SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------
F O R M 10 - Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-5354
SWANK, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-1886990
(State or other jurisdiction of incorporation (IRS employer identification
or organization) Number)
6 Hazel Street, Attleboro, Massachusetts 02703
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code 508-222-3400
Former name, former address and former fiscal year, if changed since last
report.
Indicate by X 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
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date July 20, 1994
Title of Class Shares Outstanding
Common Stock 16,509,523
$.10 par value
<PAGE>
PART I - FINANCIAL STATEMENTS
Item 1. Financial Statements.
<TABLE>
<CAPTION>
SWANK, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
ASSETS June 30, 1995 December 31, 1994
<S> <C> <C> <C> <C>
Current:
Cash and temporary cash investments $445 $ 2,153
Accounts receivable, less allowances 14,308 13,874
of $5,226 and $9,484
Inventories, at the lower of cost
or market
Raw materials $ 4,646 $ 4,295
Work-in-process 8,340 7,987
Finished goods 18,164 31,150 13,867 26,149
------- -------
Deferred income taxes 4,105 4,105
Prepaid and other 4,420 977
------- ------
Total current assets 54,428 47,258
Property, plant and equipment, at cost
Less accumulated depreciation 22,415 22,064
and amortization 16,009 6,406 15,477 6,587
------- -------
Deferred income taxes 834 834
Other assets 3,246 2,779
------- -------
Total Assets $64,914 $57,458
======= =======
LIABILITIES
Current:
Notes payable to banks $19,700 $ 5,000
Current portion of long-term obligations 666 2,920
Accounts payable, trade 6,328 3,665
Accrued employee compensation 1,521 3,010
Income taxes payable - 1,826
Other liabilities 6,974 6,512
------- -------
Total current liabilities 35,189 22,933
------- -------
Long-term obligations 4,247 4,308
------- -------
Total liabilities 39,436 27,241
------- -------
STOCKHOLDERS' EQUITY
Preferred stock, par value $1.00
Authorized 1,000,000 shares
Common stock, par value $.10:
Authorized 43,000,000 and 66,000,000
shares
Issued 16,843,042 and 16,804,155 1,684 1,680
Capital in excess of par value 850 825
Retained earnings 24,188 28,421
------- -------
26,722 30,926
Less:
Unearned ESOP shares 535 -
Treasury stock at cost 333,519 shares 709 709
------- -------
Total stockholders' equity 25,478 30,217
------- -------
Total liabilities and stockholders'
equity $64,914 $57,458
======= =======
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SWANK, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE QUARTERS ENDED JUNE 30, 1995 AND 1994
(Dollars in thousands)
----------------
1995 1994
<S> <C> <C>
Net sales $28,253 $28,945
Cost of goods sold 17,086 15,848
-------- --------
Gross profit 11,167 13,097
Selling and administrative expenses 14,697 13,783
-------- --------
Loss from operations (3,530) (686)
Interest charges 497 429
-------- --------
Loss before income taxes (4,027) (1,115)
Benefit for income taxes (1,346) (186)
-------- --------
Net loss $ (2,681) $ (929)
======== ========
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Share and per share information:
Weighted average common shares and
common share equivalents outstanding 16,197,076 16,470,636
Net loss per share $(.17) $(.06)
====== ======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
<TABLE>
<CAPTION>
SWANK, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Dollars in thousands)
1995 1994
<S> <C> <C>
Net sales 58,219 $57,947
Cost of goods sold 35,269 32,432
------- ------
Gross profit 22,950 25,515
Selling and administrative expenses 28,821 26,474
------- -------
Loss from operations (5,871) (959)
Interest charges 743 651
-------- -------
Loss before income taxes (6,614) (1,610)
Benefit for income taxes (2,381) (269)
--------- -------
Net loss $ (4,233) $(1,341)
========= ========
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Share and per share information:
Weighted average common shares and common
share equivalents outstanding 16,335,751 16,457,571
Net loss $(.26) $(.08)
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
<TABLE>
<CAPTION>
SWANK, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1995 and 1994
(Dollars in thousands)
<S> <C> <C>
1995 1994
Cash flow from operating activities:
Net loss $ (4,233) $(1,341)
Adjustments to reconcile net loss
to operating cash flows:
Depreciation and amortization 567 529
Gain on sale of fixed assets (15)
Loan forgiveness in lieu of contribution to
employees' stock ownership plan 236
Decrease in receivable reserves (4,258) (3,350)
Change in assets and liabilities:
Decrease in accounts receivable 3,824 4,178
Increase in inventory (5,001) (6,299)
Increase in prepaid and other (3,910) (400)
Decrease in accounts payable and accrued other (251) (4,565)
--------- ---------
Net cash used in operating activities (13,262) (11,027)
--------- ---------
Cash flow from investing activities:
Capital expenditures (387) (363)
Proceeds from the sale of plant and equipment 15
--------- ---------
Net cash used in investing activities (387) (348)
--------- ---------
Cash flow from financing activities:
Borrowing under revolving credit agreement 23,950 21,250
Payments of revolving credit agreement (9,250) (9,750)
Principal payments of long-term debt (2,254) (1,620)
Advance to employees' stock ownership trust (535) (814)
Proceeds from the exercise of employees' stock
options 30 33
-------- ---------
Net cash provided by financing activities: 11,941 9,099
--------- ---------
Net decrease in cash and equivalents (1,708) (2,276)
Cash and equivalents at beginning of period 2,153 2,935
-------- ---------
Cash and equivalents at end of period $ 445 $ 659
========= =========
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<PAGE>
Notes to Unaudited Consolidated Financial Statements.
(1) The unaudited information furnished herein reflects all adjustments
(consisting only of normal recurring adjustments) which are, in the opinion of
management, necessary to present a fair statement of the results for the periods
ended June 30, 1995 and 1994. The financial information contained herein
represents condensed financial data and, therefore, does not include all
footnote disclosures required to be included in financial statements prepared
in conformity with generally accepted accounting principles. Footnote
information was included in the Company's annual report to stockholders for the
fiscal year ended December 31, 1994; the condensed financial data included
herein should be read in conjunction with the information in the annual report.
(2) Certain reclassifications have been made in the prior year's consolidated
financial statements to conform with the current year's presentation. As stated
in Footnote J of the 1994 Annual Report, equal amounts related to sales returns
have been reclassified between sales and cost of sales.
(3) During the six months ended June 30, 1995, the Company has not incurred any
material changes in the commitments and contingencies as previously referenced
in Footnote I of the 1994 annual report.
(4) In April 1995, the shareholders voted to reduce the number of authorized
$.10 par value common shares from 66,000,000 to 43,000,000.
(5) Pursuant to the Company's revolving credit agreement, as amended, certain
financial ratios are required to be met for the six months ended June 30, 1995.
These include leverage and current ratios, of 1.10 to 1 and 1.90 to 1,
respectively. As of June 30, 1995 the actual leverage and current ratios were
1.44 to 1 and 1.60 to 1, respectively. The Company was not in compliance with
these covenants. The Company was also not in compliance with covenants
pertaining to minimum tangible net worth which was $1,452,000 below the required
minimum, results of operations which were $4,691,000 below the cumulative loss
before taxes required, and interest coverage where earnings before interest and
taxes is required to be 250% of interest expense and the actual reults were
computed to be 103%. The banks have agreed to waive the aforementioned
defaults.
On July 20, 1995 the Company modified and extended its revolving Credit
Agreement (the "New Agreement") with The Chase Manhattan Bank, N.A. and Fleet
National Bank ("the Banks") for $32,000,000. The new agreement provides for
loans and letters of credit in an amount up to $32,000,000, with a sublimit of
$7,000,000 in letters of credit, available through June 30, 1998.
The New Agreement bears interest at the prime rate plus 1%. These loans and
letters of credit are collateralized by all of the Company's assets.
The terms of the New Agreement require the Company to maintain certain financial
ratios and minimum amounts of tangible net worth. The New Agreement also limits
capital expenditures, prohibits additional indebtness over a specified amount
and contains other covenants normally associated with such agreements. The
Company believes this facility will be adequate to meet its seasonal working
capital requirements during the loan period.
<PAGE>
Item 2. Management's Discussion and Analysis of the Financial Condition and
Results of Operations
Results of Operations
As is customary in the fashion accessories industry, the Company makes
modifications to its lines coinciding with the Spring (January - June) and Fall
(July - December) seasons. The Company believes that results of operations are
considered to be more meaningful on a seasonal basis (six months) than on a
quarterly basis as the timing of sales (deliveries) and related income between
quarters can be affected by the availability of materials, retail sales and
fashion trends. These factors may affect the shift of volume between quarters
within a season differently in one year than another.
Quarters Ended June 30, 1995 and 1994
Net sales for the quarter ended June 30, 1995 were $28,253,000, a decrease of
$692,000 or 2% from the quarter ended June 30, 1994.
Net sales decreased in men's and women's jewelry $565,000 or 5% and other
product lines $1,264,000 or 60% compared to 1994, offset, in part, by increased
sales in men's leather accessories $1,137,000 or 8%. The decreased sales in
men's and women's jewelry were primarily the result of actual returns being
higher than anticipated. These decreases were offset, in part, by sales from the
Guess? lines, which also attributed to the increased sales in men's leather
accessories. The decreased sales in other product lines resulted principally
from the Company's decision to discontinue the sale and distribution of men's
accessories under various National Football League team logos and the names and
logos of several college and university teams.
Included in net sales are adjustments relating to customer returns. The customer
return adjustments reflect the difference in anticipated and actual spring
returns. During the Spring of 1995, the Company initiated efforts to penetrate
new markets and expand market share. These programs included replacement of slow
moving goods. These programs, combined with higher than anticipated returns of
1994 sales, as opposed to the Company's favorable experience in the prior
period, resulted in reductions to current period sales. The following table
quantifies these adjustments (in thousands):
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1995 1994 Variance
Men's and Women's Jewelry $(1,642) $918 $(2,560)
Men's Leather Accessories (37) 167 (204)
Other product lines (312) 53 (365)
Increase(Decrease)in Net Sales $(1,991) $1,138 $(3,129)
</TABLE>
Included in the sales figures above were sales from the Company's factory
outlets which decreased 26% compared to 1994. Decreases of 20% and 8% were
attributable to same store sales and closed store sales, respectively, offset
in part, by an 2% increase in new store sales.
Gross profit for the quarter ended June 30, 1995 was $11,167,000, a decrease
$1,930,000 or 15% from the quarter ended June 30, 1994. Gross profit expressed
as a percentage of net sales declined 5 percentage points, from 45% to 40%.
Gross profit decreased in men's and women's jewelry $1,160,000 or 18% and other
product line $913,000 or 106% offset, in part, by increases in men's leather
accessories of $143,000 or 2%. The decrease in gross profit for men's and
<PAGE>
Item 2. Management's Discussion and Analysis of the Financial Condition and
Results of Operations (Continued)
women's jewelry and other product lines was primarily the result of unfavorable
adjustments caused by actual returns being higher than anticipated, unfavorable
production variances, lower margins on current line items, and increased sales
of off-price merchandise. These decreases were offset, in part, by an increase
in gross profit for men's leather accessories primarily as a result of increased
sales volume.
Included in gross profit are adjustments relating to customer returns. The
customer return adjustments reflect the difference in anticipated and actual
spring returns. The following table highlights these adjustments (in thousands):
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1995 1994 Variance
Men's and Women's Jewelry $(990) $300 $(1,290)
Men's Leather Accessories 2 150 (148)
Other product lines (172) 50 (222)
Increase(Decrease)in Gross Profit $(1,160) $500 $(1,660)
</TABLE>
Inventory levels increased $5,001,000 or 19% from December 31, 1994 reflecting
the normal cyclical nature of the Company's sales. The Company continues to
monitor inventory levels to obtain a balance between meeting our customer
response times and minimizing excess carrying costs. The increase in notes
payable to banks at June 30, 1995 of $14,700,000 compared with December 31, 1994
is attributable to several factors; higher outstanding borrowings at the
beginning of 1995, funding the build-up of inventory for the fall season, higher
income tax payments, and less cash generated from operations.
Selling and administrative expenses increased by $914,000 or 7% primarily as a
result of increased compensation costs, in-store markdowns, and travel costs.
Compensation and related fringe benefits contributed to an increase of $200,000
or 3%, relating to additional personnel required for the new Guess? lines and
higher group insurance and workman's compensation premiums. In-store markdowns
increased $330,000 or 78% principally attributable to higher sales volume from
the new Guess? line and competitive pressures. Travel costs increased $183,000
or 34% as a result of additional personnel for the Guess? lines. Total
advertising and promotion expressed as a percentage of net sales increased one
percentage point to 5% from 4% in the second quarter 1995.
Interest charges increased by $68,000 or 16% as a result of increased short term
borrowings, offset in part, by decreased long term debt.
Income Taxes
The Company recognized a tax benefit at an effective tax rate of 33% in the
quarter in order to adjust the combined federal and state rate to the Company's
current estimated full year rate. The higher effective rate in 1995 results
from the elimination of the valuation allowance against the net deferred tax
asset which was recorded in the fourth quarter of 1994.
Six Months Ended June 30, 1995 and 1994
Net sales for the six months ended June 30, 1995 were $58,219,000, an increase
of $272,000 or less than 1% from the six months ended June 30, 1994.
<PAGE>
Item 2. Management's Discussion and Analysis of the Financial Condition and
Results of Operations (Continued)
Net sales increased in men's and women's jewelry $359,000 or 1%, and men's
leather accessories $1,538,000 or 5% compared to 1994, offset in part by
decreased sales in other product lines $1,623,000 or 49%. Sales in men's and
women's jewelry and men's leather accessories increased primarily as a result
of sales attributable to the new Guess? lines and the expansion of the customer
base for the Company's special market lines, despite the result of actual
returns being higher than anticipated. These increases were offset, in part, by
decreased sales in other product lines attributable principally to the Company's
decision to discontinue the sale and distribution of men's accessories under
various National Football League team logos and the names and logos of several
college and university teams.
Included in net sales are adjustments relating to customer returns. The customer
return adjustments reflect the difference in anticipated and actual spring
returns. During the Spring of 1995, the Company initiated efforts to penetrate
new markets and expand market share. These programs included the replacement of
slow moving goods. These programs, combined with higher than anticipated returns
of 1994 sales, as opposed to the Company's favorable experience in the prior
period, resulted in reductions to current period sales. The following table
highlights these adjustments (in thousands):
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1995 1994 Variance
Men's and Women's Jewelry $(1,642) $1,835 $(3,477)
Men's Leather Accessories (37) 333 (370)
Other product lines (312) 104 (416)
Increase(Decrease)in Net Sales $(1,991) $2,272 $(4,263)
</TABLE>
Included in the sales figures above were sales from the Company's factory
outlets which decreased 21% compared to 1994. Decreases of 17% and 8% were
attributable to same store sales and closed store sales, respectively, offset
in part, by an 4% increase in new store sales.
Gross profit for the six months ended June 30, 1995 was $22,950,000, a decrease
$2,565,000 or 10% from the six months ended June 30, 1994. Gross profit
expressed as a percentage of net sales declined 5 percentage points, from 44%
to 39%.
Gross profit decreased in men's and women's jewelry $1,792,000 or 13%, men's
leather accessories $128,000 or 1%, and in other product line $645,000 or 67%.
The decrease in gross profit for men's and women's jewelry, men's leather
accessories, and other product lines was primarily the result of unfavorable
adjustments caused by actual returns being higher than anticipated, unfavorable
production variances, lower margins on current line items, and increased sales
of off-price merchandise.
Included in gross profit are adjustments relating to customer returns. The
customer return adjustments reflect the difference in anticipated and actual
spring returns. The following table highlights these adjustments (in thousands):
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1995 1994 Variance
Men's and Women's Jewelry $(990) $850 $(1,840)
Men's Leather Accessories 2 150 (148)
Other product lines (172) 50 (222)
Increase(Decrease)in Gross Profit $(1,160) $1,050 $(2,210)
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of the Financial Condition and
Results of Operations (Continued)
Selling and administrative expenses increased by $2,347,000 or 9% primarily as
a result of increased compensation costs, advertising and promotion, and travel
costs. Compensation and related fringe benefits contributed to an increase of
$910,000 or 6%, relating primarily to additional personnel required for the new
Guess? lines. Advertising and promotion increased $619,000 or 18% principally
attributable to higher sales volume from the Guess? line and competitive
pressures. Travel costs increased $345,000 or 31% as a result of additional
personnel for the Guess? lines.
Interest charges increased by $92,000 or 14% as a result of increased short term
borrowings, offset in part, by decreased long term debt.
Income Taxes
The Company recognized a tax benefit at an effective tax rate of 36% for the
six months in order to recongize the estimated combined federal and state rate
for the full year. The higher effective rate in 1995 results from the
elimination of the valuation allowance against the net deferred tax asset
which was recorded in the fourth quarter of 1994.
Capital Resources and Liquidity
The Company's working capital decreased $5,086,000 during the six months ended
June 30, 1995.
The Company has maintained lines of credit with banks to provide sufficient
working capital during the year. At June 30, 1995, the Company had a revolving
credit facility of $21,000,000, including a $7,000,000 facility for letters of
credit, available through December 31, 1995 for seasonal working capital needs.
The Company's short-term bank borrowings peak during the months of August
through November. On July 20, 1995 the Company modified and extended its
revolving credit agreement (the "New Agreement") with The Chase Manhattan Bank,
N.A. and Fleet National Bank ("the Banks") for $32,000,000, including $7,000,000
in letters of credit, available through June 30, 1998. The Company believes
this facility will be adequate to meet its seasonal working capital requirements
during the loan period. The Company has no material commitments for capital
expenditures.
Long-term Liquidity and Capital Reserves
As is customary in the fashion accessories industry, substantial
percentages of the Company's sales and earnings occur in the months of
September, October and November, during which the Company makes significant
shipments of its products to retailers for sale during the holiday season. As
a result, receivables increase during the year and peak in the fourth quarter.
The Company builds its inventory during the first three quarters of the year to
respond to the holiday season. Cash required for operations is provided by a
revolving credit facility. Outstanding balances for the prior credit facility
are required to be paid in full for a 30 day period during the first six months
of each year. Under the new agreement outstanding balances are required to be
reduced to no greater than $2 million for a 30 day period during the first six
months of each year. Cash generated from operations is used to pay down the
credit facility during the months of December and January.
<PAGE>
Item 2. Managements's Discussion and Analysis of the Financial Condition and
Results of Operations (Continued)
Cash used in operations for the six month period ended June 30, 1995
totaled $13,262,000 consisting primarily of a $4,233,000 net loss, reductions
in accounts payable, income taxes payable and other accrued items, and increases
in inventory and prepaid expenses. Cash used in investing activities was
$387,000 for replacement of used machinery and equipment. Cash provided by
financing activities totaled $11,941,000 consisting primarily of borrowings
under the Company's credit facility, offset in part by repayments under that
credit facility and long term debt.
Net accounts receivable increased primarily as a result of increased sales and
reductions in the reserves against accounts receivable. The reductions of
the reserves reflect the actual charges as processed for cash discounts,
doubtful accounts, in-store markdowns, cooperative advertising and gross profit
on returns.
In 1992 the Company refinanced all existing long-term debt with proceeds
of a $9,000,000 bank term loan. The loan bears interest at the prime rate plus
2% and is collaterized by all of the Company's assets. Cash provided from
operating activities, the sale of certain operations, and the modification and
extension of the revolving credit agreement has provided funds for the repayment
of all long -term debt at July 20, 1995.
Pursuant to the Company's revolving credit agreement, as amended, certain
financial ratios are required to be met for the six months ended June 30, 1995.
These include leverage and current ratios, of 1.10 to 1 and 1.90 to 1,
respectively. As of June 30, 1995 the actual leverage and current ratios were
1.44 to 1 and 1.60 to 1, respectively. The Company was not in compliance with
these covenants. The Company was also not in compliance with covenants
pertaining to minimum tangible net worth which was $1,452,000 below the required
minimum, results of operations which were $4,691,000 below the required minimum,
and interest coverage where earnings before interest and taxes is required to be
250% of interest expense and the actual results were computed to be 103%. The
banks have agreed to waive the aforementioned defaults. The Company signed the
New Agreement on July 20, 1995 and has established new covenants.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4.10 Amended and Restated Credit Agreement dated as of July 20, 1995
between the Company, each of the banks which is a signatory thereto
and The Chase Manhattan Bank, N.A., as Agent.
4.10.1 Amendment No. 2 dated July 20, 1995 to the Swank Security Agreement.
4.10.2 Amendment No. 2 dated July 20, 1995 to the FSC Security Agreement.
4.10.3 Modification and Confirmation of Open-End Indenture of Mortgage,
Assignment of Rents, Security Agreement and Fixture Filing
(Connecticut) dated July 20, 1995.
4.10.4 Modification and Confirmation of Open-End Indenture of Mortgage,
Assignment of rents, Security Agreement and Fixture Filing
(Massachusetts) dated July 20, 1995.
27.0 Financial Data Schedule.
(b) Current reports on Form 8-K - none
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act Of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
SWANK, INC.
Registrant
Andrew C. Corsini
Senior Vice President, Treasurer
and Chief Financial Officer
Date:
Conformed Copy
************************************************************
SWANK, INC.
CREDIT AGREEMENT
Dated as of December 22, 1992
$30,000,000
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Agent
************************************************************
<PAGE>
TABLE OF CONTENTS
This Table of Contents is inserted for convenience of reference
only and shall not constitute a part of the Agreement to which it
is attached.
