<PAGE> 1
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-5869-1
SUPERIOR SURGICAL MFG. CO., INC.
Incorporated - New York I.R.S. Employer Identification
No. 11-1385670
10099 Seminole Blvd.
Seminole, Florida 34642
Telephone (813) 397-9611
Securities registered pursuant to Section 12 (b) of the Act:
Common Shares with a par value Listed on
of $1.00 each American Stock Exchange
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
----
As of March 22, 1996, 8,133,552 common shares were outstanding, and the
aggregate market value of the registrant's common shares held by non-affiliates
was approximately $53.2 million (based on the closing price of the
registrant's common shares on the American Stock Exchange on said date).
Documents Incorporated by Reference:
Registrant's Proxy Statement to be filed on or before March 30, 1996, for
its Annual Meeting of Shareholders to be held May 3, 1996, is incorporated by
reference to furnish the information required by Items 10, 11, 12 and 13 of
Part III.
Exhibit index may be found on Page 22.
Page 1 of 95
<PAGE> 2
PART I
Item 1. Business
(a) Superior Surgical Mfg. Co., Inc. ("registrant" or the "Company") was
organized as a New York corporation in 1920. Registrant's
business has not changed in any significant way during the past
five years.
(b) Although registrant operates, for selling, promotional and other
reasons through various divisions, nevertheless there are no
distinct segments or lines of business; registrant's entire
business consists of the sale of uniforms and service apparel,
and miscellaneous products directly related thereto.
(c) Registrant manufactures and sells a wide range of apparel and
accessories for the medical and health fields as well as for
the industrial, commercial, leisure, and public safety markets.
Its principal products are:
1. Uniforms and service apparel for personnel of:
A) Hospitals and health facilities;
B) Hotels, commercial buildings, residential
buildings, and food service facilities;
C) General and special purpose industrial uses;
D) Commercial enterprises (career apparel for banks,
airlines, etc.);
E) Public and private safety and security
organizations;
F) Miscellaneous service uses.
2. Miscellaneous products directly related to:
A) Uniforms and service apparel specified
above (e.g. operating room masks, boots, and
sheets);
B) Linen suppliers and industrial launderers,
to whom a substantial portion of the registrant's
uniforms and service apparel are sold; such
products being primarily industrial laundry bags.
Uniforms and service apparel account for 90-95% of total sales
and revenues; no single class of product listed above as a
miscellaneous product of the registrant accounts for more than 10% of
total sales and revenues.
Registrant competes with national and regional manufacturers and
also with local firms in most major metropolitan areas. Industry
statistics are not available, but the registrant believes that it is
one of the leading suppliers of garments to hospitals and industrial
clean rooms, hotels and motels, food service establishments and
uniforms to linen suppliers. Registrant experiences competition
primarily in the areas of product development, styling and pricing.
Registrant competes with more than three dozen firms including
divisions of larger corporations. The nature and degree of
competition varies with the customer and market where it occurs.
I-1 Page 2 of 95
<PAGE> 3
Registrant has a substantial number of customers, the
largest of which accounted for no more than 4% of registrant's
1995 sales. Although registrant at all times has a
substantial backlog of orders, registrant does not consider
this significant since its backlog of orders at any time
consists primarily of recurrent firm orders being processed
and filled. Registrant normally completes shipments of orders
from stock between 1 and 2 weeks after their receipt. As of
February 29, 1996, the backlog of all orders was approximately
$7,300,000, compared to approximately $9,300,000 a year
earlier.
Registrant markets itself to its customers as a "stock
house". Therefore, registrant at all times carries
substantial inventories of raw materials (principally piece
goods) and finished garments which requires substantial
working capital. Registrant's principal raw materials are
textile products, generally available from a number of
sources.
While registrant owns and uses several trademarks, its
mark "Fashion Seal Uniforms" (presently registered to August
7, 2007, subject to renewal) is important since more than 50%
of registrant's products are sold under that name. In view of
the nature of registrant's business, compliance with Federal,
state, or local laws regulating the discharge of materials
into the environment, or otherwise relating to the protection
of the environment, has had no material effect upon its
operations or earnings. Substantially all of registrant's
business is non-seasonal in nature. The registrant has
approximately 1,900 employees.
Item 2. Properties
The Company has an ongoing program designed to maintain and improve its
facilities. Generally, all Properties are in satisfactory condition. The
Company's Properties are currently fully utilized (except as otherwise noted),
and have aggregate productive capacity to meet registrant's present needs as
well as those of the foreseeable future. The material manufacturing locales
are rented for nominal amounts due to cities providing incentives for
manufacturers to locate in their area - all such properties may be purchased
for nominal amounts. As a result, it is believed that the subject lease
expirations and renewal terms thereof are not material.
(a) Seminole, Florida - Plant of approximately 60,000 square feet owned
by the registrant; used as principal administrative
office and for warehousing and shipping, as well as the
corporate design center.
(b) Eudora, Arkansas - Plant of approximately 217,000 square feet,
partially leased from the City of Eudora under lease
requiring payment of only a nominal rental; used for
manufacturing, warehousing, and shipping.
(c) Leesburg, Georgia - Plant of approximately 85,000 square feet, leased
from Development Authority of Leesburg, Georgia under
lease requiring payment of only a nominal rental; used for
manufacturing, warehousing, and shipping.
(d) Lake Village, Arkansas - Plant of approximately 35,000 square feet,
leased the City of Lake Village under lease requiring
payment of only a nominal amount; used for manufacturing.
(e) Tampa, Florida - Plant of approximately 111,000 square feet, owned
by the registrant; used for regional administrative
offices, warehousing, shipping, and small retail operation.
(f) Miami, Florida - Plant of approximately 9,000 square feet, leased
from private owners under a lease expiring in 1997;
used for regional sales office, warehousing, shipping, and
small retail operation.
I-2 Page 3 of 95
<PAGE> 4
(g) McGehee, Arkansas - Plant of approximately 26,000 square feet, leased from
the City of McGehee under lease requiring payment of only a nominal
rental; used for manufacturing.
(h) Memphis, Tennessee - Plant of approximately 4,000 under lease expiring
2002; used for warehousing, square feet, leased from private owners
shipping and retail sales.
(i) Miscellaneous -
New Orleans, Louisiana, sales office - leased; Burbank,
California, sales office - leased; Las Vegas, Nevada,
warehouse and sales office - leased; Atlanta, Georgia,
warehouse and sales office - leased; San Antonio, Texas, sales
office - leased; Yazoo City, Mississippi, used for
manufacturing - leased; Hamburg, Arkansas, used for
manufacturing - owned; Delhi, Louisiana, used for
manufacturing - leased; Lexington, Mississippi, used for
manufacturing - owned; Tallulah, Louisiana, used for
manufacturing - leased; Pine Bluff, Arkansas, used for
manufacturing - owned.
Item 3. Legal Proceedings
As previously reported, the Company has been a target of a federal
criminal investigation relating to a previously reported dispute involving
alleged false statements and false claims purportedly made in connection with
contracts ostensibly awarded by the U. S. Department of Veterans Affairs. The
investigation has also evaluated actions by agents of the Company in connection
with the matter, including those of Gerald M. Benstock, a Director of the
Company. A former vice president of the Company has entered into a plea
agreement with federal authorities in connection with this matter; the specific
terms and conditions of which are not known to the Company. Federal
authorities have also conducted a civil investigation of the Company relating
to these matters. The dispute does not involve the integrity of the Company's
products.
The Company has reached tentative agreements with the Department of
Justice and the United States Attorney's Office in Tampa, Florida, to resolve
these previously announced disputes. The tentative agreements are subject to
additional approvals within the government and by the court. If finalized, the
agreements will resolve the disputes and criminal and civil investigations of
the Company arising from the VA contracts. The agreements provide for a
$6,200,000 payment to settle civil and contractual disputes and a $300,000 fine
coupled with a guilty plea by the Company for one count for a violation of the
Federal False Statements Act. The Company is not certain whether or not a
previously terminated officer will be charged in connection with the matter.
However, upon finalization of the agreements, the investigations are expected
to be concluded with none of the Company's existing officers or directors being
charged. The Company is in active discussions with the Department of Veterans
Affairs (formerly the Veterans Administration) with regard to the Company's
ability to receive future Federal contracts and other benefits. Management
expects that no restrictions will be placed on the Company upon finalization of
the agreements and resulting plea. The Company charged $4,250,000, or
approximately $.51 per share against its earnings in the fourth quarter of 1995
in anticipation of the dispute settlement. Management is not aware of any
additional charges that may result should a finalization of the settlement
occur.
While there can be no assurances, the Company believes the settlement will
be finalized. Should settlement not occur, the Company will vigorously assert
specific defenses in the matter. However, in such event, the Company is unable
to estimate the outcome or the potential effect on the Company.
Additionally, in the event the settlement is not effected and the Company
is indicted or convicted on criminal charges, or if significant civil damages
are pursued, certain collateral consequences would be likely to result, such as
suspension or debarment from the award of future federal government contracts.
The Company believes that a suspension or debarment in connection with federal
government contracts would not have a material adverse effect on the Company;
however, such action may also impede the Company's ability to receive certain
contracts awarded under various federal grant and other non-procurement
programs. The precise impact of any potential exclusion under various federal
grant and other non-procurement programs is not clear.
I-3 Page 4 of 95
<PAGE> 5
Item 4. Submission of Matters to a Vote of Security Holders
(a) None
PART II
Item 5. Market Price of and Dividends on Registrant's Common Equity and
Related Stockholder Matters.
The principal market on which registrant's common shares are
traded is the American Stock Exchange; said shares have also
been admitted to unlisted trading on the Midwest Stock Exchange.
The table below presents, for registrant's common shares,
dividend information and high and low sales prices as reported
in the consolidated transaction reporting system of the
American Stock Exchange.
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------------------------------
1995 1994
------------------------------------------ -----------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31
Common Shares: ------- ------- -------- ------- ------- ------- -------- -------
High $14-3/4 $13 $11 $10-3/8 $16 $14-1/2 $15-1/8 $15-1/8
Low $10-3/4 $10-3/4 $9-1/2 $ 8-3/4 $13-5/8 $12-3/8 $11-3/4 $12-3/8
Dividends (total
for 1995-$.36;
1994-$.32) $ .09 $ .09 $ .09 $ .09 $ .08 $ .08 $ .08 $ .08
</TABLE>
Long-term debt agreements of the registrant include covenants which, among
other things, restrict dividends payable. Under the most restrictive debt
agreement, retained earnings of approximately $9,630,000 were available at
December 31, 1995 for declaration of dividends. Registrant expects that, so
long as earnings and business conditions warrant, it will continue to pay
dividends and that the amount thereof, as such conditions permit, and as the
Directors approve, will increase from time to time.
On March 22, 1996, registrant had 567 shareholders of record and the
closing price for registrant's common shares on the American Stock Exchange was
$10 per share.
I-4, II-1 Page 5 of 95
<PAGE> 6
Item 6.
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Years Ended December 31, 1995 1994 1993 1992 1991
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales ........................ $135,197,798 $135,067,397 $130,126,690 $128,665,516 $117,502,780
------------ ------------ ------------ ------------ ------------
Costs and expenses:
Cost of goods sold ............ $ 91,169,728 $ 89,308,729 $ 87,280,624 $ 85,250,260 $ 78,059,449
Selling and administrative
expenses .................... 30,162,203 28,537,946 27,835,521 26,964,446 25,779,480
Provision for dispute
settlement .................. 4,250,000 -- 2,250,000 --
Interest expense - net ........ 968,830 959,715 641,669 586,628 823,623
------------ ------------ ------------ ------------ ------------
$126,550,761 $118,806,390 $118,007,814 $112,801,334 $104,662,552
------------ ------------ ------------ ------------ ------------
Earnings before taxes on
income ......................... $ 8,647,037 $ 16,261,007 $ 12,118,876 $ 15,864,182 $ 12,840,228
Taxes on income .................. 4,885,000 6,180,000 4,415,000 5,950,000 4,815,000
------------ ------------ ------------ ------------ ------------
Net earnings ..................... $ 3,762,037 $ 10,081,007 $ 7,703,876 $ 9,914,182 $ 8,025,228
------------ ------------ ------------ ------------ ------------
Net earnings per common
share .......................... $ .45 $ 1.17 $ .89 $ 1.15 $ .94
============ ============ ============ ============ ============
Cash dividends per common
share .......................... $ .36 $ .32 $ .28 $ .25 $ .22
============ ============ ============ ============ ============
At year end:
Total assets .................. $106,133,637 $104,864,385 $ 87,168,003 $ 80,585,153 $ 74,470,776
------------ ------------ ------------ ------------ ------------
Long-term debt ................ $ 18,000,000 $ 18,600,000 $ 4,200,000 $ 4,955,000 $ 7,110,385
------------ ------------ ------------ ------------ ------------
Working capital ............... $ 55,081,842 $ 64,295,804 $ 53,096,945 $ 51,353,415 $ 47,873,560
------------ ------------ ------------ ------------ ------------
Shareholders' equity .......... $ 69,517,878 $ 70,937,920 $ 68,568,495 $ 63,082,410 $ 54,659,128
------------ ------------ ------------ ------------ ------------
=============================================================================================================
</TABLE>
Item 7.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
OPERATIONS: Net sales for 1993 increased by 1% over 1992, due to the
continuation of new uniform programs (the Company manufactures and sells a wide
range of uniforms, career apparel and accessories for the hospital and
healthcare fields; hotels; fast food and other restaurants; and public safety,
industrial, transportation and commercial markets) and new customers for
non-health care products offset by the uncertain and sluggish healthcare market
which negatively affected those sales in 1993. Sales increased by 4% in 1994
over 1993 due to increased demand, resulting principally from a continuation of
those factors increasing sales in 1993. Sales in 1995 were essentially the same
as those in 1994, which the Company believes were primarily due to general
business conditions in the market in which the Company sold in 1995.
As a percent of sales, cost of goods sold were 67.4% in 1995, 66.1% in 1994 and
67.1% in 1993. The increases in 1993 and 1995 were due to increased costs and
the inability to raise sales prices sufficiently to cover increased costs.
Selling and administrative expenses increased by 6% in 1995 and by 3% in each
of 1994 and 1993. The increases were attributable to increases in costs. As a
percentage of sales, selling and administrative expenses have not changed
significantly over the past several years and no material change is expected in
1996.
The total of the provision for dispute settlement in the amount of $2,250,000
in 1993 and $4,250,000 in 1995 represent the sum of the payment to be made
under tentative agreements with the Department of Justice and the United States
Attorney's Office in Tampa, Florida to resolve the previously-announced dispute
with the federal government arising out of certain contractual relations. (See
Note 11 of Notes to Financial Statements.)
Interest expense as a percentage of sales was 0.7% in 1995 and 1994; it was
0.5% in 1993. The reduction in 1993 as a percentage of sales was principally
due to reduced borrowings by the Company.
The effective income tax rate in 1995 was 56.5%; in 1994, it was 38.0% and in
1993, it was 36.4%. Included in the 1995 calculations is the non-deductible
portion of the dispute charge. The effective tax rate for 1995 with-
II-2 Page 6 of 95
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (cont'd)
out this charge would have been 37.9%. Included in the income tax provision for
1993 is the effect of recalculating the effective income tax rate for 1993,
based on the Revenue Reconciliation Act of 1993, which raised corporate income
tax rates retroactive to January 1, 1993. Also included is the adjustment to
the deferred income tax provision necessary to comply with the Financial
Accounting Standards Board Statement No. 109 (FAS No. 109), requiring deferred
tax calculations on the liability method. The aggregate effect of these changes
was to decrease the income tax provision and increase net earnings for 1993 by
approximately $.02 per share.
In 1995, the Company showed net income (after taxes) of 2.8% of sales, with a
return of 5.4% on average equity; for 1994, net income was 7.5% of sales, with
a return of 14.5% on average equity, while for 1993, the corresponding figures
were 5.9% and 11.7%.
LIQUIDITY AND CAPITAL RESOURCES: The Company uses a number of standards for its
own purposes in measuring its liquidity: working capital, profitability ratios;
long-term debt as a percentage of long-term debt and equity, and activity
ratios. In its computations, as in this report, all inventory figures are on a
FIFO basis.
The working capital of the Company in 1995 was $55,081,842 and the working
capital ratio 4.2:1; for 1994, it was $64,295,804 and the ratio 6.3:1; while
for 1993, the figures were $53,096,945 and 5.8:1. The Company has operated
without hindrance or restraint with its present working capital, believing that
income generated from operations and outside sources of credit, both trade and
institutional, are more than adequate.
In 1995, the Company's percentage of long-term debt to long-term debt and
equity was 20.6%; in 1994, it was 20.8% and in 1993, it was 5.8%.
The Company has an on-going capital expenditure program designed to maintain
and improve its facilities. Capital expenditures were approximately $9,750,000,
$9,100,000 and $6,800,000 in the years 1995, 1994 and 1993, respectively.
Projected capital expenditures for 1996, while different from those of the last
several years, are expected to be lower in 1996 than in 1995 or 1994. The
Company at all times evaluates its capital expenditure programs in light of
prevailing economic conditions.
In 1993, the Company's cash and certificates of deposit balance increased by
approximately $400,000 due to a decelerating rate of increase in accounts
receivable and inventories compared to 1992, increases in depreciation, offset
by a decrease in net earnings and increases in capital expenditures. In 1994,
the Company's cash and certificates of deposit balance increased by
approximately $8,200,000, principally due to new borrowings in the amount of
$15,000,000 offset by the repurchase of 550,000 shares of its common stock for
an aggregate consideration of $6,765,000. In 1995, the Company's cash and
certificates of deposit balance decreased by approximately $5,800,000,
principally due to capital expenditures, expenditures in financing activities
(dividends and repurchase of 230,000 shares of its common stock) offset by cash
flows from operating activities.
As of December 31, 1995, under its existing revolving credit agreement, the
Company had $9,000,000 available to it. In addition, under the most restrictive
terms of its agreements with its lenders, the Company could avail itself of
$6,000,000 in short-term credit (see Note 4 of Notes to Financial Statements).
The revolving credit agreement and the agreements with Massachusetts Mutual
Life Insurance Company contain restrictive provisions concerning minimum
working capital ($20,000,000), debt to net worth ratios, other borrowing,
capital expenditures, rental commitments, tangible net worth ($55,000,000),
working capital ratio (2.5:1) and payment of dividends. On December 31, 1995,
under the most restrictive terms of the debt agreements, retained earnings of
approximately $9,630,000 were available for declaration of dividends. The
Company is in full compliance with all terms, conditions and covenants of the
various credit agreements. On January 31, 1996, the Company entered into a
7-year Credit Agreement, which made available to the Company up to $10,000,000
for 4 years on a revolving credit basis and thereafter for 3 years as a term
loan with installment repayments of principal. The new credit agreement, which
replaces the agreement entered into December 1, 1990, is written with
substantially the same terms and conditions as the terminated agreement. With
funds from such credit facility, anticipated cash flows generated from
operations and other available credit sources readily available, the Company
believes for the foreseeable future that its liquidity is satisfactory, its
working capital adequate and its capital resources sufficient for funding its
ongoing capital expenditure program and its operations, including planned
expansion.
Page 7 of 95
II-3
<PAGE> 8
Item 8 - Financial Statements and Supplementary Data
SUPERIOR SURGICAL MFG. CO., INC.
Statements of Earnings
Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Net sales .......................................... $135,197,798 $135,067,397 $130,126,690
------------ ------------ ------------
Costs and expenses:
Cost of goods sold .............................. $ 91,169,728 $ 89,308,729 $ 87,280,624
Selling and administrative expenses ............. 30,162,203 28,537,946 27,835,521
Provision for dispute settlement ................ 4,250,000 -- 2,250,000
Interest expense - net .......................... 968,830 959,715 641,669
------------ ------------ ------------
$126,550,761 $118,806,390 $118,007,814
------------ ------------ ------------
Earnings before taxes on income .................... $ 8,647,037 $ 16,261,007 $ 12,118,876
Taxes on income .................................... 4,885,000 6,180,000 4,415,000
------------ ------------ ------------
Net earnings ....................................... $ 3,762,037 $ 10,081,007 $ 7,703,876
============ ============ ============
Net earnings per common share ...................... $ .45 $ 1.17 $ .89
============ ============ ============
Dividends per common share ......................... $ .36 $ .32 $ .28
============ ============ ============
- -------------------------------------------------------------------------------------------------
</TABLE>
Statements of Shareholders' Equity
Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
Additional Total
Common Paid-In Retained Shareholders'
Shares Capital Earnings Equity
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Balance, January 1, 1993 ........................... $ 8,678,352 $ 115,138 $ 54,288,920 $ 63,082,410
Net earnings .................................... 7,703,876 7,703,876
Common shares issued upon exercise
of options ...................................... 24,900 191,456 216,356
Cash dividends declared ($.28 per share) ........ (2,434,147) (2,434,147)
------------ ------------ ------------ ------------
Balance, December 31, 1993 ......................... $ 8,703,252 $ 306,594 $ 59,558,649 $ 68,568,495
Net earnings .................................... 10,081,007 10,081,007
Common shares issued upon exercise
of options ...................................... 210,300 1,604,894 1,815,194
Purchase and retirement of common shares ........ (550,000) (109,817) (6,105,183) (6,765,000)
Cash dividends declared ($.32 per share) ........ (2,761,776) (2,761,776)
------------ ------------ ------------ ------------
Balance, December 31, 1994 ......................... $ 8,363,552 $ 1,801,671 $ 60,772,697 $ 70,937,920
Net earnings .................................... 3,762,037 3,762,037
Purchase and retirement of common shares ........ (230,000) (49,541) (1,912,359) (2,191,900)
Cash dividends declared ($.36 per share) ........ (2,990,179) (2,990,179)
------------ ------------ ------------ ------------
Balance, December 31, 1995 ......................... $ 8,133,552 $ 1,752,130 $ 59,632,196 $ 69,517,878
============ ============ ============ ============
</TABLE>
See Notes to Financial Statements.
11-4 Page 8 of 95
<PAGE> 9
SUPERIOR SURGICAL MFG. CO., INC.
