AMENDED AND RESTATED
CREDIT AGREEMENT
dated as of May 31, 1997
between
S & K FAMOUS BRANDS, INC.
and
SIGNET BANK
TABLE OF CONTENTS*
ARTICLE I
SECTION 1.1 Definitions.....................................................................1
ARTICLE II
SECTION 2.1 Commitment to Lend Fed Funds Loans..............................................5
SECTION 2.2 Letters of Credit...............................................................6
SECTION 2.3 Money Market Loans..............................................................6
SECTION 2.4 Method of Fed Funds Borrowing...................................................8
SECTION 2.5 Maturity of Loans...............................................................8
SECTION 2.6 Revolving Note..................................................................8
SECTION 2.7 Interest Rates; Payments........................................................8
SECTION 2.8 Overdue Interest Rates..........................................................9
SECTION 2.9 Prepayment......................................................................9
SECTION 2.10 Funding Losses..................................................................9
SECTION 2.11 Commitment Fees.................................................................9
SECTION 2.12 Optional Termination or Reduction of Commitment................................10
SECTION 2.13 Extension of Availability Period...............................................10
ARTICLE III
SECTION 3.1 Amount.........................................................................10
SECTION 3.2 Proceeds.......................................................................10
SECTION 3.3 Term Note......................................................................11
SECTION 3.4 Interest.......................................................................11
SECTION 3.5 Voluntary Prepayments..........................................................11
ARTICLE IV
SECTION 4.1 All Revolving Loans............................................................11
SECTION 4.2 First Borrowing................................................................12
SECTION 4.3 Term Loan......................................................................12
ARTICLE V
SECTION 5.1 Authorized Representatives.....................................................13
SECTION 5.2 Funds..........................................................................13
SECTION 5.3 Method of Payment..............................................................13
ARTICLE VI
SECTION 6.1 Corporate Existence And Standing...............................................13
SECTION 6.2 Authorization and Validity.....................................................13
SECTION 6.3 Compliance with Laws and Contracts.............................................13
SECTION 6.4 No Governmental or Other Approvals.............................................14
SECTION 6.5 Financial Statements...........................................................14
SECTION 6.6 Taxes..........................................................................14
SECTION 6.7 Litigation.....................................................................14
SECTION 6.8 ERISA..........................................................................14
SECTION 6.9 Defaults.......................................................................15
SECTION 6.10 Accuracy of Information........................................................15
SECTION 6.11 Regulation U...................................................................15
ARTICLE VII
SECTION 7.1 Financial Reporting............................................................15
SECTION 7.2 Use of Proceeds................................................................17
SECTION 7.3 Consolidated Tangible Net Worth................................................17
SECTION 7.4 Current Ratio..................................................................17
SECTION 7.5 Ratio of Consolidated Unsubordinated Liabilities to Consolidated
Effective Tangible Net Worth ...............................................17
SECTION 7.6 Fixed Charge Coverage Ratio....................................................17
SECTION 7.7 Notice of Default..............................................................17
SECTION 7.8 Conduct of Business and Maintenance of Existence...............................17
SECTION 7.9 Taxes..........................................................................18
SECTION 7.10 Insurance......................................................................18
SECTION 7.11 Inspection.....................................................................18
SECTION 7.12 Mergers, Acquisitions and Sale of Assets.......................................18
SECTION 7.13 Sale of Accounts...............................................................19
SECTION 7.14 Investments....................................................................19
SECTION 7.15 Guaranties.....................................................................20
SECTION 7.16 Liens..........................................................................20
SECTION 7.17 Prepayment of Subordinated Debt................................................21
SECTION 7.18 Purchase of Stock, Money Market Instruments....................................21
ARTICLE VIII
SECTION 8.1 Events of Default..............................................................21
SECTION 8.2 Acceleration and Recourse......................................................23
ARTICLE IX
SECTION 9.1 Illegality.....................................................................23
SECTION 9.2 Increased Cost.................................................................24
ARTICLE X
SECTION 10.1 Notices........................................................................25
SECTION 10.2 Term of Agreement..............................................................25
SECTION 10.3 No Waivers.....................................................................25
SECTION 10.4 Governing Law..................................................................25
SECTION 10.5 Computation of Interest........................................................25
SECTION 10.6 Expenses, Taxes. etc...........................................................25
SECTION 10.7 Payments in Immediately Available Funds........................................26
SECTION 10.8 Accounting Terms...............................................................26
SECTION 10.9 Representations of the Bank....................................................26
SECTION 10.10 Repayments in Bankruptcy.......................................................26
SECTION 10.11 Changes, Waivers, etc..........................................................26
SECTION 10.12 Singular and Plural............................................................27
SECTION 10.13 Use of Defined Terms...........................................................27
SECTION 10.14 Binding Effect of Agreement....................................................27
SECTION 10.15 Headings.......................................................................27
SECTION 10.16 Counterparts...................................................................27
SECTION 10.17 Successors and Assigns.........................................................27
SECTION 10.18 Consent to Jurisdiction........................................................28
SECTION 10.19 Enforcement of Judgments.......................................................29
SECTION 10.20 Service of Process.............................................................29
SECTION 10.21 Completeness and Modification .................................................29
SECTION 10.22 Waiver of Claims...............................................................29
Exhibit A Revolving Note
Exhibit B Form of Term Note
Exhibit C Opinion of Counsel
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* This Table of Contents is not a part of the Agreement.