Page
Section 1. Definitions and Accounting Matters . . . . . . . . 1
1.01 Certain Defined Terms . . . . . . . . . . . . . . . 1
1.02 Accounting Terms and Determinations . . . . . . . . 18
Section 2. Commitments. . . . . . . . . . . . . . . . . . . . 19
2.01 Loans . . . . . . . . . . . . . . . . . . . . . . . 19
2.02 Letters of Credit . . . . . . . . . . . . . . . . . 20
2.03 Borrowings. . . . . . . . . . . . . . . . . . . . . 24
2.04 Changes of Commitments. . . . . . . . . . . . . . . 24
2.05 Commitment Fee. . . . . . . . . . . . . . . . . . . 25
2.06 Several Obligations; Remedies Independent . . . . . 25
2.07 Notes . . . . . . . . . . . . . . . . . . . . . . . 25
2.08 Use of Proceeds . . . . . . . . . . . . . . . . . . 26
Section 3. Payments of Principal; Conversions . . . . . . . . 26
3.01 Amortization. . . . . . . . . . . . . . . . . . . . 26
3.02 Mandatory Prepayments . . . . . . . . . . . . . . . 27
3.03 Optional Prepayments. . . . . . . . . . . . . . . . 29
Section 4. Interest . . . . . . . . . . . . . . . . . . . . . 29
Section 5. Payments; Pro Rata Treatment; Computations; Etc. . 30
5.01 Payments. . . . . . . . . . . . . . . . . . . . . . 30
5.02 Pro Rata Treatment. . . . . . . . . . . . . . . . . 30
5.03 Computations. . . . . . . . . . . . . . . . . . . . 31
5.04 Minimum and Maximum Amounts . . . . . . . . . . . . 31
5.05 Non-Receipt of Funds by the Agent . . . . . . . . . 31
5.06 Sharing of Payments, Etc. . . . . . . . . . . . . . 32
Section 6. Yield Protection . . . . . . . . . . . . . . . . . 33
6.01 Additional Costs Generally. . . . . . . . . . . . . 33
6.02 Additional Costs in Respect of Letters of Credit. . 34
Section 7. Conditions Precedent . . . . . . . . . . . . . . . 35
7.01 Initial Extension of Credit . . . . . . . . . . . . 35
7.02 Initial and Subsequent Extensions of Credit . . . . 38
Section 8. Representations and Warranties . . . . . . . . . . 39
8.01 Corporate Existence . . . . . . . . . . . . . . . . 39
8.02 Financial Condition . . . . . . . . . . . . . . . . 39
8.03 Litigation. . . . . . . . . . . . . . . . . . . . . 40
8.04 No Breach . . . . . . . . . . . . . . . . . . . . . 40
8.05 Corporate Action. . . . . . . . . . . . . . . . . . 40
8.06 Approvals . . . . . . . . . . . . . . . . . . . . . 41
8.07 Regulations U and X . . . . . . . . . . . . . . . . 41
8.08 ERISA . . . . . . . . . . . . . . . . . . . . . . . 41
8.09 Taxes . . . . . . . . . . . . . . . . . . . . . . . 41
8.10 Subsidiaries, Etc.. . . . . . . . . . . . . . . . . 42
8.11 Material Agreements; Licenses . . . . . . . . . . . 42
8.12 Investment Company Act. . . . . . . . . . . . . . . 42
8.13 Public Utility Holding Company Act. . . . . . . . . 43
8.14 Hazardous Materials . . . . . . . . . . . . . . . . 43
8.15 Accuracy of Information . . . . . . . . . . . . . . 45
Section 9. Covenants. . . . . . . . . . . . . . . . . . . . . 46
9.01 Financial Statements. . . . . . . . . . . . . . . . 46
9.02 Taxes and Claims. . . . . . . . . . . . . . . . . . 51
9.03 Insurance . . . . . . . . . . . . . . . . . . . . . 51
9.04 Maintenance of Existence; Conduct of Business . . . 54
9.05 Maintenance of and Access to Properties . . . . . . 54
9.06 Compliance with Applicable Laws . . . . . . . . . . 54
9.07 Litigation. . . . . . . . . . . . . . . . . . . . . 55
9.08 Indebtedness. . . . . . . . . . . . . . . . . . . . 55
9.09 Leverage Ratio. . . . . . . . . . . . . . . . . . . 55
9.10 Tangible Net Worth. . . . . . . . . . . . . . . . . 56
9.11 Current Ratio . . . . . . . . . . . . . . . . . . . 57
9.12 EBIT/Interest Expense . . . . . . . . . . . . . . . 57
9.14 Acquisitions; Mergers; Disposition of Assets. . . . 58
9.15 Contingent Liabilities. . . . . . . . . . . . . . . 58
9.16 Liens . . . . . . . . . . . . . . . . . . . . . . . 59
9.17 Dividend Payments, Etc. . . . . . . . . . . . . . . 59
9.18 Capital Expenditures. . . . . . . . . . . . . . . . 60
9.19 Investments . . . . . . . . . . . . . . . . . . . . 60
9.20 Transactions with Affiliates. . . . . . . . . . . . 61
9.21 Actuals As Against 1993-1995 Plan . . . . . . . . . 61
Section 10. Defaults. . . . . . . . . . . . . . . . . . . . . 62
10.01 Events of Default. . . . . . . . . . . . . . . . . 62
10.02 Collateral Account . . . . . . . . . . . . . . . . 66
Section 11. The Agent . . . . . . . . . . . . . . . . . . . . 66
11.01 Appointment, Powers and Immunities . . . . . . . . 66
11.02 Reliance by Agent. . . . . . . . . . . . . . . . . 67
11.03 Defaults . . . . . . . . . . . . . . . . . . . . . 67
11.04 Rights as a Bank . . . . . . . . . . . . . . . . . 67
11.05 Indemnification. . . . . . . . . . . . . . . . . . 68
11.06 Non-Reliance on Agent and other Banks. . . . . . . 68
11.07 Failure to Act . . . . . . . . . . . . . . . . . . 69
11.08 Resignation or Removal of Agent. . . . . . . . . . 69
11.09 Consents under Basic Documents . . . . . . . . . . 70
11.10 Collateral Sub-Agents. . . . . . . . . . . . . . . 70
11.11 Agency Fees. . . . . . . . . . . . . . . . . . . . 70
Section 12. Miscellaneous . . . . . . . . . . . . . . . . . . 70
12.01 Waivers. . . . . . . . . . . . . . . . . . . . . . 70
12.02 Notices. . . . . . . . . . . . . . . . . . . . . . 71
12.03 Expenses, Etc. . . . . . . . . . . . . . . . . . . 71
12.04 Indemnification. . . . . . . . . . . . . . . . . . 72
12.05 Amendments, Etc. . . . . . . . . . . . . . . . . . 72
12.06 Successors and Assigns; Assignments and
Participations . . . . . . . . . . . . . . . . . 73
12.07 Survival . . . . . . . . . . . . . . . . . . . . . 75
12.08 Captions . . . . . . . . . . . . . . . . . . . . . 75
12.09 Counterparts . . . . . . . . . . . . . . . . . . . 75
12.10 Governing Law. . . . . . . . . . . . . . . . . . . 75
<PAGE>
Schedule I Material Agreements; Licenses
Schedule II Subsidiaries
Schedule III Hazardous Materials
Schedule IV 1993 - 1995 Plan
Schedule V Existing Letters of Credit
Exhibit A Form of Revolving Credit Note
Exhibit B Form of Term Loan Note
Exhibit C Form of Compliance Certificate
Exhibit D Form of Borrowing Base Certificate
Exhibit E-1 Form of Security Agreement
Exhibit E-2 Form of FSC Security Agreement
Exhibit F-1 Form of Mortgage (Connecticut)
Exhibit F-2 Form of Mortgage (Massachusetts)
Exhibit G Form of Opinion of Counsel to Swank
Exhibit H Form of Opinion of Special New York Counsel to
Chase
<PAGE>
CREDIT AGREEMENT dated as of December 22, 1992 between:
SWANK, INC., a corporation duly organized and validly existing
under the laws of the State of Delaware ("Swank"); each of the
banks which is a signatory hereto (individually, a "Bank" and,
collectively, the "Banks"); and THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION), as agent for the Banks (in such capacity,
together with its successors in such capacity, the "Agent").
Swank has requested that the Banks extend credit to it
in an aggregate amount not exceeding $30,000,000 to refinance
existing indebtedness and for the working capital purposes of
Swank and its Subsidiaries, and the Banks are prepared to extend
such credit upon the terms hereof. Accordingly, the parties
hereto hereby agree as follows:
Section 1. Definitions and Accounting Matters.
1.01 Certain Defined Terms. As used herein, the
following terms shall have the following meanings (all terms
defined in this Section 1.01 or in other provisions of this
Agreement in the singular to have the same meanings when used in
the plural and vice versa):
"Affiliate" shall mean, as to any Person, any other
Person which directly or indirectly controls, or is under common
control with, or is controlled by, such Person and, if such
Person is an individual, any member of the immediate family
(including parents, spouse and children) of such individual and
any trust whose principal beneficiary is such individual or one
or more members of such immediate family and any Person who is
controlled by any such member or trust. As used in this
definition, "control" (including, with its correlative meanings,
"controlled by" and "under common control with") shall mean
possession, directly or indirectly, of power to direct or cause
the direction of management or policies (whether through
ownership of securities or partnership or other ownership
interests, by contract or otherwise), provided that, in any
event, any Person which 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 interests of any other
Person (other than as a limited partner of such other Person)
will be deemed to control such corporation or other Person.
Notwithstanding the foregoing: no individual shall be deemed to
be an Affiliate of a corporation solely by reason of his or her
being an officer or director of such corporation; no Subsidiary
of Swank shall be deemed to be an Affiliate of Swank or any other
Subsidiary of Swank.
"Applicable Margin" shall mean (a) with respect to
Revolving Credit Loans, 2% per annum; and (b) with respect to
Term Loans, 2% per annum; provided that, if the Leverage Ratio
(determined as at the most recent December 31, commencing with
December 31, 1992, for which financial statements shall have been
delivered to the Banks pursuant to Section 9.01(b) hereof) shall
be equal to any of the applicable amounts set forth in the
schedule below, then the Applicable Margin otherwise specified in
clause (a) or (b) above, for any day during the period commencing
with the date of delivery (the "Delivery Date") of such financial
statements as at the most recent December 31 to but not including
the earlier of the date such financial statements as at the next
following December 31 are delivered to the Agent or the date such
financial statements are required to be delivered to the Agent
pursuant to Section 9.01(b) hereto, shall be reduced by the
percentage set forth in the schedule below opposite the relevant
Leverage Ratio, except notwithstanding the foregoing, in the
event that the Leverage Ratio at the June 30 immediately
following said December 31 shall be greater than any of the
applicable amounts set forth in the schedule below, then the
Applicable Margin shall not be subject to the aforesaid reduction
but shall revert to the percentages specified in clause (a) or
(b) above upon the date on which the financial statements as at
said June 30 shall be delivered to the Banks, and provided
further that in the event Swank shall fail to deliver to the
Banks financial statements as at any December 31 or June 30
pursuant to said Section 9.01(a) or 9.01(b) by the date such
financial statements are required to be delivered pursuant to
said Section 9.01(a) or 9.01(b), then the Leverage Ratio
(determined as aforesaid) shall, until such time as such
financial statements are in fact delivered to the Banks, be
deemed not to be equal to any of the amounts set forth in the
schedule below and the Applicable Margin accordingly shall not be
reduced.
December 31 June 30
Leverage Ratio Leverage Ratio Reduction
less than or equal less than or equal
to 1.0 to 1 to 1.15 to 1 .50 of 1%
less than or equal
to 1.05 to 1
(for June 30, 1995) .50 of 1%
less than or equal less than or equal
to .75 to 1 to .90 to 1 1%
"Base Rate" shall mean for any day, a rate per annum
equal to the higher of (a) the Federal Funds Rate plus 1/2 % of 1%
or (b) the Prime Rate.
"Basic Documents" shall mean this Agreement, the Notes,
the Security Agreement, the FSC Security Agreement and the
Mortgages.
"Borrowing Base" shall mean, as at any day of
determination thereof, the sum of (i) 75% of the aggregate amount
of Eligible Receivables at said date, plus (ii) the lesser of
(w) 50% of the aggregate amount of Eligible Inventory at said
date or (x) during the months of January through April in any
year, $4,000,000, during the months of May through October in any
year, $11,000,000, and during the months of November and December
in any year, $0, plus (iii) as to any real estate, machinery or
equipment of Swank as to which Swank shall have delivered to the
Banks an appraisal (which appraisal shall be updated annually) in
form and substance, and by an appraisal firm having a level of
experience and reputation, satisfactory to the Majority Banks,
during the following respective years the following respective
percentages of (y) the appraised value of any machinery and
equipment covered by such appraisal: during 1993, 50%; during
1994, 37.50%; and during 1995, 0%; and (z) the appraised value of
any real estate covered by such appraisal: during 1993, 75%;
during 1994, 56.25%; and during 1995, 0% (the value of all such
machinery and equipment being agreed on the date hereof to be
$2,100,000, the value of all such real estate being agreed on the
date hereof to be $2,250,000 as to Attleboro, Massachusetts and
$4,800,000 as to Norwalk, Connecticut) plus (iv) the cost of any
machinery or equipment acquired by Swank since the date of
delivery of the most recent appraisal required hereby, minus the
appraised value of any machinery or equipment retired during such
fiscal year or exchanged therefor, provided, that if the cost of
such machinery or equipment acquired by Swank exceeds $1,000,000,
Swank shall, at the request of the Majority Banks, deliver to the
Banks an updated appraisal.
"Borrowing Base Certificate" shall mean a certificate
of the chief financial officer of Swank appropriately completed,
and in substantially the form of Exhibit D hereto.
"Business Day" shall mean any day other than a day on
which commercial banks are authorized or required to close in New
York City.
"Capital Expenditures" shall mean any expenditure by
Swank or any of its Subsidiaries (whether paid in cash or accrued
as a liability, by way of the acquisition of the securities of
any Person, the incurrence of Capital Lease Obligations or
otherwise, or any obligations to make any such expenditure) in
respect of the purchase or other acquisition of fixed or capital
assets, excluding (i) normal replacements and maintenance which
are properly charged to current operations in accordance with
generally accepted accounting principles and (ii) expenditures
made for purposes of replacing items with respect to which Swank
has received insurance proceeds under an insurance policy
described in clause (1) of Section 9.03 hereof, to the extent
such expenditures do not exceed the aggregate amount of such
proceeds.
"Capital Lease Obligations" shall mean, as to any
Person, the obligations of such Person to pay rent or other
amounts under a lease of (or other agreement conveying the right
to use) real and/or personal property which obligations are
classified and accounted for as a capital lease on a balance
sheet of such Person under generally accepted accounting
principles (including Statement of Financial Accounting Standards
No. 13 of the Financial Accounting Standards Board) and, for
purposes of this Agreement, the amount of such obligations shall
be the capitalized amount thereof, determined in accordance with
generally accepted accounting principles (including such
Statement No. 13).
"Casualty Event" shall mean, with respect to any
Property of any Person, any loss of or damage to, or any
condemnation or other taking of, such Property for which such
Person or any of its Subsidiaries receives insurance proceeds, or
proceeds of a condemnation award or other compensation.
"Chase" shall mean The Chase Manhattan Bank (National
Association).
"Closing Date" shall mean the date upon which the
initial extension of credit hereunder is made.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Collateral Account" shall mean the collateral account
established pursuant to Section 4.01 of the Security Agreement.
"Commitment Percentage" shall mean, as to any Bank, the
amount (expressed as a percentage) equal to the ratio of the
Revolving Credit Commitment of such Bank to the aggregate amount
of the Revolving Credit Commitments of all of the Banks.
"Commitments" shall mean, collectively, the Revolving
Credit Commitments, and the Term Loan Commitments.
"Compliance Certificate" shall mean the certificate,
duly executed by the chief financial officer of Swank,
appropriately completed, and in substantially the form of Exhibit
C hereto.
"Debt and Equity Issuance" shall mean (a) the issuance
or sale by Swank or any of its Subsidiaries after the Closing
Date of (i) any notes or other securities evidencing
Indebtedness, (ii) any capital stock, (iii) any warrants or
options exercisable in respect of capital stock or (iv) any other
security or instrument representing an equity interest (or the
right to obtain any equity interest) in the issuing or selling
Person or (b) the receipt by Swank or any of its Subsidiaries
after the Closing Date of any capital contribution received
(whether or not evidenced by any equity security issued by the
recipient of such contribution); provided that Debt and Equity
Issuance shall not include (w) any such issuance or sale by any
Subsidiary of Swank to Swank, (x) any capital contribution by
Swank to any Subsidiary of Swank, (y) the issuance of warrants or
options to directors, officers or employees of Swank or any of
its Subsidiaries, and any capital stock of Swank issued upon
exercise of any such warrants or options, to the extent that the
net cash consideration received in respect of such issuance or
exercise during any fiscal year shall not exceed $250,000 in the
aggregate or (z) the incurrence of Indebtedness permitted under
Section 9.08 hereof.
"Debt Service" shall mean, for any period of four
fiscal quarters, the sum of all payments of principal in respect
of all Indebtedness of Swank and its Subsidiaries (other than
Indebtedness in respect of the Revolving Credit Loans and Letter
of Credit Liabilities) made during such period.
"Default" shall mean an Event of Default or an event
which with notice or lapse of time or both would become an Event
of Default.
"Dividend Payment" shall mean, with respect to any
capital stock of any Person, dividends (in cash, Property or
obligations) on, or other payments or distributions on account
of, or the setting apart of money for a sinking or other
analogous fund for, the purchase, redemption, retirement or other
acquisition of, any shares of such stock, but excluding dividends
payable solely in shares of common stock of such Person.
"Dollars" and "$" shall mean lawful money of the United
States of America.
"EBIT" shall mean, for any period, Net Income for such
period determined before interest, taxes and extraordinary or
unusual items on a consolidated basis for Swank and its
Subsidiaries in accordance with generally accepted accounting
principles.
"EBT" shall mean for any period, EBIT for such period
minus Interest Expense for such period.
"Eligible Inventory" shall mean, as at any date of
determination thereof, the sum of the following (determined
without duplication):
(a) the value (determined at the lower of cost or
market) of all Inventory owned by (and in the possession or
under the control of) Swank and located in a jurisdiction in
the United States of America, other than Inventory located
at any of the factory outlet stores owned by Swank (except
the factory outlet store located at Taunton, Massachusetts),
as to which appropriate Uniform Commercial Code financing
statements have been filed naming Swank as "debtor" and the
Agent as "secured party" (excluding however any such
Inventory which has been shipped to a customer of Swank,
including Processors referred to below, even if on a
consignment or "sale or return" basis), plus
(b) the value (determined at the lower of cost or
market) of all Inventory being processed by third parties on
behalf of Swank ("Processors"), but only to the extent that
Swank shall have filed an appropriate Uniform Commercial
Code financing statement in the respective jurisdiction in
which such Inventory is located naming the Processor as
"debtor", Swank as "secured party" and the Agent as
"assignee" and delivered to the Agent an opinion of counsel
satisfactory to the Agent to the effect that to the extent
such arrangement constitutes a consignment or security
interest under applicable law, Swank has a valid perfected
first priority security interest in such Inventory.
"Eligible Receivables" shall mean, as at any date of
determination thereof, the aggregate of all Receivables at said
date due to Swank other than the following (determined without
duplication):
(a) all Receivables which, at the date of issuance of
the respective invoice therefor, were payable by their terms
more than sixty days after shipment except that, subject to
clause (c) below, during the period commencing July 15 of
any year through January 10 of the immediately following
year there shall not be excluded from "Eligible Receivables"
by reason of this clause (a) up to $500,000 in respect of
Receivables ("Christmas Receivables") arising under Swank's
Christmas dating program even though such Receivables, at
the date of issuance of the respective invoice therefor, are
payable by their terms more than 60 days after shipment, so
long as such Receivables are payable on or before January 10
following the respective Christmas,
(b) any Receivable due from a Subsidiary or Affiliate
of Swank,
(c) any Christmas Receivable due from an account
debtor which the Majority Banks (through the Agent) have
notified Swank does not have a satisfactory credit standing
(as determined in the sole discretion of the Majority
Banks),
(d) any Receivable (other than a Christmas Receivable)
due from an account debtor under any invoice generated after
receipt by Swank of notice from the Majority Banks (through
the Agent) that such account debtor does not have a
satisfactory credit standing (as determined in the sole
discretion of the Majority Banks),
(e) any Receivable which remains unpaid for more than
sixty days (measured from the due date set forth in the
original invoice therefor),
(f) all Receivables of any account debtor if
(i) Receivables to such account debtor at any time exceed
$100,000 in the aggregate, and (ii) more than 50% of the
aggregate amount of the Receivables of such account debtor
have at the time remained unpaid for more than sixty days
(measured from the due date set forth in the original
invoice therefor),
(g) any Receivable as to which there is any unresolved
dispute with the respective account debtor (but only to the
extent of such dispute) and
(h) any Receivable evidenced by an Instrument (as
defined in the Security Agreement) not in the possession of
the Agent.
"Environmental Claim" shall mean, with respect to any
Person, (a) any written notice, claim or demand or other written
communication (collectively, a "claim") by any other Person
alleging or asserting such Person's liability for investigatory
costs, cleanup costs, governmental response costs, damages to
natural resources or other Property, personal injuries, fines or
penalties arising out of, based on or resulting from (i) the
presence, or Release into the environment, of any Hazardous
Material at any location, whether or not owned by such Person, or
(ii) circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law. The term "Environmental
Claim" shall include, without limitation, any claim by any
governmental authority for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any
applicable Environmental Law, and any claim by any third party
seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from the presence of
Hazardous Materials or arising from alleged injury or threat of
injury to health, safety or the environment.
"Environmental Laws" shall mean any and all applicable
Federal, state and local laws, rules or regulations, and any
orders or decrees, in each case as now or hereafter in effect,
relating to the regulation or protection of human health, safety
or the environment or to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals or
toxic or hazardous substances or wastes into the indoor or
outdoor environment, including, without limitation, ambient air,
soil, surface water, ground water, wetlands, land or subsurface
strata, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, chemicals or toxic or
hazardous substances or wastes.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade
or business that is a member of any group of organizations (i)
described in Section 414(b) or (c) of the Code of which Swank is
a member and (ii) solely for purposes of potential liability
under Section 302(c)(11) of ERISA and Section 412(c)(11) of the
Code and the lien created under Section 302(f) of ERISA and
Section 412(n) of the Code, described in Section 414(m) or (o) of
the Code of which Swank is a member.
"ESOP" shall have the meaning assigned to such term in
Section 9.17 hereof.
"Event of Default" shall have the meaning assigned to
such term in Section 10.01 hereof.
"Excess Cash Flow" shall mean, for any period, the
following (determined on a consolidated basis for Swank and its
Subsidiaries in accordance with generally accepted accounting
principles): (a) Net Income for such period (determined after
interest and taxes but before extraordinary or unusual items)
derived by Swank and its Subsidiaries from operations in the
ordinary course of business, plus (b) depreciation and
amortization for such period to the extent deducted in
determining Net Income for such period, minus (c) Capital
Expenditures made during such period (other than any Capital
Expenditures to the extent made from the proceeds of Indebtedness
permitted under Section 9.08(iii) hereof) minus (d) cash
expenditures made (plus cash amounts received) during such fiscal
year arising out of extraordinary or unusual items in such fiscal
year or any prior fiscal year minus (e) any amounts (i) which
would otherwise be included hereunder but which are applied to
the mandatory prepayment of the Loans pursuant to Section 3.02
hereof during such period and (ii) applied to the payment of
principal of the Term Loans pursuant to Section 3.01(ii) hereof
(including for 1992, scheduled payments of principal made
pursuant to the 1987 Credit Agreement).
"Existing Credit Agreements" shall mean, collectively,
(i) the Credit Agreement dated as of December 31, 1987 between
Swank, the banks named therein and The Chase Manhattan Bank
(National Association), as agent, as modified, supplemented and
in effect from time to time, and (ii) the Credit Agreement dated
as of May 11, 1990 between Swank, the banks named therein and The
Chase Manhattan Bank (National Association), as agent, as
modified, supplemented and in effect from time to time.
"Existing Letters of Credit" shall have the meaning
assigned to such term in Section 2.02(i) hereof.
"Federal Funds Rate" shall mean, for any day, the rate
per annum (rounded upwards, if necessary, to the nearest 1/100th
of 1%) equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business
Day next succeeding such day, provided that (a) if such day is
not a Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the next preceding Business Day
as so published on the next succeeding Business Day, and (b) if
such rate is not so published for any day, the Federal Funds Rate
for such day shall be the average rate charged to Chase on such
day on such transactions as determined by the Agent.
"FSC" shall mean Swank Sales International (V.I.),
Inc., a Virgin Islands corporation.
"FSC Security Agreement" shall mean a Security
Agreement in substantially the form of Exhibit E-2 hereto between
the FSC and the Agent, as said Security Agreement shall be
modified and supplemented and in effect from time to time.
"Hazardous Material" shall mean, collectively, (a) any
petroleum or petroleum products, flammable explosives,
radioactive materials, friable asbestos, urea formaldehyde foam
insulation, and transformers or other equipment that contain
dielectric fluid containing polychlorinated biphenyls (PCB's),
(b) any chemicals or other materials or substances defined as or
included in the definition of "hazardous substances", "hazardous
wastes", "hazardous materials", "extremely hazardous wastes",
"restricted hazardous wastes", "toxic substances", "toxic
pollutants", "contaminants", "pollutants" or words of similar
import under any Environmental Law and (c) any other chemical or
other material or substance, exposure to which is prohibited,
limited or regulated under any Environmental Law.
"Indebtedness" shall mean, as to any Person: (i)
indebtedness of such Person for borrowed money (whether by loan
or the issuance and sale of debt securities) or for the deferred
purchase or acquisition price of Property or services, other than
accounts payable (other than for borrowed money) incurred in the
ordinary course of business; (ii) indebtedness secured by a Lien
on the Property of such Person, whether or not the respective
obligation so secured has been assumed by such Person; (iii)
obligations of such Person in respect of letters of credit or
similar instruments issued or accepted by banks and other
financial institutions for the account of such Person; (iv)
Capital Lease Obligations of such Person; and (v) obligations of
such Person in respect of any Interest Rate Protection Agreement.
"Interest Expense" shall mean, for any period, the sum
of the following: (a) all interest in respect of Indebtedness
accrued or capitalized during such period (whether or not
actually paid during such period) plus (b) the net amounts
payable (or minus the net amounts receivable) under Interest Rate
Protection Agreements accrued during such period (whether or not
actually paid or received during such period), provided that in
determining Interest Expense for any period, there shall be
excluded the aggregate amount of interest on premiums borrowed by
Swank to pay for life insurance policies owned by Swank.
"Interest Rate Protection Agreement" shall mean, for
any Person, an interest rate swap, cap or collar agreement or
similar arrangement between such Person and one or more financial
institutions providing for the transfer or mitigation of interest
risks either generally or under specific contingencies.
"Inventory" shall mean readily marketable materials of
a type manufactured or consumed by Swank in the ordinary course
of business as presently conducted, whether in the form of raw
materials, work in process or finished goods.
"Investment" in any Person shall mean: (a) the
acquisition (whether for cash, Property, services or securities
or otherwise) of capital stock, bonds, notes, debentures,
partnership or other ownership interests or other securities of
such Person; and (b) any deposit with, or advance, loan or other
extension of credit to, such Person (other than any such advance,
loan or extension of credit having a term not exceeding 90 days
representing the purchase price of inventory or supplies
purchased in the ordinary course of business) or guarantee of, or
other contingent obligation with respect to, Indebtedness or
other liability of such Person and (without duplication) any
amount committed to be advanced, lent or extended to such Person.
"Letter of Credit" shall have the meaning assigned to
such term in Section 2.02 hereof and shall include all Existing
Letters of Credit.
"Letter of Credit Documents" shall mean, with respect
to any Letter of Credit, collectively, the respective letter of
credit or like instrument itself, any amendments thereto, any
documents delivered thereunder, any application therefor, and any
other agreements, instruments, guarantees or other documents
(whether general in application or applicable only to the
respective Letter of Credit) governing or providing for (i) the
rights and obligations of the parties concerned or at risk or
(ii) any collateral security for such obligations.
"Letter of Credit Liabilities" shall mean, without
duplication, at any time and in respect of any Letter of Credit,
the sum of (i) the undrawn face amount of such Letter of Credit
plus (ii) the aggregate unpaid amount of all outstanding
acceptances created thereunder plus (iii) the aggregate unpaid
amount of all Reimbursement Obligations at the time due and
payable in respect of previous drawings made (or acceptances that
have matured) under such Letter of Credit.
"Leverage Ratio" shall mean, as at any date of
determination thereof, the ratio of (i) Total Liabilities as at
such date to (ii) Tangible Net Worth as at such date.
"Lien" shall mean, with respect to any asset or
revenue, any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset or revenue. For
the purposes of this Agreement, a Person shall be deemed to own
subject to a Lien any asset which it has acquired or holds
subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title
retention agreement relating to such asset.
"Loans" shall mean the loans provided for by Section
2.01 hereof.