Balance Sheets
December 31, 1995 and 1994
ASSETS
CURRENT ASSETS
<TABLE>
<CAPTION>
1995 1994
------------- ------------
<S> <C> <C>
Cash and certificates of deposit ......................................................... $ 5,421,553 $ 11,233,700
Accounts receivable, less allowance for doubtful accounts of $250,000 .................... 24,783,217 23,356,474
Inventories .............................................................................. 41,089,948 40,991,963
Prepaid expenses and other current assets ................................................ 1,092,883 875,132
------------ ------------
TOTAL CURRENT ASSETS ................................................................... $ 72,387,601 $ 76,457,269
PROPERTY, PLANT AND EQUIPMENT ............................................................... 30,734,584 26,234,749
EXCESS OF COST OVER FAIR VALUE OF ASSETS ACQUIRED ........................................... 822,926 827,577
OTHER ASSETS ................................................................................ 2,188,526 1,344,790
------------ ------------
$106,133,637 $104,864,385
============ ============
</TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
Accounts payable ........................................................................ $ 6,630,608 $ 7,471,452
Accrued expenses ........................................................................ 3,061,018 3,126,813
Liability for dispute settlement ........................................................ 6,500,000 -
Taxes on income ......................................................................... 514,133 963,200
Current portion of long-term debt ....................................................... 600,000 600,000
------------ ------------
TOTAL CURRENT LIABILITIES .............................................................. $ 17,305,759 $ 12,161,465
LONG-TERM DEBT .............................................................................. 18,000,000 18,600,000
LIABILITY FOR DISPUTE SETTLEMENT ............................................................ - 2,250,000
DEFERRED INCOME TAXES ....................................................................... 1,310,000 915,000
SHAREHOLDERS' EQUITY:
Preferred stock, $1 par value - authorized 300,000 shares (none issued) ................. $ - $ -
Common stock, $1 par value - authorized 50,000,000 shares, issued and
outstanding 8,133,552 and 8,363,552, respectively ...................................... 8,133,552 8,363,552
Additional paid-in capital .............................................................. 1,752,130 1,801,671
Retained earnings ....................................................................... 59,632,196 60,772,697
------------ ------------
TOTAL SHAREHOLDERS' EQUITY ............................................................. $ 69,517,878 $ 70,937,920
------------ ------------
$106,133,637 $104,864,385
============ ============
</TABLE>
See Notes to Financial Statements.
II-5 Page 9 of 95
<PAGE> 10
SUPERIOR SURGICAL MFG. CO., INC.
Statements of Cash Flows
Years Ended December 31, 1995, 1994, and 1993
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net earnings ........................................................... $ 3,762,037 $ 10,081,007 $ 7,703,876
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization ...................................... 3,748,341 2,864,847 2,503,726
Liability for dispute settlement ................................... 4,250,000 - 2,250,000
Deferred income taxes .............................................. 395,000 (130,000) (625,000)
Changes in assets and liabilities:
Accounts receivable .............................................. (1,426,743) (2,506,295) (532,998)
Inventories ...................................................... (97,985) (1,358,970) (773,143)
Prepaid expenses and other current assets ........................ (217,751) (186,864) (257,826)
Accounts payable ................................................. (840,844) 331,988 567,010
Accrued expenses ................................................. (65,795) 531,854 37,890
Taxes on income .................................................. (449,067) 348,115 (173,135)
------------ ------------ ------------
Net cash flows provided from operating activities ...................... $ 9,057,193 $ 9,975,682 $ 10,700,400
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment ............................. $ (9,745,755) $ (9,109,599) $ (6,808,039)
Carrying amount of property, plant and equipment disposals ............. 1,502,230 887,499 82,944
Other assets ........................................................... (843,736) (83,313) (391,186)
------------ ------------ ------------
Net cash (used) in investing activities ................................ $ (9,087,261) $ (8,305,413) $ (7,116,281)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in long-term debt ............................................. $ - $ 15,000,000 $ 3,500,000
Reduction in long-term debt ............................................ (600,000) (755,000) (4,460,000)
Declaration of cash dividends .......................................... (2,990,179) (2,761,776) (2,434,147)
Proceeds received on exercise of stock options ......................... - 1,815,194 216,356
Common stock reacquired and retired .................................... (2,191,900) (6,765,000) -
------------ ------------ ------------
Net cash (used) provided in financing activities ....................... $ (5,782,079) $ 6,533,418 $ (3,177,791)
------------ ------------ ------------
Net (decrease) increase in cash and certificates of deposit .......... $ (5,812,147) $ 8,203,687 $ 406,328
Cash and certificates of deposit balance, beginning of year ............... 11,233,700 3,030,013 2,623,685
------------ ------------ ------------
Cash and certificates of deposit balance, end of year ..................... $ 5,421,553 $ 11,233,700 $ 3,030,013
============ ============ ============
</TABLE>
See Notes to Financial Statements.
II-6 Page 10 of 95
<PAGE> 11
SUPERIOR SURGICAL MFG. CO., INC.
Notes to Financial Statements
Years Ended December 31, 1995, 1994 and 1993
NOTE 1 - Summary of Significant Accounting Policies:
a) Business description
The Company manufactures and sells a wide range of apparel and accessories for
the medical and health fields as well as for the industrial, leisure and public
safety markets. Revenue recognition from the sale of products is recorded at
the time the finished goods are shipped.
b) Inventories
Inventories are stated at the lower of cost (first-in, first-out method) or
market.
c) Property, plant and equipment
Property, plant and equipment are stated at cost. Major renewals and
improvements are capitalized, while replacements, maintenance and repairs which
do not improve or extend the life of the respective assets are expensed
currently. Costs of assets sold or retired and the related accumulated
depreciation and amortization are eliminated from accounts and the net gain or
loss is reflected in the statement of earnings.
d) Excess of cost over fair value of assets acquired
Excess costs over fair value of assets acquired arising prior to 1972
(approximately $742,000) are being carried until such time as there may be
evidence of diminution of value or the term of existence of such value becomes
limited. The Company's policy is to amortize excess costs arising subsequent to
1971 between 20 and 40 years.
e) Depreciation and amortization
Plants and equipment are depreciated on the straight-line basis at 2-1/2% to 5%
for buildings, 2-1/2% to 20% for improvements, 10% to 20% for machinery,
equipment and fixtures and 20% to 33-1/3% for transportation equipment.
Leasehold improvements are amortized over the terms of the leases inasmuch as
such improvements have useful lives equivalent to the terms of the respective
leases.
f) Employee benefits
Pension plan costs are funded currently based on actuarial estimates, with
prior service costs amortized over 20 years. The Company has no post-retirement
benefit plans other than pensions.
g) Taxes on income
The Company computes taxes currently payable upon determination of taxable
income which differs from pre-tax financial statement income. Deferred taxes are
provided on this difference, primarily the effect of computing depreciation of
plant and equipment by accelerated methods for tax purposes and by the
straight-line method for financial reporting purposes. Included in the income
tax provision for 1993 is the effect of recalculating the effective income tax
rate for 1993, based on the Revenue Reconciliation Act of 1993, which raised
corporate income taxes retroactive to January 1, 1993. Also included is the
adjustment to the deferred income tax provision necessary to comply with
Financial Accounting Standards Board Statement No. 109 (FAS No. 109), requiring
deferred tax calculations on the liability method. The aggregate effect of these
changes was to decrease the income tax provision and increase net earnings for
1993 by approximately $.02 per share.
- --------------------------------------------------------------------------------
NOTE 2 - Inventories:
<TABLE>
<CAPTION>
December 31,
-------------------------
1995 1994
----------- -----------
<S> <C> <C>
Finished goods ...................................... $24,783,647 $23,887,026
Work in process ..................................... 3,515,698 4,306,872
Raw materials ....................................... 12,790,603 12,798,065
----------- -----------
$41,089,948 $40,991,963
=========== ===========
</TABLE>
The opening inventory used in computing cost of goods sold for 1994 was
$39,632,993. General and administrative costs capitalized to inventories are
not material.
- --------------------------------------------------------------------------------
NOTE 3 - Property, Plant and Equipment:
<TABLE>
<CAPTION>
December 31,
-------------------------
1995 1994
----------- -----------
<S> <C> <C>
Land ............................................... $ 2,101,351 $ 1,102,886
Buildings, improvements and leaseholds ............. 10,611,343 12,408,158
Machinery, equipment and fixtures .................. 38,292,834 32,487,680
----------- -----------
$51,005,528 $45,998,724
Accumulated depreciation and amortization........... 20,270,944 19,763,975
----------- -----------
$30,734,584 $26,234,749
=========== ===========
</TABLE>
Depreciation and amortization charges were $3,743,690, $2,860,007, and
$2,496,718 in 1995, 1994 and 1993, respectively.
Page 11 of 95
II-7
<PAGE> 12
NOTE 4 - Long-Term Debt:
<TABLE>
<CAPTION>
December 31,
-------------------------
1995 1994
----------- -----------
<S> <C> <C>
Note payable-bank, pursuant to revolving credit and term loan agreement ...... $ -- $ --
6.65% note payable to Massachusetts Mutual Life Insurance Company, due
$1,666,667 annually, 1997-2005 ............................................ 15,000,000 15,000,000
9.9% note payable to Massachusetts Mutual Life Insurance Company, due
$600,000 annually, 1996-2001 ............................................... 3,600,000 4,200,000
----------- -----------
$18,600,000 $19,200,000
Less payments due within one year included in current liabilities ............ 600,000 600,000
----------- -----------
$18,000,000 $18,600,000
=========== ===========
</TABLE>
On December 1, 1990, the Company entered into an 8-year Credit Agreement which
made available to the Company up to $9,000,000 for 5 years on a revolving
credit basis and thereafter for 3 years as a term loan with installment
repayments of principal. Interest is payable at the prime rate of the lender
(8-1/2% at December 31, 1995) for funds borrowed in domestic currency and at
the lender's Eurodollar rate plus 1/2% for funds borrowed in the Eurodollar
market. The Company pays a 1/10% commitment fee per annum on funds not borrowed
during the 5 year revolving credit period. The debt due under the credit
agreement may be prepaid, in part or in full at any time without penalty; in
addition, any amount prepaid during the 5 year revolving credit term may be
reborrowed without penalty. The Credit Agreement also permits additional
unsecured short-term borrowing from banks up to $6,000,000 without any
"clean-up" requirements.
The Credit Agreement and the agreements with Massachusetts Mutual Life
Insurance Company contain restrictive provisions concerning minimum working
capital ($20,000,000), debt to net worth ratios, other borrowing, capital
expenditures, rental commitments, tangible net worth ($55,000,000), working
capital ratio (2.5:1), and payment of dividends. At December 31, 1995, under
the most restrictive terms of the debt agreements, retained earnings of
approximately $9,630,000 were available for declaration of dividends. The
Company is in full compliance with all terms, conditions and covenants of the
various credit agreements.
Principal payments on long-term obligations are $2,266,667 in each of the years
1997 through 2000.
On January 31, 1996, the Company entered into a 7 year Credit Agreement which
made available to the Company up to $10,000,000 for 4 years on a revolving
credit basis and thereafter for 3 years as a term loan with installment
repayments of principal. The new Credit Agreement, which replaces the agreement
entered into December 1, 1990, is written with substantially the same terms and
conditions as the terminated agreement.
- --------------------------------------------------------------------------------
NOTE 5 - Taxes on Income:
Aggregate income tax provisions (benefits) consist of the following:
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Current:
Federal ..................................................... $ 3,865,000 $ 5,520,000 $ 4,340,000
State and local ............................................. 625,000 790,000 700,000
----------- ----------- -----------
$ 4,490,000 $ 6,310,000 $ 5,040,000
Deferred ....................................................... 395,000 (130,000) (625,000)
----------- ----------- -----------
$ 4,885,000 $ 6,180,000 $ 4,415,000
=========== =========== ===========
</TABLE>
The difference between the total statutory Federal income tax rate and the
actual effective tax rate is accounted for as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Statutory Federal income tax rate .............................. 34.0% 34.5 % 34.2 %
State and local income taxes, net of Federal income tax benefit 3.2% 3.0 3.2
FAS No. 109 implementation ..................................... - - (1.3)
Non deductible dispute settlement costs ........................ 18.7% - -
Other items .................................................... 0.6% 0.5 0.3
---- ---- ----
Effective tax rate ............................................. 56.5% 38.0 % 36.4 %
===== ====== ======
</TABLE>
II-8 Page 12 of 95
<PAGE> 13
NOTE 6 - Pension Plans:
Noncontributory qualified defined benefit pension plans, providing for normal
retirement at age 65, cover all eligible employees (as defined). Periodic
benefit payments on retirement are determined based on a fixed amount applied
to service or determined as a percentage of earnings prior to retirement.
Pension plan assets for retirement benefits consist primarily of fixed income
securities and common stock equities.
Net periodic pension cost for 1995, 1994 and 1993 included the following
components:
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Service cost - benefits earned during the period .......... $ 651,000 $ 640,000 $ 687,000
Interest cost on projected benefit obligation ............. 960,000 824,000 865,000
Actual (return) loss on assets ............................ (2,107,000) 199,000 (1,397,000)
Net amortization and deferral ............................. 1,593,000 (970,000) 780,000
Effect of settlement distributions ........................ - - (15,000)
----------- ----------- -----------
Net periodic pension cost ................................. $ 1,097,000 $ 693,000 $ 920,000
=========== =========== ===========
</TABLE>
Assumptions used in the pension accounting (one corporate plan and four
plant/factory plans) for the three years ended December 31, 1995 were:
<TABLE>
<CAPTION>
Long Term Rate
Discount Rate of Return Salary Scale
--------------- -------------------- ----------------
Corp. Plants Corp. Plants Corp. Plants
----- ------ ----- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C>
1993 7.00% 7.50% 8.00% 8.00% 6.00% N/A
1994 8.00% 8.00% 8.00% 8.00% 6.00% N/A
1995 7.00% 7.00% 8.00% 8.00% 4.50% N/A
</TABLE>
The following table sets forth the plans' funded status and amounts recognized
in the Company's balance sheets at December 31, 1995 and 1994, for its pension
plans:
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
----------------------------- ------------------------------
Assets Exceed Accumulated Assets Exceed Accumulated
Accumulated Benefits Accumulated Benefits
Benefits Exceed Assets Benefits Exceed Assets
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation ............................... $ (7,529,000) $ (3,960,000) $ (5,101,000) $ (2,838,000)
============ ============ ============ ============
Accumulated benefit obligation .......................... $ (7,812,000) $ (4,010,000) $ (5,405,000) $ (2,874,000)
============ ============ ============ ============
Projected benefit obligation ............................ $(10,197,000) $ (4,358,000) $ (8,158,000) $ (2,874,000)
Plan assets at fair value .................................. 9,192,000 3,113,000 7,742,000 2,362,000
------------ ------------ ------------ ------------
Projected benefit obligation
over plan assets ........................................ $ (1,005,000) $ (1,245,000) $ (416,000) $ (512,000)
Unrecognized net (gain) or loss ............................ (1,155,000) 289,000 (564,000) 122,000
Prior service cost not yet recognized in net
periodic pension cost ................................... 2,052,000 734,000 917,000 177,000
Unrecognized net (asset) obligation at date of
initial application ..................................... - 231,000 (58,000) 284,000
Adjustment required to recognize minimum
liability ............................................... - (906,000) - (583,000)
------------ ------------ ------------ ------------
Prepaid pension cost (pension liability) ................... $ (108,000) $ (897,000) $ (121,000) $ (512,000)
============ ============ ============ ============
</TABLE>
II-9 Page 13 of 95
<PAGE> 14
NOTE 7 - Quarterly Results for 1993, 1994 and 1995:
<TABLE>
<CAPTION>
Quarter Ended
----------------------------------------------------------
March 31, June 30, September 30, December 31,
1993 1993 1993 1993
------------ ------------ ------------ -------------
(Unaudited)
<S> <C> <C> <C> <C>
Net sales ......................................... $ 31,578,095 $ 33,751,918 $ 32,382,493 $ 32,414,184
------------ ------------ ------------ ------------
Gross profit ...................................... $ 10,639,493 $ 11,205,813 $ 10,362,782 $ 10,637,978
------------ ------------ ------------ ------------
Earnings before taxes on income ................... $ 3,585,072 $ 4,001,685 $ 3,328,443 $ 1,203,676
------------ ------------ ------------ ------------
Net earnings ...................................... $ 2,465,072 $ 2,506,685 $ 1,993,443 $ 738,676
============ ============ ============ ============
Net earnings per common share ..................... $ .28 $ .29 $ .23 $ .09
============ ============ ============ ============
Dividends per common share ........................ $ .07 $ .07 $ .07 $ .07
============ ============ ============ ============
Average outstanding shares ........................ 8,686,233 8,691,775 8,692,413 8,699,593
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
----------------------------------------------------------
March 31, June 30, September 30, December 31,
1994 1994 1994 1994
------------ ------------ ------------ -------------
(Unaudited)
<S> <C> <C> <C> <C>
Net sales ......................................... $ 31,907,441 $ 35,873,454 $ 33,247,093 $ 34,039,409
------------ ------------ ------------ ------------
Gross profit ...................................... $ 10,591,394 $ 12,050,846 $ 11,312,800 $ 11,803,628
------------ ------------ ------------ ------------
Earnings before taxes on income ................... $ 3,209,622 $ 4,598,653 $ 3,971,762 $ 4,480,970
------------ ------------ ------------ ------------
Net earnings ...................................... $ 1,989,622 $ 2,853,653 $ 2,461,762 $ 2,775,970
============ ============ ============ ============
Net earnings per common share ..................... $ .23 $ .32 $ .29 $ .33
============ ============ ============ ============
Dividends per common share ........................ $ .08 $ .08 $ .08 $ .08
============ ============ ============ ============
Average outstanding shares ........................ 8,818,554 8,897,552 8,509,791 8,363,552
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
----------------------------------------------------------
March 31, June 30, September 30, December 31,
1995 1995 1995 1995
------------ ------------ ------------ -------------
(Unaudited)
<S> <C> <C> <C> <C>
Net sales ......................................... $ 34,116,921 $ 33,045,056 $ 33,267,467 $ 34,768,354
------------ ------------ ------------ ------------
Gross profit ...................................... $ 11,430,126 $ 10,969,725 $ 11,045,624 $ 10,582,595
------------ ------------ ------------ ------------
Earnings (loss) before taxes on income ............ $ 3,601,317 $ 3,243,626 $ 3,246,434 $ (1,444,340)
------------ ------------ ------------ ------------
Net earnings (loss) ............................... $ 2,231,317 $ 2,013,626 $ 2,011,434 $ (2,494,340)
============ ============ ============ ============
Net earnings (loss) per common share .............. $ .27 $ .24 $ .24 $ (.30)
============ ============ ============ ============
Dividends per common share ........................ $ .09 $ .09 $ .09 $. 09
============ ============ ============ ============
Average outstanding shares ........................ 8,363,552 8,363,552 8,363,552 8,193,552
============ ============ ============ ============
</TABLE>
The independent certified public accountants made a limited review of the 1993,
1994 and 1995 quarterly financial information in accordance with standards
established by the American Institute of Certified Public Accountants. Such
review was substantially less in scope than an examination in accordance with
generally accepted auditing standards, the objective of which is the expression
of opinion regarding the financial statements taken as a whole, and
accordingly, no such opinion was expressed.
II-10 Page 14 of 95
<PAGE> 15
NOTE 8 - Stock Options:
In 1993 the Company adopted an Incentive Stock Option Plan under which options
on 1,500,000 shares were reserved for grant. All options under the Plan have or
will be granted at prices at least equal to the fair market value of the shares
on the date of grant. Options (all of which are exercisable at each respective
year end) granted to date under the Plan are exercisable in part or in full
within five years of grant date. Proceeds from the exercise of options are
credited to common stock to the extent of par value, and the balance is
credited to additional paid-in capital. A summary of option transactions
during the three years ended December 31, 1995 (including option transactions
from a 1983 Plan which expired in 1993) follows:
<TABLE>
<CAPTION>
Option Prices
--------------------------------------------------------
No. of Range Per Market
Shares Share Total Price
-------- ------------------- ------------- ------------
<S> <C> <C> <C> <C>
Outstanding January 1, 1993 .............................. 575,600 $ 8.56 - $ 18.08 $ 7,653,862
Exercised.............................................. (24,900) $ 8.56 - $ 16.44 (216,356) $ 435,750
Cancelled.............................................. (6,000) $ 8.56 - $ 16.44 (82,875)
------- -------------
Outstanding December 31, 1993 ............................ 544,700 $ 8.56 - $ 18.08 $ 7,354,631
Granted................................................ 104,925 $ 13.75 - $ 15.13 1,451,794 $ 1,442,719
Exercised.............................................. (210,300) $ 8.56 - $ 9.47 (1,815,194) $ 3,032,588
Cancelled.............................................. (15,100) $ 13.75 - $ 16.44 (246,325)
------- -------------
Outstanding December 31, 1994 ............................ 424,225 $ 13.75 - $ 18.08 $ 6,744,906
Granted................................................ 145,400 $ 10.75 - $ 11.83 1,571,865 $ 1,563,050
Cancelled.............................................. (19,575) $ 10.75 - $ 16.44 (289,243)
------- -------------
Outstanding December 31, 1995 ............................ 550,050 $ 10.75 - $ 18.08 $ 8,027,528
======= =============
</TABLE>
- --------------------------------------------------------------------------------
NOTE 9 - Rentals:
Aggregate rent expense, including month-to-month rentals, approximated
$567,000, $619,000, and $669,000 for the years ended December 31, 1995, 1994
and 1993, respectively. Long-term lease commitments, the last of which expire
in 2002, are not material.
- --------------------------------------------------------------------------------
NOTE 10- Earnings per Share:
Historical per share data is based on the weighted average number of shares
outstanding. The exercise of outstanding stock options would not have a
significant effect on earnings per share. The weighted average number of shares
outstanding during 1995, 1994 and 1993 was 8,320,703, 8,645,739 and 8,692,540,
respectively.
- --------------------------------------------------------------------------------
NOTE 11 - Dispute with Governmental Agency:
The Company has reached tentative agreements with the Department of Justice and
the United States Attorney's Office in Tampa, Florida, to resolve its
previously announced disputes with the federal government arising out of
certain contractual relations with the Veterans Administration from 1983 to
1992. The tentative agreements are subject to additional approvals within the
government and by the court. If finalized, the agreements will resolve the
disputes and the criminal and civil investigations of the Company arising from
the VA contracts. The agreements provide for a $6,200,000 payment to settle
civil and contractual disputes and a $300,000 fine coupled with a guilty plea
by the Company for one count for a violation of the Federal False Statements
Act. The Company is not certain whether or not a previously terminated officer
will be charged in connection with the matter. However, upon finalization of
the agreements, the investigations are expected to be concluded with none of
the Company's existing officers or directors being charged. The Company is in
active discussions with the Department of Veterans Affairs (formerly the
Veterans Administration) with regard to the Company's ability to receive future
federal contracts and other benefits. Management expects that no restrictions
will be placed on the Company as a result of the agreements and resulting plea.
