minimum excess availability of $1,000,000 for the ninety (90) day
period immediately prior to the delivery of Borrower's Fiscal Year End
audited financial statements, or (ii) an Event of Default has occurred,
including, without limitation, Borrower's failure to deliver financial
statements within the time period required by Section 6.10(a)(i).
2. Section 1 of the Loan Agreement is hereby amended by deleting
the definition of Applicable LIBOR Rate Margin in its entirety and replacing it
with the following:
Applicable LIBOR Rate Margin - The applicable margin based
upon the ratio of Borrower's EBITDA to Interest Expense as of the last
day of the fiscal year then ended for which financial statements have
been delivered pursuant to Section 6.10(a)(i), as set forth below:
<TABLE>
<CAPTION>
Ratio of EBITDA to Interest Expense Margin
- ----------------------------------- ------
<S> <C>
Equal to or greater than 1.75:1 but less than 2.00:1 3.00%
Equal to or greater than 2.00:1 but less than 2.50:1 2.75%
Equal to or greater than 2.50:1 but less than 3.00:1 2.50%
Equal to or greater than 3.00:1 but less than 4.00:1 2.25%
Equal to or greater than 4.00:1 2.00%
</TABLE>
The above pricing index shall be measured annually and shall be
effective upon receipt of the Fiscal Year End audited financial
statements referenced above. The Applicable LIBOR Rate Margin shall be
three percent (3.00%) per annum if: (i) Borrower fails to maintain a
minimum excess availability of $1,000,000 for the ninety (90) day
period immediately prior to the delivery of Borrower's Fiscal Year End
audited financial statements, or (ii) an Event of Default has occurred,
including, without limitation, Borrower's failure to deliver financial
statements within the time period required by Section 6.10(a)(i).
<PAGE> 3
3. Section 1 of the Loan Agreement is hereby amended by deleting
the definition of Revolving Credit Limit in its entirety and replacing it with
the following:
Revolving Credit Limit - $16,000,000.
4. Section 1 of the Loan Agreement is hereby amended by deleting
the definition of Revolving Credit Maturity Date in its entirety and replacing
it with the following:
Revolving Credit Maturity Date - April 30, 2002.
5. Section 2.4 of the Loan Agreement is hereby amended by
deleting Subsection (b)(i) and replacing it with the following:
(i) Provided that: (A) Borrower has and maintains an EBITDA to
Interest Expense equal to or greater than 1.75:1, and (B) subject to
the provisions of Section 2.5(b) below, Borrower shall have the option
to have the unpaid principal balance of Loans under the Revolving
Credit bear interest at the LIBOR Based Rate ("LIBOR Rate Option"),
provided that LIBOR Rate Loans shall be in $1,000,000 increments and in
a minimum amount of Two Million Dollars ($2,000,000).
6. Section 2.6 of the Loan Agreement is hereby amended by
deleting Subsection (d) in its entirety and replacing it with the following:
(d) Termination Fee: In the event there occurs any termination
of the Revolving Credit for any reason whatsoever prior to the
Revolving Credit Maturity Date, Borrower, if initiating such
termination, may only effect such termination on at least ninety (90)
days prior written notice to Agent and in all events Borrower shall pay
to Agent for the benefit of Lenders in accordance with their Revolving
Credit Pro Rata Percentage, a prepayment premium (the "Termination
Fee") in an amount equal to three percent (3%) of the Revolving Credit
Limit if such termination occurs prior to or on April 30, 1999, two
percent (2%) of the Revolving Credit Limit if the termination occurs
thereafter but prior to or on April 30, 2000, and one percent (1%) of
the Revolving Credit Limit if such termination occurs thereafter but
prior to or on April 30, 2001, and one-half of one percent (0.50%) of
the Revolving Credit Limit if such termination occurs at any time
thereafter but prior to the Revolving Credit Maturity Date, as well as
make full payment of all outstanding Obligations, in which case any and
all commitments of Lenders and Agent hereunder shall cease as of such
date of termination.