"Majority Banks" shall mean, at any time while no Loans
or Letter of Credit Liabilities are outstanding, Banks having at
least 63-1/3% of the aggregate amount of the Commitments and, at
any time while Loans or Letter of Credit Liabilities are
outstanding, Banks holding at least 63-1/3% of the outstanding
aggregate principal amount of the Loans and Letter of Credit
Liabilities and, for purposes hereof, a Bank shall be deemed to
hold a Letter of Credit Liability hereunder in an amount equal to
its participation interest in such Letter of Credit under Section
2.02 hereof.
"Material Adverse Effect" shall mean a material adverse
effect on (a) the Property, business (including its prospects),
operations, financial condition, liabilities or capitalization of
Swank and its Subsidiaries taken as a whole, (b) the validity or
enforceability of any of the Basic Documents, (c) the rights and
remedies of the Banks and the Agent under any of the Basic
Documents, (d) the ability of Swank to make timely payment of the
scheduled payments of principal of or interest on the Loans or
the Reimbursement Obligations or other amounts payable in
connection therewith or (e) the ability of Swank to perform any
of its material obligations under any of the Basic Documents.
"Mortgages" shall mean, collectively, (i) an Open-End
Indenture of Mortgage, Assignment of Rents, Security Agreement
and Fixture Filing in substantially the form of Exhibit F-1
hereto by Swank in favor of the Agent and covering property of
Swank in Norwalk, Connecticut, as said Open-End Indenture of
Mortgage, Assignment of Rents, Security Agreement and Fixture
Filing shall be modified and supplemented and in effect from time
to time and (ii) an Indenture of Mortgage, Assignment of Rents,
Security Agreement and Fixture Filing in substantially the form
of Exhibit F-2 hereto by Swank in favor of the Agent and covering
property of Swank in Attleboro, Massachusetts, as said Indenture
of Mortgage, Assignment of Rents, Security Agreement and Fixture
Filing shall be modified and supplemented and in effect from time
to time.
"Multiemployer Plan" shall mean a multiemployer plan
defined as such in Section 3(37) of ERISA to which contributions
have been made by Swank or any ERISA Affiliate and which is
covered by Title IV of ERISA.
"Net Consideration" shall mean, with respect to the
disposition of any asset referred to in Section 3.02(b) hereof,
the aggregate value of all consideration (to the extent of the
legal interest of Swank or the respective Subsidiary therein)
consisting of cash and its equivalent received in connection with
such disposition after deducting therefrom the amount of federal,
state and local income taxes estimated to be payable in respect
of any gain realized as a result of such disposition and the
aggregate amount of reasonable legal expenses, brokerage
commissions and other costs associated with and appropriate to
such disposition.
"Net Income" shall mean, for any fiscal year,
consolidated net income of Swank and its Subsidiaries as
reflected in the financial statements delivered pursuant to
Section 9.01(b) hereof, determined after provision for taxes and
any extraordinary or unusual items, provided that in determining
net income for any period contributions to the ESOP shall not be
treated as an expense to the extent that the proceeds of such
contributions are applied to the payment of principal or interest
on loans made by Swank to the ESOP.
"1987 Credit Agreement" shall mean the Credit Agreement
referred to in clause (i) of the definition of "Existing Credit
Agreement" in this Section 1.01.
"1990 Credit Agreement" shall mean the Credit Agreement
referred to in clause (ii) in the definition of "Existing Credit
Agreement" in this Section 1.01.
"1993-1995 Plan" shall mean the "1993-1995 Operating
Plan" of Swank and its Subsidiaries dated November 16, 1992
attached as Schedule IV hereto, including the assumptions and
footnotes contained therein, as the same may be supplemented,
modified, amended or restated from time to time by Swank with the
consent of the Majority Banks.
"Notes" shall mean, the promissory notes provided for
by Section 2.07 thereof, and shall include the Revolving Credit
Notes and the Term Loan Notes.
"PBGC" shall mean, the Pension Benefit Guaranty
Corporation or any entity succeeding to any or all of its
functions under ERISA.
"Permitted Investments" of any Person shall mean:
(a) direct obligations of the United States of America, or of any
agency thereof, or obligations guaranteed as to principal and
interest by the United States of America or any agency thereof,
maturing not more than 365 days from the date of acquisition
thereof by such Person; (b) certificates of deposit issued by any
Bank or any other bank or trust company organized under the laws
of the United States of America or any state thereof and having
capital, surplus and undivided profits of at least $500,000,000;
(c) commercial paper rated A-1 or P-2 or better by Standard &
Poor's Corporation or Moody's Investors Services, Inc.,
respectively, maturing not more than 90 days from the date of
acquisition thereof by such Person; and (d) securities issued by
any registered open-end mutual fund that has total assets of not
less than $1,000,000,000 and whose portfolios substantially
consist of one or more of the investments referred to in the
foregoing clauses (a) through (c).
"Person" shall mean any individual, corporation,
company, voluntary association, partnership, joint venture,
trust, unincorporated organization or government (or any agency,
instrumentality or political subdivision thereof).
"Plan" shall mean an employee benefit or other plan
established or maintained by Swank or any ERISA Affiliate and
that is covered by Title IV of ERISA, other than a Multiemployer
Plan.
"Plants" shall mean, collectively, the facilities of
Swank located in Norwalk, Connecticut, Attleboro, Massachusetts
and Taunton, Massachusetts.
"Post-Default Rate" shall mean, in respect of any
principal of any Loan, any Reimbursement Obligation or any other
amount payable by Swank under this Agreement or any Security
Document which is not paid when due (whether at stated maturity,
by acceleration or otherwise), a rate per annum during the period
commencing on the due date until such amount is paid in full
equal to 2 1/2% above the Base Rate as in effect from time to time
plus the Applicable Margin for such Loans.
"Prime Rate" shall mean the rate of interest from time
to time announced by Chase at the Principal Office as its prime
commercial lending rate. Each change in any interest rate
provided for herein based upon the Prime Rate resulting from a
change in the Prime Rate shall take effect at the time of such
change in the Prime Rate.
"Principal Office" shall mean the principal office of
Chase, presently located at 1 Chase Manhattan Plaza, New York,
New York 10081.
"Principal Payment Dates" shall mean, the twelve
Quarterly Dates falling on or nearest to March 31, June 30,
September 30 and December 31 of each year, commencing with
March 31, 1993 through and including December 31, 1995.
"Property" shall mean any right or interest in or to
property of any kind whatsoever, whether real, personal or mixed
and whether tangible or intangible.
"Quarterly Dates" shall mean the last Business Day of
each March, June, September and December, the first of which
shall be the first such day after the date of this Agreement.
"Receivables" shall mean, as at any date of
determination thereof, the unpaid portion of the obligation, as
stated on the respective invoice, of a customer of Swank in
respect of Inventory purchased and shipped, net of any credits,
rebates or offsets owed to the respective customer and also net
of any commissions payable to third parties (and for purposes
hereof, a credit or rebate paid by check or draft of Swank shall
be deemed to be outstanding until such check or draft shall have
been debited to the respective account of Swank on which such
check or draft was drawn).
"Regulations A, G, T, U and X" shall mean Regulations
A, G, T, U and X of the Board of Governors of the Federal Reserve
System or same successor as the same may be modified respectively
and supplemented and in effect from time to time.
"Regulatory Change" shall mean, with respect to any
Bank, any change on or after the date of this Agreement in United
States federal, state or foreign laws or regulations or the
adoption or making on or after such date of any interpretations,
directives or requests applying to a class of banks including
such Bank of or under any United States federal or state, or any
foreign, laws or regulations (whether or not having the force of
law) by any court or governmental or monetary authority charged
with the interpretation or administration thereof.
"Reimbursement Obligations" shall mean, collectively,
the obligations of Swank then outstanding, or which may
thereafter arise in respect of Letters of Credit (or acceptances
created under Letters of Credit) then outstanding, under Section
2.02 hereof to reimburse any Bank for the amount paid by such
Bank in respect of any drawing under a Letter of Credit or any
payment of any acceptance.
"Release" shall mean any release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge,
dispersal, leaching or migration into the indoor or outdoor
environment, including, without limitation, the movement of
Hazardous Materials through ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata.
"Revolving Credit Commitment" shall mean, as to any
Bank, the obligation of such Bank to make Revolving Credit Loans
under Section 2.01(a) hereof, and to participate in Letters of
Credit issued under Section 2.02 hereof, in an aggregate
principal or face amount at any one time outstanding up to but
not exceeding the amount set opposite such Bank's name on the
signature pages hereto (as the same may be reduced from time to
time pursuant to Section 2.04 hereof). The original aggregate
principal amount of the Revolving Credit Commitment is
$21,000,000.
"Revolving Credit Commitment Termination Date" shall
mean the Quarterly Date falling on or nearest to December 31,
1995.
"Revolving Credit Loans" shall mean the loans provided
for by Section 2.01(a) hereof.
"Revolving Credit Notes" shall have the meaning
assigned to such term in Section 2.07 hereof.
"Security Agreement" shall mean a Security Agreement in
substantially the form of Exhibit E-1 hereto between Swank and
the Agent, as said Security Agreement shall be modified and
supplemented and in effect from time to time.
"Security Documents" shall mean, collectively, the
Security Agreement, the FSC Security Agreement and the Mortgages.
"Subsidiary" shall mean, with respect to any Person
(the "parent"), any corporation of which at least a majority of
the outstanding shares of stock having by the terms thereof
ordinary voting power to elect a majority of the board of
directors of such corporation (irrespective of whether or not at
the time stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening
of any contingency) is at the time directly or indirectly owned
or controlled by the parent or one or more of the Subsidiaries of
the parent or by the parent and one or more of the Subsidiaries
of the parent.
"Tangible Net Worth" shall mean, as at any date of
determination thereof, total assets of Swank and its Subsidiaries
determined (without duplication) in accordance with generally
accepted accounting principles minus the sum of (i) Total
Liabilities as at such date of determination plus (ii) the book
value of all good-will (but not any other intangible assets), and
any write-up in the book value of assets resulting from a
revaluation thereof subsequent to the fiscal year ending on or
nearest to December 31, 1991.
"Term Loan Commitment" shall mean, as to any Bank, the
obligation of such Bank to make Term Loans under Section 2.01(b)
hereof in an aggregate principal amount equal to the amount set
opposite such Bank's name on the signature pages hereof. The
original aggregate principal amount of the Term Loan Commitments
is $9,000,000.
"Term Loan Commitment Termination Date" shall mean
December 31, 1992.
"Term Loan Notes" shall have the meaning assigned to
such term in Section 2.07 hereof.
"Term Loans" shall mean the loans provided for by
Section 2.01(b) hereof.
"Total Liabilities" shall mean, as at any date of
determination thereof, all Indebtedness of Swank and its
Subsidiaries and all other liabilities of Swank and its
Subsidiaries which should be classified as liabilities on a
balance sheet of Swank and its Subsidiaries prepared in
accordance with generally accepted accounting principles and in
any event including all reserves (other than general contingency
reserves) and all deferred taxes and other deferred items and all
Indebtedness of Swank and its Subsidiaries (whether or not such
Indebtedness would be included as a liability on the balance
sheet of Swank and its Subsidiaries).
"Warrants" shall mean, collectively, the warrants for
shares of common stock of Swank issued to the banks party to the
1990 Credit Agreement.
1.02 Accounting Terms and Determinations.
(a) All accounting terms used herein shall (except as
otherwise expressly provided herein) be interpreted, and all
financial statements and certificates and reports as to financial
matters required to be delivered to the Banks hereunder shall
(unless otherwise disclosed to the Banks in writing at the time
of delivery thereof in the manner described in subsection (b)
below) be prepared, in accordance with generally accepted
accounting principles applied on a basis consistent with those
used in the preparation of the latest financial statements
furnished to the Banks hereunder after the date hereof. All
calculations made for the purposes of determining compliance with
the terms of Sections 9.08, 9.09, 9.10, 9.11, 9.12, 9.13, 9.16,
9.17, 9.18, 9.19 and 9.21 hereof shall (except as otherwise
expressly provided herein) be made by application of generally
accepted accounting principles applied on a basis consistent with
those used in the preparation of the annual or quarterly
financial statements furnished to the Banks pursuant to Section
9.01 hereof unless (i) Swank shall have objected to determining
such compliance on such basis at the time of delivery of such
financial statements or (ii) the Majority Banks shall so object
in writing within 30 days after delivery of such financial
statements, in either of which events such calculations shall be
made on a basis consistent with those used in the preparation of
the latest financial statements as to which such objection shall
not have been made (which, if objection is made in respect of the
first financial statements delivered under Section 9.01 hereof,
shall mean the financial statements as at December 31, 1991
referred to in Section 8.02 hereof).
(b) Swank shall deliver to the Banks at the same time
as the delivery of any annual or quarterly financial statement
under Section 9.01 hereof a description in reasonable detail of
any material variation between the application of accounting
principles employed in the preparation of such statement and the
application of accounting principles employed in the preparation
of the next preceding annual or quarterly financial statements as
to which no objection has been made in accordance with the last
sentence of subsection (a) above, and reasonable estimates of the
difference between such statements arising as a consequence
thereof.
(c) To enable the ready determination of compliance
with the covenants set forth in Section 9 hereof, Swank will not
change the last day of its fiscal year from December 31 in each
year. Compliance by Swank with the provisions of Sections 9.08,
9.09, 9.10, 9.11, 9.12, 9.13, 9.14, 9.17, 9.18, 9.19 and 9.21
hereof, inclusive, shall be determined as follows: if the
financial statements as at the last day of any fiscal quarter or
fiscal year delivered pursuant to this Agreement shall
demonstrate that the provisions of said Sections had been
breached as at said date, Swank shall be deemed to continue to be
in breach of said Sections as of each day thereafter until it
shall have delivered financial statements as at the last day of a
subsequent fiscal quarter or fiscal year demonstrating compliance
with said Sections.
Section 2. Commitments.
2.01 Loans. Each Bank severally agrees, on the terms
of this Agreement, to make Loans to Swank as follows:
(a) Revolving Credit Loans. Each Bank severally
agrees on the terms of this Agreement to make loans to Swank
in Dollars during the period from and including the date of
this Agreement to but excluding the Revolving Credit
Commitment Termination Date in an aggregate principal amount
at any one time outstanding up to but not exceeding the
amount of such Bank's Revolving Credit Commitment as then in
effect. Subject to the terms of this Agreement, during such
period, Swank may borrow, repay and reborrow the amount of
the Revolving Credit Commitments, provided that in no event
shall the aggregate principal amount of the Revolving Credit
Loans, together with the aggregate amount of all Letter of
Credit Liabilities, exceed the aggregate amount of the
Revolving Credit Commitments.
(b) Term Loans. Each Bank severally agrees, on the
terms of this Agreement to make term loans to Swank in
Dollars on the Closing Date in a principal amount equal to
such Bank's Term Loan Commitment as then in effect.
2.02 Letters of Credit. Subject to the terms and
conditions hereof, the Revolving Credit Commitments may, in
addition to the Revolving Credit Loans provided for in Section
2.01(a) above, be utilized, upon the request of Swank, by the
issuance by Chase of letters of credit (the "Letters of Credit")
having terms not extending beyond the earlier of the Revolving
Credit Commitment Termination Date or (in the case of commercial
letters of credit) the date 180 days after the issuance thereof
or (in the case of standby letters of credit) 360 days after the
issuance thereof, provided that in no event shall (x) the
aggregate amount of the Letter of Credit Liabilities in respect
of all Letters of Credit exceed $6,000,000 or (y) the aggregate
amount of all Letter of Credit Liabilities, together with the
aggregate principal amount of the Revolving Credit Loans, exceed
the aggregate amount of the Revolving Credit Commitments. The
following additional provisions shall apply to each Letter of
Credit:
(a) Swank shall give the Agent at least five Business
Days' irrevocable prior notice (effective upon receipt)
specifying the date (which shall be no later than the date
30 days preceding the Revolving Credit Commitment
Termination Date) each such Letter of Credit is to be
issued, and describing the proposed terms of each such
Letter of Credit and the nature of the transactions proposed
to be supported thereby. Upon receipt of such notice the
Agent shall promptly notify each Bank of the contents
thereof and of such Bank's Commitment Percentage of the
amount of each such proposed Letter of Credit.
(b) On each day during the period commencing with the
issuance by Chase of any Letter of Credit and until such
Letter of Credit shall have expired or been terminated, the
Revolving Credit Commitment of each Bank shall be deemed to
be utilized for all purposes hereof (including for purposes
of the calculation of commitment fees under Section 2.05
hereof) in an amount equal to such Bank's Commitment
Percentage of the then undrawn face amount of such Letter of
Credit and of all outstanding acceptances created
thereunder. By its execution and delivery of this Agreement
each Bank (other than Chase) agrees that it shall
automatically acquire a participation in Chase's liability
under each Letter of Credit issued hereunder, and in each
acceptance created under such Letter of Credit, in an amount
equal to such Bank's Commitment Percentage of such
liability, and each Bank (other than Chase) thereby shall
absolutely, unconditionally and irrevocably assume, as
primary obligor and not as surety, and unconditionally shall
agree with Chase to pay and discharge when due, its
Commitment Percentage of Chase's liability under each such
Letter of Credit and acceptances.
(c) Upon receipt from the beneficiary of any Letter of
Credit of any demand for payment under such Letter of Credit
(or under any acceptance created by Chase under such Letter
of Credit), Chase shall promptly notify Swank and each Bank
as to the amount to be paid as a result of such demand and
the respective payment date. Swank shall forthwith
reimburse Chase for any amounts paid by Chase upon any
drawing under any Letter of Credit or upon the maturity of
any acceptance, without presentment, demand, protest or
other formalities of any kind. The Agent agrees to give each
Bank prompt notice of the amount of the liability of Swank
for failure to reimburse Chase for payment under any Letter
of Credit or acceptance when such reimbursement is due,
specifying such Bank's Commitment Percentage of the amount
of such liability.
(d) Each Bank hereby agrees to pay to Chase at the
Principal Office in Dollars and in immediately available
funds, the amount of such Bank's Commitment Percentage of
any Letter of Credit Liability specified in such notice, not
later than 11:00 a.m. New York time on the Business Day
immediately succeeding the date of any notice by the Agent
to such Bank pursuant to clause (c) above that Swank shall
have failed to reimburse Chase for any drawing made under
any Letter of Credit or for the payment of any acceptance.
Each Bank acknowledges and agrees that its obligation to
make such payments to Chase, and Chase's right to receive
the same, is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including, without
limiting the effect of the foregoing, the failure of any
other Bank to make its payment under this clause (d) and
further agrees that each such payment to Chase shall be made
without any offset, abatement, withholding or reduction
whatsoever.
(e) Simultaneously with the making of each payment by
a Bank to Chase pursuant to clause (d) above, such Bank
shall, automatically and without any further action on the
part of Chase or such Bank, acquire (x) a participation in
an amount equal to such payment in the Reimbursement
Obligation owing by Swank to Chase pursuant to the Letter of
Credit Documents relating to the respective Letter of Credit
and (y) a participation in a percentage equal to such Bank's
Commitment Percentage in any interest, acceptance
commission, or other amounts payable by Swank hereunder and
under such Letter of Credit Documents. Each payment
received by Chase in respect of any such Reimbursement
Obligation, interest or other amount (including by way of
setoff or application of proceeds of any collateral
security) shall be promptly paid by Chase to the Banks
entitled thereto, pro rata in accordance with the respective
Commitment Percentage of the Banks (including Chase), each
such payment to be made in the same money and funds in which
received. In the event any payment received by Chase and so
paid to the Banks hereunder is rescinded or must otherwise
be returned by Chase, each Bank will, upon the request of
Chase, repay to Chase the amount of such payment paid to
such Bank, with interest at the Federal Funds Rate as in
effect from time to time.
(f) Swank agrees to pay to Chase in respect of each
Letter of Credit a letter of credit fee (but not less than
$100) equal to 3/4 of 1% of the face amount thereof
(provided that, for any period during which the Applicable
Margin is reduced as provided in the definition of such term
in Section 1.01 hereof, such Letter of Credit fee shall be
reduced to a rate equal to 1/2 of 1%), for the period from
and including the date of issuance of such Letter of Credit
to and including the date of expiration or termination
thereof such letter of credit fee to be paid in arrears
quarterly, on each Quarterly Date, and on the Revolving
Credit Termination Date. Chase agrees to pay to each Bank,
from time to time at reasonable intervals (but in any event
at least quarterly), but only to the extent actually
received, an amount equal to such Bank's Commitment
Percentage of all such letter of credit fees in respect of
each Letter of Credit including any such fee in respect of
any period of any renewal or extension thereof.
(g) Swank agrees to pay to Chase for its own account a
letter of credit issuance fee in respect of each Letter of
Credit in an amount equal to 1/2 of 1% of the face amount of
any draft drawn under such Letter of Credit (but not less
than $100) as well as Chase's standard opening and amendment
fees in place at the time of issuance, such fee to be
non-refundable and payable at the time of Letter of Credit
draft presentation/payment.
(h) The issuance by Chase of each Letter of Credit shall,
in addition to the conditions precedent set forth in Section
7 hereof, be subject to the conditions precedent that such
Letter of Credit shall be in such form, contain such terms
and support such transactions as shall be reasonably
satisfactory to Chase and that Swank shall have executed and
delivered such other instruments and agreements relating to
such Letter of Credit as Chase shall have reasonably
requested, provided that in no event such a Letter of Credit
permits the creation of acceptances having a maturity later
than the Revolving Credit Commitment Termination Date, and
provided that all such instruments and agreements shall be
subject to the terms and provisions of this Agreement, which
terms and provisions shall control in the event of any
conflict or inconsistency with any other such instrument or
agreement. All Letters of Credit shall provide for payment
by Chase against presentations of sight drafts, except that
commercial letters of credit may provide for acceptance of
drafts payable up to 60 days after sight (but not for
acceptance of longer maturity or for deferred sight drafts).
(i) Pursuant to Section 2.02 of the 1990 Credit
Agreement, Chase has issued the Letters of Credit identified
in Schedule V hereto, and created acceptances thereunder as
identified in said Schedule V, each of which is outstanding
on the date hereof. Each of the parties hereto agrees that
each Existing Letter of Credit shall constitute, on and
after the Closing Date, a Letter of Credit for all purposes
of this Agreement (and each such acceptance shall constitute
an acceptance created under a Letter of Credit hereunder).
On the Closing Date, each Bank (other than Chase) shall,
acquire a participation in each such Letter of Credit and
acceptance as provided in Section 2.02(b) hereof.
Swank hereby indemnifies and holds harmless each Bank and the
Agent from and against any and all claims and damages, losses,
liabilities, costs or expenses which such Bank or the Agent may
incur (or which may be claimed against such Bank or the Agent by
any Person whatsoever) by reason of or in connection with the
execution and delivery or transfer of or payment or failure to
pay under any Letter of Credit; provided that Swank shall not be
required to indemnify any Bank or the Agent for any claims,
damages, losses, liabilities, costs or expenses to the extent,
but only to the extent, caused by (i) the willful misconduct or
gross negligence of such Bank or the Agent in determining whether
a request presented under any Letter of Credit complied with the
terms of such Letter of Credit or (ii) such Bank's or the Agent's
failure to pay under any Letter of Credit after the presentation
to it of a request strictly complying with the terms and
conditions of such Letter of Credit. Nothing in this Section
2.02 is intended to limit the obligations of Swank under this
Agreement.
2.03 Borrowings. Swank shall give the Agent (which
shall promptly notify the Banks) notice of each borrowing
hereunder, which notice shall be irrevocable and effective only
upon receipt by the Agent, shall specify the aggregate amount
(subject to Section 5.04 hereof), the date (which shall be a
Business Day) of the Loans to be borrowed, whether such Loans are
to be Revolving Credit Loans or Term Loans and shall be given not
later than 11:00 a.m. New York time by telephone, and promptly
confirmed in writing, on the Business Day on which such borrowing
is to occur. Not later than 12:00 noon New York time on the date
specified for each borrowing, each Bank shall make available the
amount of the Loan to be made by it on such date to the Agent, at
the Principal Office, in immediately available funds, for the
account of Swank. The amount so received by the Agent shall,
subject to the terms and conditions of this Agreement, be made
available to Swank by depositing the same, in immediately
available funds, in an account of Swank designated by Swank and
maintained with the Agent at the Principal Office.
2.04 Changes of Commitments.
(a) The aggregate amount of the Revolving Credit
Commitments shall be automatically reduced to zero on the
Revolving Credit Commitment Termination Date.
(b) Swank shall have the right at any time or from
time to time (i) so long as no Revolving Credit Loans or Letter
of Credit Liabilities are outstanding, to terminate the Revolving
Credit Commitments and (ii) to reduce permanently the aggregate
unused amount of the Revolving Credit Commitments (for which
purpose use of the Revolving Credit Commitments shall be deemed
to include the aggregate amount of Letter of Credit Liabilities)
provided that Swank shall give five Business Days prior notice to
the Agent (which shall promptly notify the Banks) of each such
termination or reduction, which notice shall specify the
effective date thereof and the amount of any such reduction
(which shall not be less than $1,000,000 in the aggregate or the
remaining unused amount of the Revolving Credit Commitments, if
less) and shall be irrevocable and effective only upon receipt by
the Agent.