THIS AMENDED AND RESTATED CREDIT AGREEMENT is dated as of May 31, 1997
and is by and between S&K FAMOUS BRANDS, INC., a Virginia corporation (the
"Company"), and SIGNET BANK, formerly Signet Bank/Virginia, a Virginia
corporation (the "Bank"), and provides as follows:
The Company has requested that the Bank make available to the Company
the revolving loans, in the aggregate principal amount not exceeding $14,000,000
at any one time outstanding, and to then make the term loan as described in this
Agreement. The Bank is willing to make such loans to the Company on the terms
and conditions set forth herein. Accordingly, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
As used in this Agreement,
"Agreement" means this credit agreement, as it may be amended,
supplemented or modified from time to time.
"Assignee" shall have the meaning ascribed to such term in Section
10.17 of this Agreement.
"Availability Period" means the period commencing on the date this
Agreement becomes effective and ending on the Termination Date.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in Richmond, Virginia are authorized by law to close.
"Capitalized Lease Obligations" means the amount of the obligations of
the Company and its Subsidiaries under Financing Leases which would be shown as
a liability on a balance sheet of the Company or a Subsidiary, prepared in
accordance with generally accepted accounting principles.
"Commitment" means $14,000,000, as such amount may be reduced from time
to time pursuant to Section 2.12.
"Commitment Fee" has the meaning set forth in Section 2.11.
"Company" means S&K Famous Brands, Inc., a Virginia corporation.
"Consolidated" refers to any determination to be made for the Company
and its Subsidiaries in accordance with generally accepted accounting
principals, including the principles, including the principles of consolidation.
"Default" means an event described in Article VIII.
"Effective Tangible Net Worth" means Tangible Net Worth plus the
principal amount of Subordinated Debt outstanding from time to time.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Fed Funds Loans" means a Loan made in accordance with Section 2.1
hereof.
"Fed Funds Rate" means, for each day, that rate per annum, determined
solely by the Bank, as the offered rate published by Telerate, page 12 (or by
Reuters Limited, PREBON page, if Telerate is not available) (rounded upwards, if
necessary, to the next higher 1/100 of 1%) for federal funds for a term of 30
days.
"Financing Lease" means any lease of property which would be
capitalized on a balance sheet of the Company or a Subsidiary, prepared in
accordance with generally accepted accounting principles.
"Funded Debt" means any Indebtedness of the Company or any Subsidiary
which has a stated maturity more than one year after the date of determination
or has a maturity which may be extended by the Company or any Subsidiary to a
date more than one year after the date of determination.
"Guaranty" means any agreement by which the Company or any Subsidiary
assumes, guarantees, indorses, contingently agrees to purchase or provide funds
for the payment of, or otherwise becomes liable upon, the obligation of any
other Person for borrowed money, or agrees to maintain the net worth or working
capital or other financial condition of any other Person or otherwise assures
any creditor of such other Person against loss.
"Indebtedness" means the Company's and each Subsidiary's (a)
obligations for borrowed money, (b) obligations representing the deferred
purchase price of the property other than accounts payable arising in connection
with the purchase of inventory on terms customary in the trade, (c) obligations
whether or not assumed and with or without recourse, secured by liens or payable
out of the proceeds of production from property now or hereafter owned or
acquired by the Company or any Subsidiary and (d) Capitalized Lease Obligations.