7. Section 2.6 of the Loan Agreement is hereby amended by
deleting Subsection (e) in its entirety and replacing it with the following:
<PAGE> 4
(e) Collateral Management Fee: So long as the Revolving Credit
is outstanding and has not been terminated pursuant to the terms
hereof, Borrower shall unconditionally pay to Agent, for its sole
benefit, a non-refundable audit and collateral management fee
("Collateral Management Fee") in an amount per month payable in
advance, based upon the ratio of Borrower's EBITDA to Interest Expense
as of the last day of the fiscal year then ended for which financial
statements have been delivered pursuant to Section 6.10(a)(i), as set
forth below:
<TABLE>
<CAPTION>
Ratio of EBITDA to Interest Expense Fee
----------------------------------- ---
<S> <C>
Less than 1.75:1 $6,000
Equal to or greater than 1.75:1 but less than 2.00:1 $5,000
Equal to or greater than 2.00:1 but less than 2.50:1 $4,000
Equal to or greater than 2.50:1 but less than 3.00:1 $4,000
Equal to or greater than 3.00:1 but less than 4.00:1 $3,000
Equal to or greater than 4.00:1 $3,000
</TABLE>
The above index shall be measured annually and shall be effective as of
the first day of the first full month after receipt of the Borrower's
Fiscal Year End audited financial statements for the fiscal year just
ended. The Collateral Management Fee shall be $6,000 per month if: (i)
Borrower fails to maintain a minimum excess availability of $1,000,000
for the ninety (90) day period immediately prior to the delivery of
Borrower's Fiscal Year End audited financial statements, or (ii) an
Event of Default has occurred, including, without limitation,
Borrower's failure to deliver financial statements within the time
period required by Section 6.10(a)(i).
8. Section 6.9 of the Loan Agreement is hereby deleted in its
entirety and replaced with the following:
6.9 Financial Covenants: Borrower shall maintain and
comply with the following financial covenants (calculated on the basis
of GAAP):
(a) Working Capital: Borrower shall have and maintain
Working Capital, measured quarterly at the end of each Fiscal Quarter,
of not less than: $7,000,000 as of Fiscal Quarter end December, 1998;
$7,000,000 as of Fiscal Quarter end March, 1999; $7,000,000 as of
Fiscal Quarter end June, 1999; $7,000,000 as of Fiscal Quarter end
September, 1999; $7,500,000 as of Fiscal Quarter end December, 1999 and
for each Fiscal Quarter end through Fiscal Quarter end September, 2000;
$8,000,000 as of Fiscal Quarter end December, 2000 and for each Fiscal
Quarter end through Fiscal Quarter end September, 2001; $8,500,000 as
of Fiscal Quarter end December, 2001 and for each Fiscal Quarter end
thereafter.
<PAGE> 5
(b) Tangible Net Worth: Borrower shall have and maintain
a Tangible Net Worth, on a consolidated basis, measured monthly at each
Fiscal Month End, of not less than:
<TABLE>
<CAPTION>
<S> <C>
$10,000,000 as of December, 1998 through May, 1999,
$11,000,000 as of June, 1999 through November, 1999,
$11,400,000 as of December, 1999 through November,
2000,
$11,800,000 as of December, 2000 through November,
2001,
$12,200,000 as of each Fiscal Month End thereafter.
</TABLE>
(c) Net Income: Borrower shall have and maintain a Net
Income, on a consolidated basis, measured annually, of not less than:
$0 as of the close of Fiscal Year End 1998; $400,000 as of the close of
Fiscal Year End 1999 and for each Fiscal Year End thereafter.
(d) Current Ratio: Borrower shall have and maintain a
Current Ratio, on a consolidated basis, measured monthly at each Fiscal
Month End, of not less than: 1.20:1 as of December, 1998 through
November, 2000; 1.25:1 as of December, 2000 through November, 2001; and
1.30:1 as of each Fiscal Month End thereafter.
(e) Debt to Tangible Net Worth: Borrower shall have and
maintain a Debt to Tangible Net Worth Ratio, on a consolidated basis,
measured quarterly at the end of each Fiscal Quarter, not to exceed:
2.50:1 as of Fiscal Quarter end December, 1998 and for each Fiscal
Quarter end thereafter.
(f) Capital Expenditure: Borrower shall not expend for
Capital Expenditures in excess of: $750,000 during the fiscal year
ending December, 1998; $1,250,000 during fiscal year ending December,
1999; and $1,000,000 during each fiscal year thereafter, determined on
a noncumulative basis.
(g) Inventory Turnover. Borrower shall have and maintain
an Inventory Turnover Period not to exceed 120 days during fiscal year
ending December, 1998, and each fiscal year thereafter.
9. Amendment Fee: Contemporaneously with the execution of this
Amendment, Borrower shall pay to Lender an amendment fee ("Amendment Fee") in
the amount of $10,000, which such Amendment Fee is fully earned and
nonrefundable as of such date.