2.05 Commitment Fee. Swank shall pay to the Agent for
the account of each Bank a commitment fee on the average daily
unused amount of the Revolving Credit Commitment of such Bank
hereunder, for the period from and including the date this
Agreement shall be executed and delivered by all parties hereto
to but not including the earlier of the date such Commitment is
terminated or the Revolving Credit Commitment Termination Date,
at a rate per annum equal to 1/2 of 1%. Accrued commitment fees
shall be payable on the Quarterly Dates and on the earlier of the
date the Revolving Credit Commitments are terminated or the
Revolving Credit Commitment Termination Date.
2.06 Several Obligations; Remedies Independent. The
failure of any Bank to make any Loan to be made by it on the date
specified therefor shall not relieve any other Bank of its
obligation to make its Loan on such date, but neither the Agent
nor any Bank shall be responsible for the failure of any other
Bank to make a Loan to be made by such other Bank. The amounts
payable by Swank at any time hereunder and under the Notes to
each Bank shall be separate and independent debts and each Bank
shall be entitled to protect and enforce its rights arising out
of this Agreement and the Notes, and it shall not be necessary
for any other Bank or the Agent to consent to, or be joined as an
additional party in, any proceedings for such purposes, provided
that nothing herein shall permit any individual Bank to exercise
any of the rights or remedies set forth in Section 10.01 or 10.02
hereof to the extent that said Sections provide that such rights
or remedies shall be exercised by the Agent or the Majority
Banks.
2.07 Notes.
(a) The Revolving Credit Loans made by each Bank shall
be evidenced by a single promissory note of Swank in
substantially the form of Exhibit A hereto, dated the date
hereof, payable to the order of such Bank in an aggregate
principal amount equal to its Revolving Credit Commitment as
originally in effect and otherwise duly completed.
(b) The Term Loans made by each Bank shall be
evidenced by a single promissory note of Swank in substantially
the form of Exhibit B hereto, dated the date hereof, payable to
the order of such Bank in an aggregate principal amount equal to
its Term Loan Commitment as originally in effect and otherwise
duly completed.
(c) Each Bank is hereby authorized by Swank to endorse
on the schedule (or a continuation thereof) attached to the
respective Notes held by it the amount and interest rate of each
Revolving Credit Loan or Term Loan, as the case may be, made by
such Bank to Swank, the date such Loan is made, and the amount of
each payment or prepayment of principal received by such Bank,
provided that any failure by such Bank to make any such
endorsement shall not affect the obligations of Swank hereunder
or under such Notes in respect of such Loans.
(d) No Bank shall be entitled to have its Notes
subdivided, by exchange for promissory note of lesser
denominations or otherwise, except in connection with a permitted
assignment of all or any portion of such Bank's relevant
Commitment, Loans and Notes pursuant to Section 12.06(f) hereof.
2.08 Use of Proceeds. Swank will use the proceeds of
the loans hereunder only for the purposes stated in the recitals
hereto in compliance with all applicable legal and regulatory
requirements; provided that neither of the Agent nor any Bank
shall have any responsibility as to the use of any of such
proceeds.
Section 3. Payments of Principal; Conversions.
3.01 Amortization. Subject to the prepayments of
principal of Loans required pursuant to Section 3.02 hereof,
Swank will pay to the Agent for the account of each Bank the
principal of each Loan made by such Bank as follows:
(i) Swank shall pay in full the entire outstanding
principal amount of the Revolving Credit Loans on the
Revolving Credit Commitment Termination Date.
(ii) Swank shall pay the principal of the Term Loans in
twelve equal consecutive quarterly installments on each
Principal Payment Date, each such installment to be in an
amount equal to $750,000.
3.02 Mandatory Prepayments.
(a) Excess Cash Flow. No later than the earlier of
(i) the date 95 days after the last day of any fiscal year
commencing with the fiscal year ending December 31, 1992 or
(ii) the date the audited financial statements for such fiscal
year shall be delivered to the Banks pursuant to Section 9.01(b)
hereof, Swank shall prepay the Loans and the Revolving Credit
Commitments shall be subject to automatic reduction hereunder in
an aggregate amount equal to 50% of the amount of Excess Cash
Flow for such fiscal year, such prepayment and reduction to the
effected in each case in the manner and to the extent specified
in clause (e) of this Section 3.02.
(b) Sale Proceeds. In the event that the Majority
Banks shall consent to any sale, lease, assignment, transfer or
other disposition of any asset not permitted by Section 9.13
hereof, Swank shall, simultaneously with the consummation of any
such transaction, deliver to the Banks a statement, certified by
the chief financial officer of Swank and reasonably acceptable to
the Majority Banks, of the amount of the Net Consideration
arising out of such transaction and shall prepay the Loans and
the Revolving Credit Commitments shall be subject to automatic
reduction hereunder in an aggregate amount equal to 100% of such
Net Consideration, such prepayment and reduction to be effected
in each case in the manner and to the extent specified in clause
(e) of this Section 3.02.
(c) Debt and Equity Issuance. Upon any Debt and
Equity Issuance after the Closing Date (after obtaining any
consent of the Majority Banks thereto to the extent such
transaction is not permitted under this Agreement), Swank shall
(except, as otherwise may be agreed to by the Majority Banks in
such consent in the case of the issuance by Swank or any of its
Subsidiaries of the items referred to in clauses (ii) through
(iv) of part (a) of the definition of Debt and Equity Issuance or
the receipt by Swank and its Subsidiaries of any capital
contribution) prepay the Loans and the Revolving Credit
Commitments shall be subject to automatic reduction in an
aggregate amount equal to 100% of the Net Consideration thereof,
such prepayment and reduction to be effected in each case in the
manner and to the extent specified in clause (e) of this Section
3.02.
(d) Insurance Proceeds. Upon the receipt by Swank of
the proceeds of insurance, compensation, awards, damages and
other payments or relief arising out of or in respect of any
Casualty Event in excess of $250,000 in any fiscal year not
applied to the repair or replacement of the respective Property
damage to which gives rise to such proceeds (or that it does not
elect to apply to such repair or replacement as provided in the
Mortgages), within 90 days of the receipt of such proceeds, Swank
shall prepay the Loans and the Revolving Credit Commitments shall
be subject to automatic reduction, in an aggregate amount, if
any, equal to 100% of the Net Consideration thereof, not
theretofore applied to the repair or replacement of such
Property, such prepayment and reduction to be effected in each
case in the manner and to the extent specified in clause (e) of
this Section 3.02.
(e) Application. Prepayments and reductions of Loans
and Revolving Credit Commitments described in the above clauses
of this Section 3.02 shall be effected as follows:
(i) first, the amount of the prepayment specified in
such clauses shall be applied to the outstanding principal
amounts of the remaining installments of the Term Loans pro
rata in accordance with the respective amounts thereof until
the Term Loans are paid in full; and
(ii) second, the Revolving Credit Commitments shall be
automatically reduced by an amount equal to any excess over
the amount referred to in the foregoing clause (i) (and to
the extent that, after giving effect to such reduction, the
aggregate principal amount of Revolving Credit Loans would
exceed the Revolving Credit Commitments, Swank shall prepay
Revolving Credit Loans).
(f) Revolving Credit Loan Clean-Up. Swank will from
time to time prepay the Revolving Credit Loans in such amounts as
shall be necessary so that for a period of at least thirty
consecutive days at any time during the first two fiscal quarters
of each fiscal year (commencing with the fiscal year ending
December 31, 1993), the aggregate outstanding principal amount of
the Revolving Credit Loans shall be zero. In no event shall this
clause (f) of this Section 3.02 require Swank to provide cover
for the Letter of Credit Liabilities or terminate any Letters of
Credit.
(g) Borrowing Base. In the event that at any time the
aggregate outstanding amount of the Loans and Letter of Credit
Liabilities hereunder shall exceed the Borrowing Base, Swank
shall prepay Revolving Credit Loans (but shall not be required to
prepay any other Loans or provide cover for Letter of Credit
Liabilities) to the extent necessary that either the aggregate
outstanding amount of the Loans and Letter of Credit Liabilities
hereunder is less than the Borrowing Base or no Revolving Credit
Loans are outstanding hereunder.
3.03 Optional Prepayments. Swank may prepay Loans
upon notice given to the Agent (which shall promptly notify the
Banks) not later than 11:00 a.m. New York time by telephone, and
promptly confirmed in writing, on the day on which such
prepayment is to occur, which notice shall in each case specify
the prepayment date (which shall be a Business Day), the amount
of the prepayment (subject to Section 5.04 hereof) and Loans to
be prepaid and shall be irrevocable and effective only upon
receipt by the Agent, provided that interest on the principal
prepaid accrued to the prepayment date, shall be paid on the
prepayment date. Each prepayment of a Term Loan made pursuant to
this Section 3.03 shall be applied to the principal installments
of the Term Loans ratably in accordance with the remaining
installments of the Term Loans.
Section 4. Interest. Swank will pay to the Agent for
the account of each Bank interest on the unpaid principal amount
of each Loan made by such Bank, for the period commencing on the
date of such Loan to but excluding the date such Loan shall be
paid in full, at a rate per annum equal to the Base Rate (in
effect from time to time) plus the Applicable Margin.
Notwithstanding the foregoing, Swank will pay to the Agent for
the account of each Bank interest at the applicable Post-Default
Rate on any principal of any Loan made by such Bank, on any
Reimbursement Obligation owing to such Bank and (to the fullest
extent permitted by law) on any other amount payable by Swank
under this Agreement or the Notes to or for the account of such
Bank, which shall not be paid in full when due (whether at stated
maturity, by acceleration or otherwise), for the period
commencing on the due date thereof until the same is paid in
full. Accrued interest on each Loan shall be payable on each
Quarterly Date, except that interest payable at the Post-Default
Rate shall be payable from time to time on demand of the Agent or
any Bank (through the Agent). Promptly after the determination of
any interest rate provided for herein or any change therein, the
Agent shall notify the Banks and Swank thereof.
Section 5. Payments; Pro Rata Treatment;
Computations; Etc.
5.01 Payments. Except to the extent otherwise
provided herein, all payments of principal, interest,
Reimbursement Obligations and other amounts to be made by Swank
hereunder and under the Notes shall be made in Dollars, in
immediately available funds, to the Agent at the Principal
Office, not later than 11:00 a.m. New York time on the date on
which such payment shall become due (each such payment made after
such time on such due date to be deemed to have been made on the
next succeeding Business Day). The Agent, or any Bank for whose
account any such payment is made, may (but shall not be obligated
to) debit the amount of any such payment which is not made by
such time to any ordinary deposit account of Swank with the Agent
or such Bank, as the case may be. Swank shall, at the time of
making each payment hereunder or under any Note, specify to the
Agent the Loans or other amounts payable by Swank hereunder to
which such payment is to be applied (and, in the event that it
fails to so specify or if an Event of Default has occurred and is
continuing, the Agent may apply such payment as it may elect in
its sole discretion, but subject to Section 5.02 hereof). Each
payment received by the Agent hereunder or under any Note for the
account of a Bank shall be paid promptly to such Bank, in
immediately available funds, for the account of such Bank's
Applicable Lending Office for the Loan in respect of which such
payment is made. If the due date of any payment hereunder or
under any Note would otherwise fall on a day which is not a
Business Day such date shall be extended to the next succeeding
Business Day and interest shall be payable for any principal so
extended for the period of such extension.
5.02 Pro Rata Treatment. Except to the extent
otherwise provided herein: (a) each borrowing from the Banks
under Section 2.01 hereof shall be made from the Banks pro rata
in accordance with the respective Commitment being utilized, each
payment of commitment fees under Section 2.05 hereof shall be
made for the account of the Banks pro rata according to their
respective Revolving Credit Commitments, and each reduction of
the Revolving Credit Commitments under Section 2.04 hereof shall
be applied to the Revolving Credit Commitments pro rata according
to their respective Revolving Credit Commitments; (b) each
payment by Swank of interest on Loans shall be made to the Agent
for the account of the Banks pro rata in accordance with the
respective unpaid principal amounts of the Loans held by the
Banks; and (c) each payment by Swank of principal of Revolving
Credit or Term Loans shall be made to the Agent for the account
of the Banks pro rata in accordance with the respective unpaid
principal amounts of such Loans held by the Banks.
5.03 Computations. Interest on Loans, Reimbursement
Obligations and letter of credit fees and issuance fees payable
in respect of Letters of Credit shall be computed on the basis of
a year of 365 or 366 days, as the case may be, and actual days
elapsed (including the first day but excluding the last day)
occurring in the period for which payable, provided that
acceptance commission shall be calculated in the basis of a year
of 360 days and actual days elapsed.
5.04 Minimum and Maximum Amounts. Each borrowing and
prepayment of principal of Revolving Credit Loans shall be in an
amount equal to $500,000 (or a greater multiple of $100,000) or
(in the case of borrowings) the remaining unused amount of the
Revolving Credit Commitments.
5.05 Non-Receipt of Funds by the Agent. Unless the
Agent shall have been notified by a Bank or Swank (the "Payor")
prior to the date on which the Payor is to make payment to the
Agent of (in the case of a Bank) the proceeds of a Loan to be
made by such Bank, or a participation in a Letter of Credit
drawing to be acquired by such Bank, hereunder or (in the case of
Swank) a payment to the Agent for account of one or more of the
Banks hereunder (any such payment being herein called the
"Required Payment"), which notice shall be effective upon
receipt, that the Payor does not intend to make the Required
Payment to the Agent, the Agent may assume that the Required
Payment has been made and may, in reliance upon such assumption
(but shall not be required to), make the amount thereof available
to the intended recipient(s) on such date; and, if the Payor has
not in fact made the Required Payment to the Agent, the
recipient(s) of such payment shall, on demand, repay to the Agent
the amount so made available together with interest thereon in
respect of each day during the period commencing on the date (the
"Advance Date") such amount was so made available by the Agent
until the date the Agent recovers such amount at a rate per annum
equal to the Federal Funds Rate for such day and, if such
recipient(s) shall fail promptly to make such payment, the Agent
shall be entitled to recover such amount, on demand, from the
Payor, together with interest as aforesaid, provided that if
neither the recipient(s) nor the Payor shall return the Required
Payment to the Agent within three Business Days of the Advance
Date, then, retroactively to the Advance Date, the Payor and the
recipient(s) shall each be obligated to pay interest on the
Required Payment as follows:
(i) if the Required Payment shall represent a payment
to be made by Swank to the Banks, Swank and the recipient(s)
shall each be obligated retroactively to the Advance Date to
pay interest in respect of the Required Payment at the
Post-Default Rate as provided, in the case of Swank,
pursuant to Section 4 hereof (and, in case the recipient(s)
shall return the Required Payment to the Agent, without
limiting the obligation of Swank under Section 3.02 hereof
to pay interest to such recipient(s) at the Post-Default
Rate in respect of the Required Payment) and
(ii) if the Required Payment shall represent proceeds
of a loan to be made by the Banks to Swank, the Payor and
Swank shall each be obligated retroactively to the Advance
Date to pay interest in respect of the Required Payment at
the rate of interest provided for such Required Payment
pursuant to Section 4 hereof (and, in case Swank shall
return the Required Payment to the Agent, without limiting
any claim Swank may have against the Payor in respect of the
Required Payment).
5.06 Sharing of Payments, Etc. Swank agrees that, in
addition to (and without limitation of) any right of set-off,
bankers' lien or counterclaim a Bank may otherwise have, each
Bank shall be entitled, at its option, to offset balances held by
it for the account of Swank at any of its offices, in Dollars or
in any other currency, against any principal of or interest on
any of such Bank's Loans hereunder or any Reimbursement
Obligation or other obligation of Swank hereunder held by such
Bank which is not paid when due (regardless of whether such
balances are then due to Swank), in which case it shall promptly
notify Swank and the Agent thereof, provided that such Bank's
failure to give such notice shall not affect the validity
thereof. If a Bank shall obtain payment of any principal of or
interest on any Loan made by it to Swank under this Agreement or
on any Reimbursement Obligation or other obligation of Swank held
by such Bank hereunder, through the exercise of any right of
set-off, banker's lien, counterclaim or similar right or
otherwise, and, as a result of such payment, such Bank shall have
received a greater percentage of the amounts then due hereunder
by Swank to such Bank than the percentage received by any other
Bank, it shall promptly purchase from such other Banks
participations in (or, if and to the extent specified by such
Bank, direct interests in) the Loans made or Reimbursement
Obligations or other obligations of Swank held, by such other
Banks in such amounts, and make such other adjustments from time
to time as shall be equitable, to the end that all the Banks
shall share the benefit of such excess payment (net of any
expenses which may be incurred by such Bank in obtaining or
preserving such excess payment) pro rata in accordance with the
unpaid principal and interest on the Loans made, or Reimbursement
Obligations or other obligations of Swank held by each of the
Banks. To such end all the Banks shall make appropriate
adjustments among themselves (by the resale of participations
sold or otherwise) if such payment is rescinded or must otherwise
be restored. Swank agrees that any Bank so purchasing a
participation (or direct interest) in the Loans made, or
Reimbursement Obligations or other obligations of Swank held, by
other Banks may exercise all rights of set-off, bankers' lien,
counterclaim or similar rights with respect to such participation
as fully as if such Bank were a direct holder of Loans or
Reimbursement Obligations or other obligations of Swank in the
amount of such participation. Nothing contained herein shall
require any Bank to exercise any such right or shall affect the
right of any Bank to exercise, and retain the benefits of
exercising, any such right with respect to any other indebtedness
or obligation of Swank. If under any applicable bankruptcy,
insolvency or other similar law, any Bank receives a secured
claim in lieu of a set-off to which this Section 5.06 applies,
such Bank shall, to the extent practicable, exercise its rights
in respect of such secured claim in a manner consistent with the
rights of the Banks entitled under this Section 5.06 to share in
the benefits of any recovery on such secured claim.
Section 6. Yield Protection.
6.01 Additional Costs Generally.
(a) Swank shall pay directly to each Bank from time to
time on request such amounts as such Bank may determine to be
necessary to compensate such Bank (or, without duplication, the
bank holding company of which such Bank is a subsidiary) for any
costs which it determines are attributable to the maintenance by
such Bank (or such bank holding company), pursuant to any law or
regulation or any interpretation, directive or request (whether
or not having the force of law) of any court or governmental or
monetary authority (i) following any Regulatory Change or
(ii) implementing any risk-based capital guideline or requirement
(whether or not having the force of law and whether or not the
failure to comply therewith would be unlawful) heretofore or
hereafter issued by any government or governmental or supervisory
authority implementing at the national level the Basle Accord
(including, without limitation, the Final Risk-Based Capital
Guidelines of the Board of Governors of the Federal Reserve
System (12 CFR Part 208, Appendix A; 12 CFR Part 225, Appendix A)
and the Final Risk-Based Capital Guidelines of the Office of the
Comptroller of the Currency (12 CFR Part 3, Appendix A)), of
capital in respect of its Commitments or Loans (such compensation
to include, without limitation, an amount equal to any reduction
of the rate of return on assets or equity of such Bank (or such
bank holding company) to a level below that which such Bank (or
such bank holding company) could have achieved but for such law,
regulation, interpretation, directive or request). For purposes
of this Section 6.01(a), "Basle Accord" shall mean the proposals
for risk-based capital framework described by the Basle Committee
on Banking Regulations and Supervisory Practices in its paper
entitled "International Convergence of Capital Measurement and
Capital Standards" dated July 1988, as amended, modified and
supplemented and in effect from time to time or any replacement
thereof.
(b) Each Bank shall notify Swank of any event
occurring after the date of this Agreement that will entitle such
Bank to compensation under paragraph (a) of this Section 6.01 as
promptly as practicable, but in any event within 45 days, after
such Bank obtains actual knowledge thereof; provided, that if any
Bank fails to give such notice within 45 days after it obtains
actual knowledge of such an event, such Bank shall, with respect
to compensation payable pursuant to this Section 6.01 in respect
of any costs resulting from such event, only be entitled to
payment under this Section 6.01 for costs incurred from and after
the date 45 days prior to the date that such Bank does give such
notice. Each Bank will furnish to Swank a certificate setting
forth the basis and amount of each request by such Bank for
compensation under paragraph (a) of this Section 6.01.
Determinations and allocations by any Bank for purposes of this
Section 6.01 of the effect of capital maintained pursuant to
paragraph (a) of this Section 6.01, on its costs or rate of
return of maintaining Loans or maintaining its obligation to make
Loans, or on amounts receivable by it in respect of Loans, and of
the amounts required to compensate such Bank under this Section
6.01, shall be presumptively correct absent manifest error,
provided that such determinations and allocations are made on a
reasonable basis.
6.02 Additional Costs in Respect of Letters of Credit.
Without limiting the obligations of Swank under Section 6.01
hereof (but without duplication), if as a result of any
Regulatory Change there shall be imposed, modified or deemed
applicable any tax, reserve, special deposit, capital adequacy or
similar requirement against or with respect to or measured by
reference to Letters of Credit issued or to be issued hereunder
and the result shall be to increase the cost to any Bank or Banks
of issuing (or purchasing participations in) or maintaining any
Letter of Credit hereunder or maintaining its obligation
hereunder to issue (or purchase participations in) any Letter of
Credit hereunder or reduce any amount receivable by any Bank
hereunder in respect of any Letter of Credit (which increase in
cost, or reduction in amount receivable, shall be the result of
such Bank's or Banks' reasonable allocation of the aggregate of
such increases or reductions resulting from such event), then,
upon demand by such Bank or Banks, Swank agrees to pay
immediately to such Bank or Banks, from time to time as specified
by such Bank or Banks, such additional amounts as shall be
sufficient to compensate such Bank or Banks for such increased
costs or reductions in amount. A statement as to such increased
costs or reductions in amount incurred by any such Bank or Banks,
submitted by such Bank or Banks to Swank, shall be presumptively
correct absent manifest error as to the amount thereof.
Section 7. Conditions Precedent.
7.01 Initial Extension of Credit. The obligation of
the Banks to make the initial Loans hereunder is subject to the
following conditions precedent, each of which shall have been
fulfilled to the satisfaction of each Bank:
(a) Corporate. The Agent shall have received the
following documents each certified as indicated below:
(i) a copy of the charter, as amended, of Swank and
the FSC certified by the Secretary of State of Delaware and
the Virgin Islands, as the case may be, and a certificate as
to the good standing of and charter documents filed by Swank
and the FSC from such respective Secretary of State, dated
as of a recent date; and
(ii) a certificate of the Secretary or an Assistant
Secretary of Swank and the FSC, dated the Closing Date and
certifying (A) that attached thereto is a true and complete
copy of the by-laws of Swank or the FSC, as the case may be,
as in effect on the date of such certificate, (B) that
attached thereto is a true and complete copy of resolutions
duly adopted by the board of directors of Swank or the FSC,
as the case may be, authorizing the execution, delivery and
performance of each of the Basic Documents, and the Loans
hereunder, and that such resolutions have not been modified,
rescinded or amended and are in full force and effect, (C)
that the charter of Swank or the FSC, as the case may be,
has not been amended since the date of the certification
thereto furnished pursuant to clause (i) above, and (D) as
to the incumbency and specimen signature of each officer of
Swank or the FSC, as the case may be, executing the Basic
Documents and each other document to be delivered by Swank
or the FSC, as the case may be, from time to time in
connection therewith (and the Agent and each Bank may
conclusively rely on such certificate until it receives
notice in writing from Swank or the FSC, as the case may
be).
(b) Financial Officer Certificates. A certificate of
a senior financial officer of Swank to the effect set forth in
the first sentence of Section 7.02 hereof and a Borrowing Base
Certificate as at the last day of the monthly accounting period
most recently ended prior to the Closing Date.
(c) Notes. The Agent shall have received the
Revolving Credit Note and Term Loan Note for each Bank, in each
case duly completed and executed.
(d) Security Agreement. The Security Agreement shall
have been duly executed and delivered by Swank and the Agent, and
Swank shall have delivered to the Agent certificates evidencing
the Pledged Stock pledged by it thereunder, accompanied by
undated stock powers executed in blank, and shall have taken such
other action (including delivering to the Agent, for filing,
appropriately completed and duly executed copies of Uniform
Commercial Code financing statements) as the Agent shall have
requested in order to perfect the security interests created
pursuant to the Security Agreement.
(e) FSC Security Agreement. The FSC Security
Agreement shall have been duly executed and delivered by the FSC
and the Agent and the FSC shall have taken such action (including
delivering to the Agent, for filing, appropriately completed and
duly executed copies of Uniform Commercial Code financing
statements) as the Agent shall have requested in order to perfect
the security interests created pursuant to the FSC Security
Agreement.
(f) Mortgages and Title Insurance. The Mortgages
shall have been duly executed and delivered by Swank in
recordable form (in such number of copies as the Agent shall have
requested) and the Agent shall have received policies of title
insurance on forms of and issued by one or more title companies
satisfactory to the Majority Banks (the "Title Companies"),
insuring the priority of the Liens created under the Mortgages
for an amount at least equal to $3,000,000 (in the case of such
Mortgage on property in Massachusetts) and $6,000,000 (in the
case of such Mortgage on property in Connecticut), subject only
to such exceptions as are satisfactory to the Majority Banks.
Swank shall have paid to the Title Companies all expenses and
premiums of the Title Companies in connection with the issuance
of such policies and in addition shall have paid to the Title
Companies an amount equal to the recording and stamp taxes
payable in connection with recording the Mortgages in the
appropriate county land offices.