The Company charged $4,250,000, or approximately $.51 per share against its
earnings in the fourth quarter of 1995 in anticipation of the dispute
settlement. Management is not aware of any additional charges that may result
should a finalization of the settlement occur.
II-11 Page 15 of 95
<PAGE> 16
NOTE 12 - Accrued Expenses:
<TABLE>
<CAPTION>
December 31,
-----------------------
1995 1994
---------- ----------
<S> <C> <C>
Salaries, wages, commissions and vacation pay.......... $1,348,561 $1,812,730
Other accrued expenses................................. 1,712,457 1,314,083
---------- ----------
$3,061,018 $3,126,813
========== ==========
</TABLE>
NOTE 13 - Supplemental Information:
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Income taxes paid...................... $4,939,067 $5,961,885 $5,213,135
========== ========== ==========
Interest paid.......................... $1,411,805 $1,436,998 $ 680,083
========== ========== ==========
</TABLE>
II-12 Page 16 of 95
<PAGE> 17
SUPERIOR SURGICAL MFG. CO., INC.
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
Superior Surgical Mfg. Co., Inc.
Seminole, Florida
We have audited the accompanying balance sheets of Superior Surgical Mfg. Co.,
Inc. as of December 31, 1995 and 1994, and the related statements of earnings,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Superior Surgical Mfg. Co.,
Inc. as of December 31, 1995 and 1994, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
1995, in conformity with generally accepted accounting principles.
/s/ DELOITTE & TOUCHE, LLP
- ----------------------------
Deloitte & Touche, LLP
Certified Public Accountants
Tampa, Florida
March 8, 1996
II-13 Page 17 of 95
<PAGE> 18
PART II
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
NONE
PART III
Items 10, 11, Directors and Executive Officers; Executive Compensation;
12 and 13 Security Ownership of Management and others; Certain
Transactions.
Management's Proxy Statement to be filed on or before March 30, 1996 for the
Annual Meeting of Shareholders to be held May 3, 1996, is herein incorporated
by reference to furnish substantially all the information required by the above
items.
II-14, III-1 Page 18 of 95
<PAGE> 19
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
<TABLE>
<CAPTION>
(a) 1. Financial Statements Page
<S> <C> <C> <C>
The following financial statements of Superior Mfg. Co., Inc.
are included in Part II, Item 8:
Statements of earnings - years ended
December 31, 1995, 1994 and 1993 . . . . . . . . . . . . . II-4
Statements of shareholders' equity - years ended
December 31, 1995, 1994 and 1993 . . . . . . . . . . . . . II-4
Balance sheets - December 31, 1995 and 1994 . . . . . . . . II-5
Statements of cash flows - years ended
December 31, 1995, 1994 and 1993 . . . . . . . . . . . . . II-6
Notes to financial statements . . . . . . . . . . . . . . . II-7 to II-12
Opinion of independent certified public accountants . . . . II-13
(a) 2. Financial Statement Schedules
All schedules are omitted because they are not applicable, or
not required, or because the required information is included in the
financial statements or notes thereto.
(a) 3. Exhibits
Exhibit No.:
3.2 By-Laws of the Registrant filed as Exhibit
3.2 to the Registrant's 1992 Annual Report
on Form 10-K and incorporated herein by
reference.
4.1 Credit Agreement dated January 31, 1996,
between the Registrant and Chemical Bank. IV-5
4.2 Note Agreement dated January 5, 1994 between
the registrant and Massachusetts Mutual Life
Insurance Company filed with the Commission
as Exhibit 4.2 in registrant's 1994 Form 10-
Q for the three months ended March 31, 1994
which is hereby incorporated herein by
reference.
4.3 The Registrant, by signing this Registration
Statement, agrees to furnish the Commission
upon its request a copy of any instrument
which defines the rights of holders of long-
term debt of the Registrant and which
authorizes a total amount of securities not
in excess of 10% of the total assets of the
Registrant.
</TABLE>
IV-1 Page 19 of 95
<PAGE> 20
<TABLE>
<S> <C> <C>
10.1 Description of the informal bonus plan for
officers of the Registrant filed as Exhibit
10 to the Registrant's 1992 Annual Report on
Form 10-K and incorporated herein by
reference.
10.2 1993 Incentive Stock Option Plan of the
Registrant filed as Exhibit 4.3 to the
Registrant's August 18, 1993 Registration
Statement on Form S-8 and incorporated
herein by reference.
10.3 1994 Superior Surgical Mfg. Co., Inc.
Supplemental Pension Plan filed as Exhibit
10.3 to the Registrant's 1994 Annual Report
on Form 10-K and incorporated herein by
reference.
13. Forms 10-Q for the first three quarters of
1995 - herein incorporated by reference to
Registrant's filings thereof with the
Securities and Exchange Commission.
23. Consent of independent accountants. IV-6
99. The information contained under the headings
"Directors and Executive Officers, Executive
Compensation";"Security Ownership of Certain
Beneficial Owners and Management"; and
"Certain Relationships and Related
Transactions" in the definitive Proxy
Statement of the Registrant to be used
in connection with the Registrant's 1996
Annual Meeting of Stockholders, to be filed
on or before March 30, 1996, is hereby
incorporated herein by reference.
(b) Reports on Form 8-K:
There were no reports on Form 8-K for the three months ended
December 31, 1995.
(c) See (a)3. above.
(d) None
</TABLE>
IV-2 Page 20 of 95
<PAGE> 21
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
SUPERIOR SURGICAL MFG. CO., INC.
/s/ Gerald M. Benstock
---------------------------------------
BY: Gerald M. Benstock
(Chairman and Chief Executive
Officer)
/s/ John W. Johansen
---------------------------------------
BY: John W. Johansen
(Chief Financial Officer and Principal
Accounting Officer, Sr. Vice President,
Treasurer and Secretary)
DATE: March 28, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
/s/ Saul Schechter /s/ Alan D. Schwartz
- ------------------------------ ----------------------------------------
Saul Schechter, March 28, 1996 Alan D. Schwartz, March 28, 1996
(Director) (Director)
/s/ Manuel Gaetan /s/ Michael Benstock
- ------------------------------ ----------------------------------------
Manuel Gaetan, March 28, 1996 Michael Benstock, March 28, 1996
(Director) (Director)
/s/ Thomas K. Riden /s/ Peter Benstock
- ------------------------------ ----------------------------------------
Thomas K. Riden, March 28, 1996 Peter Benstock, March 28, 1996
(Director) (Director)
IV-3 Page 21 of 95
<PAGE> 22
SUPERIOR SURGICAL MFG. CO., INC.
EXHIBIT INDEX
(a) 3. Exhibits
<TABLE>
<CAPTION>
Exhibit No.:
- ------------
<C> <S> <C>
3.2 By-Laws of the Registrant filed as Exhibit 3.2 to the Registrant's 1992
Annual Report on Form 10-K and incorporated herein by reference.
4.1 Credit Agreement dated January 31, 1996, between the Registrant and
Chemical Bank. IV-5
4.2 Note Agreement dated January 5, 1994 between the registrant and
Massachusetts Mutual Life Insurance Company filed with the Commission as
Exhibit 4.2 in registrant's 1994 Form 10-Q for the three months ended
March 31, 1994 which is hereby incorporated herein by reference.
4.3 The Registrant, by signing this Registration Statement, agrees to furnish
the Commission upon its request a copy of any instrument which defines
the rights of holders of long-term debt of the Registrant and which
authorizes a total amount of securities not in excess of 10% of the total
assets of the Registrant.
10.1 Description of the informal bonus plan for officers of the Registrant
filed as Exhibit 10 to the Registrant's 1992 Annual Report on Form 10-K
and incorporated herein by reference.
10.2 1993 Incentive Stock Option Plan of the Registrant filed as Exhibit 4.3
to the Registrant's August 18, 1993 Registration Statement on Form S-8
and incorporated herein by reference.
10.3 1994 Superior Surgical Mfg. Co., Inc. Supplemental Pension Plan filed as
Exhibit 10.3 to the Registrant's 1994 Annual Report on Form 10-K and
incorporated herein by reference.
13. Forms 10-Q for the first three quarters of 1995 -- herein incorporated by
reference to Registrant's filings thereof with the Securities and
Exchange Commission.
23. Consent of independent accountants. IV-6
99. The information contained under the headings "Directors and Executive
Officers, Executive Compensation"; "Security Ownership of Certain
Beneficial Owners and Management"; and "Certain Relationships and Related
Transactions" in the definitive Proxy Statement of the Registrant to be
used in connection with the Registrant's 1996 Annual Meeting of
Stockholders, to be filed on or before March 30, 1996, is hereby
incorporated herein by reference.
</TABLE>
IV-4 Page 22 of 95
<PAGE> 1
EXHIBIT 4.1
================================================================================
$10,000,000
CREDIT AGREEMENT
DATED AS OF JANUARY 31, 1996
BY AND BETWEEN
SUPERIOR SURGICAL MFG. CO., INC.
AND
CHEMICAL BANK
================================================================================
IV-5 Page 23 of 95
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
-----------
SECTION 1.02. Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
----------------
ARTICLE II
LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.01. Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
----------------------
SECTION 2.02. Revolving Credit Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
---------------------
SECTION 2.03. Conversion to Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
-----------------------
SECTION 2.04. Term Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
---------
ARTICLE III
PROVISIONS RELATING TO ALL EXTENSIONS
OF CREDIT; FEES AND PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.01. Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-------------
SECTION 3.02. USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
----------------
SECTION 3.03. Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
--------------------
SECTION 3.04. Commitment Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
---------------
SECTION 3.05. INABILITY TO DETERMINE INTEREST RATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
-------------------------------------
SECTION 3.06. Illegality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
-----------
SECTION 3.07. Other Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
------------
SECTION 3.08. INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
---------
SECTION 3.09. Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
----------------
SECTION 3.10. Funds; Manner of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
------------------------
ARTICLE IV
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.01. Organization, Corporate Powers, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
------------------------------------
SECTION 4.02. Authorization of Borrowing, Enforceable Obligations . . . . . . . . . . . . . . . . . . . . . 18
---------------------------------------------------
SECTION 4.03. Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
-------------------
SECTION 4.04. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
-----
SECTION 4.05. Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
-------------------
SECTION 4.06. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
----------
SECTION 4.07. Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
----------
SECTION 4.08. Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
---------------------
SECTION 4.09. Federal Reserve Regulations; Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . 21
--------------------------------------------
SECTION 4.10. Governmental Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
---------------------
SECTION 4.11. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
------------
SECTION 4.12. Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
-------------------
SECTION 4.13. Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
----------------------
ARTICLE V
CONDITIONS OF LENDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 5.01. Conditions To Initial Revolving Credit Loan . . . . . . . . . . . . . . . . . . . . . . . . . 22
-------------------------------------------
SECTION 5.02. Conditions to All Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
-----------------------
</TABLE>
IV-5-1 Page 24 of 95
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE VI
AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 6.01. Corporate Existence, Properties, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
-------------------------------------
SECTION 6.02. Payment of Indebtedness, Taxes, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
------------------------------------
SECTION 6.03. Financial Statements, Reports, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-----------------------------------
SECTION 6.04. Access to Premises and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
------------------------------
SECTION 6.05. Notice of Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
------------------------
SECTION 6.06. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
-----------------
SECTION 6.07. Notice of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
--------------------
SECTION 6.08. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
-----
SECTION 6.09. Compliance with Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
-------------------------------
SECTION 6.10. Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
-------------
SECTION 6.11. Default in Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
---------------------------
SECTION 6.12. Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
------------------
ARTICLE VII
NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 7.01. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
-----
SECTION 7.02. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
------------
SECTION 7.03. Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
----------
SECTION 7.04. Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
--------------
SECTION 7.05. Sales of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
--------------
SECTION 7.06. Loans and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
---------------------
SECTION 7.07. Nature of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
------------------
SECTION 7.08. Sale and Leaseback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
------------------
SECTION 7.09. Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
------
SECTION 7.10. Federal Reserve Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
---------------------------
SECTION 7.11. Accounting Policies and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
----------------------------------
SECTION 7.12. Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
-------------------
SECTION 7.13. Limitations on Fundamental Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
----------------------------------
SECTION 7.14. Consolidated Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
-------------------------------
SECTION 7.15. Total Consolidated Unsubordinated Liabilities to Tangible Net Worth . . . . . . . . . . . . 34
-------------------------------------------------------------------
SECTION 7.16. Current Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
-------------
SECTION 7.17. Debt Service Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
---------------------------
SECTION 7.18. Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
--------
SECTION 7.20 Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
-----------------
SECTION 7.21. Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
---------
SECTION 7.22. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
----------------------------
SECTION 7.23. Joint Ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
--------------
ARTICLE VIII
EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 8.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
-----------------
ARTICLE IX
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.01. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
-------
SECTION 9.02. Survival of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
---------------------
SECTION 9.03. Expenses of the Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
--------------------
SECTION 9.04. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
--------------
SECTION 9.05. No Waiver of Rights by the Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
-------------------------------
</TABLE>
3
IV-5-2 Page 25 of 95
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 9.06. SUBMISSION TO JURISDICTION; JURY WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . 40
---------------------------------------
SECTION 9.07. Modification of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
-------------------------
SECTION 9.08. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
------------
SECTION 9.09. Sale of Participations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
-----------------------
SECTION 9.10. Reinstatement; Certain Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
-------------------------------
SECTION 9.11. Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
---------------
SECTION 9.12. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
------------
SECTION 9.13. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
--------
</TABLE>
4
IV-5-3 Page 26 of 95
<PAGE> 5
<TABLE>
<S> <C> <C>
SCHEDULES
Schedule I - Subsidiaries
Schedule II - Liens
Schedule III - Existing Indebtedness
Schedule IV - Existing Guarantees
EXHIBITS
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Term Note
Exhibit C - Form of Corporate Guaranty
Exhibit D - Form of Notice of Borrowing
Exhibit E - Form of Opinion of Counsel
</TABLE>
IV-5-4 Page 27 of 95
<PAGE> 6
CREDIT AGREEMENT dated as of January 31, 1996, by and between SUPERIOR
SURGICAL MFG. CO., INC., a New York corporation (the "Company") and CHEMICAL
BANK, a New York banking corporation (the "Bank").
RECITALS
The Company has requested the Bank to extend credit to the Company in
order to enable it to borrow from time to time on a revolving credit basis and
to convert outstandings under the revolving credit line to a term loan, all of
the foregoing not to exceed, in the aggregate, $10,000,000. The proceeds of
such facilities shall be used by the Company for general corporate purposes of
the Company. The Bank is willing to extend such loans to the Company, subject
to the terms and conditions hereinafter set forth.
Accordingly, the Company and the Bank agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. DEFINITIONS. As used herein, the following words and
terms shall have the following meanings:
"Alternate Base Rate" shall mean for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of
(a) the Prime Rate in effect on such day and (b) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. For purposes hereof, "Prime Rate"
shall mean the rate of interest per annum publicly announced from time to time
by the Bank as its prime rate in effect at its principal office; each change in
the Prime Rate shall be effective on the date such change is announced.
Federal Funds Effective Rate shall mean, for any day, the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of
the quotations for the day of such transactions received from three Federal
funds brokers of recognized standing selected by it. If for any reason the
Bank shall have determined (which determination shall be conclusive absent
manifest error) that it is unable to ascertain the Federal Funds Effective
Rate, for any reason, including the inability or failure of the Bank to obtain
sufficient quotations in accordance with the terms thereof, the Alternate Base
Rate shall be determined without regard to clause (b) of the first sentence of
this definition, as appropriate, until the circumstances giving rise to such
inability no longer exist. Any change in the Alternative Base Rate due to a
change in the Prime Rate or the Federal Funds Effective Rate shall be effective
on the
IV-5-5 Page 28 of 95
<PAGE> 7
effective date of such change in the Prime Rate or the Federal Funds Effective
Rate, respectively.
"Alternate Base Rate Loans" shall mean Loans at such times as they are
being made and/or maintained at a rate of interest based on the Alternate Base
Rate.
"Affiliate" shall mean any corporation, partnership, limited liability
company, limited liability partnership, joint venture, trust or unincorporated
organization which, directly or indirectly, controls or is controlled by or is
under common control with the Company or any of its Subsidiaries. For the
purpose of this definition, "control" of the Company shall mean the power,
direct or indirect, to direct or cause the direction of the management or
policies of the Company whether through the ownership of voting securities by
contract or otherwise; provided that, in any event, any person who owns
directly or indirectly 5% or more of the securities having ordinary voting
power for the election of directors or other governing body of a corporation or
5% or more of the partnership or other ownership interest of any Person (other
than as a limited partner of such other Person) will be deemed to control such
corporation or other Person.
"Agreement" shall mean this Credit Agreement dated as of January 31,
1996, as it may hereafter be amended, restated, supplemented or otherwise
modified from time to time.
"Available Revolving Credit Commitment" shall mean the Revolving
Credit Commitment reduced by the aggregate principal amount of the Revolving
Credit Loans then outstanding.
"Borrowing Date" shall mean, with respect to any Loan, the date on
which such Loan is disbursed to the Company.
"Business Day" shall mean any day not a Saturday, Sunday or legal
holiday, on which banks in New York City are open for business; provided,
however, that when used in connection with a Eurodollar Loan the terms
"Business Day" shall exclude any day on which the Bank is not open for dealings
in dollar deposits in the London interbank eurodollar market.
"Capital Expenditures" shall mean additions to property and equipment
of the Company and its Subsidiaries, which, in conformity with Generally
Accepted Accounting Principles, are included as "additions to property, plant
or equipment" or similar items which would be reflected in the consolidated
statement of cash flow of the Company and its Subsidiaries.
"Capital Lease" shall mean (a) any lease of property, real or
personal, if the then present value of the minimum rental commitment thereunder
should, in accordance with General Accepted Accounting Principles, be
capitalized on the balance sheet of the
2
IV-5-6 Page 29 of 95
<PAGE> 8
lessee, and (b) any other such lease the obligations under which are
capitalized on the consolidated balance sheet of the Company.
"Chief Financial Officer" shall mean the Chief Financial Officer of
the Company.
"Closing Date" shall mean January 31, 1996.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Commitments" shall mean, collectively, the Revolving Credit
Commitment and the Term Loan Commitment.
"Consolidated" shall mean, in respect of the Company, as applied to
any financial or accounting term, such term determined on a consolidated basis
in accordance with Generally Accepted Accounting Principles for the Company and
all consolidated Subsidiaries thereof.
"Consolidated Current Assets" shall mean, at any date, the aggregate
amount of all assets of the Company and its Subsidiaries which would be
properly classified as current assets at such date, but excluding deferred
assets, all computed in accordance with Generally Accepted Accounting
Principles applied on a consistent basis.
"Consolidated Current Liabilities" shall mean the aggregate amount of
all liabilities of the Company and its Subsidiaries (including tax and other
proper accruals) which would be classified as current liabilities and for
purposes of this Agreement including the current portion, if any, of the
outstanding principal amount of the Notes, all computed and consolidated in
accordance with Generally Accepted Accounting Principles applied on a
consistent basis.
"Consolidated Debt Service Coverage Ratio" shall mean for any period,
the ratio of (x) Consolidated Net Income plus, to the extent deducted in
determining Consolidated Net Income the sum of (i) all taxes to any government
or governmental instrumentality (other than real estate taxes, sale taxes or
use taxes) expensed on the Company's books (whether paid or accrued), (ii) all
interest accrued or paid (if not previously accrued on any Indebtedness), and
(iii) all depreciation and amortization charges, less (i) all dividends,
distributions and withdrawals accrued or paid (if not previously accrued) in
respect to any capital stock, (ii) extraordinary gains segregated according to
Generally Accepted Accounting Principles, and (iii) unfunded Consolidated
Capital Expenditures, to (y) the sum of (i) all interest accrued or paid (if
not previously accrued) on any Indebtedness, during the then preceding four
fiscal quarters, plus (ii) the scheduled installments of principal on all
Indebtedness with a maturity of
3
IV-5-7 Page 30 of 95
<PAGE> 9
365 days or more due during the next succeeding four fiscal quarters. All the
foregoing categories shall be calculated with respect to the Company and its
Subsidiaries and shall be calculated (without duplication) over the four fiscal
quarters next preceding the date of calculation thereof with the exception of
the scheduled installments of principal on all Indebtedness of the Company and
its Subsidiaries with a maturity of 365 days or more which shall be calculated
based upon the next succeeding four fiscal quarters.
"Consolidated Net Income" shall mean, for any period, the net income
(or net loss) of the Company and its Subsidiaries on a consolidated basis for
such period determined in accordance with Generally Accepted Account Principles
applied on a consistent basis.
"Consolidated Net Worth" shall mean the total Consolidated assets of
the Company and its Subsidiaries determined in accordance with Generally
Accepted Accounting Principles, less the total Consolidated liabilities of the
Company and its Subsidiaries determined in accordance with Generally Accepted
Accounting Principles applied on a consistent basis.
"Consolidated Tangible Net Worth" shall mean total Consolidated assets
of the Company and its Subsidiaries determined in accordance with Generally
Accepted Accounting Principles, except that there shall be excluded therefrom
all obligations due to the Company or a Subsidiary from an Affiliate and all
intangible assets, including, without limitation, goodwill, covenants not to
compete, treasury stock, less the sum of (x) the total Consolidated liabilities
of the Company and its Subsidiaries determined in accordance with Generally
Accepted Accounting Principles applied on a consistent basis, and (y) the
amount of any write-up subsequent to December 31, 1981 in the book value of any
Consolidated assets.
"Consolidated Total Unsubordinated Liabilities" shall mean all items
which, in accordance with Generally Accepted Accounting Principles applied on a
consistent basis, would properly be included on the liability side of the
balance sheet (other than Subordinated Debt, capital stock, capital surplus and
retained earnings), as of the date on which the amount of Consolidated Total
Unsubordinated Liabilities is to be determined, of the Company and its
Subsidiaries, computed and consolidated in accordance with Generally Accepted
Accounting Principles applied on a consistent basis.
"Corporate Guarantors" shall mean each Person who, from time to time,
executes or is required to execute a Corporate Guaranty in accordance with
Section 6.10.