<PAGE> 6
10. Conditions to Closing: Agent's and Lenders' obligation to
enter into this Amendment are subject to the following conditions having been
satisfied in full to Agent's and Lenders' satisfaction:
(a) Execution and delivery of this Amendment to Agent;
(b) Payment of Amendment Fee by Borrower to Lender;
(c) Delivery of a certification by the Chief Executive
Officer of Borrower that there has not occurred any material adverse change,
since February 28, 1999, in the operations and condition (financial or
otherwise) of Borrower;
(d) Delivery of such other documentation or documents as
Agent may reasonable require;
(e) No Event of Default shall have occurred under the
Loan Agreement and be continuing and no event shall have occurred which with the
passage of time, the giving of notice or both would constitute an Event of
Default under the Loan Agreement; and
(f) Payment or reimbursement to Agent for all legal
expenses incurred by Agent or Lenders to analyze, prepare and negotiate and
conclude this Amendment and all related agreements and transactions described
herein.
11. CONFIRMATION OF INDEBTEDNESS: Borrower hereby acknowledges and
confirms that as of the close of business on April 16, 1999, it is indebted to
Lenders under the Loan Documents, in the aggregate principal amount of twelve
million, five hundred eighty nine thousand, ninety six and 98/100 Dollars
($12,589,096.98), comprised of $12,339,096.98 outstanding with respect to the
Revolving Credit Loans and $250,000 representing the face value of issued and
outstanding Letters of Credit issued for the benefit of Borrower, plus all fees,
costs and expenses (including attorneys' fees) incurred to date in connection
with the Loan Documents, without defense, setoff, claim or counterclaim, of any
nature.
12. CONFIRMATION OF SECURITY INTEREST: Borrower hereby confirms
that all Collateral, liens, and security interests at any time granted by
Borrower to Agent for the benefit of Lenders, shall continue unimpaired and in
full force and effect and shall continue to cover and secure the Obligations of
Borrower to Lenders to the full extent set forth in the Loan Agreement, as
amended hereby. All Collateral remains free and clear of any Liens other than
Permitted Liens or Liens in favor of Agent for the benefit of Lenders. Nothing
herein contained is intended to in any way impair or limit the validity,
priority and extent of Agent's existing security interest in and Liens upon the
Collateral.
<PAGE> 7
13. REPRESENTATION AND WARRANTIES: Borrower represents and
warrants to Lender that:
(a) All warranties and representations made to Agent
and/or Lenders under the Loan Agreement are true and correct as of the date
hereof, except those warranties and representations made in Section 5.2 of the
Loan Agreement relating to those locations which have been closed;
(b) The execution and delivery by Borrower of this
Amendment and the performance by it of the transactions herein contemplated (i)
are and will be within its powers, (ii) have been authorized by all necessary
corporate or partnership action, and (iii) are not and will not be in
contravention of any order of any court or other agency of government, of law or
any other indenture, agreement or undertaking to which Borrower is a party or by
which the Property of Borrower is bound, or be in conflict with, result in a
breach of, or constitute (with due notice and/or lapse of time) a default under,
any such indenture, agreement or undertaking or result in the imposition of any
lien, charge or incumbrance of any nature on any Property of Borrower;
(c) This Amendment and any assignment, instrument,
document, or agreement executed and delivered in connection herewith, will be
valid, legal, binding and enforceable in accordance with the respect of terms;
and
(d) No Event of Default has occurred under the Loan
Agreement and that no event has occurred which with the passage of time, the
giving of notice or both would constitute an Event of Default under the Loan
Agreement.
14. INCORPORATION: The parties acknowledge and agree that this
Amendment is incorporated into and made a part of the Loan Agreement, the terms
and provisions of which, unless expressly modified herein, are hereby ratified
and confirmed and continue unchanged and in full force and effect. Any future
reference to the Loan Agreement shall mean the Loan Agreement as amended hereby.
To the extent that any term or provision of this Amendment is or may be deemed
expressly inconsistent with any term or provision of the Loan Agreement, the
terms and provisions hereof shall control. All other terms and provisions of the
Loan Agreement unless expressly modified herein shall remain in full force and
effect.
15. NO MODIFICATION: No modification hereof or of any agreement
referred to herein shall be binding or enforceable unless in writing and signed
on behalf of the party against whom enforcement is sought.
16. WAIVER: Nothing herein shall be construed to constitute a
waiver of any breach of any representation, warranty or covenant made or agreed
to by Borrower under the Loan Documents as amended hereby, and all of Agent's
and Lenders' claims and rights resulting from any such breach or
misrepresentation by Borrower, are expressly reserved by Agent and Lenders.