(g) Repayment of Certain Indebtedness. All
Indebtedness of Swank under the Existing Credit Agreements shall
have been (or shall be simultaneously) repaid in full, Swank
shall have terminated any outstanding Commitments thereunder, and
the respective holders of such Indebtedness shall have released
any Liens securing any such Indebtedness and Chase, as issuer of
the Existing Letters of Credit thereunder (and the creator of
acceptances) shall have released the banks thereunder of any
obligations in respect thereof.
(h) Insurance. Swank shall have delivered to the
Agent certificates of insurance satisfactory to the Agent
evidencing the existence of all insurance required to be
maintained by Swank pursuant to Section 9.03 hereof and shall
have named the Agent as loss payee thereunder to the extent
required by said Section 9.03.
(i) Collateral Account. The Collateral Account
contemplated by Section 4.01 of the Security Agreement shall have
been established.
(j) Appraisals. The Agent shall have received reports
from The Binswanger Company and Joseph Finn Co., Inc.,
respectively, in form and substance satisfactory to each Bank,
setting forth the appraisal value of certain Property of Swank.
(k) Opinion of Counsel to Swank. The Agent shall have
received an opinion dated the Closing Date and addressed to the
Agent and the Banks, of Parker Chapin Flattau & Klimpl, special
New York counsel to Swank, in substantially the form of Exhibit G
hereto (and in that connection Swank hereby authorizes and
directs such counsel to deliver its opinion to the Banks and the
Agent and agrees that the Bank and the Agent are entitled to rely
thereon).
(l) Opinion of Special New York Counsel to Chase. The
Agent shall have received an opinion of Milbank, Tweed, Hadley &
McCloy, special New York counsel to Chase, dated the Closing Date
and addressed to the Agent and the Banks substantially in the
form of Exhibit H hereto (and in that connection Chase hereby
authorizes and directs such counsel to deliver its opinion to the
Banks and the Agent agrees that the Banks and the Agent are
entitled to rely thereon).
(m) Opinion of Local Counsel to the Banks. The Agent
shall have received (i) an opinion dated the Closing Date and
addressed to the Agent and the Banks, of Day, Berry & Howard,
local counsel to the Banks; and (ii) an opinion dated the Closing
Date and addressed to the Agent and the Banks, of Goodwin,
Procter & Hoar, local counsel to the Banks.
(n) Certain Fees. The Banks shall have received the
arrangement and other fees heretofore agreed to by Swank in
respect of the transactions contemplated by this Agreement. The
obligation of any Bank to make its initial extension of credit
hereunder is also subject to the payment or delivery by Swank of
such fees and other consideration as Swank shall have agreed to
pay or deliver to any Bank or an affiliate thereof or the Agent
in connection herewith, including, without limitation, the
reasonable fees and expenses of Milbank, Tweed, Hadley & McCloy,
special New York counsel to Chase, and Brown, Rudwick, Freed &
Gesmer, counsel for Fleet National Bank, in connection with the
negotiation, preparation, execution and delivery of this
Agreement and the Notes and the other Basic Documents and the
extensions of credit hereunder (to the extent that statements for
such fees and expenses have been delivered to Swank).
(o) Other Documents. The Agent shall have received
such other documents as any Bank or special New York counsel to
the Banks may reasonably request.
7.02 Initial and Subsequent Extensions of Credit. The
obligation of each Bank to make each extension of credit (whether
a Loan or Letter of Credit) to be made by it hereunder (including
its initial extension of credit) is subject to the further
conditions precedent that, as of the date of such extension of
credit and after giving effect thereto: (a) no Default shall
have occurred and be continuing; and (b) the representations and
warranties made by Swank in each of the Basic Documents shall be
true on and as of the date of the making of such extension of
credit with the same force and effect as if made on and as of
such date (except to the extent such representations and
warranties expressly relate to an earlier date). Each notice of
borrowing by Swank, or request for issuance of a Letter of
Credit, shall constitute a certification by Swank to the effect
set forth in the preceding sentence (both as of the date of such
notice and, unless Swank otherwise notifies the Agent prior to
the date of such borrowing or issuance, as of the date of such
borrowing or issuance).
Section 8. Representations and Warranties. Swank
represents and warrants to the Banks and the Agent that:
8.01 Corporate Existence. Each of Swank and its
Subsidiaries: (a) is a corporation duly organized and validly
existing under the laws of the jurisdiction of its incorporation;
(b) has all requisite corporate power, and has all material
governmental licenses, authorizations, consents and approvals
necessary to own its assets and carry on its business as now
being or as proposed to be conducted; and (c) is qualified to do
business in all jurisdictions in which the nature of the business
conducted by it makes such qualification necessary and where
failure so to qualify would have a material adverse effect on its
financial condition, operations, prospects or business.
8.02 Financial Condition. Swank has heretofore
delivered to each of the Banks the following financial
statements:
(i) the balance sheet of Swank as of December 31, 1991
and the related statements of income, changes in
stockholders' equity and cash flow for the fiscal year ended
December 31, 1991, with the opinion thereon of Coopers &
Lybrand; and
(ii) the balance sheet of Swank as of September 30,
1992, and the related statements of income, changes in
stockholders' equity and cash flow for the nine-month period
ended September 30, 1992.
Each of said financial statements is complete and correct in all
material respects and fairly presents the financial condition and
results of operations, as the case may be, of Swank as at the
respective dates and for the respective periods covered thereby
(subject, in the case of such financial statements as at
September 30, 1992, to normal year-end audit adjustments), all in
accordance with generally accepted accounting principles and
practices applied on a consistent basis (except as noted therein
and except that such financial statements as at September 30,
1992 do not contain footnotes as required by generally accepted
accounting principles). Swank did not have on any of said dates
any material contingent liabilities, material liabilities for
taxes, unusual and material forward or long-term commitments or
material unrealized and anticipated losses from any unfavorable
commitments, except as referred to or reflected or provided for
in said balance sheets as at said dates. Since December 31,
1991, there has been no material adverse change in the financial
condition, operations, or business (including the prospects) of
Swank and its Subsidiaries taken as a whole from that set forth
in said financial statements as at said date.
8.03 Litigation. There is no action, suit, proceeding
or arbitration, and to the knowledge of Swank no governmental
investigation, at law or in equity before or by any federal,
state, municipal or other regulatory authority or agency or
governmental department, commission, board, bureau, agency or
instrumentality, domestic, or foreign, pending or, to the
knowledge of Swank, threatened against or affecting Swank or any
of its Subsidiaries or any Property of Swank or any of its
Subsidiaries which, if adversely determined, could be reasonably
expected to have a Material Adverse Effect.
8.04 No Breach. None of the execution and delivery of
the Basic Documents, the consummation of the transactions therein
contemplated or compliance with the terms and provisions thereof
will conflict with or result in a breach of, or require any
consent under, the charter or by-laws of Swank or any of its
Subsidiaries, or any applicable law or regulation, or any order,
writ, injunction or decree of any court or governmental authority
or agency, or any agreement or instrument to which Swank or any
of its Subsidiaries is a party or by which any of them is bound
or to which any of them is subject, or constitute a default under
any such agreement or instrument, or (except for the Liens
created pursuant to the Security Documents) result in the
creation or imposition of any Lien upon any of the revenues or
assets of Swank or any of its Subsidiaries pursuant to the terms
of any such agreement or instrument.
8.05 Corporate Action. Swank has all necessary
corporate power and authority to execute, deliver and perform its
obligations under each of the Basic Documents; and the execution,
delivery and performance by Swank of each of the Basic Documents
have been duly authorized by all necessary corporate action on
its part; and this Agreement has been duly and validly executed
and delivered by Swank and constitutes, and on the Closing Date
each of the other Basic Documents (in the case of the Notes, for
value) will constitute, the legal, valid and binding obligation
of Swank, enforceable in accordance with their respective terms,
except as the enforceability thereof may be limited by (a)
bankruptcy, insolvency, reorganization or moratorium or similar
laws of general applicability effecting the enforcement of
creditors' rights and (b) the application of general principles
of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
8.06 Approvals. No authorizations, approvals or
consents of, and no filings or registrations with, any
governmental or regulatory authority or agency are necessary for
the execution, delivery or performance by Swank of each of the
Basic Documents or for the validity or enforceability thereof,
except for the filings and recordings of the Liens to be created
pursuant to the Security Documents.
8.07 Regulations U and X. Neither Swank nor any of
its Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the
purpose, whether immediate, incidental or ultimate, of buying or
carrying margin stock (within the meaning of Regulation U or X of
the Board of Governors of the Federal Reserve System) and no part
of the proceeds of any extension of credit hereunder will be used
to acquire any such margin stock.
8.08 ERISA. Each Plan, and, to the knowledge of
Swank, each Multiemployer Plan, is in compliance in all material
respects with, and has been administered in all material respects
in compliance with, the applicable provisions of ERISA, the Code
and any other Federal or State law, and no event or condition has
occurred and is continuing as to which Swank would be under an
obligation to furnish a report to the Banks under Section 9.01(h)
hereof.
8.09 Taxes. Each of Swank and its Subsidiaries have
filed all United States Federal income tax returns and all other
material tax returns which are required to be filed by them and
have paid all taxes due pursuant to such returns or pursuant to
any assessment received by any of them, except to the extent the
same may be contested as permitted by Section 9.02 hereof. The
charges, accruals and reserves on the books of Swank and its
Subsidiaries in respect of taxes and other governmental charges
are, in the opinion of Swank, adequate. Swank knows of no
proposed tax assessments against it or any of its Subsidiaries
which would have a Material Adverse Effect.
8.10 Subsidiaries, Etc. Schedule II hereto is a
complete and correct list, as of the date of this Agreement, of
all Subsidiaries of Swank and of all Investments held by Swank or
any of its Subsidiaries. Except as disclosed in Schedule II
hereto and except for the Liens of the Security Agreement, Swank
owns, free and clear of Liens, all outstanding shares of the
Subsidiaries (and each Subsidiary owns, free and clear of Liens
all outstanding shares of its Subsidiaries) and all such shares
are validly issued, fully paid and non-assessable.
8.11 Material Agreements; Licenses. Set forth in
Schedule I hereto is a complete and correct list, as of the date
of this Agreement, of (i) all credit agreements, indentures,
purchase agreements, capitalized leases, obligations in respect
of letters of credit, guarantees, joint venture agreements, and
other material instruments presently in effect (other than the
Existing Credit Agreements and related instruments and documents)
providing for, evidencing, securing or otherwise relating to any
Indebtedness or lease obligations of Swank or any of its
Subsidiaries, and all obligations of Swank or any of its
Subsidiaries to issuers of surety or appeal bonds issued for
account of Swank or any of its Subsidiaries, and such list
correctly sets forth the names of the debtor or lessee and
creditor or lessor with respect to the Indebtedness or lease
obligations outstanding or to be outstanding and the Property
subject to any Lien securing such Indebtedness or lease
obligation and (ii) all patents, trademarks, service marks,
licenses, copyrights and similar property rights relating to
inventory sold, manufactured, processed or distributed by Swank
or any of its Subsidiaries, and such list correctly sets forth
the respective owner of such patent, trademark, service mark,
license, copyright or property right, the respective licensor and
licensee thereof and any license agreement or similar instrument
relating thereto. Swank has heretofore delivered to the Agent a
complete and correct copy of all such credit agreements,
indentures, purchase agreements, letters of credit, guarantees,
joint venture agreements, license agreements, other instruments
or leases, including any modifications or supplements thereto, as
in effect on the date hereof.
8.12 Investment Company Act. Neither Swank nor any of
its Subsidiaries is an investment company within the meaning of
the Investment Company Act of 1940, as amended, and none of them
is, directly or indirectly, controlled by or acting on behalf of
any Person which is an investment company, within the meaning of
said Act.
8.13 Public Utility Holding Company Act. Neither
Swank nor any of its Subsidiaries is a "holding company", or an
"affiliate" of a "holding company" or a "subsidiary company" of a
"holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended from time to time.
8.14 Hazardous Materials. Swank and its Subsidiaries
have obtained all environmental and health permits, licenses and
other authorizations required under all Environmental Laws to
carry on its business as now being or as planned to be conducted,
except to the extent failure to have any such permit, license or
authorization would not have a Material Adverse Effect. Each of
such permits, licenses and authorizations is in full force and
effect and each of Swank and its Subsidiaries is in compliance
with the terms and conditions thereof, and is also in compliance
with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables
contained in any applicable Environmental Law or in any
regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved
thereunder, except in any circumstance to the extent failure to
comply therewith would not have a Material Adverse Effect.
In addition, except as set forth in Schedule III
hereto:
(a) No notice, notification, demand, request for
information, citation, summons or order has been issued, no
complaint has been filed, no penalty has been assessed and
no investigation or review is pending or to Swank's
knowledge threatened by any governmental or other entity
with respect to any alleged failure by Swank or any of its
Subsidiaries to have any environmental, health or safety
permit, license or other authorization required under any
Environmental Law in connection with the conduct of the
business of Swank or any of its Subsidiaries or with respect
to any generation, treatment, storage, recycling,
transportation, discharge or disposal, or any Release of any
Hazardous Materials generated by Swank or any of its
Subsidiaries.
(b) Neither Swank nor any of its Subsidiaries owns,
operates or leases a treatment, storage or disposal facility
requiring a permit under the Resource Conservation and
Recovery Act of 1976, as amended, or under any comparable
state or local statute; and except as otherwise set forth in
Schedule III hereto:
(i) no polychlorinated biphenyls (PCB's) is or
has been present at any site or facility now or
previously owned, operated or leased by Swank or any of
its Subsidiaries;
(ii) no asbestos or asbestos-containing materials
is or has been present at any site or facility now or
previously owned, operated or leased by Swank or any of
its Subsidiaries;
(iii) there are no underground storage tanks or
surface impoundments for Hazardous Materials, active or
abandoned, at any site or facility now or previously
owned, operated or leased by Swank or any of its
Subsidiaries;
(iv) no Hazardous Materials have been Released at,
on or under any site or facility now or (to the best
knowledge of Swank) previously owned, operated or
leased by Swank or any of its Subsidiaries in a
reportable quantity established by statute, ordinance,
rule, regulation or order; and
(v) no Hazardous Materials have been otherwise
Released at, on or under any site or facility now or
previously owned, operated or leased by Swank or any of
its Subsidiaries that would have a Material Adverse
Effect.
(c) Except as set forth in Schedule III hereto,
neither Swank nor any of its Subsidiaries has transported or
arranged for the transportation of any Hazardous Material to
any location that is listed on the National Priorities List
("NPL") under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended
("CERCLA"), listed for possible inclusion on the NPL by the
Environmental Protection Agency in the Comprehensive
Environmental Response and Liability Information System, as
provided for by 40 C.F.R. sec. 300.5 ("CERCLIS"), or on any
similar state or local list or that is the subject of
Federal, state or local enforcement actions or other
investigations that is reasonably likely to lead to
Environmental Claims against Swank or any of its
Subsidiaries.
(d) No Hazardous Material generated by Swank or any of
its Subsidiaries has been recycled, treated, stored,
disposed of or Released in a reportable quantity by Swank or
any of its Subsidiaries at any location other than those
listed in Schedule III hereto.
(e) No written notification of a Release of a
Hazardous Material has been filed by or on behalf of Swank
or any of its Subsidiaries and no site or facility now or
(to the knowledge of Swank) previously owned, operated or
leased by Swank or any of its Subsidiaries is listed or
proposed for listing on the NPL, CERCLIS or any similar
state list of sites requiring investigation or clean-up.
(f) No Liens have arisen under or pursuant to any
Environmental Laws on any site or facility owned, operated
or leased by Swank or any of its Subsidiaries, and no
government action has been taken or to Swank's knowledge is
in process that would be reasonably likely to subject any
such site or facility to such Liens and neither Swank nor
any of its Subsidiaries would be required to place any
notice or restriction relating to the presence of Hazardous
Materials at any site or facility owned by it in any deed to
the real property on which such site or facility is located.
(g) There have been no environmental investigations,
studies, audits, tests, reviews or other analyses conducted
by or that are in the possession of Swank or any of its
Subsidiaries in relation to any site or facility now or
previously owned, operated or leased by Swank or any of its
Subsidiaries which have not been made available to the
Agent.
8.15 Accuracy of Information. The information
reports, financial statements, exhibits and schedules furnished
in writing by or on behalf of Swank to the Agent or any Bank in
connection with the negotiation, preparation or delivery of this
Agreement and the other Basic Documents or included herein or
therein or delivered pursuant hereto or thereto, when taken as a
whole, do not contain any untrue statement of material fact or
omit to state any material fact necessary to make the statements
herein or therein, in light of the circumstances under which they
were made, not misleading. All written information furnished
after the date hereof by Swank and its Subsidiaries to the Agent
and the Banks in connection with this Agreement and the other
Basic Documents and the transactions contemplated hereby and
thereby will be true, complete and accurate in every material
respect, or (in the case of projections) based on reasonable
estimates, on the date as of which such information is stated or
certified. There is no fact known to Swank that is peculiar to
its assets or business and will be reasonably likely to
have a Material Adverse Effect that has not been disclosed
herein, in the other Basic Documents or in a report, financial
statement, exhibit, schedule, disclosure letter or other writing
furnished to the Banks for use in connection with the
transactions contemplated hereby or thereby.
Section 9. Covenants. Swank agrees that, so long as
the Commitments are in effect and until payment in full of all of
the Loans, the termination of all Letters of Credit and the
payment in full of all Letter of Credit Liabilities, all interest
thereon and all other amounts payable by Swank hereunder, unless
the Majority Banks shall otherwise agree as contemplated by
Section 12.05 hereof:
9.01 Financial Statements. Swank shall deliver to
each of the Banks:
(a) as soon as available and in any event within 30
days after the end of each fiscal quarter in each fiscal
year of Swank and its Subsidiaries, consolidated statements
of income, changes in stockholders' equity and cash flow of
Swank and its Subsidiaries for such fiscal quarter and for
the period from the beginning of such fiscal year to the end
of such fiscal quarter, and the related balance sheet as at
the end of such fiscal quarter, setting forth in each case
in comparative form the corresponding figures for the
corresponding fiscal quarter and period in the preceding
fiscal year accompanied, in each case, by a certificate of
the chief financial officer of Swank, and John Tulin (in his
capacity as an officer of Swank), which certificate shall
state that said consolidated financial statements fairly
present the consolidated financial position and results of
operations of Swank and its Subsidiaries in accordance with
generally accepted accounting principles (except for the
absence of footnotes and the absence of a physical
inventory, unless such inventory has in fact been completed
as at the end of such period), consistently applied, as at
the end of, and for, such fiscal quarter and period (subject
to normal year-end audit adjustments).
(b) as soon as available and in any event within 90
days after the end of each fiscal year of Swank and its
Subsidiaries, consolidated statements of income, changes in
stockholders' equity and cash flow of Swank and its
Subsidiaries for such fiscal year and the related
consolidated balance sheet as at the end of such fiscal
year, setting forth in each case in comparative form the
corresponding figures for the preceding fiscal year, and
accompanied by an opinion thereon of Coopers & Lybrand or
other independent certified public accountants of recognized
national standing selected by Swank and reasonably
satisfactory to the Majority Banks, which opinion shall
state that said consolidated financial statements fairly
present the consolidated financial position and results of
operations of Swank and its Subsidiaries as at the end of,
and for, such fiscal year, and a certificate of such
accountants stating that, in making the examination
necessary for their opinion, they obtained no knowledge,
except as specifically stated, of any Default.
(c) simultaneously with the delivery of any financial
statements pursuant to clause (a) or (b) above, copies of
the consolidating statement work sheets from which the
respective consolidated financial statements delivered
pursuant to such clauses (a) and (b) were prepared.
(d) as soon as available and in any event within 45
days after the end of each monthly accounting period of
Swank and its Subsidiaries (50 days after the end of the
January, February and July accounting periods), a management
report with respect to sales and operating revenues and
costs of manufacturing and related information in the form
normally submitted to the board of directors.
(e) as soon as available and in any event within 45
days after the end of each monthly accounting period of
Swank and its Subsidiaries (50 days after the end of the
January, February and July accounting periods), an analysis
of accounts receivables and inventory of Swank and its
Subsidiaries in such detail as the Majority Banks (through
the Agent) shall from time to time specify and an
itemization of the obligations of Swank and its Subsidiaries
in respect of commercial and standby letters of credit
outstanding at the end of such monthly accounting period in
such detail as the Majority Banks (through the Agent) shall
from time to time specify.
(f) promptly upon their becoming available, copies of
all registration statements and regular periodic reports, if
any, which Swank shall have filed with the Securities and
Exchange Commission (or any governmental agency substituted
therefor) or any national securities exchange.
(g) promptly upon the mailing thereof to the
shareholders of Swank generally, copies of all financial
statements, reports and proxy statements so mailed.
(h) as soon as possible, and in any event within ten
Business Days after Swank knows or believes that any of the
events or conditions specified below with respect to any
Plan or Multiemployer Plan has occurred or exists, a
statement signed by a senior financial officer of Swank
setting forth details respecting such event or condition and
the action, if any, that Swank or its ERISA Affiliate
proposes to take with respect thereto (and a copy of any
report or notice required to be filed with or given to PBGC
by Swank or an ERISA Affiliate with respect to such event or
condition):
(i) any reportable event, as defined in
Section 4043(b) of ERISA and the regulations issued
thereunder, with respect to a Plan, as to which PBGC
has not by regulation waived the requirement of
Section 4043(a) of ERISA that it be notified within
30 days of the occurrence of such event (provided that
a failure to meet the minimum funding standard of
Section 412 of the Code or Section 302 of ERISA,
including, without limitation, the failure to make on
or before its due date a required installment under
Section 412(m) of the Code or Section 302(e) of ERISA,
shall be a reportable event regardless of the issuance
of any waivers in accordance with Section 412(d) of the
Code); and any request for a waiver under
Section 412(d) of the Code for any Plan;
(ii) the distribution under Section 4041 of ERISA
of a notice of intent to terminate any Plan or any
action taken by Swank or an ERISA Affiliate to
terminate any Plan, if such termination would be
reasonably likely to impose a material liability or
obligation on Swank or any such ERISA Affiliate;
(iii) the institution by PBGC of proceedings under
Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or
the receipt by Swank or any ERISA Affiliate of a notice
from a Multiemployer Plan that such action has been
taken by PBGC with respect to such Multiemployer Plan,
if such termination would be reasonably likely to
impose a material liability or obligation on Swank or
any such ERISA Affiliate;
(iv) the complete or partial withdrawal from a
Multiemployer Plan by Swank or any ERISA Affiliate that
results in a material liability under Section 4201
or 4204 of ERISA (including the obligation to satisfy
secondary liability as a result of a purchaser default)
or the receipt by Swank or any ERISA Affiliate of
notice from a Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241
or 4245 of ERISA or that it intends to terminate or has
terminated under Section 4041A of ERISA;
(v) the institution of a proceeding by a
fiduciary of any Multiemployer Plan against Swank or
any ERISA Affiliate to enforce Section 515 of ERISA,
which proceeding is not dismissed within 30 days;and
(vi) the adoption of an amendment to any Plan
that, pursuant to Section 401(a)(29) of the Code or
Section 307 of ERISA, would result in the loss of
tax-exempt status of the trust of which such Plan is a
part if Swank or an ERISA Affiliate fails to timely
provide security to the Plan in accordance with the
provisions of said Sections;
(i) as soon as available and in any event no later
than the fifth Business Day after the end of each monthly
accounting period of Swank (commencing with the monthly
accounting period ending December 31, 1992) a Borrowing Base
Certificate as at the last day of such accounting period.
(j) in May 1993 and in October 1993, and in each May
and October in each year thereafter, and from time to time
at such other times (including at any other time in 1993) as
requested by the Banks through the Agent, but no more than
four times during any fiscal year, a report of an
independent collateral auditor (which may be, or be
affiliated with, one of the Banks) with respect to the
Receivables and Inventory components included in the
Borrowing Base as at the end of a recent monthly accounting
period which report shall indicate that, based upon a review
by such auditors of the Receivables (including verification
with respect to the amount, aging, identity and credit of
the respective account debtors and the billing practices of
Swank) and Inventory (including verification as to the
value, location and respective types), the information set
forth in the Borrowing Base Certificate delivered by Swank
as at the end of such monthly accounting period is accurate
and complete in all material respects.
(k) as soon as available and in any event within 15
days after the end of each month in each fiscal year of
Swank and its Subsidiaries, consolidated statements of
income, changes in stockholders' equity and cash flow of
Swank and its Subsidiaries for such month and for the period
from the beginning of such fiscal year to the end of such
month, and the related balance sheet as at the end of such
month, setting forth in each case in comparative form the
corresponding figures for the corresponding month and period
in the preceding fiscal year (and, in the case of the fiscal
year ending December 31, 1992, for the corresponding month
and period in the 1992 Plan) accompanied, in each case, by a
certificate of the chief financial officer, and John Tulin
(in his capacity as an officer of Swank), of Swank, which
certificate shall state that said consolidated financial
statements fairly present the consolidated financial
position and results of operations of Swank and its
Subsidiaries in accordance with generally accepted
accounting principles (except for the absence of footnotes
and the absence of a physical inventory, unless such
inventory has in fact been completed as at the end of such
period), consistently applied, as at the end of, and for,
such month and period (subject to normal quarterly statement
and year-end audit adjustments).