"Corporate Guaranty" means the Corporate Guaranty substantially in the
form of Exhibit C attached hereto to be
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executed and delivered by any Person who may be required to execute the same
pursuant to Section 6.10, as the same may hereafter be amended, restated,
supplemented or otherwise modified from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time. Section references to ERISA are to ERISA,
as in effect at the date of this Agreement and any subsequent provisions of
ERISA, amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with the Company or any of its Subsidiaries would be
deemed to be a member of the same "controlled group" within the meaning of
Section 414(b), (c), (m) and (o) of the Code.
"Eurocurrency Reserve Requirement" shall mean a fraction (expressed as
a decimal), the numerator of which is the number one and the denominator of
which is the number one minus the applicable statutory reserve requirements
(expressed as a decimal) for the Bank (without duplication, but including,
without limitation, basic, supplemental, marginal and emergency reserves), from
time to time in effect under Regulation D of the Board of Governors of the
Federal Reserve System ("Regulation D") with respect to Eurocurrency funding
currently referred to as "Eurocurrency liabilities" in Regulation D. It is
agreed that for purposes hereof each Eurodollar Loan shall be deemed to
constitute a "Eurocurrency liability" as defined in Regulation D, and to be
subject to the reserve requirements of Regulation D, without benefit of credit
or proration, exemptions or offsets which might otherwise be available to the
Bank from time to time under Regulation D.
"Eurodollar Loan" shall mean Loans at such time as they are made
and/or being maintained at a rate of interest based upon Reserve Adjusted
Libor.
"Event of Default" shall mean any Event of Default set forth in
Article VIII.
"Executive Officer" shall mean either the Chairman, a President, the
Chief Financial Officer, an Executive Vice President or the Secretary of the
Company and their respective successors, if any, designated by the Board of
Directors.
"Hazardous Materials" includes, without limit, any flammable
explosives, radioactive materials, hazardous materials, hazardous wastes,
hazardous or toxic substances, or related materials defined in the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended (42 U.S.C. Sections 9601, et
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seq.), the Hazardous Materials Transportation Act, as amended (49) U.S.C.
Sections 1801, et esq.), the Resource Conservation and Recovery Act, as amended
(42 U.S.C. Sections 9601, et seq.), and in the regulations adopted and
publications promulgated pursuant thereto, or any other federal, state or local
environment law, ordinance, rule or regulation.
"Indebtedness" shall have the meaning set forth in Section 7.02 of this
Agreement.
"Interest Payment Date" shall mean (a) as to any Alternate Base Rate
Loan, the first Business Day of each calendar month during the term hereof
commencing with the calendar month immediately following the date of such
Alternate Base Rate Loan, and the date such Alternate Base Rate Loan is
required to be paid in full, (b) as to any Eurodollar Loan in respect of which
the Company has selected an Interest Period of one, two, or three months, the
last day of such Interest Period, (c) as to any Eurodollar Loan in respect of
which the Company has selected any Interest Period of six months, the date
which is three months from the first day of such Interest Period, and the last
day of such Interest Period, and (d) as to each Loan, on the date such Loan is
paid in full.
"Interest Period" with respect to any Eurodollar Loan:
(a) initially, the period commencing on the date such Eurodollar
Loan is made and ending one, two, three or six months thereafter, as selected
by the Company in its Notice of Borrowing as provided in Section 2.01(c) or
Section 2.03, or in its notice of conversion from an Alternate Base Rate Loan
as provided in Section 3.01(d); and
(b) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Eurodollar Loan and ending one,
two, three or six months thereafter, as selected by the Company by irrevocable
written notice to the Bank not less than three Business Days prior to the last
day of the then current Interest Period with respect to such Eurodollar Loan;
provided, however, that all of the foregoing provisions relating to Interest
Periods are subject to the following:
(i) if any Interest Period pertaining to a
Eurodollar Loan would otherwise end on a day which is not a
Business Day, the Interest Period shall be extended to the
next succeeding Business Day unless the result of such
extension would be carry such Interest Period into another
calendar month in which event such Interest Period shall end
on the immediately preceding Business Day;
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(ii) if the Company shall fail to give notice as
provided in clause (b) above, the Company shall be deemed to
have requested conversion of the affected Eurodollar Loan to
an Alternate Base Rate Loan on the last day of the then
current Interest Period with respect thereto;
(iii) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at
the end such Interest Period) shall end on the last Business
Day of a calendar month; and
(iv) no Interest Period may be selected with respect
to a Term Loan which ends later than the Term Loan Maturity
Date and no Interest Period may be selected with respect to a
Revolving Credit Loan which ends later than the Revolving
Credit Termination Date.
"Liens" shall have the meaning specified in Section 7.01.
"Loan(s)" shall mean the Revolving Credit Loan and the Term Loan and
shall refer to either an Alternate Base Rate Loan or a Eurodollar Loan, each of
which shall be a "Type" of Loan.
"Loan Documents" shall mean, collectively, this Agreement and the
Notes, and each other agreement executed in connection with the transactions
contemplated hereby or thereby.
"Notes" shall mean, collectively, the Revolving Credit Note and the
Term Note.
"Notice of Borrowing" shall mean the Notice of Borrowing substantially
in the form attached hereto as Exhibit D.
"Obligations" shall mean all obligations, liabilities and indebtedness
of the Company to the Bank, whether now existing or hereafter created, absolute
or contingent, direct or indirect, due or not, whether created directly or
acquired by assignment or otherwise, including without limitation, all
obligations, liabilities and indebtedness of the Company with respect to the
principal of and interest on the Loans and the payment of performance of all
other obligations, liabilities, and indebtedness of the Company to the Bank
hereunder, under any one or more of the Notes or with respect to the Loans,
including without limitation all fees, costs, expenses and indemnity
obligations hereunder.
"Payment Office" shall mean the Bank's office located at
7600 Jericho Turnpike, Woodbury, New York 11797, Attention: Account Officer -
Superior Surgical Mfg. Co., Inc.
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"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Person" shall mean any natural person, corporation, business trust,
joint venture, association, company, partnership or government, or any agency
or political subdivision thereof.
"Plan" shall mean any multi-employer or single-employer plan defined
in Section 4001 of ERISA, which is maintained, or at any time during the five
calendar years preceding the date of this Agreement was maintained for
employees of the Company, any of its Subsidiaries or an ERISA Affiliate.
"Remaining Capital Expenditure Funds" shall mean with respect to any
fiscal year of the Company the positive difference, if any, of $9,000,000 less
the actual Consolidated Capital Expenditures of the Company and its
Subsidiaries for such fiscal year.
"Reserve Adjusted Libor" shall mean with respect to the Interest
Period pertaining to a Eurodollar Loan, the rate per annum equal to the product
(rounded upwards to the next higher 1/8 of one percent) of (a) the annual rate
of the interest at which dollar deposits of an amount comparable to the amount
of such Loan and for a period equal to the Interest Period applicable thereto
are offered to the Bank in immediately available funds in the London interbank
market for Eurodollars at approximately 11:00 A.M. (London time) on the second
Business Day prior to the commencement of such Interest Period, multiplied by
(b) the Eurocurrency Reserve Requirement.
"Reportable Event" shall mean an event described in Section 4043(b) of
ERISA with respect to a Plan as to which the 30 day notice requirement has not
been waived by the PBGC.
"Revolving Credit Commitment" shall have the meaning specified in
Section 2.01.
"Revolving Credit Commitment Termination Date" shall mean the fourth
anniversary of the Closing Date.
"Revolving Credit Loan" shall have the meaning specified in Section
2.01.
"Revolving Credit Note" shall have the meaning specified in Section
2.02.
"Subordinated Debt or Subordinated Indebtedness" shall mean all debt
which is subordinated in right of payment to the monetary obligations of the
Company and/or any of its Subsidiaries to the Bank upon terms satisfactory to
and approved in writing by the Bank.
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"Subsidiaries" shall mean any corporation, association or other
business entity more than 50% of the voting stock of which is at the time owned
or controlled, directly or indirectly, by the Company or one or more of its
Subsidiaries or a combination thereof.
"Term Loan" shall have the meaning specified in Section 2.03.
"Term Loan Commitment" shall mean the Bank's obligation to make a Term
Loan to the Company pursuant to Section 2.03.
"Term Loan Maturity Date" shall mean January 1, 2003.
"Term Note" shall have the meaning specified in Section 2.04.
"Type" shall have the meaning set forth in the definition of "Loans".
"Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the present value of the accrued benefits under the Plan as of
the close of its most recent plan year exceeds the fair market value of the
assets allocable thereto, determined in accordance with Section 412 of the
Code.
SECTION 1.02. ACCOUNTING TERMS. Except as otherwise herein
specifically provided, each accounting term used herein shall have the meaning
given to it under Generally Accepted Accounting Principles. "Generally
Accepted Accounting Principles" shall mean those generally accepted accounting
principles and practices which are recognized as such by the American Institute
of Certified Public Accountants acting through the Financial Accounting
Standards Board ("FASB") or through other appropriate boards or committees
thereof and which are consistently applied for all periods so as to properly
reflect the consolidated financial condition, and the consolidated results of
operations and changes in financial position, of the Company and its
Subsidiaries except that any accounting principle or practice required to be
changed by the FASB (or other appropriate board or committee of the FASB) in
order to continue as a generally accepted accounting principle or practice may
be so changed. Any dispute or disagreement between the Company and the Bank
relating to the determination of Generally Accepted Accounting Principles
shall, in the absence of manifest error, be conclusively resolved for all
purposes hereof by the written opinion with respect thereto, delivered to the
Bank, of the independent accountants selected by the Company and approved by
the Bank for the purpose of auditing the periodic consolidated financial
statements of the Company and its Subsidiaries.
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ARTICLE II
LOANS
SECTION 2.01. REVOLVING CREDIT LOANS. (a) Subject to the terms and
conditions, and relying upon the representations and warranties, set forth
herein, the Bank agrees to make loans (individually a "Revolving Credit Loan"
and, collectively, the "Revolving Credit Loans") to the Company at any time or
from time to time on or after the date hereof and until the Revolving Credit
Commitment Termination Date or until the Revolving Credit Commitment of the
Bank shall have been terminated in accordance with the terms hereof, in an
aggregate principal amount at any time outstanding not in excess of $10,000,000
(the "Revolving Credit Commitment"). Within the foregoing limits, the Company
may borrow, repay and reborrow hereunder on or after the date hereof and prior
to the Revolving Credit Commitment Termination Date, subject to the terms,
provisions and limitations set forth herein.
(b) The initial Revolving Credit Loan made by the Bank shall be
made against delivery to the Bank of the Revolving Credit Note, payable to the
order of the Bank, as referred to in Section 2.02 hereof. The Bank will make
available each requested Revolving Credit Loan to the Company by crediting the
proceeds thereof into an account of the Company at the Payment Office on the
date and in the amount set forth in the applicable Notice of Borrowing.
(c) The Company shall give the Bank a duly completed Notice of
Borrowing executed by an Executive Officer, no later than 11:00 a.m., three
Business Days prior to the date of each proposed Eurodollar Loan under this
Section 2.01 or on the date of each proposed Alternate Base Rate Loan under
this Section 2.01. Such notice shall be irrevocable and shall specify the
amount and Type of the proposed borrowing, the initial Interest Period if a
Eurodollar Loan, and the proposed Borrowing Date. Each borrowing pursuant to
the Revolving Credit Commitment shall be in an aggregate principal amount of
the lesser of (x) $100,000 or whole multiples of $100,000 with respect to the
Alternate Base Rate Loans and $500,000 or whole multiples of $100,000 in excess
thereof with respect to Eurodollar Loans, and (y) the Available Revolving
Credit Commitment.
(d) The Company shall have the right, upon not less than three
Business Days' written notice to the Bank, to terminate the Revolving Credit
Commitment or from time to time to permanently reduce the amount of the
Revolving Credit Commitment; provided, however, that no such termination or
reduction shall be permitted if, after giving effect thereto and to any
prepayments of the Revolving Credit Loans made on the effective date thereof,
the then outstanding principal amount of the Revolving Credit Loans would
exceed the amount of the Available Revolving Credit Commitment then in effect;
and, provided, further, that any such termination or reduction of Eurodollar
Loans shall be made only on the last day of
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the Interest Period with respect thereto or on the date of payment in full of
all amounts owing to the Bank pursuant to Section 3.08 as a result of such
termination or reduction. Any such reduction shall be in the amount of
$500,000 or whole multiples of $100,000 in excess thereof, and shall reduce
permanently the amount of the Revolving Credit Commitment then in effect.
(e) The Revolving Credit Commitment shall automatically terminate
on the Revolving Credit Commitment Termination Date. Upon such termination,
unless the Revolving Credit Loans are converted to a Term Loan in accordance
with Section 2.03 below, the Company shall immediately repay in full the
principal amount of the Revolving Credit Loans then outstanding, together with
all accrued interest thereon and all other amounts due and payable hereunder.
SECTION 2.02. REVOLVING CREDIT NOTE. The Revolving Credit Loans
made by the Bank shall be evidenced by a promissory note (a "Revolving Credit
Note"), substantially in the form attached hereto as Exhibit "A", appropriately
completed, duly executed and delivered on behalf of the Company and payable to
the order of the Bank in a principal amount equal to the Revolving Credit
Commitment. The date, Type and amount of each Revolving Credit Loan and the
date and amount of each payment or prepayment of principal of each Revolving
Credit Loan shall be recorded on the grid schedule annexed to the Revolving
Credit Note, and the Company authorizes the Bank to make such recordation;
provided, however, that the failure of the Bank to set forth each such
Revolving Credit Loan, payment and other information on such grid shall not in
any manner affect the obligation of the Company to repay each Revolving Credit
Loan made by the Bank in accordance with the terms of the Revolving Credit Note
and this Agreement. The Revolving Credit Note, the grid schedule and the books
and records of the Bank shall be presumptive evidence of the Revolving Credit
Loans. The aggregate unpaid amount of the Revolving Credit Loans of the Bank
at any time shall be the principal amount owing on the Revolving Credit Note of
the Company at such time.
SECTION 2.03. CONVERSION TO TERM LOAN. Subject to the terms and
conditions set forth herein, the Company shall have the option to convert the
aggregate outstanding principal balance of the Revolving Credit Loans
outstanding on the Revolving Credit Commitment Termination Date to a term loan
(the "Term Loan"). The Company shall exercise such option by delivering to the
Bank a duly completed Notice of Borrowing executed by an Executive Officer, no
later than 11:00 a.m., three (3) business days' prior to the date of a proposed
Eurodollar Loan or on the date of an Alternate Base Rate Loan under this
Section 2.03. Such Notice shall be irrevocable and shall specify the Type of
the proposed borrowing, and the Initial Interest Period if a Eurodollar Loan.
The Bank shall make the Term Loan hereunder by crediting the aggregate amount
of the Term Loan to the account of the Company at the Payment Office. The Term
Loan by the Bank shall be made against
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delivery to the Bank of the Term Note payable to the order of the Bank, as
referred to in Section 2.04 hereof.
SECTION 2.04. TERM NOTE. The Term Loan of the Bank shall be
evidenced by a promissory note (the "Term Note") substantially in the form
attached hereto as Exhibit "B" appropriately completed, payable to the order of
the Bank, duly executed and delivered on behalf of the Company, dated the
Revolving Credit Commitment Termination Date and in a principal amount equal to
the aggregate outstanding principal balance of the Revolving Credit Loans on
such date. The Term Note shall be payable as to principal in twelve (12)
consecutive quarterly installments on the first Business Day of January, April,
July and October of each year commencing April 1, 2000. Each such installment
shall be equal to one-twelfth (1/12th) (rounded to the nearest $1.00 of the
original principal amount of the Term Loan) provided that the final installment
shall in any event be equal to the remaining principal amount outstanding on
Term Loan Maturity Date. The date, Type and amount of the Term Loan and the
date and amount of each payment or prepayment of principal of the Term Loan
shall be recorded on the grid schedule annexed to the Term Note, and the
Company authorizes the Bank to make such recordation; provided, however, that
the failure of the Bank to set forth such Term Loan, payments and other
information on such grid shall not in any manner affect the obligation of the
Company to repay the Term Loan made by the Bank in accordance with the terms of
the Term Note and this Agreement. The Term Note, the grid schedule and the
books and records of the Bank shall be presumptive evidence of the Term Loan
made by the Bank.
ARTICLE III
PROVISIONS RELATING TO ALL EXTENSIONS
OF CREDIT; FEES AND PAYMENTS
SECTION 3.01. INTEREST RATE.
(a) Each Loan which is an Alternate Base Rate Loan shall bear
interest for the period from the date thereof on the unpaid principal amount
thereof at a fluctuating rate per annum equal to the Alternate Base Rate.
(b) Each Eurodollar Loan shall bear interest for the
Interest Period applicable thereto on the unpaid principal amount thereof at a
rate per annum equal to the Reserve Adjusted Libor determined for each Interest
Period thereof in accordance with the terms hereof plus a margin of .50% per
annum.
(c) If the Company shall default in the payment of the
principal of or interest on any portion of any Loan or any other amount
becoming due hereunder, the Company shall on demand from time to time pay
interest on such defaulted amount accruing from the date of such default
(without reference to any period of grace)
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up to and including the date of actual payment (after as well as before
judgment) at a rate of 3% per annum in excess of the Alternate Base Rate as in
effect from time to time.
(d) The Company may elect from time to time to convert
outstanding Loans from Eurodollar Loans to Alternate Base Rate Loans by giving
the Bank at least three Business Days' prior irrevocable notice of such
election, provided that any such conversion of Eurodollar Loans shall only be
made on the last day of an Interest Period with respect thereto or upon the
date of payment in full of any amounts owing pursuant to Section 3.08 as a
result of such conversion. The Company may elect from time to time to convert
outstanding Loans from Alternate Base Rate Loans to Eurodollar Loans by giving
the Bank irrevocable written notice of such election not later than 11:00 a.m.
three Business Days prior to the date of the proposed conversion. All or any
part of outstanding Alternate Base Rate Loans may be converted as provided
herein, provided that each conversion shall be in an aggregate principal amount
of $500,000 or a whole multiple of $100,000 in excess thereof, and further
provided that no Event of Default or event which upon notice, passage of time
or both would constitute an Event of Default shall have occurred and be
continuing. Any conversion to or from Eurodollar Loans hereunder shall be in
such amounts and be made pursuant to such elections so that, after giving
effect thereto, the aggregate principal amount of all Eurodollar Loans having
the same Interest Period shall not be less than $500,000.
(e) Any Eurodollar Loans may be continued as such upon
the expiration of an Interest Period with respect thereto by compliance by the
Company with the notice provisions contained in the definition of Interest
Period; provided, that no Eurodollar Loan may be continued as such when any
Event of Default or event which upon notice, passage of time or both would
constitute an Event of Default has occurred and is continuing, but shall be
automatically converted to an Alternate Base Rate Loan on the last day of the
Interest Period in effect when the Bank is notified, or otherwise has actual
knowledge, of such default or Event of Default.
(f) No Revolving Credit Loans may be converted to or
continued as a Eurodollar Loan if the Interest Period would extend beyond the
Revolving Credit Termination Date. No Term Loan may be converted to or
continued as a Eurodollar Loan if the Interest Period would extend beyond the
Term Loan Maturity Date.
(g) Anything in this Agreement or in the Notes to the
contrary notwithstanding, the obligation of the Company to make payments of
interest shall be subject to the limitation that payments of interest shall not
be required to be paid to the Bank to the extent that the charging or receipt
thereof would not be
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permissible under the law or laws applicable to the Bank limiting the rates of
interest that may be charged or collected by the Bank.
(h) Interest on each Loan shall be payable to the Bank in
arrears on each Interest Payment Date.
SECTION 3.02. USE OF PROCEEDS.
The proceeds of the Loans shall be used for general corporate purposes
of the Company.
SECTION 3.03. OPTIONAL PREPAYMENTS. The Company may on the last day of
an Interest Period if the Loans to be repaid are in whole or in part Eurodollar
Loans, or at any time and from time to time if the Loans to be repaid are
Alternate Base Rate Loans, repay the then outstanding Loans, in whole or in
part, without premium or penalty, upon not less than three Business Days'
irrevocable written notice to the Bank with respect to prepayments of
Eurodollar Loans and on the same Business Day with respect to Alternate Base
Rate Loans, specifying the date and amount of repayment and whether such
repayment is of Eurodollar Loans or Alternate Base Rate Loans or a combination
thereof, and if a combination thereof, the amount of repayment allocable to
each. Each partial prepayment of the Term Loan shall be applied to the
remaining installments of principal thereof in the inverse order of maturity.
Amounts prepaid with respect to the Term Loan may not be reborrowed. If such
notice is given, the Company shall make such repayment and the payment amount
specified in such notice shall be due and payable, on the date specified
therein, together with accrued interest to such date on the amount repaid to
the Bank. Partial prepayments pursuant to this Section 3.03 shall be in an
aggregate principal amount of $100,000 or a whole multiple thereof.
SECTION 3.04. COMMITMENT FEE. The Company agrees to pay to the Bank
a commitment fee of $10,000 on the Closing Date and on each anniversary of the
Closing Date until the Revolving Credit Commitment Termination Date.
SECTION 3.05. INABILITY TO DETERMINE INTEREST RATE. In the event
that the Bank shall have determined (which determination shall be conclusive
and binding upon the Company) that, by reason of circumstances affecting the
London interbank market, adequate and reasonable means do not exist for
ascertaining the Reserve Adjusted Libor applicable pursuant to Section 3.01(b)
for any requested Interest Period with respect to (a) the making of a
Eurodollar Loan, (b) a Eurodollar Loan that will result from the requested
conversion of an Alternate Base Rate Loan into a Eurodollar Loan or (c) the
continuation of a Eurodollar Loan beyond the expiration of the then current
Interest Period with respect thereto, the Bank shall forthwith give notice of
such determination, confirmed in writing, to the Company at least one Business
Day prior to, as the case may be, the requested Borrowing
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Date for such Eurodollar Loan, the conversion date of such Alternate Base Rate
Loan or the last day of such Interest Period. If such notice is given (i) any
Eurodollar Loan that was to have been made shall be made as an Alternate Base
Rate Loan, (ii) any Alternate Base Rate Loan that was to have been converted to
a Eurodollar Loan shall be continued as an Alternate Base Rate Loan and (iii)
any outstanding Eurodollar Loan shall be converted, on the last day of the then
current Interest Period with respect thereto, to an Alternate Base Rate Loan.
Until such notice has been withdrawn by the Bank, the Company shall not have
the right to request a Eurodollar Loan or to convert an Alternate Base Rate
Loan to a Eurodollar Loan.