<PAGE> 8
17. GOVERNING LAW: This terms and provisions of this Amendment
shall be governed by, construed and enforced in accordance with the laws of the
Commonwealth of Pennsylvania.
18. COUNTERPARTS: This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
and such counterparts together shall constitute one and the same respective
agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this Amendment the
day and year first above written.
MELLON BANK, N.A., as Agent and Lender
By: /s/ Roger Attix
---------------------------------
Roger Attix
Vice President
L.A. T SPORTSWEAR, INC.
By: /s/ Isador Mitzner
---------------------------------
Name:Isador Mitzner
Title: C.E.O.
Attest: /s/ John Hankinson
---------------------------------
Name:John Hankinson
Title: C.F.O.
<PAGE> 1
EXHIBIT 10.40.6
FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
This Fifth Amendment ("Amendment") to Loan and Security Agreement,
dated as of July 28, 1999, among L.A. T SPORTSWEAR, INC. ("Borrower"), MELLON
BANK, N.A., as Agent ("Agent") and MELLON BANK, N.A. ("Mellon") and the
financial institutions now or hereafter a party to the Loan Agreement (as
defined below) and listed on Schedule "A" attached thereto and made a part
thereof (as such Schedule may be amended, modified or replaced from time to
time), in their capacity as lenders (Mellon and the other financial institutions
are individually referred to as "Lender" and collectively as "Lenders").
BACKGROUND
A. On or about April 29, 1996, the parties hereto entered into a
Loan and Security Agreement (as amended, supplemented, or modified from time to
time "Loan Agreement") and related agreements, instruments and documents,
pursuant to which Lenders established a Revolving Credit for the benefit of
Borrower. All capitalized terms used but not defined herein shall have the
meaning given to such term in the Loan Agreement.
B. Borrower and Lenders desire to modify certain terms and
conditions of the Loan Documents as more fully set forth herein.
TERMS AND CONDITIONS
NOW, THEREFORE, with the foregoing background hereinafter incorporated
by reference as if set forth more fully below, the parties hereto, intending to
be legally bound hereby, promise and agree as follows:
1. Section 1 of the Loan Agreement is hereby amended by deleting
the definition of Revolving Credit Limit in its entirety and replacing it with
the following:
Revolving Credit Limit - $17,000,000.
2. Conditions to Closing: Agent's and Lenders' obligation to
enter into this Amendment are subject to the following conditions having been
satisfied in full to Agent's and Lenders' satisfaction:
(a) Execution and delivery of this Amendment to Agent;
(b) Delivery of a certification by the Chief Executive
Officer of Borrower that there has not occurred any material adverse change,
since April 20, 1999, in the operations and condition (financial or otherwise)
of Borrower;
<PAGE> 2
(c) Delivery of such other documentation or documents as
Agent may reasonable require;
(d) No Event of Default shall have occurred under the
Loan Agreement and be continuing and no event shall have occurred which with the
passage of time, the giving of notice or both would constitute an Event of
Default under the Loan Agreement; and
(e) Payment or reimbursement to Agent for all expenses
incurred by Agent or Lenders to analyze, prepare and negotiate and conclude this
Amendment and all related agreements and transactions described herein
(including, without limitation, attorneys' fees and costs).
3. CONFIRMATION OF INDEBTEDNESS: Borrower hereby acknowledges and
confirms that as of the close of business on July 28, 1999, it is indebted to
Lenders under the Loan Documents, in the aggregate principal amount of Thirteen
million, six hundred fifty-five thousand, eight hundred twenty nine and 45/100
Dollars ($13,655,829.45), comprised of $13,297,996.94 outstanding with respect
to the Revolving Credit Loans and $357,832.51 representing the face value of
issued and outstanding Letters of Credit issued for the benefit of Borrower,
plus all fees, costs and expenses (including attorneys' fees) incurred to date
in connection with the Loan Documents, without defense, setoff, claim or
counterclaim, of any nature.
4. CONFIRMATION OF SECURITY INTEREST: Borrower hereby confirms
that all Collateral, liens, and security interests at any time granted by
Borrower to Agent for the benefit of Lenders, shall continue unimpaired and in
full force and effect and shall continue to cover and secure the Obligations of
Borrower to Lenders to the full extent set forth in the Loan Agreement, as
amended hereby. All Collateral remains free and clear of any Liens other than
Permitted Liens or Liens in favor of Agent for the benefit of Lenders. Nothing
herein contained is intended to in any way impair or limit the validity,
priority and extent of Agent's existing security interest in and Liens upon the
Collateral.
