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EXHIBIT 10.5
FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (this
"Amendment") is made and entered into this 9th day of July, 1998, by and between
TROPICAL SPORSTWEAR INT'L CORPORATION, a Florida corporation ("Tropical"),
TROPICAL SPORTSWEAR COMPANY, INC., a Delaware corporation ("TSCI"), SAVANE
INTERNATIONAL CORP., a Texas corporation (formerly known as Farah Incorporated)
("Savane"), and APPAREL NETWORK CORPORATION, a Florida corporation ("Apparel")
(Tropical, TSCI, Savane and Apparel collectively referred to hereinafter as
"Borrowers" and individually as a "Borrower") each with its chief executive
office and principal place of business at 0000 Xxxx Xxxxxx Xxxxxx, Xxxxx,
Xxxxxxx 00000-0000; the various financial institutions listed on the signature
pages hereof and their respective successors and permitted assigns which become
"Lenders" as provided in the Loan Agreement (as defined below); and FLEET
CAPITAL CORPORATION, a Rhode Island corporation, in its capacity as collateral
and administrative agent for the Lenders (together with its successors in such
capacity, "Agent") with an office at 000 Xxxxxxxx Xxxxxxx, X.X., Xxxxx 000,
Xxxxxxx, Xxxxxxx 00000.
RECITALS:
Borrowers, Agent and Fleet Capital Corporation, NationsBanc Commercial
Corporation and First Union National Bank, as Lenders (the "Existing Lenders"),
are parties to a certain Loan and Security Agreement dated June 10, 1998 (the
"Loan Agreement"), pursuant to which the Existing Lenders have made certain
revolving credit loans and letter of credit accommodations to Borrowers.
Borrowers have requested that Agent and Existing Lenders amend the Loan
Agreement to increase the maximum amount of revolving credit loans available to
Borrowers to $110,000,000 and to add Deutsche Financial Services Corporation
("Deutsche") as a "Lender" under the Loan Agreement.
Agent and Lenders are willing to amend the Loan Agreement on the terms
and conditions as hereinafter set forth.
NOW, THEREFORE, for TEN DOLLARS ($10.00) in hand paid and other good
and valuable consideration, the receipt and sufficiency of which are hereby
severally acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. DEFINITIONS. All capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the meaning ascribed to such terms in the
Loan Agreement.
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2. AMENDMENT TO LOAN AGREEMENT. The Loan Agreement is hereby amended as
follows:
a. By deleting the definition of "Lenders," "Revolver
Commitments" and "Senior Subordinated Notes" in Section 1 of the Loan Agreement
and by substituting the following new definitions in lieu thereof:
Lenders - each of Fleet, NationsBanc Commercial
Corporation, First Union National Bank and Deutsche Financial
Services Corporation, together with their respective
successors and permitted assigns pursuant to Section 14.1
hereof, including Fleet as the procurer of Letters of Credit
and as the provider of Swingline Loans.
Revolver Commitments means the aggregate principal
amount of the Revolver Commitments of all Lenders, the maximum
amount of which shall be $110,000,000.
Senior Subordinated Notes - the Senior Subordinated
Unsecured Notes, issued by Tropical in the aggregate amount of
$100,000,000, and payable in 2008.
b. By deleting subsection (ii) in the definition of
"Availability Reserve" in Section 1 of the Loan Agreement and by substituting
the following new subsection (ii) in lieu thereof:
(ii) all amounts of past due rent or other charges owing at
such time by any Obligor to any landlord of any premises where
any of the collateral is located, and, at Agent's election, an
amount equal to 3 months rent with respect to each premises
leased by any Borrower (other than retail locations of any
Borrower) for which Agent has not received a landlord
agreement in form and substance satisfactory to Agent;
b. By deleting the reference to "$45,000,000" in subsection
(i) in the definition of "Inventory Formula Amount" in Section 1 of the Loan
Agreement and by substituting a reference to "$55,000,000" in lieu thereof.
c. By deleting the reference to "$85,000,000" in the first
paragraph of Section 2 of the Loan Agreement and by substituting a reference to
"$110,000,000" in lieu thereof.
d. By deleting Section 3.2.3 of the Loan Agreement in its
entirety and by substituting the following new Section 3.2.3 in lieu thereof:
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3.2.3. Audit and Appraisal Fees. Borrowers shall be
jointly and severally obligated to reimburse Agent for all
reasonable costs and expenses incurred by Agent in connection
with all audits and appraisals of any Obligor's books and
records and such other matters pertaining to any Obligor or
any Collateral as Agent shall deem appropriate.
e. By deleting the reference to "October 2, 1999" in the sixth
period listed in Section 10.3.1 of the Loan Agreement and by substituting a
reference to "October 3, 1999" in lieu thereof.