SECTION 3.06. ILLEGALITY. Notwithstanding any other provisions
herein, if any introduction of or change in any law, regulation, treaty or
directive or in the interpretation or application thereof shall make it
unlawful for the Bank to make or maintain Eurodollar Loans as contemplated by
this Agreement, the Bank shall forthwith give notice of such circumstances,
confirmed in writing, to the Company and (a) the commitment of the Bank to make
and to allow conversion to or continuations of Eurodollar Loans shall forthwith
be cancelled for the duration of such illegality and (b) the Loans then
outstanding as Eurodollar Loans, if any, shall be converted automatically to
Alternate Base Rate Loans on the next succeeding last day of each Interest
Period applicable to such Eurodollar Loans or within such earlier period as may
be required by law. The Company shall pay to the Bank, upon demand, any
additional amounts required to be paid pursuant to Section 3.08 hereof.
SECTION 3.07. OTHER EVENTS. (a) In the event that any
introduction of or change in, any applicable law, regulation, treaty, order,
directive or in the interpretation or application thereof (including without
limitation, any request, guideline or policy, whether or not having the force
of law of, or from any central bank or other governmental authority, agency or
instrumentality and including, without limitation, Regulation D), by any
authority charged with the administration or interpretation thereof shall
occur, which:
(i) shall subject the Bank to any tax of any kind
whatsoever with respect to this Agreement, the Notes, the Loans made hereunder,
or change the basis of taxation of payments to the Bank of principal, interest,
fee or any other amount payable hereunder (other than any tax that is measured
with respect to the overall net income of the Bank; or
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement (whether or not having
the force of law) against assets held by, or deposits or other liabilities in or
for the account of, advances or loans by,
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or other credit extended by, or any other acquisition of funds by, any office
of the Bank; or
(iii) shall impose on the Bank any other condition, or change
therein;
and the result of any of the foregoing is to increase the cost to the Bank of
making, renewing or maintaining advances or extensions of credit or to reduce
any amount receivable hereunder, in each case by an amount which the Bank deems
material, then, in any such case, the Company, shall pay the Bank, upon demand,
such additional amount or amounts as the Bank shall have determined will
compensate the Bank for such increased costs or reduction. If the Bank becomes
entitled to claim any additional amounts pursuant to this Section 3.07, it
shall promptly notify the Company of the event by reason of which it has become
so entitled. Such notice shall include a description of the basis for such
additional amounts and the Bank's calculations thereof, all of which shall be
conclusive and binding on the Company. This Section 3.07 shall survive the
termination of this Agreement and payment of the Notes.
(b) No failure on the part of the Bank to demand compensation
under clause (a) above on one occasion shall constitute a waiver of its right
to demand compensation on any other occasion and no failure on the part of the
Bank to promptly notify the Company shall in any way reduce any obligations of
the Company to the Bank under this Section 3.07.
SECTION 3.08. INDEMNITY. The Company agrees to indemnify the Bank
and to hold the Bank harmless from any loss, cost or expense which the Bank may
sustain or incur, including, without limitation, interest or fees payable by
the Bank to lenders of funds obtained by it in order to maintain Eurodollar
Loans hereunder, as a consequence of (a) default by the Company in payment of
the principal amount of or interest on any of a Eurodollar Loans, (b) default
by the Company to accept or make a borrowing of a Eurodollar Loan or a
conversion or continuation of a Eurodollar Loan after the Company has requested
such borrowing, conversion or continuation, (c) default by the Company in
making any prepayment of any Eurodollar Loan after the Company gives a notice
in accordance with Section 3.03 of this Agreement and/or (d) the making of any
payment of a Eurodollar Loan or the making of any conversion of a Eurodollar
Loan to an Alternate Base Rate Loan on a day which is not the last day of the
applicable Interest Period with respect thereto. The Bank's determination of
such amounts shall be conclusive absent manifest error. This Section 3.08
shall survive termination of this Agreement and payment of the Notes.
SECTION 3.09. CAPITAL ADEQUACY. If the Bank shall have determined
that the adoption on or after the date hereof of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or
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administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by the Bank (or any lending office of the Bank) or the Bank's
holding company, with any request or directive regarding capital adequacy
(whether or not having the force of the law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on the Bank's capital or on the capital of the Bank's holding company as
a consequence of its obligations hereunder to a level below that which the Bank
could have achieved but for such adoption, change or compliance (taking into
consideration the Bank's policies and the policies of the Bank's holding
company with respect to capital adequacy) by an amount deemed by the Bank to be
material, then from time to time, the Company shall pay to the Bank, upon
demand by the Bank, the additional amount or amounts as the Bank shall have
determined will compensate the Bank or the Bank's holding company for such
reduction. If the Bank becomes entitled to claim any additional amounts
pursuant to this Section 3.09, it shall promptly notify the Company. Such
notice shall include a description of the basis for such additional and the
Bank's calculation thereof, all of which shall be conclusive and binding on the
Company absent manifest error. This Section 3.09 shall survive termination of
the Agreement and payment of the Notes.
SECTION 3.10. FUNDS; MANNER OF PAYMENT. (a) Unless otherwise
specified herein each payment and prepayment of principal of and interest on
the Notes shall be made by the Company not later than 12:00 noon, New York City
time, on the date on which it is payable.
(b) All payments under this Agreement shall be made by the Company
without defense, set-off or counterclaim to the Bank on the date when due and
shall be made in lawful money of the United States of America in immediately
available funds at the Payment Office of the Bank.
(c) The Bank shall directly charge all interest payments due in
respect of the Loans to the Company's account(s) at the Payment Office or other
office of the Bank.
(d) No payment pursuant to any subsection of this Article III of
less than the entire unpaid principal amount of any Loan shall be credited to
or relieve the Company to any extent from its obligations to make any other
payment or prepayment required by any other section of this Article III.
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<PAGE> 23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into this Agreement and to make
the Loans herein provided for, the Company represents and warrants to the Bank
that:
SECTION 4.01. ORGANIZATION, CORPORATE POWERS, ETC. The Company and
each Subsidiary of the Company (i) is a corporation duly incorporated, validly
existing and in good standing under the laws of the state of its incorporation,
(ii) has the power and authority to own properties and to carry on its business
as now being conducted, (iii) is duly qualified to do business in every
jurisdiction wherein the conduct of its business or the ownership of its
properties are such as to require such qualification, (iv) has the corporate
power to execute and perform each of the Loan Documents to which it is a party,
(v) with respect to the Company, has the corporate power to borrow hereunder
and to execute and deliver the Notes, and (vi) is in compliance in all material
respects with all applicable federal, state and local laws, rules and
regulations.
SECTION 4.02. AUTHORIZATION OF BORROWING, ENFORCEABLE OBLIGATIONS.
The execution, delivery and performance by the Company of this Agreement, and
the other Loan Documents to which it is a party, the borrowings by the Company
hereunder, and the execution, delivery and performance of each Corporate
Guarantor of the Loan Documents to which it is a party (a) have been duly
authorized by all requisite corporate action (b) will not violate or require
any consent under (i) any provision of law applicable to the Company or any
Corporate Guarantor, any governmental rule or regulation, or the Certificate of
Incorporation or By-laws of the Company or any Corporate Guarantor or (ii) any
order of any court or other agency of government binding on the Company or any
Corporate Guarantor or any indenture, agreement or other instrument to which
the Company or any Corporate Guarantor is a party, or by which the Company or
any Corporate Guarantor or any of its property is bound, and (c) will not 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 other
instrument, or result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of the property or assets of the
Company or any Corporate Guarantor other than as contemplated by this Agreement
or the other Loan Documents. This Agreement and each other Loan Document to
which the Company, or any of its Subsidiaries is a party, constitutes a legal,
valid and binding obligation of the Company and such Subsidiary as the case may
be, enforceable against the Company and such Subsidiary, as the case may be, in
accordance with its terms.
SECTION 4.03. FINANCIAL CONDITION. The Company has heretofore
furnished to the Bank the audited consolidated and
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consolidating balance sheet of the Company and its Subsidiaries and the related
statements of income, retained earnings and cash flow of the Company and its
Subsidiaries, dated December 31, 1994, prepared by Deloitte & Touche
independent certified accountants for the fiscal year ended December 31, 1994,
and the management prepared interim consolidated and consolidating balance
sheet of the Company and its Subsidiaries, and the related consolidating
statements of income, retained earnings and cash flow for the nine-month period
ended September 30, 1995. All such financial statements were prepared in
conformity with Generally Accepted Accounting Principles and fairly present the
financial position and results of operations of the Company and its
Subsidiaries as of the date of such financial statements and for the periods to
which they relate and, since the date thereof, no material adverse change in
the business, operations, properties or assets or condition (financial or
otherwise) of the Company and its Subsidiaries has occurred. The Company shall
deliver to the Bank a certificate by the Chief Financial Officer of the Company
to that effect on the Closing Date. There are no material obligations or
liabilities contingent or otherwise, of the Company or its Subsidiaries, which
is not reflected in such statements.
SECTION 4.04. TAXES. All assessed deficiencies resulting from
Internal Revenue Service examinations of the federal income tax returns of the
Company or any of its Subsidiaries have been discharged or reserved against in
accordance with Generally Accepted Accounting Principles. The Company and each
of its Subsidiaries have filed or caused to be filed all federal, state and
local tax returns which are required to be filed, and has paid or has caused to
be paid all taxes as shown on said returns or on any assessment received by
them, to the extent that such taxes have become due, except (i) any such taxes
that are immaterial in amount and reserved against in accordance with Generally
Accepted Accounting Principles and (ii) taxes which are being contested in good
faith and which are reserved against in accordance with Generally Accepted
Accounting Principles.
SECTION 4.05. TITLE TO PROPERTIES. The Company and each of its
Subsidiaries each has good and marketable title to its respective properties
and assets reflected on the financial statements referred to in Section 4.03
hereof, except for such properties and assets as have been disposed of since
the date of such financial statements as no longer used or useful in the
conduct of their respective business or as have been disposed of in the
ordinary course of business, and all such properties and assets are free and
clear of mortgages, pledges, liens, charges and other encumbrances, except as
permitted by the provisions of this Agreement.
SECTION 4.06. LITIGATION. (a) Except as described in Section
8.01(h), there are no actions, suits or proceedings (whether or not purportedly
on behalf of the Company or any of its Subsidiaries)
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pending or, to the knowledge of the Company, threatened against or affecting
the Company or any of its Subsidiaries at law or in equity or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which involve any of
the transactions contemplated herein or which, if adversely determined against
the Company or such Subsidiary, could result in any materially adverse change
in the business, operations, prospects, properties or assets or in the
condition, financial or otherwise, of the Company, or such Subsidiary; and (b)
neither the Company nor any of its Subsidiaries is in default with respect to
any judgment, writ, injunction, decree, rule or regulation of any court or
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which could have a
materially adverse effect on the business, operations, prospects, properties or
assets or in the condition, financial or otherwise, of the Company or its
Subsidiaries.
SECTION 4.07. AGREEMENTS. Neither the Company nor any of its
Subsidiaries is a party to any agreement or instrument or subject to any
charter or other corporate restriction or any judgment, order, writ,
injunction, decree or regulation materially and adversely affecting its
business, operations, prospects, properties or assets, or condition, financial
or otherwise. Neither the Company nor any of its Subsidiaries is in default in
any manner which would materially and adversely affect the business, properties
or assets, or condition, financial or otherwise, of the Company or any of its
Subsidiaries in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any agreement or instrument
to which it is a party.
SECTION 4.08. COMPLIANCE WITH ERISA. Each Plan is in compliance
with ERISA; no Plan is insolvent or in reorganization, no Plan has an Unfunded
Current Liability, and no Plan has an accumulated or waived funding deficiency
or permitted decreases in its funding standard account within the meaning of
Section 412 of the Code; neither the Company nor any ERISA Affiliate nor any of
the Company's Subsidiaries has incurred any material liability to or on account
of a Plan pursuant to Section 515, 4062, 4063, 4064, 4201 or 4024 of ERISA or
expects to incur any liability under any of the foregoing sections on account
of the termination of participation in or contributions to any such Plan, no
proceedings have been instituted to terminate any Plan, no condition exists
which presents a material risk to the Company or any of its Subsidiaries or any
ERISA Affiliate of incurring a liability to or on account of a Plan pursuant to
the foregoing provisions of ERISA and the Code; no lien imposed under the Code
or ERISA on the assets of the Company or any of its Subsidiaries exists or is
likely to arise on account of any Plan; and the Company, and each of its
Subsidiaries may terminate contributions to any other employee
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benefit plans maintained by them without incurring any material liability to
any person interested therein.
SECTION 4.09. FEDERAL RESERVE REGULATIONS; USE OF PROCEEDS. (a)
Neither the Company nor any of the Company's Subsidiaries is engaged
principally in, nor has as one of its important activities, the business of
extending credit for the purpose of purchasing or carrying any "margin stock"
(within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System of the United States, as amended to the date hereof). If
requested by the Bank, the Company will, and will cause each of its
Subsidiaries to, furnish to the Bank such a statement on Federal Reserve Form
U-1.
(b) No part of the proceeds of any Loan will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately,
(i) to purchase or to carry margin stock or to extend credit to others for the
purpose of purchasing or carrying margin stock, or to refund indebtedness
originally incurred for such purposes, or (ii) for any purpose which violates
or is inconsistent with the provisions of the Regulations G, T, U, or X of the
Board of Governors of The Federal Reserve System.
(c) The proceeds of each Loan shall be used only for the purposes
permitted under Section 3.02.
SECTION 4.10. GOVERNMENTAL APPROVAL. No registration with or
consent or approval of, or other action by, any federal, state or other
governmental authority or regulatory body is required in connection with the
execution, delivery and performance of this Agreement by the Company or any
Corporate Guarantor, or with the execution and delivery of other Loan Documents
to which it is a party or, with respect to the Company, the borrowings
hereunder.
SECTION 4.11. SUBSIDIARIES. Attached hereto as Schedule I is a
correct and complete list of all of the Company's Subsidiaries showing as to
each Subsidiary, its name, the jurisdiction of its incorporation and the
percentages of such outstanding shares owned by the Company.
SECTION 4.12. HAZARDOUS MATERIALS. The Company and each of its
Subsidiaries are each in compliance with all federal, state or local laws,
ordinances, rules, regulations or policies governing Hazardous Materials and
neither the Company nor any of its Subsidiaries has used Hazardous Materials
on, from, or affecting any property now owned or occupied or hereafter owned or
occupied by the Company or any of its Subsidiaries in any manner which violates
federal, state or local laws, ordinances, rules, regulations, or policies
governing the use, storage, treatment, transportation, manufacture, refinement,
handling, production or disposal of Hazardous Materials, and that, to the best
of the Company's knowledge, no prior owner of any such property or any tenant,
subtenant, prior tenant or prior subtenant have used
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<PAGE> 27
Hazardous Materials on, from, or affecting such property in any manner which
violates federal, state or local laws, ordinances, rules, regulations, or
policies governing the use, storage, treatment, transportation, manufacture,
refinement, handling, production or disposal of Hazardous Materials.
SECTION 4.13. INVESTMENT COMPANY ACT. Neither the Company nor any
of its Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
ARTICLE V
CONDITIONS OF LENDING
SECTION 5.01. CONDITIONS TO INITIAL REVOLVING CREDIT LOAN. The
Bank shall have no obligation to make the Term Loan and the initial Revolving
Credit Loan hereunder unless on the Closing Date the following conditions
precedent are fulfilled to the satisfaction of the Bank:
(a) REVOLVING CREDIT NOTE. The Bank shall have received a
Revolving Credit Note conforming to the requirements of Section 2.02 hereof,
executed by a duly authorized officer of the Company.
(b) REPRESENTATIONS AND WARRANTIES. The Company shall have
delivered to the Bank a certificate dated the Closing Date and executed by an
Executive Officer certifying that (i) the representations and warranties by the
Company pursuant to this Agreement and the Loan Documents shall be true and
correct on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date, and
(ii) no Event of Default, nor any event which upon notice or lapse of time or
both would constitute an Event of Default, shall have occurred and be
continuing on the Closing Date.
(c) OPINION OF COUNSEL. On the Closing Date, the Bank shall have
received the favorable written opinion of counsel for the Company dated the
Closing Date, substantially in the form of Exhibit "E" attached hereto.
(d) NO DEFAULT CERTIFICATE; DEEMED REPRESENTATION. The Company
shall have delivered to the Bank a certificate, dated the Closing Date and
signed by the Chief Financial Officer of the Company stating that (i) such
officer has read this Agreement, (ii) to the best of such officer's knowledge,
the conditions precedent set forth in Section 5.01 have been satisfied, (iii)
that to the best of such officer's knowledge, no Event of Default nor any event
which upon notice or lapse of time or both would constitute an Event of Default
has occurred and is continuing, and (iv) such
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officer has made or caused to be made such examination or investigation as is
necessary to enable him or her to express an informed opinion as to the matters
set forth in the preceding clauses (ii) and (iii) hereof.
(e) SUPPORTING DOCUMENTS. The Bank shall have received on or
prior to the Closing Date (a) a certificate of good standing for the Company
from the secretary of the state of its jurisdiction of incorporation dated as
of a recent date; (b) certified copies of the Certificate of Incorporation and
By-laws of the Company; (c) a certificate of the Secretary or an Assistant
Secretary of the Company dated the Closing Date and certifying (i) that neither
the Certificate of Incorporation nor the By-laws of the Company has been
amended since the date of their certification (ii) that attached thereto is a
true and complete copy of resolutions adopted by the Board of Directors of the
Company authorizing the execution, delivery and performance of each Loan
Document and the borrowings hereunder; (iii) the incumbency and specimen
signature of each officer of the Company executing each Loan Document and any
certificates or instruments furnished pursuant hereto or thereto, and a
certification by another officer of the Company as to the incumbency and
signature of the Secretary or Assistant Secretary of the Company; and (d) such
other documents as the Bank may reasonably request.
(f) INSURANCE. The Bank shall have received on or prior to the
Closing Date a certificate of insurance from an independent insurance broker
confirming the insurance required to be maintained pursuant to Section 6.01
hereof.
(g) RECEIVABLES, INVENTORY, AND EQUIPMENT FREE FROM ENCUMBRANCES.
The Bank shall have received on or prior to the Closing Date, proof
satisfactory to the Bank that the Company's and each of its Subsidiaries'
accounts receivable, inventory, equipment and all other assets of the Company
and each of its Subsidiaries are free and clear of all Liens, except those
Liens permitted pursuant to Section 7.01.
(h) NO MATERIAL ADVERSE CHANGES. There shall not have occurred in
the sole opinion of the Bank any material adverse change in the business,
operations, performance, properties, prospects or condition, financial or
otherwise, of the Company or any of its Subsidiaries; provided, however, any
judgments, orders or decrees with respect to the federal investigation
described in Section 8.01(h) which individually and in the aggregate are less
then $15,000,000 shall not, by itself, be deemed to be such a material adverse
change.
(i) FEES. The Company shall have paid the fees payable on the
Closing Date referred to in Section 3.04 and all costs and expenses incurred by
the Bank in connection with the negotiation,
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preparation and execution of the Loan Documents (including, without limitation,
the fees and expenses of counsel).
(j) COMPLETION OF PROCEEDINGS. All corporate and other
proceedings, and all documents, instruments and other legal matters in
connection with the transactions contemplated by the Loan Documents shall be
satisfactory in form and substance to the Bank and its counsel.
(k) OTHER INFORMATION, DOCUMENTATION. The Bank shall receive
such other and further information and documentation as it may require,
including, but not limited, to any information or documentation relating to
compliance by the Company and each of its Subsidiaries with the requirements of
all federal, state and local laws, ordinances, rules, regulations or policies
governing the use, storage, treatment, transportation, refinement, handling,
production or disposal of Hazardous Materials.
SECTION 5.02. CONDITIONS TO ALL LOANS. The obligation of the Bank
to extend any Loan hereunder (including, the initial Revolving Credit Loan and
the Term Loan) shall be subject to the conditions precedent set forth in
Section 5.01 and the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. As of each borrowing
hereunder, the representations and warranties by the Company and each Corporate
Guarantor, if any, pursuant to this Agreement and the Loan Documents to which
each is a party shall be true and correct on and as of such date with the same
effect as such representations and warranties have been made on and as of such
date.
(b) NO EVENTS OF DEFAULT. At the time of each borrowing
hereunder, the Company and each Subsidiary shall be in compliance with all the
terms and provisions set forth herein on their parts to be observed or
performed, and no Event of Default or any event which upon notice or lapse of
time or both would constitute an event of default shall have occurred and be
continuing or will result after giving effect to Loan requested.
SECTION 5.03. ADDITIONAL CONDITIONS TO TERM LOAN. The obligation of
the Bank to make the Term Loan shall be subject to the additional condition
precedent that as of the Revolving Credit Termination Date, the Bank shall
receive a Term Note conforming to the requirements of Section 2.04 hereof
executed by a duly authorized officer of the Company.
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ARTICLE VI
AFFIRMATIVE COVENANTS
The Company agrees with the Bank that so long as this Agreement shall
remain in effect or any of the principal of or interest on the Notes or any
other Obligations hereunder shall be unpaid it will, and will cause each of its
Subsidiaries to:
SECTION 6.01. CORPORATE EXISTENCE, PROPERTIES, ETC. Do or cause to
be done all things necessary to preserve and keep in full force and effect its
corporate existence, rights and franchises and comply with all laws applicable
to it; at all times maintain, preserve and protect all franchises and trade
names and preserve all of its property used or useful in the conduct of its
business and keep the same in good repair, working order and condition, and
from time to time make, or cause to be made, all needful and proper repairs,
renewals, replacements, betterments and improvements thereto so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; at all times keep its insurable properties adequately
insured and maintain (i) insurance to such extent and against such risks,
including fire, as is customary with companies in the same or similar
businesses, (ii) workmen's compensation insurance in the amount required by
applicable law, (iii) public liability insurance, which shall include product
liability insurance, in the amount customary with companies in the same or
similar business against claims for personal injury or death or properties
owned, occupied or controlled by it, and (iv) such other insurance as may be
required by law or as may be reasonably required in writing by the Bank. Each
such policy of insurance shall provide for at least thirty (30) day's prior
written notice to the Bank of any modification or cancellation of such
policies. The Company shall provide to the Bank promptly upon receipt thereof
evidence of the annual renewal of each such policy.