(l) promptly following the delivery thereof to Swank,
or to the Board of Directors or management of Swank, a copy
of any management letter or report by independent public
accountants with respect to the financial condition,
operations, business or prospects of Swank.
(m) On June 30, 1993, and on each June 30 in each year
thereafter, a report of a licensed engineer (familiar with
the identification of toxic and hazardous substances) that,
based upon a physical on-site inspection within the
preceding 45 days of the properties and facilities of Swank
located in Norwalk, Connecticut and Attleboro, Massachusetts
covered by the Mortgages, Swank is in compliance (except as
otherwise noted therein) with applicable environmental
regulations with respect to its manufacturing operations at
such facilities (which report delivered at June 30, 1993,
shall specifically confirm that any action recommended to be
taken by Swank in previous environmental reports hereof has
been completed).
(n) promptly after Swank knows or has reason to know
of the occurrence of any Default or any event affecting
Swank or any of its Subsidiaries that is reasonably likely
to result in a Material Adverse Effect.
(o) from time to time such other information regarding
the financial condition, operations, prospects or business
of Swank or any of its Subsidiaries as the Agent or any Bank
through the Agent may reasonably request.
Swank will furnish to each Bank, at the time it
furnishes each set of financial statements pursuant to paragraph
(a) above (for the first three fiscal quarters in any fiscal
year) or (b) above (for the fiscal year), a Compliance
Certificate as of the end of the respective fiscal quarter or
fiscal year (which Compliance Certificate, in the case of the
financial statements delivered pursuant to paragraph (a) above
shall also be certified by John Tulin, in his capacity as an
officer of Swank).
9.02 Taxes and Claims. Swank will pay and discharge,
and will cause each of its Subsidiaries to pay and discharge, all
taxes, assessments and governmental charges or levies imposed
upon it or upon its income or profits, or upon any Property
belonging to it, prior to the date on which penalties attach
thereto if the failure to pay or discharge the same would have a
Material Adverse Effect, and all lawful claims which, if unpaid,
might become a Lien upon the Property of Swank or any such
Subsidiary, provided that neither Swank nor any such Subsidiary
shall be required to pay any such tax, assessment, charge, levy
or claim the payment of which is being contested in good faith
and by proper proceedings if it maintains adequate reserves with
respect thereto.
9.03 Insurance. Swank will maintain, and will cause
each of its Subsidiaries to maintain, insurance with responsible
companies in such amounts and against such risks as is usually
carried by owners of similar businesses and properties in the
same general areas in which Swank and its Subsidiaries operate,
provided that in any event Swank will maintain:
(1) Casualty Insurance -- insurance against loss or
damage covering all of the tangible real and personal
property and improvements of Swank and its Subsidiaries by
reason of any Peril (as defined below) in amounts (subject
to such deductibles as shall be reasonably satisfactory to
the Majority Banks) (i) in the case of fixed assets, as
shall be reasonable and customary but in no event in an
amount less than $24,000,000 and (ii) in the case of
inventory, not less than the greater of the fair market
value thereof or the amounts necessary to avoid the insured
named therein from becoming a co-insurer of any loss under
such policy.
(2) Automobile Liability Insurance for Bodily Injury
and Property Damage -- carry or cause to be carried
insurance in respect of all vehicles (whether owned, hired
or rented by Swank or any of its Subsidiaries) in such
amounts as are then customary for vehicles used in
connection with similar property and businesses, but in any
event to the extent required by applicable law.
(3) Comprehensive General Liability Insurance --
insurance against claims for bodily injury, death or
property damage occurring on, in or about the facilities
owned, leased or used by Swank and its Subsidiaries
(including the Plants and adjoining streets, sidewalks and
waterways), in such amounts as are then customary for
property similar in use and located in the same state or
country.
(4) Workers' Compensation Insurance -- insurance
(including Employers' Liability Insurance) to the extent
required by applicable law.
(5) Product Liability Insurance -- insurance against
claims for bodily injury, death or property damage resulting
from the use of products sold by Swank or any of its
Subsidiaries in such amounts as are then customarily
maintained by responsible persons engaged in businesses
similar to that of Swank and its Subsidiaries.
(6) Business Interruption Insurance -- insurance
against loss of operating income (up to an aggregate amount
equal to $25,000,000 and subject to a deductible, or
self-insured amount, not in excess of $100,000) by reason of
any Peril affecting the operations of Swank or any of its
Subsidiaries.
(7) Key-Man Insurance -- at all times on and after the
Closing Date, insurance on the life of John Tulin in an
amount not less than $1,000,000.
Such insurance shall be written by financially responsible
companies selected by Swank and having an A. M. Best rating of
"A" or better and being in a financial size category of VI or
larger, or by other companies acceptable to the Majority Banks,
and (in the case of casualty insurance, business interruption and
key-man life insurance only) shall name the Agent as loss payee,
as its interests may appear. Each policy referred to in this
Section 9.03 shall provide that it will not be cancelled or
reduced except after not less than 60 days' written notice to the
Agent and shall also provide that the interests of the Agent and
the Banks shall not be invalidated by any act or negligence of
Swank or any Person having an interest in any facility owned,
leased or used by Swank and its Subsidiaries nor by occupancy or
use of any facility owned, leased or used by Swank and its
Subsidiaries for purposes more hazardous than permitted by such
policy nor by any foreclosure or other proceedings relating to
any facility owned, leased or used by Swank and its Subsidiaries.
Swank will advise the Agent promptly of any policy cancellation,
reduction or amendment.
On the date of the initial extension of credit
hereunder Swank will deliver to the Agent certificates of
insurance satisfactory to the Agent evidencing the existence of
all insurance required to be maintained by Swank hereunder and
showing that such insurance will be in effect through December
31, 1993, subject only to the payment of premiums as they become
due and the right of the respective insurer to cancel or reduce
the respective policy upon not less than 30 days' written notice
to the Agent as provided in the preceding paragraph. Thereafter,
on each December 1 in each year (commencing with December 1,
1993) Swank will deliver to the Agent certificates of insurance
evidencing that all insurance required to be maintained by Swank
hereunder will be in effect through the December 31 of the
calendar year following the calendar year of the current
December 1, subject only to the payment of premiums as they
become due and the right of the respective insurer to cancel or
reduce the respective policy as aforesaid. Swank will not obtain
or carry separate insurance concurrent in form or contributing in
the event of loss with that required by this Section 9.03 unless
the Agent is the named insured thereunder, with loss payable as
provided herein. Swank will immediately notify the Agent
whenever any such separate insurance is obtained and shall
deliver to the Agent the certificates evidencing the same.
For purposes hereof, the term "Peril" shall mean,
collectively, fire, lightning, flood, windstorm, hail, explosion,
riot and civil commotion, vandalism and malicious mischief,
damage from aircraft, vehicles and smoke and all other perils
covered by the "all-risk" endorsement then in use in the locality
in which the facilities owned, leased or used by Swank and its
Subsidiaries are located.
9.04 Maintenance of Existence; Conduct of Business.
Swank will preserve and maintain, and will cause each of its
Subsidiaries to preserve and maintain, its corporate existence
and all of its rights, privileges and franchises necessary or
desirable in the normal conduct of its business, and will conduct
its business in a regular manner, provided that nothing herein
shall (i) prohibit the merger of any Subsidiary of Swank into
Swank (so long as Swank is the surviving corporation) or into any
other Subsidiary of Swank or (ii) prohibit the liquidation of any
Subsidiary of Swank if such liquidation is determined to be
appropriate in the judgment of the Board of Directors of Swank.
Notwithstanding the foregoing, Swank will not, and will not
permit any of its Subsidiaries to, own or operate more than
forty-six factory outlet stores during the fiscal year ending
December 31, 1993 and more than fifty factory outlet stores
during the fiscal years ending December 31, 1994 and December 31,
1995, provided that Swank may relocate up to four such factory
outlet stores during any fiscal year (by closing an existing
factory outlet store and opening a replacement factory outlet
store at a new location).
9.05 Maintenance of and Access to Properties. Swank
will keep, and will cause each of its Subsidiaries to keep, all
of its properties necessary, in the judgment of the Board of
Directors of Swank, in its business in good working order and
condition, ordinary wear and tear excepted, and will permit
representatives of the Banks to inspect such properties and to
examine and make extracts from the books and records of Swank and
any such Subsidiary during normal business hours.
9.06 Compliance with Applicable Laws. Swank will
comply, and will cause each of its Subsidiaries to comply, with
the requirements of all applicable laws, rules, regulations and
orders of any governmental body or regulatory authority, a breach
of which would be reasonably likely to have a Material Adverse
Effect, except where contested in good faith and by proper
proceedings.
9.07 Litigation. Swank will promptly give to the
Agent (which shall promptly notify each Bank) notice in writing,
referring to this Section 9.07, of all litigation and of all
proceedings of which Swank is aware before any courts,
arbitrators or governmental or regulatory agencies affecting
Swank or any of its Subsidiaries, which litigation or
proceedings, if adversely determined, would be reasonably likely
to have a Material Adverse Effect.
9.08 Indebtedness. Swank will not, and will not
permit any of its Subsidiaries to, create, incur or suffer to
exist any Indebtedness except: (i) Indebtedness to the Banks
under this Agreement and the other Basic Documents; (ii)
Indebtedness outstanding on the date hereof and listed in
Schedule I hereto (excluding, however, following the making of
the initial extension of credit hereunder, Indebtedness
outstanding under the Existing Credit Agreements); (iii)
Indebtedness (including Capital Lease Obligations) up to but not
exceeding the Permitted Amount at any one time outstanding
incurred in respect of the purchase of fixed or capital assets of
Swank and its Subsidiaries (and, for purposes hereof, the
"Permitted Amount" shall mean, during the period commencing on
the date hereof to and including December 31, 1993, $450,000, and
during any fiscal year thereafter, the sum of $450,000 plus, for
each December 31 occurring subsequent to December 31, 1993 but
prior to the beginning of such fiscal year, an additional
$75,000, (e.g. during the fiscal year ending December 31, 1994,
the Permitted Amount shall be $525,000; during the fiscal year
ending December 31, 1995, the Permitted Amount shall be $600,000,
and so forth); and (iv) Indebtedness in respect of loans
representing (and not in excess of) the cash surrender value of
Swank's corporate owned life insurance policies.
9.09 Leverage Ratio. Swank will not permit the
Leverage Ratio as at the last day of the following respective
fiscal quarters to exceed the following respective amounts set
forth below:
Fiscal Quarters
Ending Ratio
12/31/92 1.60 to 1
3/31/93 1.80 to 1
6/30/93 1.70 to 1
9/30/93 2.00 to 1
12/31/93 1.15 to 1
3/31/94 1.40 to 1
6/30/94 1.35 to 1
9/30/94 1.65 to 1
12/31/94 1.00 to 1
3/31/95 1.10 to 1
6/30/95 1.10 to 1
9/30/95 1.40 to 1
9.10 Tangible Net Worth. Swank will not permit its
Tangible Net Worth as at the last day of the fiscal year ending
December 31, 1992 to be less than $20,000,000, and, at any time
during any fiscal quarter thereafter, Swank will not permit its
Tangible Net Worth to be less than the percentage of actual
Tangible Net Worth as at the last day of the immediately
preceding fiscal year as set forth opposite such date in the
Schedule below:
Period Percentage
1/1/93 through 9/30/93 85%
10/1/93 through 12/31/93 100%
1/1/94 through 3/31/94 90%
4/1/94 through 7/31/94 85%
8/1/94 through 9/30/94 90%
10/1/94 through 12/31/94 100%
1/1/95 through 7/31/95 90%
8/1/95 through 9/30/95 95%
10/1/95 through 12/31/95 100%
, provided that in no event shall Tangible Net Worth as at any
date be less than $17,000,000. Any breach by Swank under this
Section 9.10 as at any December 31 shall not be deemed cured by
reason of Swank being in compliance with its obligations under
this Section 9.10 as at a later date when the required Tangible
Net Worth is determined based upon actual Tangible Net Worth as
at said December 31 (even though Swank shall be in compliance
with its obligations under this Section 9.10 as at said later
date shall be at least equal to the relevant percentage set forth
above of the required Tangible Net Worth as at said December 31.
9.11 Current Ratio. Swank will not permit the ratio
of consolidated current assets of Swank and its Subsidiaries
(determined in accordance with generally accepted accounting
principles) to consolidated current liabilities of Swank and its
Subsidiaries (so determined), in each case as at the last day of
any fiscal quarter set forth below to be less than the following
respective amounts set forth below:
Fiscal Quarters
Ending Ratio
12/31/92 1.90 to 1
3/31/93 1.70 to 1
6/30/93 1.70 to 1
9/30/93 1.50 to 1
12/31/93 2.20 to 1
3/31/94 1.80 to 1
6/30/94 1.75 to 1
9/30/94 1.55 to 1
12/31/94 2.10 to 1
3/31/95 1.90 to 1
6/30/95 1.90 to 1
9/30/95 1.75 to 1
9.12 EBIT/Interest Expense. Swank will not at any
time permit EBIT (calculated retrospectively for the period of
four fiscal quarters ending on any date set forth in the schedule
below), to be less than the percentage of Interest Expense
(calculated retrospectively for such period) set forth opposite
such date in the Schedule below:
Date Percentage
12/31/92 160%
3/31/92 150%
6/30/93 170%
9/30/93 200%
12/31/93 225%
3/31/94 230%
6/30/94 230%
9/30/94 250%
12/31/94 250%
3/31/95 250%
6/30/95 250%
9/30/95 250%
9.13 Adjusted Net Income/Debt Service. Swank will not
at any time permit the ratio of (i) Adjusted Net Income for any
fiscal year to (ii) the sum of Debt Service plus Interest Expense
for such fiscal year to be less than the percentage set forth
opposite such fiscal year in the Schedule below (for purposes of
this Section 9.13, "Adjusted Net Income" shall mean, for any
fiscal year, Net Income for such fiscal year determined after
taxes but before interest, depreciation and amortization, and
extraordinary or unusual items on a consolidated basis for Swank
and its Subsidiaries in accordance with generally accepted
accounting principles):
Fiscal Year Ending Percentage
12/31/92 70%
12/31/93 120%
12/31/94 130%
9.14 Acquisitions; Mergers; Disposition of Assets.
Except as permitted by Section 9.04 hereof, Swank will not, and
will not permit any of its Subsidiaries to, be a party to any
merger or consolidation. Swank will not, and will not permit any
of its Subsidiaries to, acquire any business or assets from, or
capital stock of, or be party to any acquisition of, any Person
except Capital Expenditures and Investments permitted by Section
9.18 or 9.19 hereof. Swank will not, and will not permit any of
its Subsidiaries to, sell, lease, assign, transfer, license,
sublicense or otherwise dispose of any of its assets (including,
without limitation, any rights in respect of any patents,
trademarks, service marks, licenses, copyrights or similar
property rights relating to any product line or lines) except:
(i) dispositions in the ordinary course of business; and (ii)
dispositions of tools, equipment and other assets that are
obsolete, worn out, unused or unuseful in the business of Swank
or any of its Subsidiaries, provided that any such tools and
equipment disposed of in any single fiscal year shall not have a
fair market value in excess of $250,000.
9.15 Contingent Liabilities. Swank will not, and will
not permit any of its Subsidiaries to, directly or indirectly
(including, without limitation, by means of causing a bank to
open a letter of credit), guarantee, endorse, contingently agree
to purchase or to furnish funds for the payment or maintenance
of, or otherwise be or become contingently liable under or with
respect to, the Indebtedness, other obligations, net worth,
working capital or earnings of any Person, or guarantee the
payment of dividends or other distributions upon the stock of any
corporation, or agree to purchase, sell or lease (as lessee or
lessor) Property, products, materials, supplies or services
primarily for the purpose of enabling a debtor to make payment of
his, her or its obligations or to assure a creditor against loss,
except: (i) endorsements of instruments and documents for
deposit or collection in the ordinary course of business; (ii)
guarantees outstanding on the date hereof and identified on
Schedule I hereto; (iii) the obligations of Swank and its
Subsidiaries under the Basic Documents; and (iv) additional
guarantees issued by Swank in the ordinary course of business so
long as the aggregate liability of Swank and its Subsidiaries in
respect to all such guarantees shall not exceed $300,000 at any
one time outstanding.
9.16 Liens. Swank will not, and will not permit any
of its Subsidiaries to, create or suffer to exist any Lien upon
any of its Property, now owned or hereafter acquired, securing
any Indebtedness or other obligation except: (i) the Liens
created pursuant to the Security Documents; (ii) Liens incidental
to the conduct of its business or the ownership of its Property
which are not incurred in connection with the borrowing of money
or the obtaining of advances or credit and which do not
materially detract from the value of its Property or materially
impair the use thereof in the operation of its business; (iii)
existing Liens listed on Schedule I hereto; (iv) Liens created
under the Existing Credit Agreements and related instruments and
documents (which Liens will be terminated upon the making of the
initial Loans hereunder as provided in Section 7.01(g) hereof);
and (v) Liens securing Indebtedness permitted pursuant to Section
9.08(iii) hereof so long as the Lien covering any item of
Property secures only the Indebtedness incurred in respect of the
purchase of such Property and so long as such Indebtedness is
secured by no other Lien on Property of Swank or any of its
Subsidiaries.
9.17 Dividend Payments, Etc. Swank will not, and will
not permit any of its Subsidiaries to, at any time make or
declare any Dividend Payment or make any contributions to its
employee stock ownership plan (the "ESOP") except: (i) Dividend
Payments made in any fiscal year in an amount not exceeding 50%
of Excess Cash Flow for the immediately preceding fiscal year
provided that, the aggregate amount of such Dividend Payments
that are not used by the ESOP to pay the principal of and
interest on loans borrowed by the ESOP from Swank shall not
exceed $400,000 in such fiscal year; (ii) Swank may make
contributions to the ESOP (x) to permit the ESOP to make payments
of principal or interest in respect of loans borrowed by the ESOP
from Swank, (y) to permit the ESOP to purchase shares of stock of
Swank distributed or distributable to participants in the ESOP in
accordance with the applicable requirements of ERISA and (z) for
other purposes, so long as the aggregate amount of the
contributions made during any fiscal year shall not exceed 5% of
the gross employee compensation for such fiscal year; and
(iii) Swank may repurchase the Warrants as provided in the
respective Warrant Agreement pursuant to which the Warrants were
issued.
9.18 Capital Expenditures. Swank will not permit the
aggregate amount of Capital Expenditures made by Swank and its
Subsidiaries during any fiscal year to exceed $1,500,000,
provided that if during any fiscal year (the "current year"),
commencing with the fiscal year ending December 31, 1993, the
aggregate amount of Capital Expenditures actually made during the
current year shall be less than the permitted amount of Capital
Expenditures for the current year, then there shall be added to
the amount of Capital Expenditures permitted to be made hereunder
during the succeeding fiscal year an amount equal to the excess
of such permitted amount over the actual Capital Expenditures
made during the current year, provided further that in no event
shall the amount of Capital Expenditures permitted to be made in
any fiscal year exceed $1,800,000.
9.19 Investments. Swank will not, and will not permit
any of its Subsidiaries to, make any Investments except: (i)
equity Investments by Swank in the FSC and by the FSC to Swank,
in the ordinary course of business provided that the net amount
of such advances by Swank to the FSC shall not exceed $250,000 in
the aggregate; and the repayment of such intercompany advances;
(ii) Permitted Investments; (iii) Investments constituting
advances made to officers and employees of Swank and its
Subsidiaries in respect of salaries, bonuses and other amounts
anticipated to be paid to such officers and employees, so long as
the aggregate amount of such advances made to all officers and
employees shall not exceed $250,000 at any one time; (iv)
Investments in notes receivable and the like due from obligors in
respect of accounts receivable arising in the ordinary course of
business which are past due or in the process of collection;
(v) deposits and other normal business banking accounts with
domestic commercial banks having capital, surplus and undivided
profits of at least $500,000,000; and (vi) additional Investments
not permitted by clause (i) through (iv) above in an aggregate
amount not exceeding $200,000 at any one time outstanding. In
addition to the foregoing, Swank will not permit the aggregate
amount of the cash and cash equivalents held by the FSC to exceed
$350,000 at any one time.
9.20 Transactions with Affiliates. Except as
expressly permitted by this Agreement, Swank will not, and will
not permit any of its Subsidiaries to, directly or indirectly:
(i) make any Investment in an Affiliate; (ii) transfer, sell,
lease, assign or otherwise dispose of any assets to an Affiliate;
(iii) merge into or consolidate with or purchase or acquire
assets from an Affiliate; or (iv) enter into any other
transaction directly or indirectly with or for the benefit of an
Affiliate (including, without limitation, guarantees and
assumptions of obligations of an Affiliate); provided that (a)
any Affiliate who is an individual may serve as a director,
officer or employee of Swank or any of its Subsidiaries and
receive compensation for his or her services in such capacity in
an amount not exceeding such amount as is customarily paid by
companies similar in size and activities for similar services and
(b) Swank and its Subsidiaries may enter into any transaction
with an Affiliate providing for the leasing of Property, the
rendering or receipt of services or the purchase or sale of
inventory and other assets in the ordinary course of business if
the monetary or business consideration arising therefrom would be
substantially as advantageous to Swank or the respective
Subsidiary as the monetary or business consideration which would
obtain in a comparable arm's-length transaction with a Person not
an Affiliate.
9.21 Actuals As Against 1993-1995 Plan.
(a) Swank shall not permit EBT for any calendar month
beginning February 1, 1993, or for any cumulative period
beginning January 1, 1993 through and including the end of
such calendar month, to vary from the projected pre-tax
profit and loss set forth in the 1993-1995 Plan by more than
the following: (i) for each such month ending on or after
January 31, 1993, to vary adversely from the projected pre-
tax profit and loss set forth in the 1993-1995 Plan for such
month by more than the greater of 25% or $150,000 and
(ii) for each such cumulative period, other than one ending
on January 31, to vary adversely (by more than 20%) from the
projected pre-tax profit and loss set forth in the 1993-1995
Plan for such cumulative period.
(b) Swank shall not permit the aggregate amount of
sales of Swank and its Subsidiaries for any calendar month
beginning February 1, 1993, or for any cumulative period
beginning January 1, 1993 through and including the end of
such calendar month, to vary from the projected sales set
forth in the 1993-1995 Plan by more than the following:
(i) for each such month ending on or after January 31, 1993,
to vary adversely from the projected sales set forth in the
1993-1995 Plan for such month by more than the 25% and
(ii) for each such cumulative period, other than one ending
on January 31, to vary adversely (by more than 20%) from the
projected sales set forth in the 1993-1995 Plan for such
cumulative period.
The assumptions, qualifications and possible future accounting
changes set forth in the 1993-1995 Plan are included for information
purposes only and shall not be taken into account in determining
whether or not pre-tax profit and loss or sales, as the case may be,
shall be equal to the respective figures for the applicable periods
set forth in the 1993-1995 Plan even if (by way of illustration) a
particular result projected to occur for a particular period in the
1993-1995 Plan shall fail to be achieved because a particular
assumption shall prove to be untrue or a particular projected
accounting change shall occur. In determining pre-tax profit and
loss for any period, the full amount of contributions made during
such period shall be treated as an expense without deduction (as
provided in the definition of "Net Income" in Section 1.01 hereof)
for proceeds of such contributions paid by the ESOP to Swank.
Section 10. Defaults.