f. By deleting Section 10.3.3 of the Loan Agreement in its
entirety and by substituting the following new Section 10.3.3 in lieu thereof:
10.3.3. Consolidated Senior Debt/Consolidated EBITDA.
Maintain, as of the end of each Fiscal Quarter, a ratio of
Consolidated Senior Debt/EBITDA of not more than the ratio
shown below for the applicable period corresponding thereto:
Period Ratio
------ -----
July 1, 1998 through October 3, 1998 2.75 to 1.00
July 1, 1998 through January 2, 1998 2.75 to 1.00
July 1, 1998 through April 3, 1999 2.75 to 1.00
July 1, 1998 through July 3, 1999 2.50 to 1.00
October 3, 1998 through 2.50 to 1.00
October 2, 1999
Each Fiscal Quarter after October 2.50 to 1.00
2, 1999 based upon the immediately
preceding 4 Fiscal Quarters
b. By deleting the amount set forth opposite each Lender's
name under the heading "Revolver Commitment" on the signature pages to the Loan
Agreement and by substituting in lieu thereof the amount set forth opposite each
Lender's name under the heading "Revolver Commitment" on the signature pages
hereto.
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3. RATIFICATION AND REAFFIRMATION. Each Borrower hereby ratifies and
reaffirms each of the Loan Documents and all of such Borrower's covenants,
duties, indebtedness and liabilities thereunder.
4. ACKNOWLEDGMENTS AND STIPULATIONS. Each Borrower acknowledges and
stipulates that the Loan Agreement and the other Loan Documents executed by such
Borrower are legal, valid and binding obligations of such Borrower that are
enforceable against such Borrower in accordance with the terms thereof; all of
the Obligations are owing and payable without defense, offset or counterclaim
(and to the extent there exists any such defense, offset or counterclaim on the
date hereof, the same is hereby waived by each Borrower); the security interests
and liens granted by each Borrower in favor of Agent are duly perfected, first
priority security interests and liens; and the unpaid principal amount of the
Revolver Loans on and as of the close of business on July 8, 1998, totaled
$63,446,930.59.
5. REPRESENTATIONS AND WARRANTIES. Each Borrower represents and
warrants to Agent and Lenders, to induce Agent and Lenders to enter into this
Amendment, that no Default or Event of Default exists on the date hereof; the
execution, delivery and performance of this Amendment have been duly authorized
by all requisite corporate action on the part of such Borrower and this
Amendment has been duly executed and delivered by such Borrowers; and all of the
representations and warranties made by Borrowers in the Loan Agreement are true
and correct on and as of the date hereof, except to the extent any
representation or warranty specifically relates to an earlier date.
6. CONDITIONS PRECEDENT. The effectiveness of the amendments contained
in Section 2 hereof are subject to the satisfaction of each of the following
conditions precedent, in form and substance satisfactory to Agent, unless
satisfaction thereof is specifically waived in writing by Agent:
a. Borrowers execute and deliver to each Existing Lender an
Amended and Restated Revolver Note in the amount of each Existing Lender's
Revolver Commitment and Borrowers execute and deliver to Deutsche a Revolver
Note in the original principal amount equal to Deutsche's Revolver Commitment;
and
b. Agent receives the commitment fee for the increase in the
Commitments as set forth in that certain "Fee Letter" dated on or about the date
hereof from Agent to Borrowers.
7. DEUTSCHE FINANCIAL SERVICES CORPORATION. As of the date hereof,
Deutsche shall be and become a Lender under the Loan Agreement and the other
Loan Documents. Deutsche hereby (i) confirms that it has received a copy of the
Loan Agreement and the other Loan Documents, financial statements and other
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Amendment and to become a Lender under the Loan
Agreement; (ii) agrees that it will, independently and without reliance upon
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the
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time, continue to make its own credit decisions in taking or not taking action
under the Loan Agreement; (iii) appoints and authorizes Agent to take such
actions as agent on its behalf and to exercise such powers under the Loan
Agreement and other Loan Documents as are delegated to the Agent by the terms
thereof, together with such powers as are incidental thereto; and (iv) agrees
that it will perform in accordance with their terms all of the duties and
obligations which by the terms of the Loan Agreement and other Loan Documents
are required to be performed by it as a Lender.
Neither Agent or any Lender makes any representation or warranty to
Deutsche and assumes no responsibility with respect to the financial condition
of the Borrowers or the performance or observance by the Borrowers of any of
their respective obligations under the Loan Agreement or other Loan Documents.
Deutsche's LIBOR Lending office and address to which notices under the
Loan Agreement should be forwarded is as follows:
Deutsche Financial Services Corporation
Xxxxx 000
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxx
Telecopy No.: (000) 000-0000
8. EXPENSES OF AGENT. Borrowers jointly and severally agree to pay, ON
DEMAND, all costs and expenses incurred by Agent in connection with the
preparation, negotiation and execution of this Amendment and any other Loan
Documents executed pursuant hereto and any and all amendments, modifications,
and supplements thereto, including, without limitation, the reasonable costs and
fees of Agent's legal counsel and any taxes or expenses associated with or
incurred in connection with any instrument or agreement referred to herein or
contemplated hereby.