SECTION 6.02. PAYMENT OF INDEBTEDNESS, TAXES, ETC. (a) Pay all
indebtedness and obligations, including, but not limited to, all principal and
interest on all Notes, whether now existing or hereafter arising, as and when
due and payable and (b) pay and discharge or cause to be paid and discharged
promptly all taxes, assessments and government charges or levies imposed upon
it or upon its income and profits, or upon any of its property, real, personal
or mixed, or upon any part thereof, before the same shall become in default, as
well as all lawful claims for labor, materials and supplies or otherwise which,
if unpaid, might become a lien or charge upon such properties or any part
thereof; provided, however, that neither the Company nor any of its
Subsidiaries shall be required to pay and discharge or cause to be paid and
discharged any such tax, assessment, charge, levy or claim so long as the
validity thereof shall be contested in good faith by appropriate proceedings,
and the Company or such Subsidiary, as the
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case may be, shall have set aside on its books adequate reserves determined in
accordance with Generally Accepted Accounting Principles with respect to any
such tax, assessment, charge, levy or claim so contested and; further, provided
that, subject to the foregoing proviso, the Company and each of its
Subsidiaries will pay or cause to be paid all such taxes, assessments, charges,
levies or claims upon the commencement of proceedings to foreclose any lien
which has attached as security therefor.
SECTION 6.03. FINANCIAL STATEMENTS, REPORTS, ETC. Furnish to the
Bank:
(a) as soon as available, but in any event within 90 days
after the end of each fiscal year of the Company, a copy of (i) the
audited consolidated balance sheet of the Company and its Subsidiaries
as of the end of such year and the related audited consolidated
statements of income, retained earnings and cash flow for such year,
accompanied by a report thereon of independent certified public
accountants of recognized standing selected by the Company and
satisfactory to the Bank (the "Auditor"), which report shall be
unqualified; and (ii) the management prepared consolidating financial
statements of the Company and its Subsidiaries which support the
financial statements delivered pursuant to clause (i);
(b) as soon as available, but in any event not later than
60 days after the end of each quarterly period of each fiscal year of
the Company, a copy of the unaudited interim consolidated and
consolidating balance sheet of the Company and its Subsidiaries as of
the end of each such quarter and the related unaudited interim
consolidated and consolidating statements of income, retained
earnings and cash flow for such quarter and the portion of the fiscal
year through such date;
(c) with each delivery required by (a) and (b) above, a
certificate prepared and signed by the Auditor (with respect to (a)
only) and the Chief Financial Officer, respectively, as to whether or
not, as of the close of such preceding period and at all times during
such preceding period, the Company was in compliance with all the
provisions in this Agreement, showing computation of financial
covenants and quantitative negative covenants, and if the Auditor or
Chief Financial Officer, as the case may be, shall have obtained
knowledge of any default in such compliance or notice of such default,
it shall disclose in such certificate such default or defaults or
notice thereof and the nature thereof, whether or not the same shall
constitute an Event of Default hereunder;
(d) at all times indicated in (a) above, a copy of the
management letter, if any, prepared by the Auditor;
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(e) promptly, after filing thereof, copies of all regular
and periodic financial information, proxy materials and other
information and reports which the Company or any of its Subsidiaries
shall file with the Securities and Exchange Commission, including,
without limitation, the Company's annual report on Form 10-K and
quarterly report on Form 10-Q;
(f) promptly after submission to any government or
regulatory agency, all documents and information furnished to such
government or regulatory agency other than such documents and
information prepared in the normal course of business and which would
not result in any adverse action to be taken by such agency; and
(g) promptly, from time to time, such other information
regarding the operations, business affairs and condition, financial or
otherwise, of the Company or any of its Subsidiaries as the Bank may
request.
SECTION 6.04. ACCESS TO PREMISES AND RECORDS. Maintain financial
records in accordance with Generally Accepted Accounting Principles and permit
representatives of the Bank to have access during normal business hours to such
financial records and the premises of the Company and each of its Subsidiaries
upon request, and to make such excerpts from such records or to conduct such
audits as such representatives reasonably deem necessary.
SECTION 6.05. NOTICE OF ADVERSE CHANGE. Promptly, after any
change or information shall have come to the attention of an Executive Officer
of the Company, notify the Bank in writing of (a) any change in the business or
the operations which, in the good faith judgment of such officer, may be
materially adverse to the business, operation, prospects, properties or assets
or to the condition, financial or otherwise, of the Company or any of its
Subsidiaries disclosing the nature thereof, and (b) any information which
indicates that any financial statements which are the subject of any
representation contained in this Agreement, or which are furnished to the Bank
pursuant to this Agreement, fail, in any material respect, to present fairly
the financial condition and results of operations purported to be presented
therein, disclosing the nature thereof.
SECTION 6.06. NOTICE OF DEFAULT. In the event any Executive
Officer of the Company knows of any Event of Default which shall have occurred
or knows of the occurrence of any event which, upon notice or lapse of time or
both, would constitute an Event of Default, or knows of an event of default
under any other agreement, promptly, after any such default or Event of
Default, furnish to the Bank a written statement as to such occurrence,
specifying the nature thereof and the action (if any) which is proposed to be
taken with respect thereto.
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SECTION 6.07. NOTICE OF LITIGATION. Give the Bank prompt, after
any knowledge thereof, written notice of any action, suit or proceeding at law
or in equity or by or before any governmental instrumentality or other agency
which, if adversely determined against the Company or any of its Subsidiaries
on the basis of the allegations and information set forth in the complaint or
other notice of such action, suit or proceeding, or in the amendments thereof,
if any, would (i) materially impair the right of the Company or any of its
Subsidiaries to carry on its businesses substantially as now conducted or (ii)
materially and adversely affect the business, operations, properties, assets or
condition, financial or otherwise, of the Company or any of its Subsidiaries.
SECTION 6.08. ERISA. As soon as possible after the Company or any
of its Subsidiaries knows or has reason to know any of the following, the
Company will deliver to the Bank a certificate of the Chief Financial Officer
of the Company setting forth details as to such occurrence and such action, if
any, which the Company, such Subsidiary or such ERISA Affiliate is required or
proposes to take, together with any notices required or proposed to be given to
or filed with or by the Company, such Subsidiary, ERISA Affiliate, the PBGC, a
Plan participant or the Plan Administrator with respect thereto: that a
Reportable Event has occurred, that an accumulated funding deficiency has been
incurred or an application may be or has been made to the Secretary of the
Treasury for a waiver or modification of the minimum funding standard
(including any required installment payments) or an extension of any
amortization period under Section 412 of the Code with respect to a Plan, that
a Plan has been or may be terminated, reorganized, partitioned or declared
insolvent under Title IV of ERISA, that a Plan has an Unfunded Current
Liability giving rise to a lien under ERISA, that proceedings may be or have
been instituted to terminate a Plan, that a proceeding has been instituted
pursuant to Section 515 of ERISA to collect a delinquent contribution to a
Plan, or that the Company, any of its Subsidiaries or any ERISA Affiliate will
or may incur any liability (including any contingent or secondary liability) to
or on account of the termination of or withdrawal from a Plan under Section
4062, 4063, 4064, 4201 or 4204 of ERISA. The Company will deliver to the Bank
a complete copy of the annual report (Form 5500) of each Plan required to be
filed with the Internal Revenue Service. In addition to any certificates or
notices delivered to the Bank pursuant to the first sentence hereof, copies of
annual reports and any other notices received by the Company or any of its
Subsidiaries required to be delivered to the Bank hereunder shall be delivered
to the Bank no later than 10 days after the later of the date such report or
notice has been filed with the Internal Revenue Service or the PBGC, given to
Plan participants or received by the Company or its Subsidiary.
SECTION 6.09. COMPLIANCE WITH APPLICABLE LAWS. Comply with the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority, the breach of which would
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materially and adversely affect the business, operations, prospects, properties
or assets or the condition, financial or otherwise, of the Company or any of
its Subsidiaries, including, without limitation, the rules and regulations of
the Board of Governors of the Federal Reserve System and the Federal Deposit
Insurance Corporation.
SECTION 6.10. SUBSIDIARIES. Give the Bank prompt written notice
prior to the occurrence thereof, of the creation, establishment or acquisition,
in any manner, of any Subsidiary of the Company not existing on the date
hereof. The Company shall cause each Subsidiary to execute a Corporate
Guaranty within three Business Days of the creation, establishment or
acquisition of such Subsidiary and in connection therewith shall provide to the
Bank the supporting documents identified in clauses (a) through (d) of Section
5.01(e), in each case with respect to such Subsidiary.
SECTION 6.11. DEFAULT IN OTHER AGREEMENTS. Promptly notify the
Bank of any default which in any manner would materially and adversely affect
the business, properties, assets, operations or condition, financial or
otherwise, of the Company or any of its Subsidiaries in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any agreement or instrument to which the Company or any of its
Subsidiaries is a party.
SECTION 6.12. ENVIRONMENTAL LAWS. (a) Keep or cause any
property owned or occupied by the Company or any of its Subsidiaries to be kept
free from Hazardous Materials and, without limiting the foregoing, comply with
and use its best efforts to ensure compliance by all tenants and subtenants of
their respective properties with the requirements of all federal, state and
local laws, ordinances, rules, regulations or policies governing the use,
storage, treatment, transportation, manufacture, refinement, handling,
production or disposal of Hazardous Materials, provide to the Bank all
documentation in connection with such compliance that the Bank may reasonably
request, and defend, indemnify, and hold harmless the Bank, its employees,
agents, officers, and directors, from and against any claims, demands,
penalties, fines, liabilities, settlements, damages, costs, or expenses of
whatever kind of nature, known or unknown, contingent or otherwise, arising out
of, or in any way related to, (i) the presence, disposal, release, or
threatened release of any Hazardous Materials on any property at any time owned
or occupied by the Company or any of its Subsidiaries; (ii) any personal injury
(including wrongful death) or property damage (real or personal) arising out of
or related to such Hazardous Materials; (iii) any lawsuit brought or
threatened, settlement reached, or government order relating to such Hazardous
Materials, and/or (iv) any violation of laws, orders, regulations,
requirements, or demands of government authorities, or any policies or
requirements of the Bank, which are based upon or in any way related to such
Hazardous Materials including, without limitation,
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attorney and consultant fees, investigation and laboratory fees, court costs,
and litigation expenses.
(b) Execute and cause each Subsidiary to execute any and all
documentation with respect to environmental issues as the Bank may request and
such documentation shall be in form and substance satisfactory to the Bank.
ARTICLE VII
NEGATIVE COVENANTS
The Company covenants and agrees with the Bank that so long as this
Agreement shall remain in effect or any of the principal of or interest on the
Notes or any other Obligations hereunder shall be unpaid, it will not, and will
not cause or permit any of its Subsidiaries, directly or indirectly, to:
SECTION 7.01. LIENS. Incur, create, assume or suffer to exist any
mortgage, pledge, assignment, security interest, lien, charge or other
encumbrance of any nature whatsoever (including conditional sales or other
title retention agreements) collectively ("Liens") on any of their respective
assets now or hereafter owned, other than:
(a) Liens existing on the date hereof as set forth on
Schedule II attached hereto and acceptable to the Bank and any renewals or
extensions thereof to the extent permitted pursuant to section 7.02(a);
(b) deposits under workmen's compensation, unemployment
insurance and social security laws;
(c) Liens for taxes not yet due;
(d) purchase money Liens for fixed or capital assets;
provided, in each case, (x) no Event of Default or event which, upon notice or
lapse of time or both, would constitute an Event of Default shall have occurred
and be continuing or shall occur after the grant of the proposed Lien, and (y)
such purchase money Lien does not exceed 100% of the purchase price; and
(e) Liens granted to the Bank.
SECTION 7.02. INDEBTEDNESS. Incur, create, assume or suffer to
exist or otherwise become liable in respect of any indebtedness for borrowed
money or for the deferred purchase price of property or services or liability,
or similar obligations, or any obligation evidenced by notes, bonds, debentures
or similar obligations, or obligations in respect of a Capital Lease or accept
any deposits,
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advances or progress payments under contracts (collectively, "Indebtedness"),
other than:
(a) Indebtedness incurred prior to the date hereof as
described in Schedule "III" attached hereto and acceptable to the
Bank, including any renewals or extensions thereof provided any such
renewal or extension does not result in an increase in the aggregate
principal amount of such Indebtedness then outstanding;
(b) Indebtedness to the Bank;
(c) Unsecured Indebtedness for trade payables incurred in
the ordinary course of business which are not overdue;
(d) Unsecured Subordinated Indebtedness approved in
writing by the Bank;
(e) Unsecured Indebtedness for borrowings from banks in an
aggregate principal amount not in excess of $6,000,000 at any one time
outstanding; provided such indebtedness does not mature by its terms,
and is not renewable at the option of the Company, at a date more than
one year after the date of the original creation of such indebtedness;
(f) Other unsecured Indebtedness in an aggregate
principal amount not in excess of $3,000,000; and
(g) Indebtedness secured by purchased money liens as
permitted under Section 7.01(d).
SECTION 7.03. GUARANTEES. Guarantee, endorse, become surety
for, or otherwise in any way become or be responsible for the Indebtedness or
obligations of any Person, whether by agreement to maintain working capital or
equity capital or otherwise maintain the net worth or solvency of any Person or
by agreement to purchase the Indebtedness of any other person, or agreement for
the furnishing of funds, directly or indirectly, through the purchase of goods,
supplies or services for the purpose of discharging the Indebtedness of any
other person or otherwise, or enter into or be a party to any contract for the
purchase of merchandise, materials, supplies or other property if such contract
provides that payment for such merchandise, materials, supplies or other
property shall be made regardless of whether delivery of such merchandise,
supplies or other property is ever made or tendered except:
(a) Guarantees executed prior to the date hereof as described on
Schedule IV attached and acceptable to the Bank, hereto;
(b) endorsements of negotiable instruments for collection or
deposit in the ordinary course of business;
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(c) guarantees of any Indebtedness under this Agreement or any
other Indebtedness owing to the Bank; and
(d) guarantees, endorsements, or other contingent obligations of
the Company or any Subsidiary of the Company in respect of any
Person; provided that the aggregate of such guarantees,
endorsements or other contingent obligations shall not exceed
$1,000,000 at any one time outstanding.
SECTION 7.04. SALE OF ASSETS. Sell, lease, transfer or otherwise
dispose of their respective properties and assets, whether or not pursuant to
an order of a federal agency or commission, except for (i) the sale of
inventory disposed of in the ordinary course of business and (ii) the sale or
other disposition of properties or assets no longer used or useful in the
conduct of their respective businesses.
SECTION 7.05. SALES OF NOTES. Sell, transfer, discount or
otherwise dispose of notes, accounts receivable or other obligations owing to
the Company or any of its Subsidiaries, with or without recourse, except for
collection in the ordinary course of business.
SECTION 7.06. LOANS AND INVESTMENTS. Make or commit to make any
advance, loan, extension of credit, or capital contributions to or purchase or
hold beneficially any stock or other securities, or evidence of Indebtedness
of, purchase or acquire all or a substantial part of the assets of, make or
permit to exist any interest whatsoever in, any other Person except (a) for
ownership of stock of any Subsidiaries existing as of the Closing Date, (b) the
Company may make loans, investments and advances to its officers and to any
corporation not an Affiliate of the Company; provided, such loans, investments
and advances shall not exceed, in the aggregate, $2,000,000 at any time, and
(c) the Company and each of its Subsidiaries may invest in:
(i) direct obligations of the United States of America or
any governmental agency thereof, provided that such obligations mature
within one year from the date of acquisition thereof; or
(ii) dollar denominated certificates of time deposit
maturing within one year issued by any commercial bank organized and
existing under the laws of the United Sates or any state thereof and
having aggregate capital and surplus in excess of $500,000,000; or
(iii) money market mutual funds having assets in excess of
$2,500,000,000; or
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(iv) commercial paper rated not less an P-1 or A-1 or
their equivalent by Moody's Investor Services,Inc. or Standard &
Poor's Corporation, respectively; or
(v) tax exempt securities of a U.S. issuer rated A or
better by Standard and Poor's Corporation or Moody's Investors
Service, Inc.
SECTION 7.07. NATURE OF BUSINESS. Change or alter, in any
material respect, the nature of its business from the nature of the business
engaged in by it on the date hereof.
SECTION 7.08. SALE AND LEASEBACK. Enter into any arrangement,
directly or indirectly, with any Person whereby it shall sell or transfer any
property, whether real or personal, used or useful in its business, whether now
owned or hereafter acquired, of its or any of its Subsidiaries or Affiliates,
if at the time of such sale or disposition it intends to lease or otherwise
acquire the right to use or possess (except by purchase) such property or like
property for a substantially similar purpose.
SECTION 7.09. LEASES. Become liable in any way, whether directly
or by assignment or as a guarantor or other surety, for the obligations of the
lessee under any operating lease, unless, immediately after giving effect to
the occurrence of the liability with respect to such leases, the aggregate
amount of all rents paid under such leases at the time in effect during the
then current fiscal year will not exceed in the aggregate $3,000,000.
SECTION 7.10. FEDERAL RESERVE REGULATIONS. Permit any Loan or the
proceeds of any Loan to be used for any purpose which violates or is
inconsistent with the provisions of Regulations G, T, U or X of the Board of
Governors of the Federal Reserve System.
SECTION 7.11. ACCOUNTING POLICIES AND PROCEDURES. Permit any
change in the accounting policies and procedures the Company or any of its
Subsidiaries, including a change in fiscal year, without the prior written
consent of the Bank; provided, however, that any policy or procedure required
to be changed by the FASB (or other board or committee of the FASB in order to
comply with Generally Accepted Accounting Principles) may be so changed.
SECTION 7.12. HAZARDOUS MATERIALS. Cause or permit any of its
properties or assets to be used to generate, manufacture, refine, transport,
treat, store, handle, dispose, transfer, produce or process Hazardous
Materials, except in compliance with all applicable federal, state and local
laws or regulations, nor cause or permit, as a result of any intentional or
negligent act or omission on the part of the Company, any of its Subsidiaries
or any tenant or subtenant, a release of Hazardous Materials onto such property
or asset or onto any other property.
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SECTION 7.13. LIMITATIONS ON FUNDAMENTAL CHANGES. Merge or
consolidate with, or sell, assign, lease or otherwise dispose of (whether in
one transaction or in a series of transactions) all or substantially all of its
assets (whether now or hereafter acquired) to, any Person, or liquidate, wind
up or dissolve or suffer any liquidation or dissolution or without the prior
written consent of the Bank acquire all or substantially all of the assets or
the business of any Person.
SECTION 7.14. CONSOLIDATED TANGIBLE NET WORTH. Permit at any time
Consolidated Tangible Net Worth to be less $55,000,000.
SECTION 7.15. TOTAL CONSOLIDATED UNSUBORDINATED LIABILITIES TO
TANGIBLE NET WORTH. Permit at any time the ratio of Consolidated Total
Unsubordinated Liabilities, excluding deferred income taxes, to Consolidated
Tangible Net Worth to be greater than 1.6 to 1.0.
SECTION 7.16. CURRENT RATIO. Permit at any time the ratio of the
Consolidated Current Assets to Consolidated Current Liabilities to be less than
2.0 to 1.0.
SECTION 7.17. DEBT SERVICE COVERAGE RATIO. Permit at any time the
Consolidated Debt Service Coverage Ratio to be less than 1.25 to 1.0.
SECTION 7.18. NET LOSS. Suffer a Consolidated net loss for any
fiscal quarter; provided, however, an amount (not to exceed $15,000,000) of any
judgment, order or decree issued in connection with the investigation described
in Section 8.01(h) shall be excluded in the determination of Consolidated net
loss for the fiscal quarter in which such amount would otherwise be required to
be included.
SECTION 7.19. CONSOLIDATED CAPITAL EXPENDITURES. Permit
Consolidated Capital Expenditures (including capitalized lease payments) to
exceed, in the aggregate, an amount equal to $9,000,000 plus any unused
Remaining Capital Expenditure Funds from any prior fiscal year commencing
fiscal year 1994.
SECTION 7.20 SUBORDINATED DEBT. Directly or indirectly
prepay, defease, purchase, redeem, or otherwise acquire any Subordinated Debt.
SECTION 7.21. DIVIDENDS.
(a) (i) Declare or pay any dividends, either in cash or property, on
any shares of its capital stock of any class (except dividends or other
distributions payable solely in shares of capital stock of the Company); or
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(ii) Make any other payment or distribution, either directly or
indirectly or through any Subsidiary, in respect of its capital stock.
(such declarations or payments of dividends, and all such other distributions
being herein collectively call "Restricted Payments"), if after giving effect
thereto the aggregate amount of Restricted Payments made during the period from
and after December 31, 1993 to and including the date of making of the
Restricted Payment in question, would exceed the sum of (i) $5,000,000 plus
(ii) 75% of Consolidated Net Income for such period, computed on a cumulative
basis for said entire period (or if such Consolidated Net Income is a deficit
figure, then minus 100% of such deficit). The Company will not declare any
dividend which constitutes a Restricted Payment payable more than 60 days
after the date of declaration thereof.
(b) Except as hereinafter provided, directly or indirectly, or
through any Subsidiary, purchase, redeem or retire any shares of its capital
stock of any class or any warrants, rights or options to purchase or acquire
any shares of its capital stock (such purchases, redemptions or retirements of
capital stock and warrants, rights or options being herein collectively called
"Stock Repurchases"), other than in exchange for or out of the net proceeds to
the Company from the substantially concurrent issue or sale of other shares of
capital stock of the Company or warrants, rights or option's to purchase or
acquire any shares of its capital stock, if after giving effect thereto the
aggregate amount of Stock Repurchases plus Restricted Payments made during the
period from and after December 31, 1993 to and including the date of making the
Stock Repurchase in question, would exceed the sum of (i) $15,000,000 plus (ii)
75% of Consolidated Net Income for such period, computed on a cumulative basis
for said entire period (or if such Consolidated Net Income is a deficit figure,
then minus 100% of such deficit).
(c) For the purposes of this Section 7.20, the amount of any
Restricted Payment declared, paid or distributed in property of the Company
shall be deemed to be the greater of the book value or fair market value (as
determined in good faith by the Board of Directors of the Company) of such
property at the time of the making of the Restricted Payment in question.