10.01 Events of Default. If one or more of the
following events (herein called "Events of Default") shall occur
and be continuing:
(a) Swank shall default in the payment or prepayment
of any principal of or interest on any Loan, any
Reimbursement Obligation or any other amount payable by it
hereunder when due; or
(b) Swank or any of its Subsidiaries (Swank and its
Subsidiaries being referred to in this Section 10.01
collectively as the "Corporations") shall default in the
payment when due of any principal of or interest on any of
its other Indebtedness in an aggregate principal amount of
$100,000 or more (other than Indebtedness hereunder); or any
event specified in any note, agreement, indenture or other
document evidencing or relating to any such Indebtedness
shall occur if the effect of such event is to cause, or
(with the giving of any notice or the lapse of time or both)
to permit the holder or holders of such Indebtedness (or a
trustee or agent on behalf of such holder or holders) to
cause, such Indebtedness to become due, or to be prepaid in
full (whether by redemption, purchase, offer to purchase or
otherwise), prior to its stated maturity; or
(c) Any representation or warranty made or deemed made
in any Basic Document, or in any certificate furnished to
any Bank or the Agent pursuant to the provisions of any
Basic Document (including, without limitation, any
Compliance Certificate delivered hereunder), shall prove to
have been false or misleading in any material respect as of
the time made or furnished; or
(d) Swank shall default in the performance of any of
its obligations under clause (n) of Section 9.01, or any of
its obligations in Sections 9.03, 9.04 or Section 9.08
through 9.21 hereof or in the Security Agreement or any
provision of the Mortgages referred to in clauses (i) or
(ii) of the definition of such term in Section 1.01 hereof;
or Swank or the FSC shall default in the performance of any
of its other obligations under this Agreement or any other
Basic Document and such default shall continue unremedied
for a period of 30 days after notice thereof to Swank by the
Agent or any Bank (through the Agent); or
(e) Any Corporation shall admit in writing its
inability to, or be generally unable to, pay its debts as
such debts become due; or
(f) Any Corporation shall (i) apply for or consent to
the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of itself or of
all or a substantial part of its Property, (ii) make a
general assignment for the benefit of its creditors, (iii)
commence a voluntary case under the Bankruptcy Code (as now
or hereafter in effect), (iv) file a petition seeking to
take advantage of any other law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or
readjustment of debts, (v) fail to controvert in a timely
and appropriate manner, or acquiesce in writing to, any
petition filed against it in an involuntary case under the
Bankruptcy Code, or (vi) take any corporate action for the
purpose of effecting any of the foregoing; or
(g) A proceeding or case shall be commenced, without
the application or consent of a Corporation in any court of
competent jurisdiction, seeking (i) its liquidation,
reorganization, dissolution or winding-up, or the
composition or readjustment of its debts, (ii) the
appointment of a trustee, receiver, custodian, liquidator or
the like for such Corporation or of all or any substantial
part of its assets, or (iii) similar relief in respect of
such Corporation under any law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or
adjustment of debts, and such proceeding or case shall
continue undismissed, or an order, judgment or decree
approving or ordering any of the foregoing shall be entered
and continue unstayed and in effect, for a period of 60
days; or an order for relief against such Corporation shall
be entered in an involuntary case under the Bankruptcy Code;
or
(h) A final judgment or judgments for the payment of
money shall be rendered by a court or courts against any
Corporation in excess of $100,000 in the aggregate and the
same shall not be paid or discharged (or provision shall not
be made for such payment or discharge), or a stay of
execution thereof shall not be procured, within 30 days from
the date of entry thereof and such Corporation shall not,
within said period of 30 days, or such longer period during
which execution of the same shall have been stayed, appeal
therefrom and cause the execution thereof to be stayed
during such appeal; or
(i) An event or condition specified in Section 9.01(h)
hereof shall occur or exist with respect to any Plan or
Multiemployer Plan and, as a result of such event or
condition, together with all other such events or
conditions, Swank or any ERISA Affiliate shall incur or in
the opinion of the Majority Banks shall be reasonably likely
to incur a liability to a Plan, a Multiemployer Plan or PBGC
(or any combination of the foregoing) which would
constitute, in the determination of the Majority Banks, a
Material Adverse Effect; or
(j) A reasonable basis shall exist for the assertion
against Swank or any of its Subsidiaries of (or there shall
have been asserted against Swank or any of its Subsidiaries)
claims or liabilities, whether accrued, absolute or
contingent, based on or arising from the generation,
storage, transport, handling or disposal of Hazardous
Materials by Swank or any of its Subsidiaries or Affiliates,
or any predecessor in interest of Swank or any of its
Subsidiaries or Affiliates, or relating to any site or
facility owned, operated or leased by Swank or any of its
Subsidiaries or Affiliates, or any such predecessor, which
claims or liabilities (insofar as they are payable by Swank
or any of its Subsidiaries but after deducting any portion
thereof which is reasonably expected to be paid by other
creditworthy Persons jointly and severally liable therefor),
in the judgment of the Majority Banks are reasonably likely
to be determined adversely to Swank or any of its
Subsidiaries, and the amount thereof is, singly or in the
aggregate, reasonably likely to have a Material Adverse
Effect; or
(k) Except for any expiration or termination in
accordance with its terms or with the consent of the parties
thereto, any of the Security Documents shall be terminated,
or shall cease to be in full force and effect, for whatever
reason; or
(l) Marshall Tulin, John Tulin and James Tulin (or
their respective estates and legatees), or trusts for the
benefit of any of their immediate family or descendants
(which trusts are under the control of Marshall, John or
James Tulin), shall cease to own, on a fully diluted basis,
at least 1% of the issued and outstanding shares of capital
stock of Swank; or John Tulin shall cease to be actively
involved in the management of Swank and not replaced with a
Person of equivalent knowledge and experience satisfactory
to the Majority Banks within 60 days;
THEREUPON: the Agent may (and, if directed by the Majority
Banks, shall) do any one or more of the following: (a) declare
the Commitments to be terminated (whereupon the Commitments shall
be terminated), (b) terminate any Letter of Credit by sending a
notice of termination to the extent provided therein and/or (c)
declare the principal amount then outstanding of and the accrued
interest on the Loans and commitment fees and all other amounts
payable by Swank hereunder in respect of the Loans and under the
Notes to be forthwith due and payable, whereupon such amounts
shall be and become immediately due and payable, without
presentment, demand, protest or other formalities of any kind,
all of which are hereby expressly waived by Swank; provided that
in the case of the occurrence of an Event of Default referred to
in clause (f) or (g) of this Section 10.01 with respect to Swank,
the Commitments shall be automatically terminated and the
principal amount then outstanding of and the accrued interest on
the Loans and commitment fees and all other amounts payable by
Swank hereunder in respect of the Loans and under the Notes shall
be and become automatically and immediately due and payable,
without presentment, demand, protest or other formalities of any
kind, all of which are hereby expressly waived by Swank. The
Agent agrees to provide within a reasonable time notice to Swank
of any actions taken by the Agent pursuant to this Section 10
provided that, any failure by the Agent to provide such notice
shall not impair the rights or remedies of the Agent hereunder.
10.02 Collateral Account. Swank hereby agrees, in
addition to the provisions of Section 10.01 hereof, that upon the
occurrence and during the continuance of any Event of Default, it
shall, if requested by the Agent or the Majority Banks, pay (and,
in the case of any Event of Default referred to in clause (f) or
(g) of Section 10.01 hereof with respect to Swank, forthwith,
without any demand or the taking of any other action by the
Banks, pay) to the Agent an amount in immediately available funds
equal to the then aggregate face amount of all Letters of Credit,
which funds shall be held by the Agent in the Collateral Account
and be subject to withdrawal only as therein provided.
Section 11. The Agent.
11.01 Appointment, Powers and Immunities. Each Bank
hereby irrevocably appoints and authorizes the Agent (subject to
Section 11.08 hereof) to act as its agent hereunder and under the
other Basic Documents with such powers as are specifically
delegated to the Agent by the terms hereof and the other Basic
Documents, together with such other powers as are reasonably
incidental thereto. The Agent (which term as used in this
sentence and in Section 11.05 and the first sentence of Section
11.06 hereof shall include reference to its affiliates and its
own and its affiliates' officers, directors, employees and
agents): (a) shall have no duties or responsibilities except
those expressly set forth in this Agreement and the other Basic
Documents, and shall not by reason of this Agreement or any other
Basic Document be a trustee for any Bank; (b) shall not be
responsible to the Banks for any recitals, statements,
representations or warranties contained in this Agreement or any
other Basic Document, or in any certificate or other document
referred to or provided for in, or received by any of them under,
this Agreement or any other Basic Document, or for the value,
validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Basic Document or any
other document referred to or provided for herein or therein or
for any failure by Swank or any other Person (other than the
Agent) to perform any of its obligations hereunder or thereunder;
(c) shall not be required to initiate or conduct any litigation
or collection proceedings hereunder or under any other Basic
Document except to the extent requested by the Majority Banks;
and (d) shall not be responsible for any action taken or omitted
to be taken by it hereunder or under any other Basic Document or
under any other document or instrument referred to or provided
for herein or therein or in connection herewith or therewith,
except for its own gross negligence or willful misconduct. The
Agent may employ agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such agents
or attorneys-in-fact selected by it with reasonable care.
11.02 Reliance by Agent. The Agent shall be entitled
to rely upon any certification, notice or other communication
(including any thereof by telephone, telex, telecopy, telegram or
cable) believed by it to be genuine and correct and to have been
signed or sent by or on behalf of the proper Person or Persons,
and upon advice and statements of legal counsel, independent
accountants and other experts selected by the Agent. As to any
matters not expressly provided for by this Agreement or any other
Basic Document, the Agent shall in all cases be fully protected
in acting, or in refraining from acting, hereunder and thereunder
in accordance with instructions signed by the Majority Banks, and
such instructions of the Majority Banks and any action taken or
failure to act pursuant thereto shall be binding on all of the
Banks.
11.03 Defaults. The Agent shall not be deemed to have
knowledge of the occurrence of a Default (other than the
non-payment of principal of or interest on Loans or Reimbursement
Obligations) unless the Agent has received notice from a Bank or
Swank specifying such Default and stating that such notice is a
"Notice of Default". In the event that the Agent receives such a
notice of the occurrence of a Default, the Agent shall give
prompt notice thereof to the Banks (and shall give each Bank
prompt notice of each such non-payment). The Agent shall
(subject to Section 11.07 hereof) take such action with respect
to such Default under this Agreement and under the other Basic
Documents as shall be directed by the Majority Banks, provided
that, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to
such Default as it shall deem advisable in the best interests of
the Banks.
11.04 Rights as a Bank. With respect to its
Commitments and the Loans made, and Letter of Credit Liabilities
held, by it, Chase in its capacity as a Bank hereunder shall have
the same rights, powers and obligations hereunder as any other
Bank and may exercise the same as though it were not acting as
the Agent, and the term "Bank" or "Banks" shall, unless the
context otherwise indicates, include the Agent in its individual
capacity. The Agent and its affiliates may (without having to
account therefor to any Bank) accept deposits from, lend money to
and generally engage in any kind of banking, trust or other
business with Swank (and any of its Subsidiaries and Affiliates)
as if it were not acting as the Agent, and the Agent may accept
fees and other consideration from Swank (in addition to the
agency fees and arrangement fees heretofore agreed to between
Swank and the Agent for services in connection with this
Agreement or otherwise without having to account for the same to
the Banks.
11.05 Indemnification. The Banks agree to indemnify
the Agent (to the extent not reimbursed under Section 12.03 or
12.04 hereof but without limiting the obligations of Swank under
said Sections 12.03 and 12.04), ratably in accordance with the
aggregate principal amount of the Loans made and Letter of Credit
Liabilities held by the Banks (or, if no Loans or Letter of
Credit Liabilities are at the time outstanding, ratably in
accordance with their respective Commitments), for any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind
and nature whatsoever which may be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out
of this Agreement, any Letter of Credit or any other Basic
Document or any other documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or
thereby (including, without limitation, the costs and expenses
which Swank is obligated to pay under Sections 12.03 and 12.04
hereof and including also any payments under any indemnity which
the Agent is required to issue to any bank referred to in Section
4.02 of the Security Agreement to which remittances in respect of
Accounts, as defined therein, are to be made but excluding,
unless a Default has occurred and is continuing, normal
administrative costs and expenses incident to the performance of
its agency duties hereunder) or the enforcement of any of the
terms hereof or thereof or of any such other documents, provided
that no Bank shall be liable for any of the foregoing to the
extent they arise from the gross negligence or willful misconduct
of the party to be indemnified.
11.06 Non-Reliance on Agent and other Banks. Each
Bank agrees that it has, independently and without reliance on
the Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own credit
analysis of Swank and decision to enter into this Agreement and
that it will, independently and without reliance upon the Agent
or any other Bank, and based on such documents and information as
it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under this
Agreement, any Letter of Credit or any of the other Basic
Documents. The Agent shall not be required to keep itself
informed as to the performance or observance by Swank of this
Agreement or any of the other Basic Documents or any other
document referred to or provided for herein or therein or to
inspect the properties or books of Swank or any of its
Subsidiaries. Except for notices, reports and other documents
and information expressly required to be furnished to the Banks
by the Agent hereunder or under the other Basic Documents, the
Agent shall not have any duty or responsibility to provide any
Bank with any credit or other information concerning the affairs,
financial condition or business of Swank or any of its
Subsidiaries or Affiliates which may come into the possession of
the Agent or any of its affiliates.
11.07 Failure to Act. Except for action expressly
required of the Agent hereunder and the other Basic Documents,
the Agent shall in all cases be fully justified in failing or
refusing to act hereunder and thereunder unless it shall receive
further assurances to its satisfaction by the Banks of their
indemnification obligations under Section 11.05 hereof against
any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action.
11.08 Resignation or Removal of Agent. Subject to the
appointment and acceptance of a successor Agent as provided
below, the Agent may resign at any time by giving notice thereof
to the Banks and Swank, and the Agent may be removed at any time
with or without cause by the Majority Banks. Upon any such
resignation or removal, the Majority Banks shall have the right
to appoint a successor Agent. If no successor Agent shall have
been so appointed by the Majority Banks and shall have accepted
such appointment within 30 days after the retiring Agent's giving
of notice of resignation or the Majority Banks' removal of the
retiring Agent, then the retiring Agent may, on behalf of the
Banks, appoint a successor Agent, which shall be a bank which has
an office in New York, New York with a combined capital and
surplus of at least $500,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring
Agent, and the retiring or removed Agent shall be discharged from
its duties and obligations hereunder. After the retiring Agent's
resignation or removal hereunder as Agent, the provisions of this
Section 11 shall continue in effect for its benefit in respect of
any actions taken or omitted to be taken by it while it was
acting as the Agent.
11.09 Consents under Basic Documents. The Agent may,
with the prior consent of the Majority Banks (but not otherwise),
consent to any modification, supplement or waiver under any of
the Basic Documents, provided that, without the prior consent of
each Bank, the Agent shall not (except as provided herein or in
the Security Documents) release any collateral or otherwise
terminate any Lien under any Basic Document providing for
collateral security, or agree to additional obligations being
secured by such collateral security, except that no such consent
shall be required, and the Agent is hereby authorized, to release
any Lien covering Property which is the subject of a disposition
of Property permitted hereunder or to which the Majority Banks
have consented.
11.10 Collateral Sub-Agents. Each Bank by its
execution and delivery of this Agreement agrees, as contemplated
by Section 4.03 of the Security Agreement, that, in the event it
shall hold any Permitted Investments referred to therein, such
Permitted Investments shall be held in the name and under the
control of such Bank and such Bank shall hold such Permitted
Investments as a collateral sub-agent for the Agent thereunder
and shall be entitled to all of the protections afforded to the
Agent under this Section 11; Swank by its execution and delivery
of this Agreement hereby consents to the foregoing.
11.11 Agency Fees. So long as the Commitments are in
effect and until payment in full of all of the Loans, the
termination of all Letters of Credit and the payment in full of
all Letter of Credit Liabilities, all interest thereon and all
other amounts payable by Swank hereunder, Swank will pay to the
Agent an agency fee of $100,000 per annum, payable on the Closing
Date and thereafter annually in advance on December 31 of each
year, commencing with December 31, 1993. Such fee, once paid,
shall be non-refundable.
Section 12. Miscellaneous.
12.01 Waivers. No failure on the part of the Agent or
any Bank to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under this
Agreement or any Note shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or
privilege under this Agreement or any Note preclude any other or
further exercise thereof or the exercise of any other right,
power or privilege. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.
12.02 Notices. All notices and other communications
provided for herein and under the Security Documents (including,
without limitation, any modifications of, or waivers or consents
under, this Agreement) shall be given or made in writing
(including, without limitation, by telecopy) or delivered to the
intended recipient at the "Address for Notices" specified below
its name on the signature pages hereto; or, as to any party, at
such other address as shall be designated by such party in a
notice to each other party. Except as otherwise provided in this
Agreement, all such communications shall be deemed to have been
duly given when transmitted by telecopier during normal business
hours on any Business Day, or otherwise on the next succeeding
Business Day, or personally delivered or, in the case of a mailed
notice, upon receipt, in each case given or addressed as
aforesaid.
12.03 Expenses, Etc. Swank agrees to pay or reimburse
each of the Banks and the Agent for paying: (a) the reasonable
fees and expenses of local counsel to the Banks retained by the
Agent in Connecticut and Massachusetts in connection with the
Mortgages, of special New York counsel to Chase, Milbank, Tweed,
Hadley & McCloy and, of counsel for Fleet National Bank, in
connection with (i) the negotiation, preparation, execution and
delivery of this Agreement and the other Basic Documents and the
making of the Loans hereunder and (ii) any modification,
supplement or waiver of any of the terms of this Agreement or any
of the other Basic Documents; (b) all reasonable costs and
expense of the Banks and the Agent (including, without
limitation, reasonable counsels' fees) in connection with (i) any
Default and any enforcement or collection proceedings resulting
therefrom or in connection with the negotiation of any
restructuring or "work-out" (whether or not consummated), or the
obligations of the Obligors hereunder and (ii) the enforcement of
this Section 12.03; (c) all transfer, stamp, documentary or other
similar taxes, assessments or charges levied by any governmental
or revenue authority in respect of this Agreement or any of the
other Basic Documents or any other document referred to herein or
therein and all costs, expenses, taxes, assessments and other
charges incurred in connection with any filing, registration,
recording or perfection of any security interest contemplated by
any Basic Document or any other document referred to therein; and
(d) the expenses incurred in connection with the preparation of
any environmental reports or reports of independent collateral
auditors required hereunder.
12.04 Indemnification. Swank shall (to the fullest
extent permitted by applicable law) indemnify the Agent, the
Banks and each affiliate thereof and their respective directors,
officers, employees and agents from, and hold each of them
harmless against, any and all losses, liabilities, claims or
damages to which any of them may become subject, insofar as such
losses, liabilities, claims or damages arise out of or result
from any actual or proposed use by Swank of the proceeds of any
extension of credit by any Bank to Swank hereunder (whether a
Loan or Letter of Credit) or from any violation by Swank or any
of its Subsidiaries of any law, rule, regulation or order
relating to toxic, hazardous or solid wastes or from any
investigation, litigation or other proceeding (including any
threatened investigation or proceeding) relating to the
foregoing, and Swank shall reimburse the Agent and each Bank, and
each affiliate thereof and their respective directors, officers,
employees and agents, upon demand for any expenses (including
reasonable legal fees) incurred in connection with any such
investigation or proceeding; but excluding any such losses,
liabilities, claims, damages or expenses incurred by reason of
the gross negligence or willful misconduct of the Person to be
indemnified. If and to the extent that the obligations of Swank
under the preceding sentence may be unenforceable for any reason,
Swank shall make the maximum contribution to the payment and
satisfaction of each of the losses, liabilities, claims, damages
and expenses referred to above as may be permitted by applicable
law.
12.05 Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Notes, nor any consent to any
departure by Swank therefrom, shall in any event be effective
unless the same shall be agreed or consented to in writing (which
may include telecopy or telefax copies) by the Majority Banks,
and each such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given;
provided, that no amendment, waiver or consent shall, unless in
writing and signed by all the Banks, do any of the following:
(a) increase any Commitment of any of the Banks, extend the
Revolving Credit Commitment Termination Date or the Term Loan
Commitment Termination Date or subject the Banks to any
additional obligations; (b) reduce the principal of, or interest
on, the Loans or any fees hereunder; (c) postpone any date
scheduled for any payment of principal of, or interest on, the
Loans, the Reimbursement Obligations or any fee hereunder
(including any waiver of an Event of Default arising out of any
failure to make any such payment); (d) change the percentage of
any of the Commitments or of the aggregate unpaid principal
amount of any of the Loans or Letter of Credit Liabilities, or
the number of Banks, which shall be required for the Banks or any
of them to take any action under this Agreement; or (e) change
any provision contained in Sections 6, 12.03 or 12.04 hereof or
this Section 12.05. Anything in this Section 12.05 to the
contrary, no amendment, waiver or consent shall be made with
respect to Section 11 without the consent of the Agent.
12.06 Successors and Assigns; Assignments and
Participations.
(a) This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors
and permitted assigns.
(b) Swank may not assign its rights or obligations
hereunder or under the Notes without the prior written consent of
all of the Banks and the Agent.
(c) Each Bank may assign any of its Loans, its Notes,
its Commitments, and, if such Bank is a Revolving Credit Bank,
its Letter of Credit Liabilities (but only with the consent of
Swank and the Agent); provided that each such assignment by a
Bank of its Loans, Notes, Commitments or Letter of Credit
Liabilities shall be made in such manner so that the same portion
of all of its Loans, Note, Commitment and Letter of Credit
Liabilities is assigned to the respective assignee. Upon
execution and delivery by the assignee to Swank and the Agent of
an instrument in writing pursuant to which such assignee agrees
to become a "Bank" hereunder (if not already a Bank) having the
Commitment(s), Loans, and Letter of Credit Liabilities specified
in such instrument, and upon consent thereto by Swank and the
Agent, as required above, the assignee shall have, to the extent
of such assignment, the obligations, rights and benefits of a
Bank hereunder holding the Commitment(s), Loans and Letter of
Credit Liabilities (or portions thereof) assigned to it (in
addition to the Commitment(s), Loans and Letter of Credit
Liabilities, if any, theretofore held by such assignee) and the
assigning Bank shall, to the extent of such assignment, be
released from the Commitment(s) (or portion(s) thereof) so
assigned.
(d) A Bank may sell or agree to sell to one or more
other Persons a participation in all or any part of any Loans or
Letter of Credit Liabilities held by it, or in its Commitments,
in which event each purchaser of a participation (a
"Participant") shall not have any rights or benefits under this
Agreement or any Note or any other Basic Document (the Participant's
rights against such Bank in respect of such participation to be
those set forth in the agreements executed by such Bank in favor of
the Participant). All amounts payable by Swank to any Bank under
Section 6 hereof in respect of Loans, Letter of Credit Liabilities
held by it, and its Commitments, shall be determined as if such Bank
had not sold or agreed to sell any participations in such Loans,
Letter of Credit Liabilities and Commitments, and as if such Bank
were funding each of such Loan, Letter of Credit Liabilities and
Commitments in the same way that it is funding the portion of such
Loan, Letter of Credit Liabilities and Commitments in which no
participations have been sold. In no event shall a Bank that sells
a participation agree with the Participant to take or refrain from
taking any action hereunder or under any other Basic Document except
that such Bank may agree with the Participant that it will not,
without the consent of the Participant, agree to (i) increase or
extend the term, or extend the time or waive any requirement for the
reduction or termination, of such Bank's related Commitment,
(ii) extend any date fixed for the payment of principal of or
interest on the related Loan or Loans, Reimbursement Obligations or
any portion of any fee hereunder payable to the Participant,
(iii) reduce the amount of any such payment of principal,
(iv) reduce the rate at which interest is payable thereon, or any
fee hereunder payable to the Participant, to a level below the rate
at which the Participant is entitled to receive such interest or fee
or (v) release any Lien under circumstances requiring consent of
each of the Banks pursuant to Section 11.09 hereof.
(e) In addition to the assignments and participations
permitted under the foregoing provisions of this Section 12.06,
any Bank may assign and pledge all or any portion of its Loans
and its Notes to any Federal Reserve Bank as collateral security
pursuant to Regulation A and any Operating Circular issued by
such Federal Reserve Bank. No such assignment shall release the
assigning Bank from its obligations hereunder.
(f) A Bank may furnish any information concerning
Swank or any of its Subsidiaries in the possession of such Bank
from time to time to assignees and participants (including
prospective assignees and participants) subject to such Bank's
first having obtained from such assignee or participant (or
prospective assignee or participant), as the case may be, an
agreement to keep confidential any information supplied to it
which is identified as not being public except that such
confidentiality agreement need not apply to any disclosure (i) to
the extent required by statute, rule, regulation or judicial
process, (ii) to counsel for such assignee or participant (or
prospective assignee or participant), (iii) to bank examiners,
auditors and accountants, (iv) to the Agent or any other Bank
hereunder or (v) in connection with any litigation to which any
one or more of the Banks or such assignee or participant (or
prospective assignee or participant) is a party if advised by
counsel to do so.
12.07 Survival. The obligations of Swank under
Sections 6, 12.03 and 12.04 hereof shall survive the repayment of
the Loans and Reimbursement Obligations and the termination of
the Commitments. In addition, each representation and warranty
made, or deemed to be made by a notice of any extension of credit
(whether by means of a Loan or a Letter of Credit), herein or
pursuant hereto shall survive the making of such representation
and warranty, and no Bank shall be deemed to have waived, by
reason of making any extension of credit hereunder (whether by
means of a Loan or a Letter of Credit), any Default which may
arise by reason of such representation or warranty proving to
have been false or misleading, notwithstanding that such Bank or
the Agent may have had notice or knowledge (other than as
disclosed in the schedules and annexes attached hereto and to the
other Basic Documents) or reason to believe that such
representation or warranty was false or misleading at the time
such extension of credit was made.
12.08 Captions. Captions and section headings
appearing herein are included solely for convenience of reference
and are not intended to affect the interpretation of any
provision of this Agreement.
12.09 Counterparts. This Agreement may be executed in
any number of counterparts, all of which taken together shall
constitute one and the same instrument and any of the parties
hereto may execute this Agreement by signing any such
counterpart.
12.10 Governing Law. This Agreement and the Notes
shall be governed by, and construed in accordance with, the law
of the State of New York.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Credit Agreement to be duly executed and delivered as of the day
and year first above written.
SWANK, INC.