9. EFFECTIVENESS; GOVERNING LAW. This Amendment shall be effective upon
acceptance by Agent and Lenders in Atlanta, Georgia (notice of which acceptance
is hereby waived), whereupon the same shall be governed by and construed in
accordance with the internal laws of the State of Georgia.
10. SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
11. NO NOVATION, ETC.. Except as otherwise expressly provided in this
Amendment, nothing herein shall be deemed to amend or modify any provision of
the Loan Agreement or any of the other Loan Documents, each of which shall
remain in full force and effect. This Amendment is not intended to be, nor shall
it be construed to create, a novation or accord and satisfaction, and the Loan
Agreement as herein modified shall continue in full force and effect.
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12. COUNTERPARTS; TELECOPIED SIGNATURES. This Amendment may be executed
in any number of counterparts and by different parties to this Agreement on
separate counterparts, each of which, when so executed, shall be deemed an
original, but all such counterparts shall constitute one and the same agreement.
Any signature delivered by a party by facsimile transmission shall be deemed to
be an original signature hereto.
13. FURTHER ASSURANCES. Each Borrower agrees to take such further
actions as Agent and Lender shall reasonably request from time to time in
connection herewith to evidence or give effect to the amendments set forth
herein or any of the transactions contemplated hereby.
14. SECTION TITLES. Section titles and references used in this
Amendment shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreements among the parties hereto.
15. RELEASE OF CLAIMS. To induce Agent and Lenders to enter into this
Amendment, each Borrower hereby release, acquits and forever discharges Agent
and Lenders, and all officers, directors, agents, employees, successors and
assigns of Agent and Lenders, from any and all liabilities, claims, demands,
actions or causes or actions of any kind or nature (if there be any), whether
absolute or contingent, disputed or undisputed, at law or in equity, or known or
unknown, that such Borrower now has or ever had against Agent and Lenders
arising under or in connection with any of the Loan Documents or otherwise.
16. WAIVER OF JURY TRIAL. To the fullest extent permitted by applicable
law, the parties hereto each hereby waives the right to trial by jury in any
action, suit, counterclaim or proceeding arising out of or related to this
Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed under seal and delivered by their respective duly authorized
officers on the date first written above.
BORROWERS:
ATTEST: TROPICAL SPORTSWEAR INT'L
CORPORATION
/s/ Xxxxx Xxxxxxxx By: /s/ N. Xxxxx XxXxxxxxx
-------------------------------- -----------------------------------
Assistant Secretary
[CORPORATE SEAL] Title: Executive Vice President--
Finance and Operations
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[Signatures continued on the following page]
ATTEST: TROPICAL SPORTSWEAR COMPANY,
INC.
/s/ Xxxxx Xxxxxxxx By: /s/ N. Xxxxx XxXxxxxxx
-------------------------------- -----------------------------------
Assistant Secretary
[CORPORATE SEAL] Title: Executive Vice President--
Finance and Operations
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ATTEST: SAVANE INTERNATIONAL CORP.
(f/k/a Farah Incorporated)
/s/ Xxxxx Xxxxxxxx By: /s/ N. Xxxxx XxXxxxxxx
-------------------------------- -----------------------------------
Secretary
[CORPORATE SEAL] Title: Executive Vice President--
Finance and Operations
-----------------------------
ATTEST: APPAREL NETWORK CORPORATION
/s/ Xxxxx Xxxxxxxx By: /s/ N. Xxxxx XxXxxxxxx
-------------------------------- -----------------------------------
Assistant Secretary
[CORPORATE SEAL] Title: Executive Vice President--
Finance and Operations
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LENDERS:
FLEET CAPITAL CORPORATION
Revolver Commitment: $42,000,000 By: /s/ Xxxxxxxxx X. Xxxxxx
-----------------------------------
Title: Vice President
-----------------------------
NATIONSBANC COMMERCIAL
CORPORATION
Revolver Commitment: $28,000,000 By: /s/ Xxxxxx Xxxxxxx
-----------------------------------
Title: Vice President
-----------------------------
[Signatures continued on the following page]
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FIRST UNION NATIONAL BANK
Revolver Commitment: $25,000,000 By: /s/ Xxxx X. Xxxxxxx
-----------------------------------
Title: Vice President
-----------------------------
DEUTSCHE FINANCIAL SERVICES
CORPORATION
Revolver Commitment: $15,000,000 By: /s/ Xxxxxx Xxxxxxx
-----------------------------------
Title: Vice President
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AGENT:
FLEET CAPITAL CORPORATION,
as Agent
By: /s/ Xxxxxxxxx X. Xxxxxx
-----------------------------------
Title: Vice President
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