SECTION 7.22. TRANSACTIONS WITH AFFILIATES. Enter into any
transaction, including, without limitation, the purchase, sale, or exchange of
property or the rendering of any service, with any Affiliate, except in the
ordinary course of and pursuant to the reasonable requirements of the Company's
or any of its Subsidiary's business and upon fair and reasonable terms no less
favorable to the Company or such Subsidiary then they would obtain in a
comparable arms-length transaction with a Person not an Affiliate.
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SECTION 7.23. JOINT VENTURES. Enter into any joint venture or
partnership arrangement without the prior written consent of the Bank.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01. EVENTS OF DEFAULT. In the case of the happening of
any of the following events (herein called "Events of Default"):
(a) failure to pay the principal of any Loan as and when
due and payable, or failure to pay any interest on the Loans or any
fees under this Agreement within fifteen days after the date such
interest or fee is due and payable;
(b) default shall be made in the due observance or
performance of any covenant, condition or agreement of the Company or
any Corporate Guarantor to be performed pursuant to this Agreement,
the Notes or any other Loan Document; provided, however, no defaults
with respect to the covenants in Section 6 shall constitute an Event
of Default unless such default shall continued unremedied for a period
of fifteen (15) days after receipt by the Company of notice from the
Bank of such default.
(c) any representation or warranty made in this Agreement
or any other Loan Document shall prove to be false or misleading in
any material respect when made or given or when deemed made or given;
(d) any report, certificate, financial statement or other
instrument furnished in connection with this Agreement or any other
Loan Document or the borrowings hereunder, shall prove to be false or
misleading in any material respect when made or given;
(e) default in the performance or compliance in respect
of any agreement or condition relating to any obligation of the
Company, any of its Subsidiaries for any Indebtedness (other than the
Notes), if the effect of such default is to accelerate the maturity of
such obligations or to permit the holder or obligee thereof (or a
trustee on behalf of such holder or obligee) to cause such
Indebtedness to become due prior to the stated maturity thereof, or
any such Indebtedness shall not be paid when due;
(f) the Company or any of its Subsidiaries shall (i)
voluntarily commence any proceeding or file any petition seeking
relief under Title 11 of the United States Code or any other federal
or state bankruptcy, insolvency or similar law, (ii) consent to the
institution of, or fail to controvert in
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a timely and appropriate manner, any such proceeding or the filing of
any such petition, (iii) apply for or consent to the employment of a
receiver, trustee, custodian, sequestrator or similar official for the
Company or any of its Subsidiaries or for a substantial part of its
property; (iv) file an answer admitting the material allegations of a
petition filed against it in such proceeding, (v) make a general
assignment for the benefit of creditors, (vii) become unable or admit
in writing its inability or fail generally to pay its debts as they
become due or (viii) take corporate action for the purpose of
effecting any of the foregoing;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of the Company or any of
its Subsidiaries or of a substantial part of their respective
property, under Title 11 of the United States Code or any other
federal or state bankruptcy insolvency or similar law, (ii) the
appointment of a receiver, trustee, custodian, sequestrator or similar
official for the Company or any of its Subsidiaries or for a
substantial part of their property, or (iii) the winding-up or
liquidation of the Company or any of its Subsidiaries and such
proceeding or petition shall continue undismissed for 60 days or an
order or decree approving or ordering any of the foregoing shall
continue unstayed and in effect for 60 days;
(h) One or more orders, judgments or decrees for the
payment of money in excess of $2,000,000 in the aggregate shall be
rendered against the Company or any of its Subsidiaries and the same
shall not have been paid in accordance with such judgment, order or
decree and (i) an enforcement proceeding shall have been
commenced by any creditor upon such a judgment order or decree, or
(ii) there shall have been a period of thirty (30) days during which a
stay of enforcement of such judgment, order or decree, by reason of
pending appeal or otherwise, was not in effect; provided, however, no
Event of Default shall be deemed to occur hereunder with respect to
any such order, judgment or decree which is issued or entered into in
final settlement, adjudication, or other disposition of the federal
investigation pending on the date hereof against the Company with
respect to alleged false statements and false claims purportedly made
in connection with contracts ostensibly awarded to the Company by the
U.S. Department of Veterans Affairs, unless such order, judgment or
decree exceeds, individually or in the aggregate, $15,000,000.
(i) any Plan shall fail to maintain the minimum funding
standard required for any Plan year or part thereof or a waiver of
such standard or extension of any amortization period is sought or
granted under Section 412 of the Code, any
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Plan is, shall have been terminated or the subject of termination
proceedings under ERISA, any Plan shall have an Unfunded Current
Liability, a Reportable Event shall have occurred with respect to a
Plan or the Company, any of its Subsidiaries, or any ERISA Affiliate
shall have incurred a liability to or on account of a Plan under
Section 515, 4062, 4063, 4063, 4201 or 4204 of ERISA, and there shall
result from any such event or events the imposition of a lien upon the
assets of the Company or any of its Subsidiaries, the granting of a
security interest, or a liability to the PBGC or a Plan or a trustee
appointed under ERISA or a penalty under Section 4971 of the Code;
(k) any federal, state or municipal tax lien is filed
against the Company or any of its Subsidiaries or any of their
respective properties and the same is not discharged of record within
thirty (30) days; or
(l) any Loan Document shall for any reason cease to be in
full force and effect in accordance with its terms or the Company or
any Corporate Guarantor shall so assert in writing;
then, at any time thereafter during the continuance of any such event, the Bank
may, without notice to the Company or any Corporate Guarantor terminate the
Commitments and declare the Notes, both as to principal and interest, to be
forthwith due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived, anything
contained herein or in the Notes to the contrary notwithstanding; provided,
however, that if an event specified in Section 8.01(f) and (g) shall have
occurred, the Commitments shall automatically terminate and the Notes shall be
immediately due and payable.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. NOTICES. Any notice shall be conclusively
deemed to have been received by a party hereto and to be effective on the day
on which delivered to such party at the address set forth below, or, in the
case of telecopy notice, when acknowledged as received, or if sent by
registered or certified mail, on the third Business Day after the day on which
mailed in the United States, addressed to such party at said address:
(a) if to the Bank, at
Chemical Bank
7600 Jericho Turnpike
Woodbury, New York 11797
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Attention: Account Officer -
Superior Surgical Mfg. Co., Inc.
Telecopy: (516) 364-3307
(b) if to the Company, at
Superior Surgical Mfg. Co., Inc.
10099 Seminole Boulevard
Seminole, Florida 34642
Attention: Mr. John Johansen
Senior Vice President
and Chief Financial Officer
Telecopy:
- and -
(c) as to each such party at such other address as such
party shall have designated to the other in a written
notice complying as to delivery with the provisions
of this Section 9.01.
SECTION 9.02. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made herein and in the other Loan Documents and
in the certificates delivered pursuant hereto or thereto shall survive the
making by the Bank of the Loans herein contemplated and the execution and
delivery to the Bank of the Notes evidencing such Loans and shall continue in
full force and effect so long as the Notes are outstanding and unpaid.
Whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such party;
and all covenants, promises and agreements by or on behalf of the Company and
each Subsidiary of the Company which are contained in this Agreement shall bind
and inure to the benefit of the respective successors and assigns of the Bank.
The Company may not assign or transfer any of its interest under this
Agreement, or any other Loan Document without the prior written consent of the
Bank.
SECTION 9.03. EXPENSES OF THE BANK. The Company agrees (i) to
indemnify, defend and hold harmless the Bank and its officers, directors,
employees, and affiliates (each, an "indemnified person") from and against any
and all losses, claims, damages, liabilities or judgments to which any such
indemnified person may be subject and arising out of or in connection with the
Loan Documents, the financings contemplated hereby, the use of any proceeds of
such financings or any related transaction or any claim, litigation,
investigation or proceeding relating to any of the foregoing, whether or not
any of such indemnified persons is a party thereto, and to reimburse each of
such indemnified persons upon demand for any reasonable, legal or other
expenses incurred in connection with the investigation or defending any of the
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foregoing; provided that the foregoing indemnity will not, as to any
indemnified person, apply to losses, claims, damages, liabilities, judgments or
related expenses to the extent arising from the wilful misconduct or gross
negligence of such indemnified person; and (ii) to reimburse the Bank from time
to time, upon demand, all out-of-pocket expenses (including expenses of its due
diligence investigation, and reasonable fees and disbursements of counsel and
the allocated costs of internal counsel) incurred in connection with the
financings contemplated under this Agreement, the preparation, execution and
delivery of this Agreement and the other Loan Documents, any amendments and
waivers hereof or thereof, the security arrangements contemplated thereby and
the enforcement thereof. The provisions of this Section 9.03 shall survive
termination of this Agreement.
SECTION 9.04. APPLICABLE LAW. This Agreement and the Notes shall
be construed in accordance with and governed by the laws of the State of New
York, without regard to principles of conflicts of law.
SECTION 9.05. NO WAIVER OF RIGHTS BY THE BANK. Neither any failure
nor any delay on the part of the Bank in exercising any right, power or
privilege hereunder or under the Notes or any other Loan Document shall operate
as a waiver thereof, nor shall a single or partial exercise thereof preclude
any other or further exercise of any other right, power or privilege.
SECTION 9.06. SUBMISSION TO JURISDICTION; JURY WAIVER. THE COMPANY
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE UNITED STATES DISTRICT
COURT OF THE EASTERN DISTRICT OF NEW YORK AND ANY COURT IN THE STATE OF NEW
YORK IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, AND TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE COMPANY HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF
MOTION, AS A DEFENSE OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR PROCEEDING ANY
CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS,
THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT
THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT OR ANY OTHER DOCUMENT OR INSTRUMENT REFERRED TO
HEREIN OR THEREIN WHERE THE SUBJECT MATTER THEREOF MAY NOT BE LITIGATED IN OR
BY SUCH COURTS. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE COMPANY AGREES
NOT TO (i) SEEK AND HEREBY WAIVES THE RIGHT TO ANY REVIEW OF THE JUDGMENT OF
ANY SUCH COURT BY ANY COURT OF ANY OTHER NATION OR JURISDICTION WHICH MAY BE
CALLED UPON TO GRANT AN ENFORCEMENT OF SUCH JUDGMENT AND (ii) ASSERT ANY
COUNTERCLAIM IN ANY SUCH SUIT, ACTION OR PROCEEDING. THE COMPANY AGREES THAT
SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED MAIL TO THE
ADDRESS FOR NOTICES SET FORTH IN THIS AGREEMENT OR ANY METHOD AUTHORIZED BY THE
LAWS OF NEW YORK. EXCEPT AS PROHIBITED BY LAW, THE COMPANY HEREBY WAIVES ANY
RIGHT IT
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<PAGE> 46
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE NOTE OR ANY
OTHER LOAN DOCUMENT .
SECTION 9.07. MODIFICATION OF AGREEMENT. No modification,
amendment or waiver of any provision of this Agreement, the Notes or any other
Loan Document, nor consent to any departure by the Company therefrom shall in
any event be effective unless the same shall be in writing and signed by the
Bank and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on the
Company in any case shall entitle the Company to any other or further notice or
demand in the same, similar or other circumstance.
SECTION 9.08. SEVERABILITY. In case any one or more of the
provisions contained in this Agreement, the Notes or in any other Loan Document
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein and
therein shall not in any way be affected or impaired thereby.
SECTION 9.09. SALE OF PARTICIPATIONS. The Bank reserves the right
to sell participations in or to sell and assign its rights, duties or
obligations with respect to the Loans or the Commitment to such banks, lending
institutions or other parties as it may choose and without the consent of the
Company.
SECTION 9.10. REINSTATEMENT; CERTAIN PAYMENTS. If a claim is ever
made upon the Bank for repayment or recovery of any amount or amounts received
by the Bank in payment or on account of any of the Obligations under this
Agreement, the Bank shall give prompt notice of such claim to the Company, and
if the Bank repays all or part of said amount by reason of (i) any judgment,
decree or order of any court or administrative body having jurisdiction over
the Bank or any of its property, or (ii) any settlement or compromise of any
such claim effected by the Bank with any such claimant, then and in such event
the Company agrees that any such judgment, decree, order, settlement or
compromise shall be binding upon such Company notwithstanding the cancellation
of the Notes or other instrument evidencing the Obligations under this
Agreement or the termination of this Agreement, and the Company shall be and
remain liable to the Bank hereunder for the amount so repaid or recovered to
the same extent as if such amount had never originally been received by the
Bank.
SECTION 9.11. RIGHT OF SETOFF. If an Event of Default shall have
occurred and be continuing, the Bank is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by the Bank to or for
the credit or the account of the Company against any and all the obligations of
41
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<PAGE> 47
the Company now and hereafter existing under this Agreement and the Notes held
by the Bank, irrespective of whether or not the Bank shall have made any demand
under this Agreement or any Note and although such obligations may be
unmatured. The Bank agrees promptly to notify the Company after any such
setoff and application made by the Bank, but the failure to give such notice
shall not affect the validity of such setoff and application. The rights of
the Bank under this Section 9.11 are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which the Bank may
have.
SECTION 9.12. COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall constitute an original, but all of
which, taken together, shall constitute one and the same instrument.
SECTION 9.13. HEADINGS. Section headings used herein are for
convenience of reference only and are not to affect the construction of or be
taken into consideration in interpreting this Agreement.
IN WITNESS WHEREOF, the Company and the Bank have caused this
Agreement to be duly executed by their duly authorized officers, as of the day
and year first above written.
SUPERIOR SURGICAL MFG. CO., INC.
By:
---------------------------------
Title: Sr. VP & CFO
CHEMICAL BANK
By:
---------------------------------
Title: Vice President
42
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<PAGE> 48
SCHEDULE I
SUBSIDIARIES
None
43
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<PAGE> 49
SCHEDULE II
LIENS
None
44
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<PAGE> 50
SCHEDULE III
EXISTING INDEBTEDNESS
6.65% note payable to Massachusetts Mutual Life Insurance
Company ("MMLIC") in the current principal amount of
$15,000,000.
9.9% note payable to MMLIC in the current principal amount of
$3,600,000.
45
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<PAGE> 51
SCHEDULE IV
EXISTING GUARANTEES
None.
46
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<PAGE> 52
EXHIBIT A
REVOLVING CREDIT NOTE
$10,000,000 Woodbury, New York
January 31, 1996
FOR VALUE RECEIVED, SUPERIOR SURGICAL MFG. CO., INC., a New
York corporation (the "Company"), promises to pay to the order of CHEMICAL BANK
(the "Bank"), on or before January 31, 2000, TEN MILLION DOLLARS ($10,000,000)
or, if less, the unpaid principal amount of all Revolving Credit Loans made by
the Bank to the Company under the Credit Agreement referred to below.
The Company promises to pay interest on the unpaid principal
amount hereof from the date hereof until paid in full at the rates and at the
times which shall be determined, and to make principal repayments on this Note
at the times which shall be determined, in accordance with the provisions of
the Credit Agreement referred to below.
This Note is the "Revolving Credit Note" referred to in the
Credit Agreement dated as of January 31, 1996, between the Company and the Bank
(as the same may be amended, modified or supplemented from time to time, the
"Credit Agreement") and is issued pursuant to and entitled to the benefits of
the Credit Agreement to which reference is hereby made for a more complete
statement of the terms and conditions under which the Revolving Credit Loans
evidenced hereby were made and are to be repaid. Capitalized terms used herein
without definition shall have the meanings set forth in the Credit Agreement.
The Bank shall record the date and amount of each Revolving
Credit Loan and the date and amount of each payment or prepayment of principal
of each Revolving Credit Loan on the grid schedule annexed to this Note;
provided, however, that the failure of the Bank to set forth such Revolving
Credit Loans, payments and other information on the attached grid schedule
shall not in any manner effect the obligation of the Company to repay the
Revolving Credit Loans made by the Bank in accordance with the terms of this
Note.
This Note is subject to prepayment at the option of the
Company as set forth in the Credit Agreement.
Upon the occurrence of an Event of Default, the unpaid balance
of the principal amount of this Note together with all accrued but unpaid
interest thereon, may become, or may be declared to be, due and payable in the
manner, upon the conditions and with the effect provided in the Credit
Agreement.
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America
IV-5-51 Page 74 of 95
<PAGE> 53
in same day funds at the office of the Bank located at 7600 Jericho Turnpike,
Woodbury, New York 11797 or at such other place as shall be designated in
writing for such purpose in accordance with the terms of the Credit Agreement.
No reference herein to the Credit Agreement and no provision
of this Note or the Credit Agreement shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the
currency herein prescribed.
THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, The Company has caused this Note to be
executed and delivered by its duly authorized officer, as of the day and year
and at a place first above written.
SUPERIOR SURGICAL MFG. CO., INC.
By:
-----------------------------
Title: Senior Vice President
2
IV-5-52 Page 75 of 95
<PAGE> 54
REVOLVING CREDIT NOTE
$10,000,000 Woodbury, New York
January 31, 1996
FOR VALUE RECEIVED, SUPERIOR SURGICAL MFG. CO., INC., a New
York corporation (the "Company"), promises to pay to the order of CHEMICAL BANK
(the "Bank"), on or before January 31, 2000, TEN MILLION DOLLARS ($10,000,000)
or, if less, the unpaid principal amount of all Revolving Credit Loans made by
the Bank to the Company under the Credit Agreement referred to below.
The Company promises to pay interest on the unpaid principal
amount hereof from the date hereof until paid in full at the rates and at the
times which shall be determined, and to make principal repayments on this Note
at the times which shall be determined, in accordance with the provisions of
the Credit Agreement referred to below.
This Note is the "Revolving Credit Note" referred to in the
Credit Agreement dated as of January 31, 1996, between the Company and the Bank
(as the same may be amended, modified or supplemented from time to time, the
"Credit Agreement") and is issued pursuant to and entitled to the benefits of
the Credit Agreement to which reference is hereby made for a more complete
statement of the terms and conditions under which the Revolving Credit Loans
evidenced hereby were made and are to be repaid. Capitalized terms used herein
without definition shall have the meanings set forth in the Credit Agreement.
The Bank shall record the date and amount of each Revolving
Credit Loan and the date and amount of each payment or prepayment of principal
of each Revolving Credit Loan on the grid schedule annexed to this Note;
provided, however, that the failure of the Bank to set forth such Revolving
Credit Loans, payments and other information on the attached grid schedule
shall not in any manner effect the obligation of the Company to repay the
Revolving Credit Loans made by the Bank in accordance with the terms of this
Note.
This Note is subject to prepayment at the option of the
Company as set forth in the Credit Agreement.
Upon the occurrence of an Event of Default, the unpaid balance
of the principal amount of this Note together with all accrued but unpaid
interest thereon, may become, or may be declared to be, due and payable in the
manner, upon the conditions and with the effect provided in the Credit
Agreement.
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America
IV-5-53 Page 76 of 95
<PAGE> 55
in same day funds at the office of the Bank located at 7600 Jericho Turnpike,
Woodbury, New York 11797 or at such other place as shall be designated in
writing for such purpose in accordance with the terms of the Credit Agreement.
No reference herein to the Credit Agreement and no provision
of this Note or the Credit Agreement shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the
currency herein prescribed.
THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, The Company has caused this Note to be
executed and delivered by its duly authorized officer, as of the day and year
and at a place first above written.
SUPERIOR SURGICAL MFG. CO., INC.
By: /s/
-----------------------------
Title: Senior Vice President
2
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<PAGE> 56
SCHEDULE OF LOANS
<TABLE>
<CAPTION>
Amount of
Date Principal Principal
of Interest Amount of Maturity Paid or
Loan Rate Loan of Loan Unpaid
- ---- -------- --------- ------- ---------
<S> <C> <C> <C> <C>
</TABLE>
3
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<PAGE> 57
EXHIBIT B
TERM NOTE
$
------- Uniondale, New York
January 31, 2000
FOR VALUE RECEIVED, SUPERIOR SURGICAL MFG. CO., INC., a New
York corporation (the "Company"), promises to pay to the order of CHEMICAL
BANK (the "Bank"), on or before January 1, 2003, the principal amount of
___________ Dollars ($_________) in twelve (12) consecutive quarterly
installments of $______ on the first Business Day of October, January, April
and July of each year commencing April 1, 2000, provided that the final
installment shall in any event be equal to the remaining principal amount
outstanding. The Company also promises to pay interest on the unpaid principal
amount hereof from the date hereof until paid in full at the rates and at the
times which shall be determined in accordance with the provisions of the Credit
Agreement referred to below.
This Note is the "Term Note" issued pursuant to and entitled
to the benefits of the Credit Agreement dated as of January 31, 1996, between
the Bank and the Company (as the same may be amended, modified or supplemented
from time to time, the "Credit Agreement"), to which reference is hereby made
for a more complete statement of the terms and conditions under which the Term
Loan evidenced hereby was made and is to be repaid. Capitalized terms used
herein without definition shall have the meanings set forth in the Credit
Agreement.
The Bank shall record the date and amount of the Term Loan and
the date and amount of each payment or prepayment of principal of the Term Loan
on the grid schedule annexed to this Note; provided, however, that the failure
of the Bank to set forth the Term Loan, payments and other information on the
attached grid schedule shall not in any manner effect the obligation of the
Company to repay the Term Loan made by the Bank in accordance with the terms of
this Note.
This Note is subject to prepayment at the option of the
Company as set forth in the Credit Agreement.
Upon the occurrence of an Event of Default, the unpaid balance
of the principal amount of this Note, together with all accrued but unpaid
interest thereon, may become, or may be declared to be, due and payable in the
manner, upon the conditions and with the effect provided in the Credit
Agreement.
IV-5-56 Page 79 of 95
<PAGE> 58
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in same day funds
at the office of the Bank located at 7600 Jericho Turnpike, Woodbury, New York
11797 or at such other place as shall be designated in writing for such purpose
in accordance with the terms of the Credit Agreement.
No reference herein to the Credit Agreement and no provision
of this Note or the Credit Agreement shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the principal of an
interest on this Note at the place, at the respective times, and in the
currency herein prescribed.
THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Company has caused this Note to be
executed and delivered by its duly authorized officer, as of the day and year
and at the place first above written.
SUPERIOR SURGICAL MFG. CO., INC.
By:
----------------------------
Title:
2
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<PAGE> 59
SCHEDULE OF LOANS
<TABLE>
<CAPTION>
Amount of
Date Principal Principal
of Interest Amount of Maturity Paid or
Loan Rate Loan of Loan Unpaid
- ---- -------- --------- ------- ---------
<S> <C> <C> <C> <C>
</TABLE>
3
IV-5-58 Page 81 of 95
<PAGE> 60
EXHIBIT C
CORPORATE GUARANTY
THIS GUARANTY, is entered into as of [DATE], by EACH OF THE
UNDERSIGNED (each a "Guarantor" and, collectively, the "Guarantors"), in favor
of and for the benefit of CHEMICAL BANK, a New York banking corporation (the
"Bank").