By /s/ Marshall Tulin
Title: President
Address for Notices:
6 Hazel Street
Attleboro, Massachusetts 02703
Telex No.: 927600
Telecopy No.: (617) 222-3400 x 388
Attention: Andrew C. Corsini
Senior Vice President
<PAGE>
Revolving Credit Commitment THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
$10,500,000.00
Term Loan Commitment By /s/ Tracy A. Van Riper
Title: Vice President
$ 4,500,000.00
Address for Notices:
The Chase Manhattan Bank
(National Association)
2 Chase Manhattan Plaza
New York, NY 10081
Telecopy No.: 212-809-9596
Attention: Thomas J. Lewis
Vice President
and
1411 Broadway, Fifth Floor
New York, NY 10018
Telecopy No.: 212-768-9514 or 9515
Attention: John F. Jerow
Vice President
<PAGE>
Revolving Credit Commitment FLEET NATIONAL BANK
$10,500,000
By /s/ Robert T.P. Storer
Term Loan Commitment Amount Title: Vice President
$ 4,500,000
By /s/ Richard Anderson
Title: Senior Vice President
Address for Notices:
Fleet National Bank
111 Westminster Street
Providence, RI 02903-2305
Telecopy No.: (401) 751-1274
Attention: Robert T.P. Storer
<PAGE>
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Agent
By /s/ Tracy A. Van Riper
Title: Vice President
Address for Notices to
Chase as Agent:
The Chase Manhattan Bank
(National Association)
New York Agency
4 MetroTech Center-13th Floor
Brooklyn, New York 11245
Telecopy No.: 718-242-6910
Telephone No.: 718-242-7979
Attention: New York Agency
[Form of Amendment No. 2 to Security Agreement]
AMENDMENT NO. 2 TO SECURITY AGREEMENT
AMENDMENT NO. 2 dated as of July 20, 1995 between
SWANK, INC., a corporation duly organized and validly existing
under the laws of the State of Delaware ("Swank"); and THE CHASE
MANHATTAN BANK (NATIONAL ASSOCIATION), a national banking
association, as agent for the lenders party to the Credit
Agreement referred to below (in such capacity, the "Agent").
Swank, the lenders named therein (the "Banks") and the
Agent are parties to a Credit Agreement dated as of December 22,
1992 (as heretofore modified and supplemented and in effect on
the date hereof, the "1992 Credit Agreement"). In that
connection, Swank and the Agent executed a Security Agreement
dated as of December 22, 1992 (as heretofore modified and
supplemented and in effect on the date hereof, the "Existing
Security Agreement"), whereby, Swank pledged and granted a
security interest in Collateral (as defined therein) as security
for obligations under the 1992 Credit Agreement.
Concurrently with the execution and delivery of this
Amendment No. 2, Swank, the Banks and the Agent are amending and
restating the 1992 Credit Agreement pursuant to an Amended and
Restated Credit Agreement dated as of July 20, 1995 (the 1992
Credit Agreement as amended and restated and as further modified
and supplemented and in effect from time to time being
hereinafter called the "Credit Agreement"), providing, subject to
the terms and conditions thereof, for the extension and renewal
of Swank's indebtedness under the 1992 Credit Agreement and for
additional extensions of credit to Swank in an aggregate
principal amount (including the indebtedness under the 1992
Credit Agreement) not exceeding $32,000,000.
To induce the Banks to amend and restate the 1992
Credit Agreement and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged,
Swank and the Agent have agreed that the Existing Security
Agreement shall be hereby modified as follows:
Section 1. Defined Terms. Each capitalized term used
herein and not otherwise defined herein shall have the meaning
assigned thereto in the Existing Security Agreement. In
addition, subject to the execution and delivery of this Amendment
No. 2 by the parties hereto, but effective as of the date hereof,
certain terms defined in the Existing Security Agreement shall be
used therein as follows:
(a) all references in the Existing Security Agreement
to the term "Banks" shall be deemed to be references to the
Banks from time to time party to the Credit Agreement;
(b) all references in the Existing Security Agreement
to "this Agreement" or "this Security Agreement" shall be
deemed to be references to the Existing Security Agreement
as modified by this Amendment No. 2;
(c) all references in the Existing Security Agreement
to "the Credit Agreement" shall be deemed to be references
to the 1992 Credit Agreement as amended and restated by the
Credit Agreement; and
(d) all references in the Existing Security Agreement
to "Section 9.13" or "Section 9.15" of the Credit Agreement
shall be deemed to be references to Section 9.10 and Section
9.12, respectively, of the 1992 Credit Agreement as amended
and restated by the Credit Agreement,
it being the intent of this Amendment No. 2 that the obligations
of Swank under the 1992 Credit Agreement as amended and restated
by the Credit Agreement shall be "Secured Obligations" under the
Existing Security Agreement as fully as if such obligations had
been incurred under the 1992 Credit Agreement as originally in
effect.
Section 2. Amendment. Subject to the execution and
delivery of this Amendment No. 2 by the parties hereto, but
effective as of the date hereof, Annexes 1 through 6 of the
Existing Security Agreement shall be amended by substituting
Annexes 1 through 6 attached hereto.
Section 3. Representations and Warranties. Swank
hereby represents and warrants that the representations and
warranties set forth in Section 2 of the Existing Security
Agreement are true and complete on and as of the date hereof as
if made on and as of the date hereof.
Section 4. Miscellaneous. Except as herein provided,
the Existing Security Agreement shall remain unchanged and in
full force and effect. This Amendment No. 2 may be executed in
any number of counterparts, all of which taken together shall
constitute one and the same instrument and any of the parties
hereto may execute this Amendment No. 2 by signing any such
counterpart. This Amendment No. 2 shall be governed by, and
construed in accordance with, the law of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 2 to be duly executed and delivered as of the day
and year first above written.
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Agent
By
Title:
SWANK, INC.
By
Title:
EXHIBIT E-3
[Form of Amendment No. 2 to FSC Security Agreement]
AMENDMENT NO. 2 TO FSC SECURITY AGREEMENT
AMENDMENT NO. 2 dated as of July 20, 1995 between SWANK
SALES INTERNATIONAL (V.I.), INC., a corporation duly organized
and validly existing under the laws of the Virgin Islands (the
"FSC"); and THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), a
national banking association, as agent for the lenders party to
the Credit Agreement referred to below (in such capacity, the
"Agent").
Swank, Inc., a Delaware corporation, ("Swank"), the
lenders named therein (the "Banks") and the Agent are parties to
a Credit Agreement dated as of December 22, 1992 (as heretofore
modified and supplemented and in effect on the date hereof, the
"1992 Credit Agreement"). In that connection, the FSC gave a
guarantee, and pledged and granted a security interest to the
Agent in certain of its property, pursuant to a security
agreement dated as of December 22, 1992 (as heretofore modified
and supplemented and in effect on the date hereof, the "Existing
FSC Security Agreement").
Concurrently with the execution and delivery of this
Amendment No. 2, Swank, the Banks and the Agent are amending and
restating the 1992 Credit Agreement pursuant to an Amended and
Restated Credit Agreement dated as of July 20, 1995 (the 1992
Credit Agreement as amended and restated and as further modified
and supplemented and in effect from time to time being
hereinafter called the "Credit Agreement"), providing, subject to
the terms and conditions thereof, for the extension and renewal
of Swank's indebtedness under the 1992 Credit Agreement and for
additional extensions of credit to Swank in an aggregate
principal amount (including the indebtedness under the 1992
Credit Agreement) not exceeding $32,000,000.
To induce the Banks to amend and restate the 1992
Credit Agreement and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
FSC and the Agent have agreed that the Existing FSC Security
Agreement shall be hereby modified as follows:
Section 1. Defined Terms. Each capitalized term used
herein and not otherwise defined herein shall have the meaning
assigned thereto in the Existing FSC Security Agreement. In
addition, subject to the execution and delivery of this Amendment
No. 2 by the parties hereto, but effective as of the date hereof,
certain terms defined in the Existing FSC Security Agreement
shall be used therein as follows:
(a) all references in the Existing FSC Security
Agreement to the term "Banks" shall be deemed to be
references to the Banks from time to time party to the
Credit Agreement;
(b) all references in the Existing FSC Security
Agreement to "this Agreement" or "this Security Agreement"
shall be deemed to be references to the Existing FSC
Security Agreement as modified by this Amendment No. 2; and
(c) all references in the Existing FSC Security
Agreement to "the Credit Agreement" shall be deemed to be
references to the 1992 Credit Agreement as amended and
restated by the Credit Agreement,
it being the intent of this Amendment No. 2 that the obligations
of Swank under the 1992 Credit Agreement as amended and restated
by the Credit Agreement shall be "Secured Obligations" and
"Guaranteed Obligations" under the Existing FSC Security
Agreement as fully as if such obligations had been incurred under
the 1992 Credit Agreement as originally in effect.
Section 2. Amendments. Subject to the execution and
delivery of this Amendment No. 2 by the parties hereto, but
effective as of the date hereof, Section 1 of the Existing FSC
Security Agreement is amended by amending the definition of
"Secured Obligations" to read in its entirety as follows:
"Secured Obligations" shall mean, collectively, (i) the
principal of and interest on the Loans, the Notes, the
Reimbursement Obligations and all other amounts owing to the
Banks by Swank under the Credit Agreement or under the Swank
Security Agreement, (ii) any and all Other Indebtedness
which may at any time be owing by Swank to any Bank, and
(iii) Letter of Indemnity Obligations.
Section 3. Representations and Warranties. The FSC
hereby represents and warrants that the representations and
warranties set forth in Section 2 of the Existing FSC Security
Agreement are true and complete on and as of the date hereof as
if made on and as of the date hereof and as if each reference in
said Section 2 to "this Agreement" or "this Security Agreement"
included reference to the Existing FSC Security Agreement as
modified by this Amendment No. 2.
Section 4. Miscellaneous. Except as herein provided,
the Existing FSC Security Agreement shall remain unchanged and in
full force and effect. This Amendment No. 2 may be executed in
any number of counterparts, all of which taken together shall
constitute one and the same instrument and any of the parties
hereto may execute this Amendment No. 2 by signing any such
counterpart. This Amendment No. 2 shall be governed by, and
construed in accordance with, the law of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 2 to be duly executed and delivered as of the day
and year first above written.
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Agent
By
Title: Managing Director
SWANK SALES INTERNATIONAL
(V.I.), INC.
By
Title: <PAGE>
EXHIBIT F-2
[Form of Modification and Confirmation
of Connecticut Mortgage]
Recording requested by
CHICAGO TITLE INSURANCE COMPANY
This Modification and Confirmation was
prepared by and when recorded mail to:
Jane E. Kineke, Esq.
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
________________________________________________________________
Space above this line for recorder's use
MODIFICATION AND CONFIRMATION OF OPEN-END
INDENTURE OF MORTGAGE, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
KNOW ALL MEN BY THESE PRESENTS:
THIS MODIFICATION AND CONFIRMATION OF OPEN-END
INDENTURE OF MORTGAGE, ASSIGNMENT OF RENTS, SECURITY AGREEMENT
AND FIXTURE FILING (this "Modification and Confirmation") is made
as of the 20th day of July, 1995 by SWANK, INC., a Delaware
corporation having a mailing address at 6 Hazel Street,
Attleboro, Massachusetts 02703 (the "Mortgagor"), in favor of THE
CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), a national banking
association having its principal office at 1 Chase Manhattan
Plaza, New York, New York 10081, as agent for the Banks referred
to below (in such capacity, the "Mortgagee").
W I T N E S S E T H:
WHEREAS, the Mortgagor has entered into a certain
Credit Agreement dated as of December 22nd, 1992 between the
Mortgagor, certain banks (collectively, the "Banks") and The
Chase Manhattan Bank (National Association), as Agent (said
Credit Agreement, as modified and supplemented and in effect from
time to time, being herein called the "1992 Credit Agreement")
which Credit Agreement is a "commercial revolving loan
agreement", as defined in Section 49-2(c) of the Connecticut
General Statutes, Revision of 1958, as amended; and
WHEREAS, in connection with the execution and delivery
of the 1992 Credit Agreement, the Mortgagor executed and
delivered in favor of the Mortgagee an Open-End Indenture of
Mortgage, Assignment of Rents, Security Agreement and Fixture
Filing dated as of the 22nd day of December, 1992 (the "Existing
Mortgage") and recorded on December 23, 1992 at volume 2738 Page
3, in the office of Norwalk Land Records, Norwalk, Connecticut,
pursuant to which the Mortgagor conveyed to the Mortgagee, all of
Mortgagor's right, title and interest in and to the Trust Estate
(as defined in the Existing Mortgage) and granted to the
Mortgagee a security interest in the Fixtures (as so defined) for
the purpose of securing the obligations of the Mortgagor under
the Loan Instruments (as so defined) as more particularly
described in the Existing Mortgage; and
WHEREAS, concurrently with the execution and delivery
of this Modification and Confirmation, the Mortgagor, the Banks
and the Mortgagee are entering into an Amendment and Restatement
dated as of July 20, 1995 of the 1992 Credit Agreement (the 1992
Credit Agreement as so amended and restated and as further
modified and supplemented and in effect from time to time being
hereinafter called the "Credit Agreement"), and providing,
subject to the terms and conditions thereof, for the extension
and renewal of the Mortgagor's indebtedness under the 1992 Credit
Agreement and for additional loans to the Mortgagor in an
aggregate principal amount (including the indebtedness under the
1992 Credit Agreement) not exceeding $32,000,000 (the extension
and renewal of the Secured Obligations and other obligations of
the Mortgagor under the Loan Instruments (collectively, the
"Obligations")) which Credit Agreement is a "commercial revolving
loan agreement", as defined in Section 49-2(c) of the Connecticut
General Statutes, Revision of 1958, as amended; and
WHEREAS, a copy of the Credit Agreement (including
Exhibits thereto) is attached as Schedule I hereto and made a
part hereof; and
WHEREAS, the Mortgagee has been authorized by each of
the Banks party to the 1992 Credit Agreement to enter into this
Modification and Confirmation; and
WHEREAS, it is a condition to the obligation of the
Banks to extend credit to the Mortgagor pursuant to the Credit
Agreement that the Mortgagor execute and deliver this
Modification and Confirmation.
NOW, THEREFORE, to induce the Banks to amend and
restate the 1992 Credit Agreement and to extend credit under the
Credit Agreement, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
Mortgagor has agreed that the Existing Mortgage shall be hereby
amended as follows:
Section 1. Defined Terms. Each capitalized term used
herein and not otherwise defined herein shall have the meaning
assigned thereto in the Existing Mortgage. In addition, certain
terms defined in the Existing Mortgage shall be used therein as
follows:
(a) any references in the Existing Mortgage to the
term "Banks" shall be deemed to be references to the Banks
from time to time party to the Credit Agreement;
(b) any reference in the Existing Mortgage to "this
Indenture" shall be deemed to be a reference to the Existing
Mortgage as amended by this Modification and Confirmation;
(c) any reference in the Existing Mortgage to "the
Credit Agreement" shall be deemed to be a reference to the
1992 Credit Agreement as amended and restated by the Credit
Agreement;
(d) any reference in the Existing Mortgage to "the
Notes" shall be deemed to be a reference to the Notes as
defined in the Credit Agreement;
(e) any reference in the Existing Mortgage to the
"Loans" shall be deemed to include the Loans as defined in
the Credit Agreement;
(f) any reference in the Existing Mortgage to
"Section 9.15" of the Credit Agreement shall be deemed to be
a reference to Section 9.12 of the Credit Agreement; and
(g) the reference in Section 4.03(d) to "Term Loans"
shall be deemed a reference to "Loans" under the Credit
Agreement,
it being the intent of this Modification and Confirmation that
the obligations of the Mortgagor under the 1992 Credit Agreement
as amended and restated by the Credit Agreement shall be entitled
to the benefits and collateral security under the Existing
Mortgage as fully as if such obligations had been incurred under
the 1992 Credit Agreement as originally in effect.
Section 2. Confirmation and Restatement. The
Mortgagor, to induce the Mortgagee and the Banks to consummate
the transactions contemplated by the Credit Agreement and to
extend credit thereunder, and in order to continue to secure the
payment of the Obligations, hereby confirms and restates (a) the
conveyance pursuant to the Existing Mortgage to the Mortgagee of
the Trust Estate and (b) the grant pursuant to the Existing
Mortgage of a security interest in the Fixtures. Nothing
contained in this Modification and Confirmation shall be
construed as (a) a novation of the Obligations or (b) a release
or waiver of all or any portion of the conveyance to the
Mortgagee of the Trust Estate or the grant to the Mortgagee of a
security interest in the Fixtures pursuant to the Existing
Mortgage.
Section 3. Representations and Warranties. The
Mortgagor hereby represents and warrants that the representations
and warranties made by it in the Existing Mortgage are true and
complete on and as of the date hereof as if made on and as of the
date hereof and as if each reference therein to "this Mortgage"
included reference to the Existing Mortgage as amended by this
Modification and Confirmation.
Section 4. Covenants. The Mortgagor hereby covenants
and agrees to perform each and every duty and obligation of the
Mortgagor contained in the Existing Mortgage as amended by this
Modification and Confirmation.
Section 5. Acknowledgement of Consent. The Mortgagee
hereby acknowledges that each Bank has consented to this
Modification and Confirmation as required by Section 11.09 of the
1992 Credit Agreement.
Section 6. Effectiveness. This Modification and
Confirmation shall be effective as of the day and year first
written above upon its execution and delivery by the Mortgagor
and the Mortgagee. Except as herein provided, the Existing
Mortgage shall remain unchanged and in full force and effect.
IN WITNESS WHEREOF, this Modification and Confirmation
has been duly executed by the Mortgagor and the Mortgagee as of
the day and year first above written.
SWANK, INC.
By
Title:
Signed and acknowledged
in the presence of:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Agent
By
Title:
Signed and acknowledged
in the presence of:
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK)
On this the 20th day of July, 1995, before me personally
came __________________________, to me known, who, being by me
duly sworn, did depose and say that he resides at
____________________________________; that he is the
______________ of Swank, Inc., the corporation described in and
which executed the foregoing instrument; and that he signed his
name thereto by order of the board of directors of said
corporation.
Notary Public
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK)
On this the 20th day of July, 1995, before me personally
came __________________________, to me known, who, being by me
duly sworn, did depose and say that he resides at
_________________________________; that he is the ______________
of The Chase Manhattan Bank (National Association), the national
banking association described in and which executed the foregoing
instrument; and that he signed his name thereto by authority duly
given and as the act of said bank.
Notary Public
This instrument was prepared
by and should be returned to:
Jane E. Kineke, Esq.
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
EXHIBIT G-2
[Form of Modification and Confirmation
of Massachusetts Mortgage]
Recording requested by
CHICAGO TITLE INSURANCE COMPANY
This Modification and Confirmation was
prepared by and when recorded mail to:
Jane E. Kineke, Esq.
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
_________________________________________________________________
Space above this line for recorder's use
MODIFICATION AND CONFIRMATION OF INDENTURE
OF MORTGAGE, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
KNOW ALL MEN BY THESE PRESENTS:
THIS MODIFICATION AND CONFIRMATION OF INDENTURE OF MORTGAGE,
ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING (this
"Modification and Confirmation") is made as of the 20th day of
July, 1995 by SWANK, INC., a Delaware corporation having a
mailing address at 6 Hazel Street, Attleboro, Massachusetts 02703
(the "Mortgagor"), in favor of THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), a national banking association having its principal
office at 1 Chase Manhattan Plaza, New York, New York 10081, as
agent for the Banks referred to below (in such capacity, the
"Mortgagee").
W I T N E S S E T H:
WHEREAS, the Mortgagor has entered into a certain
Credit Agreement dated as of December 22nd, 1992 between the
Mortgagor, certain banks (collectively, the "Banks") and The
Chase Manhattan Bank (National Association), as Agent (said
Credit Agreement, as modified and supplemented and in effect from
time to time, being herein called the "1992 Credit Agreement");
and
WHEREAS, in connection with the execution and delivery
of the 1992 Credit Agreement, the Mortgagor executed and
delivered in favor of the Mortgagee an Indenture of Mortgage,
Assignment of Rents, Security Agreement and Fixture Filing dated
as of the 22nd day of December, 1992 (the "Existing Mortgage")
and recorded on December 23, 1992 at Book 5341 Page 60, in the
office of the Bristol County Northern Registry of Deeds,
Massachusetts, pursuant to which the Mortgagor conveyed to the
Mortgagee, all of Mortgagor's right, title and interest in and to
the Trust Estate (as defined in the Existing Mortgage) and
granted to the Mortgagee a security interest in the Fixtures (as
so defined) for the purpose of securing the obligations of the
Mortgagor under the Loan Instruments (as so defined) as more
particularly described in the Existing Mortgage; and
WHEREAS, concurrently with the execution and delivery
of this Modification and Confirmation, the Mortgagor, the Banks
and the Mortgagee are entering into an Amendment and Restatement
dated as of July 20, 1995 of the 1992 Credit Agreement (the 1992
Credit Agreement as so amended and restated and as further
modified and supplemented and in effect from time to time being
hereinafter called the "Credit Agreement"), providing, subject to
the terms and conditions thereof, for the extension and renewal
of the Mortgagor's indebtedness under the 1992 Credit Agreement
and for additional loans to the Mortgagor in an aggregate
principal amount (including the indebtedness under the 1992
Credit Agreement) not exceeding $32,000,000 (the extension and
renewal of the Secured Obligations and other obligations of the
Mortgagor under the Loan Instruments (collectively, the
"Obligations")); and
WHEREAS, the Mortgagee has been authorized by each of
the Banks party to the 1992 Credit Agreement to enter into this
Modification and Confirmation; and
WHEREAS, it is a condition to the obligation of the
Banks to extend credit to the Mortgagor pursuant to the Credit
Agreement that the Mortgagor execute and deliver this
Modification and Confirmation.
NOW, THEREFORE, to induce the Banks to amend and
restate the 1992 Credit Agreement and to extend credit under the
Credit Agreement, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
Mortgagor has agreed that the Existing Mortgage shall be hereby
amended as follows:
Section 1. Defined Terms. Each capitalized term used
herein and not otherwise defined herein shall have the meaning
assigned thereto in the Existing Mortgage. In addition, certain
terms defined in the Existing Mortgage shall be used therein as
follows:
(a) any references in the Existing Mortgage to the
term "Banks" shall be deemed to be references to the Banks
from time to time party to the Credit Agreement;
(b) any reference in the Existing Mortgage to "this
Indenture" shall be deemed to be a reference to the Existing
Mortgage as amended by this Modification and Confirmation;
(c) any reference in the Existing Mortgage to "the
Credit Agreement" shall be deemed to be a reference to the
1992 Credit Agreement as amended and restated by the Credit
Agreement;
(d) any reference in the Existing Mortgage to "the
Notes" shall be deemed to be a reference to the Notes as
defined in the Credit Agreement;
(e) any reference in the Existing Mortgage to the
"Loans" shall be deemed to include the Loans as defined in
the Credit Agreement;
(f) any reference in the Existing Mortgage to
"Section 9.15" of the Credit Agreement shall be deemed to be
a reference to Section 9.12 of the Credit Agreement; and
(g) the reference in Section 4.03(d) to "Term Loans"
shall be deemed a reference to "Loans" under the Credit
Agreement,
it being the intent of this Modification and Confirmation that
the obligations of the Mortgagor under the 1992 Credit Agreement
as amended and restated by the Credit Agreement shall be entitled
to the benefits and collateral security under the Existing
Mortgage as fully as if such obligations had been incurred under
the 1992 Credit Agreement as originally in effect.
Section 2. Confirmation and Restatement. The
Mortgagor, to induce the Mortgagee and the Banks to consummate
the transactions contemplated by the Credit Agreement and to
extend credit thereunder, and in order to continue to secure the
payment of the Obligations, hereby confirms and restates (a) the
conveyance pursuant to the Existing Mortgage to the Mortgagee of
the Trust Estate and (b) the grant pursuant to the Existing
Mortgage of a security interest in the Fixtures. Nothing
contained in this Modification and Confirmation shall be
construed as (a) a novation of the Obligations or (b) a release
or waiver of all or any portion of the conveyance to the
Mortgagee of the Trust Estate or the grant to the Mortgagee of a
security interest in the Fixtures pursuant to the Existing
Mortgage.
Section 3. Representations and Warranties. The
Mortgagor hereby represents and warrants that the representations
and warranties made by it in the Existing Mortgage are true and
complete on and as of the date hereof as if made on and as of the
date hereof and as if each reference therein to "this Mortgage"
included reference to the Existing Mortgage as amended by this
Modification and Confirmation.
Section 4. Covenants. The Mortgagor hereby covenants
and agrees to perform each and every duty and obligation of the
Mortgagor contained in the Existing Mortgage as amended by this
Modification and Confirmation.
Section 5. Acknowledgement of Consent. The Mortgagee
hereby acknowledges that each Bank has consented to this
Modification and Confirmation as required by Section 11.09 of the
1992 Credit Agreement.
Section 6. Effectiveness. This Modification and
Confirmation shall be effective as of the day and year first
written above upon its execution and delivery by the Mortgagor
and the Mortgagee. Except as herein provided, the Existing
Mortgage shall remain unchanged and in full force and effect.
<PAGE>
IN WITNESS WHEREOF, this Modification and Confirmation
has been duly executed by the Mortgagor and the Mortgagee as of
the day and year first above written.
SWANK, INC.
By:___________________
Title:
Signed and acknowledged
in the presence of:
____________________________
_____________________________
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Agent
By:___________________
Title:
Signed and acknowledged
in the presence of:
____________________________
_____________________________
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
July 20, 1995
Then personally appeared the above-named
_________________, _________________ of Swank, Inc. and
acknowledged the foregoing instrument to be the free act and deed
of said corporation, before me.
_____________________________
Notary Public
(Affix seal or stamp My commission expires:
of Notary Public here)
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
July 20, 1995
Then personally appeared the above-named
_________________, _________________ of The Chase Manhattan Bank
(National Association) and acknowledged the foregoing instrument
to be the free act and deed of said corporation, before me.
_____________________________
Notary Public
(Affix seal or stamp My commission expires:
of Notary Public here)
This instrument was prepared
by and should be returned to:
Jane E. Kineke, Esq.
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
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