5. REPRESENTATION AND WARRANTIES: Borrower represents and
warrants to Lender that:
(a) All warranties and representations made to Agent
and/or Lenders under the Loan Agreement are true and correct as of the date
hereof, except those warranties and representations made in Section 5.2 of the
Loan Agreement relating to those locations which have been closed;
(b) The execution and delivery by Borrower of this
Amendment and the performance by it of the transactions herein contemplated (i)
are and will be within its powers, (ii) have been authorized by all necessary
corporate or partnership action, and (iii) are not and will not be in
contravention of any order of any court or other agency of government, of law or
any other indenture, agreement or undertaking to which Borrower is a party or by
which the Property of Borrower is bound, or be in conflict with, result in a
breach of, or constitute (with due notice and/or lapse of time) a default under,
any such indenture, agreement or undertaking or result in the imposition of any
lien, charge or incumbrance of any nature on any Property of Borrower;
<PAGE> 3
(c) This Amendment and any assignment, instrument,
document, or agreement executed and delivered in connection herewith, will be
valid, legal, binding and enforceable in accordance with the respect of terms;
and
(d) No Event of Default has occurred under the Loan
Agreement and that no event has occurred which with the passage of time, the
giving of notice or both would constitute an Event of Default under the Loan
Agreement.
6. INCORPORATION: The parties acknowledge and agree that this
Amendment is incorporated into and made a part of the Loan Agreement, the terms
and provisions of which, unless expressly modified herein, are hereby ratified
and confirmed and continue unchanged and in full force and effect. Any future
reference to the Loan Agreement shall mean the Loan Agreement as amended hereby.
To the extent that any term or provision of this Amendment is or may be deemed
expressly inconsistent with any term or provision of the Loan Agreement, the
terms and provisions hereof shall control. All other terms and provisions of the
Loan Agreement unless expressly modified herein shall remain in full force and
effect.
7. NO MODIFICATION: No modification hereof or of any agreement
referred to herein shall be binding or enforceable unless in writing and signed
on behalf of the party against whom enforcement is sought.
8. WAIVER: Nothing herein shall be construed to constitute a
waiver of any breach of any representation, warranty or covenant made or agreed
to by Borrower under the Loan Documents as amended hereby, and all of Agent's
and Lenders' claims and rights resulting from any such breach or
misrepresentation by Borrower, are expressly reserved by Agent and Lenders.
9. GOVERNING LAW: This terms and provisions of this Amendment
shall be governed by, construed and enforced in accordance with the laws of the
Commonwealth of Pennsylvania.
10. COUNTERPARTS: This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
and such counterparts together shall constitute one and the same respective
agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have executed this Amendment the
date first above written.
MELLON BANK, N.A., as Agent and Lender
By: /s/ Roger Attix
---------------------------------
Roger Attix
Vice President
L.A. T SPORTSWEAR, INC.
By: /s/ Isador Mitzner
---------------------------------
Name: Isador Mitzner
Title: C.F.O.
Attest: /s/ John Hankinson
-------------------------------
Name: John Hankinson
Title: C.F.O.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF L.A.T. SPORTSWEAR, INC. FOR THE NINE MONTHS ENDED
OCTOBER 2, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-01-2000
<PERIOD-START> JAN-03-1999
<PERIOD-END> OCT-02-1999
<CASH> 1,032
<SECURITIES> 0
<RECEIVABLES> 12,416
<ALLOWANCES> 1,386
<INVENTORY> 23,894
<CURRENT-ASSETS> 36,314
<PP&E> 7,953
<DEPRECIATION> 4,031
<TOTAL-ASSETS> 40,369
<CURRENT-LIABILITIES> 11,869
<BONDS> 15,826
0
0
<COMMON> 10,825
<OTHER-SE> 1,726
<TOTAL-LIABILITY-AND-EQUITY> 40,369
<SALES> 73,720
<TOTAL-REVENUES> 73,720
<CGS> 61,710
<TOTAL-COSTS> 61,710
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 156
<INTEREST-EXPENSE> 759
<INCOME-PRETAX> 1,709
<INCOME-TAX> 602
<INCOME-CONTINUING> 1,107
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,107
<EPS-BASIC> .26
<EPS-DILUTED> .26
</TABLE>