RECITALS
A. Pursuant to a Credit Agreement dated January 31, 1996, by and
between Superior Surgical Mfg. Co., Inc. (the "Company") and the Bank (as the
same may be amended, modified or supplemented from time to time, the "Credit
Agreement"), the Company will receive Loans and other financial accommodations
from the Bank and will incur Obligations.
B. The Guarantors, being members of a group of corporations
affiliated with the Company and being engaged in related businesses will
receive direct and indirect benefits from such loans and financial
accommodations.
C. Each Guarantor wishes to grant the Bank security and assurance
in order to secure the payment and performance by the Company of all of its
present and future Obligations, and, to that effect, to guaranty the Company's
Obligations as set forth herein.
Accordingly, each Guarantor hereby agrees as follows:
1. GUARANTY.
(a) Each Guarantor, jointly and severally,
unconditionally and irrevocably guarantees to the Bank the full and punctual
payment by the Company, when due, whether at the stated due date, by
acceleration or otherwise, of all Obligations of the Company, howsoever
created, arising or evidenced, voluntary or involuntary, whether direct or
indirect, absolute or contingent now or hereafter existing or owing to the
Bank, (collectively, the "Guaranteed Obligations"). This Guaranty is an
absolute, unconditional, continuing guaranty of payment and not of collection
of the Guaranteed Obligations and includes Guaranteed Obligations arising from
successive transactions which shall either continue such Guaranteed Obligations
or from time to time renew such Guaranteed Obligations after the same has been
satisfied. This Guaranty is in no way conditioned upon any attempt to collect
from the Company or upon any other event or contingency, and shall be binding
upon and enforceable against each Guarantor without regard to the validity or
enforceability of the Credit Agreement, any Note or any other Loan Document or
of any term of any thereof. If for any reason the Company shall fail or be
unable duly and punctually to pay any of the Guaranteed Obligations (including,
without
IV-5-59 Page 82 of 95
<PAGE> 61
limitation amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)),
each Guarantor will forthwith pay the same, in cash, immediately upon demand.
(b) In the event the Credit Agreement, any Note or any
other Loan Document shall be terminated as a result of the rejection thereof by
any trustee, receiver or liquidating agent of the Company or any of its
properties in any bankruptcy, insolvency, reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar proceeding, each
Guarantor's obligations hereunder shall continue to the same extent as if such
Credit Agreement, Notes or such other Loan Document had not been so rejected.
(c) Each Guarantor shall pay all reasonable costs,
expenses (including, without limitation, reasonable attorneys' fees and
disbursements) and damages incurred in connection with the enforcement of the
Guaranteed Obligations of the Company under the Credit Agreement or any Note or
any other Loan Document to the extent that such costs, expenses and damages are
not paid by the Company pursuant to the respective documents, and such costs,
fees and disbursements incurred in connection with the enforcement of the
obligations of each Guarantor under this Guaranty.
(d) Each Guarantor further agrees that if any payment
made by the Company or any Guarantor to the Bank on any Obligation is
rescinded, recovered from or repaid by the Bank, in whole or in part, in any
bankruptcy, insolvency or similar proceeding instituted by or against the
Company or any Guarantor, this Guaranty shall continue to be fully applicable
to such Guaranteed Obligation to the same extent as though the payment so
recovered or repaid had never originally been made on such Guaranteed
Obligation.
(e) If any Event of Default (as defined in the Credit
Agreement) shall have occurred and be continuing, the Bank is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by the Bank to or for the credit or the account of any Guarantor against any of
and all the obligations of any Guarantor now or hereafter existing under this
Guaranty, irrespective of whether or not the Bank shall have made any demand
hereunder and although such obligations may be unmatured. The rights of the
Bank under this paragraph 1(e) are in addition to other rights and remedies
(including other rights of set off) which the Bank may have.
2
IV-5-60 Page 83 of 95
<PAGE> 62
2. GUARANTY CONTINUING, ABSOLUTE, UNLIMITED.
The obligations of each Guarantor hereunder shall be continuing,
absolute, unlimited and unconditional, shall not be subject to any
counterclaim, set-off, deduction or defense based upon any claim any Guarantor
may have against the Bank or the Company or any other person, and shall remain
in full force and effect without regard to, and, to the fullest extent
permitted by applicable law, shall not be released, discharged or in any way
affected by, any circumstance or condition (whether or not any Guarantor shall
have any knowledge or notice thereof) whatsoever which might constitute a legal
or equitable discharge or defense including, but not limited to, (a) any
express or implied amendment, modification or supplement to the Credit
Agreement, any Note, or any other Loan Document or any other agreement referred
to in any thereof, or any other instrument applicable to the Company or to the
Loans, or any part thereof; (b) any failure on the part of the Company to
perform or comply with the Credit Agreement, the respective Notes or any other
Loan Document or any failure of any other person to perform or comply with any
term of the Credit Agreement, any Notes, or any other Loan Document or any
other agreement as aforesaid; (c) any waiver, consent, change, extension,
indulgence or other action or any action or inaction under or in respect of the
Credit Agreement, any Notes, or any other Loan Document or any other agreement
as aforesaid, whether or not the Bank, the Company or any Guarantor has notice
or knowledge of any of the foregoing; (d) any bankruptcy, insolvency,
reorganization, arrangement, readjustment, composition, liquidation or similar
proceeding with respect to the Company, or its properties or its creditors, or
any action taken by any trustee or receiver or by any court in any such
proceeding; (e) any furnishing or acceptance of additional security or any
release of any security; (f) any limitation on the liability or obligations of
the Company under the Credit Agreement, any Note or any other Loan Document or
any termination, cancellation, frustration, invalidity or unenforceability, in
whole or in part, of the Credit Agreement, any Note, this Guaranty or any other
Loan Document or any term of any thereof; (g) any lien, charge or encumbrance
on or affecting any Guarantor's or any of the Company's respective assets and
properties; (h) any act, omission or breach on the part of the Bank under the
Credit Agreement, any Note or any other Loan Document or any other agreement at
any time existing between the Bank and the Company or any law, governmental
regulation or other agreement applicable to the Bank or any Loan; (i) any claim
as a result of any other dealings among the Bank, any Guarantor or the Company;
(j) the assignment of this Guaranty, the Credit Agreement, any Note or any
other Loan Document by the Bank to any other Person; or (k) any change in the
name of the Bank, the Company or any other Person referred to herein.
3
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<PAGE> 63
3. WAIVER.
Each Guarantor unconditionally waives, to the fullest extent permitted
by applicable law: (a) notice of any of the matters referred to in Section 2
hereof; (b) all notices which may be required by statute, rule of law or
otherwise to preserve any rights against any Guarantor hereunder, including,
without limitation, notice of the acceptance of this Guaranty, or the creation,
renewal, extension, modification or accrual of the Guaranteed Obligations or
notice of any other matters relating thereto, any presentment, demand, notice
of dishonor, protest, nonpayment of any damages or other amounts payable under
the Credit Agreement, any Note or any other Loan Documents; (c) any requirement
for the enforcement, assertion or exercise of any right, remedy, power or
privilege under or in respect of the Credit Agreement, any Note or any other
Loan Documents, including, without limitation, diligence in collection or
protection of or realization upon the Guaranteed Obligations or any part
thereof or any collateral thereof; (d) any requirement of diligence; (e) any
requirement to mitigate the damages resulting from a default by the Company
under the Credit Agreement, any Note or any other Loan Documents; (f) the
occurrence of every other condition precedent to which any Guarantor or the
Company may otherwise be entitled; (g) the right to require the Bank to proceed
against the Company or any other person liable on the Guaranteed Obligations,
to proceed against or exhaust any security held by the Company or any other
person, or to pursue any other remedy in the Bank power whatsoever, and (h) the
right to have the property of the Company first applied to the discharge of the
Guaranteed Obligations.
The Bank may, at its election, exercise any right or remedy it may
have against the Company without affecting or impairing in any way the
liability of any Guarantor hereunder and each Guarantor waives, to the fullest
extent permitted by applicable law, any defense arising out of the absence,
impairment or loss of any right of reimbursement, contribution or subrogation
or any other right or remedy of any Guarantor against the Company, whether
resulting from such election by the Bank or otherwise. Each Guarantor waives
any defense arising by reason of any disability or other defense of the Company
or by reason of the cessation for any cause whatsoever of the liability, either
in whole or in part, of the Company to the Bank for the Guaranteed Obligations.
Each Guarantor assumes the responsibility for being and keeping
informed of the financial condition of the Company and of all other
circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations
and agrees that the Bank shall not have any duty to advise any Guarantor of
information regarding any condition or circumstance or any change in such
condition or circumstance. Each Guarantor acknowledges that the Bank has not
made any representations to any Guarantor concerning the financial condition of
the Company.
4
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<PAGE> 64
4. REPRESENTATIONS AND COVENANTS OF EACH GUARANTOR.
(a) The representations and warranties contained in Article IV
of the Credit Agreement, to the extent they relate to a Guarantor, are true and
correct as of the date hereof and the Bank is entitled to rely on such
representations and warranties to the same extent as though the same were set
forth in full herein.
(b) Each Guarantor hereby agrees to perform the covenants
contained in Article VI and Article VII of the Credit Agreement, to the extent
they relate to the Guarantor, and the Bank is entitled to rely on such
agreement to perform such covenants to the same extent as though the same were
set forth in full herein.
5. PAYMENTS.
Each payment by each Guarantor to the Bank under this Guaranty shall
be made in the time, place and manner provided for payments in the Credit
Agreement without set-off or counterclaim to the account at which such payment
is required to be paid by the Company under the Credit Agreement.
6. PARTIES.
This Guaranty shall inure to the benefit of the Bank and its
successors, assigns or transferees, and shall be binding upon the Guarantor and
its successors and assigns. No Guarantor may delegate any of its duties under
this Guaranty without the prior written consent of the Bank.
7. NOTICES.
Any notice shall be conclusively deemed to have been received by a
party hereto and to be effective on the day on which delivered to such party at
the address set forth below, or if sent by registered or certified mail, on the
third Business Day after the day on which mailed in the United States,
addressed to such party at said address:
(a) if to the Bank, at
Chemical Bank
7600 Jericho Turnpike
Woodbury, New York 11797
Attention: Account Officer
Superior Surgical Mfg. Co., Inc.
5
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<PAGE> 65
(b) if to a Guarantor, at
Superior Surgical Mfg. Co., Inc.
Seminole Boulevard at 100th Terrace
Seminole, Florida 33542
Attention: Mr. Gerald Benstock
President
Telecopy:
- and -
(c) as to each such party at such other address as such
party shall have designated to the other in a written
notice complying as to delivery with the provisions
of this Section 7.
8. REMEDIES.
Each Guarantor stipulates that the remedies at law in respect of any
default or threatened default by a Guarantor in the performance of or
compliance with any of the terms of this Guaranty are not and will not be
adequate, and that any of such terms may be specifically enforced by a decree
for specific performance or by an injunction against violation of any such
terms or otherwise.
9. RIGHTS TO DEAL WITH THE COMPANY.
At any time and from time to time, without terminating, affecting or
impairing the validity of this Guaranty or the obligations of any Guarantor
hereunder, the Bank may deal with the Company in the same manner and as fully
as if this Guaranty did not exist and shall be entitled, among other things, to
grant the Company, without notice or demand and without affecting the
Guarantor's liability hereunder, such extension or extensions of time to
perform, renew, compromise, accelerate or otherwise change the time for payment
of or otherwise change the terms of indebtedness or any part thereof contained
in or arising under the Credit Agreement, any Note or any other Loan Documents,
or to waive any obligation of the Company to perform, any act or acts as the
Bank may deem advisable.
10. SUBROGATION.
(a) Upon any payment made or action taken by a Guarantor pursuant
to this Guaranty, such Guarantor shall, subject to the provisions of Sections
10(b) and (c) hereof, be fully subrogated to all of the rights of the Bank
against the Company arising out of the action or inaction of the Company for
which such payment was made or action taken by such Guarantor.
(b) Any claims of such Guarantor against the Company arising from
payments made or actions taken by such Guarantor pursuant to the provisions of
this Guaranty shall be in all respects
6
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<PAGE> 66
subordinate to the full and complete payment or performance and discharge, as
the case may be, of all amounts, obligations and liabilities, the payments or
performance and discharge of which are guaranteed by this Guaranty, and no
payment hereunder by a Guarantor shall give rise to any claim of such Guarantor
against the Bank.
(c) Notwithstanding anything to the contrary contained in this
Section 10, no Guarantor shall be subrogated to the rights of the Bank against
the Company until all of the Obligations of the Company have been paid in full,
and that subrogation shall be suspended upon the occurrence of the events
described in Section 1(d) until the Bank is paid in full.
11. SURVIVAL OF REPRESENTATIONS, WARRANTIES, ETC.
All representations, warranties, covenants and agreements made herein,
including representations and warranties deemed made herein, shall survive any
investigation or inspection made by or on behalf of the Bank and shall continue
in full force and effect until all of the obligations of the Guarantors under
this Guaranty shall be fully performed in accordance with the terms hereof, and
until the payment in full of the Guaranteed Obligations.
12. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.
THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK. EACH GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF
NEW YORK AND ANY COURT IN THE STATE OF NEW YORK IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN CONNECTION WITH THIS
GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY, AND TO THE EXTENT PERMITTED
BY APPLICABLE LAW, EACH GUARANTOR HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY
OF MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING,
ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS,
THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT
THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS GUARANTY
OR ANY DOCUMENT OR ANY INSTRUMENT REFERRED TO HEREIN OR THE SUBJECT MATTER
THEREOF MAY NOT BE LITIGATED IN OR BY SUCH COURTS. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH GUARANTOR AGREES (i) NOT TO SEEK AND HEREBY WAIVES THE
RIGHT TO ANY REVIEW OF THE JUDGMENT OF ANY SUCH COURT BY ANY COURT OF ANY OTHER
NATION OR JURISDICTION WHICH MAY BE CALLED UPON TO GRANT AN ENFORCEMENT OF SUCH
JUDGMENT AND (ii) NOT TO ASSERT ANY COUNTERCLAIM, IN ANY SUCH SUIT, ACTION OR
PROCEEDING. EACH GUARANTOR AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON IT
BY CERTIFIED OR REGISTERED MAIL TO THE ADDRESS FOR NOTICES SET FORTH IN THIS
GUARANTY OR ANY METHOD AUTHORIZED BY THE LAWS OF NEW YORK. EACH GUARANTOR
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS GUARANTY, THE LOAN DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
7
IV-5-65 Page 88 of 95
<PAGE> 67
13. MISCELLANEOUS.
(a) All capitalized terms used herein and not defined herein shall
have the meanings specified in the Credit Agreement.
(b) This Guaranty is the joint and several obligations of each
Guarantor, and may be enforced against each Guarantor separately, whether or
not enforcement of any right or remedy hereunder has been sought against any
other Guarantor. Each Guarantor acknowledges that its obligations hereunder
will not be released or affected by the failure of the other Guarantors to
execute the Guaranty or by a determination that all or a part of this Guaranty
with respect to any other Guarantor is invalid or enforceable.
(c) If any term of this Guaranty or any application thereof shall
be invalid or unenforceable, the remainder of this Guaranty and any other
application of such term shall not be affected thereby.
(d) Any term of this Guaranty may be amended, waived, discharged
or terminated only by an instrument in writing signed by each Guarantor and the
Bank.
(e) The headings in this Guaranty are for purposes of reference
only and shall not limit or define the meaning hereof.
(f) No delay or omission by the Bank in the exercise of any right
under this Guaranty shall impair any such right, nor shall it be construed to
be waiver thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise of any other right.
IN WITNESS WHEREOF, the undersigned have caused this Guaranty to be
executed and delivered as of the day and year first above written.
By: By:
--------------------------- ----------------------------
Title: Title:
8
IV-5-66 Page 89 of 95
<PAGE> 68
EXHIBIT D
[LETTERHEAD OF COUNSEL TO THE COMPANY
January 31, 1996
Chemical Bank
7600 Jericho Turnpike
Woodbury, New York 11797
Ladies and Gentlemen:
We have acted as counsel Superior Surgical Mfg. Co., Inc. (the
"Company"), a New York corporation in connection with the Credit Agreement (the
"Agreement"), dated the date hereof, between the Company and Chemical Bank (the
"Bank"), pursuant to which the Bank has agreed to make loans to the Company in
the aggregate principal amount of $10,000,000, and make other financial
accommodations to the Company as described therein. Capitalized terms used
herein and not otherwise defined herein shall have the respective meanings set
forth in the Agreement.
In acting as such counsel, we have examined:
(a) a counterpart of the Agreement executed by the Company; and
(b) the Revolving Credit Note executed by the Company in favor of
the Bank.
The documents referred to in items (a) and (b) above are hereinafter referred
to collectively as the "Loan Documents".
We have assumed the authenticity of all document submitted to us as
originals, the conformity to the originals of all documents submitted to us as
certified, conformed or photostatic copies and the authenticity of the
originals of such copies. We have also examined originals, or copies certified
to our satisfaction, of such corporate records, certificates of public
officials, certificates of corporate officers of the Company and each Guarantor
and such other instruments and documents as we have deemed necessary as a basis
for the opinions hereinafter set forth. As to questions of fact, we have, to
the extent that such facts were not independently established by us, relied
upon such certificates.
Based upon the foregoing and subject to the qualifications set forth
herein, we are of the opinion that,
1. The Company is a corporation duly organized, validly existing
and in good standing under the laws of the state of its
IV-5-67 Page 90 of 95
<PAGE> 69
incorporation and in each jurisdiction wherein the conduct of its business or
any ownership of its properties requires it to be qualified to do business, and
the Company has corporate power and authority to own its assets and to transact
the business in which it is now engaged and to execute and perform each of the
Loan Documents.
2. The Company has requisite corporate power to execute, deliver
and perform the Loan Documents to which it is a party, each of which has been
duly authorized by all necessary and proper corporate action.
3. Each Loan Document constitutes the legal, valid and binding
obligation of the Company enforceable against the Company in accordance with
its terms, subject as to enforcement by applicable bankruptcy, insolvency,
reorganization or similar laws affecting the enforcement of creditors' rights
generally, and by equitable principles of general application.
4. Neither the execution and delivery by the Company of the Loan
Documents nor the performance by the Company and its obligations under the Loan
Documents will (a) violate any law, rule or regulation (including, without
limitation, Regulations G, T, U and X of the Board of Governors of the Federal
Reserve System) or, to our knowledge, any order or decree of any court or
governmental instrumentality binding upon the Company, (b) contravene the
Certificate of Incorporation or By-Laws of the Company or, result in a breach
of or constitute a default (with due notice or lapse of time or both) under any
agreements to which the Company is bound of which we are aware, or, to our
knowledge, result in the creation or imposition of any lien, change, or
encumbrance upon any of the property or assets of the Company other than the
liens granted pursuant to the Loan Documents, or (c) require the consent,
license, approval or authorization of any governmental or public body or
authority.
5. The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940.
6. No consent or authorization of, filing with or other act by or
in respect of any governmental authority is required to be obtained by the
Company for the valid execution, delivery and performance of the Loan
Documents.
7. Assuming the proceeds of the Loans are used for the purposes
set forth in Section 3.02 of the Agreement, the making of the Loans and the
application of the proceeds thereof will not violate the provisions of
Regulation G, U or X of the Board of Governors of the Federal Reserve System.
8. There are no actions, suits or proceedings against any of the
Company, pending or, to the best of our knowledge, threatened against the
Company, before any court, governmental agency or arbitrator which challenges
the validity or enforceability of any
2
IV-5-68 Page 91 of 95
<PAGE> 70
Loan Document or (except as disclosed in Section 8.01(h) of the Credit
Agreement) which, if adversely determined, would impair the ability of the
Company to perform its obligations under any Loan Document.
Very truly yours,
3
IV-5-69 Page 92 of 95
<PAGE> 71
EXHIBIT E
NOTICE OF BORROWING
[Date]
Chemical Bank
7600 Jericho Turnpike
Woodbury, New York 11797
Attention: Account Officer,
Superior Surgical Mfg. Co., Inc.
Re: Superior Surgical Mfg. Co., Inc.
Ladies and Gentlemen:
Pursuant to the Credit Agreement dated as of January 31, 1996, (as the
same may be amended, modified or supplement, the "Credit Agreement") by and
between Superior Surgical Mfg. Co., Inc. and Chemical Bank, we hereby give you
irrevocable notice that we request a [Revolving Credit Loan] [Term Loan] as
follows:
1. Amount of Loan: [Amount]
2. Interest Period*: [1, 2, 3 or 6 months]
3. Borrowing Date: [Date]
We hereby certify that:
(i) the representations and warranties contained in the Credit
Agreement and the other Loan Documents are true, correct and complete
on and as of the date hereof to the same extent as though made on and
as of the date hereof;
(ii) no Event of Default or default which upon notice, lapse of time
or both would constitute an Event of Default has occurred and is
continuing under the Credit Agreement or will result after giving
effect to the Loan requested hereunder;
(iii) the Company has performed all agreements and satisfied all
conditions under the Credit Agreement required to be performed by it
on or before the date hereof; and
(iv) if a Revolving Credit Loan is requested, the aggregate
outstanding Revolving Credit Loans outstanding after giving effect to
the request Revolving Credit Loan will not exceed the Available
Revolving Credit Commitment.
- -------------------------------------
* If Eurodollar Loan requested.
Capitalized terms used herein but not defined shall have the
respective meanings given to them in the Credit Agreement.
IV-5-70 Page 93 of 95
<PAGE> 72
IN WITNESS WHEREOF, the Company has caused this document to be
executed and delivered by its Executive Officer as of the date written above.
SUPERIOR SURGICAL MFG. CO., INC.
By:
---------------------------
Title:
2
IV-5-71 Page 94 of 95
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Post-Effective
Amendment No. 1 to Registration Statement No. 2-85796 of Superior Surgical Mfg.
Co., Inc. on Form S-8 of our report dated March 8, 1996, appearing in the Annual
Report on Form 10-K of Superior Surgical Mfg. Co., Inc. for the year ended
December 31, 1995.
/s/ DELOITTE & TOUCHE LLP
Tampa, Florida
March 22, 1996
IV-6 Page 95 of 95
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