"Interest Period" means (1) with respect to each Money Market Loan, the
period commencing on the date of borrowing specified in the applicable Notice of
Money Market Borrowing pursuant to Section 2.3.(d) and ending one, two, three or
six months thereafter or such other period as may be agreed between the Company
and the Bank, as specified in such Notice, and (2) with respect to each Fed
Funds Loan, the period commencing on the date of borrowing specified in the
applicable Notice of Fed Funds Borrowing pursuant to Section 2.4 and ending on
the Termination Date; provided that any Interest Period which begins before the
Termination Date and would otherwise end after the Termination Date shall end on
the Termination Date.
"Investment" means any loan, advance, extension of credit (excluding
accounts receivable arising in the ordinary course of business), or contribution
of capital by the Company or any Subsidiary to any other person or any
investment in, or purchase or other acquisition of, the stock, notes, debentures
or other securities of any person made by the Company or any Subsidiary.
"Lien" means any security interest, mortgage, pledge, line, claim,
charge, encumbrance, title retention or conditional sale agreement, lessor's
interest under a Financing Lease or analogous instrument, in, of or on any of
the Company's or any Subsidiary's property.
"Loan Documents" shall have the meaning ascribed to such term in
Section 6.2 of this Agreement.
"Loans" means any Loan made to the Company under this Agreement and
"Loans" means all of such Loans.
"Money Market Loan" means a Loan made in accordance with Section 2.2.
"Notes" means the Revolving Note defined in Section 2.6 or the Term
Note defined in Section 3.3, or both.
"Notice of Borrowing" means a Notice of Fed Funds Borrowing (as defined
in Section 2.4) or a Notice of Money Market Borrowing (as defined in Section
2.3).
"Obligations" means all unpaid principal and interest under the Notes
and all other obligations of the Company or any Subsidiary to the Bank arising
under this Agreement or the Notes.
"Participant" shall have the meaning ascribed to such term in Section
10.17 of this Agreement.
"Person" means any corporation, natural person, firm, joint venture,
partnership, trust, unincorporated organization, government or any department or
agency of any government.
"Plan" means a "defined benefit pension plan" as defined in Section 35
of ERISA, other than a "multiemployer plan" as defined in Section 37(A) of
ERISA, as amended by the Multiemployer Pension Amendments Act of 1980, for which
the Company or any Subsidiary could be held liable for Unfunded Liabilities by
the Pension Benefit Guaranty Corporation.
"Potential Default" means any event described in Article VIII which but
for the lapse of time or the giving of notice, or both, would constitute a
Default.
"Prime Rate" means the rate of interest publicly announced by Signet
Bank in Richmond, Virginia, from time to time as its Prime Rate.
"Refunding Loan" means a loan which, after application of the proceeds
thereof, results in no net increase in the outstanding principal amount of the
Loans.
"Revolving Loans" means the Fed Funds Loans or the Money Market Loans
or both.
"Revolving Note" shall have the meaning ascribed to such term in
Section 2.6 of this Agreement.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Subordinated Debt" means any Indebtedness of the Company which is
subordinated to the payment of the Obligations on terms approved in writing by
the Bank.
"Subsidiary" means a corporation or other entity of which 50% or more
of the voting stock or other ownership interest is owned directly or indirectly
by the Company, by one or more of its Subsidiaries, or by the Company and one or
more of its Subsidiaries, and the financial statements of which are Consolidated
with those of the Company in preparing the Company's annual report to
stockholders, it being understood that as of the date hereof the Company has no
Subsidiaries and until the Company has a Subsidiary all references herein to
Consolidated statements and figures shall refer to the Company alone.
"Tangible Net Worth" means the sum of (i) capital stock plus
paid-in-capital (less the cost of treasury shares) and (ii) surplus and retained
earnings, minus (iii) any share capital discount and expenses, any write-up of
assets (other than permitted by the application of generally accepted accounting
principles), any aggregate excess of the carrying amount over market value of
investments, any goodwill, any patents and any other intangible assets.
"Term Note" shall have the meaning ascribed to such term in Section 3.3
of this Agreement.
"Termination Date" means May 31, 2000, unless such date has been
extended pursuant to Section 2.13.
"Unfunded Liabilities" means with regard to any Plan, the excess of the
current value of the Plan's benefits guaranteed by the Pension Benefit Guaranty
Corporation under ERISA over the current value of the Plan's assets allocable to
such benefits.
"Unsubordinated Liabilities" means all amounts which would be treated
as liabilities on a balance sheet prepared in accordance with generally accepted
accounting principles, excluding, however, Subordinated Debt.
"Unsubordinated Funded Debt" means all Funded Debt other than
Subordinated Debt.
"Working Capital" means current assets minus current liabilities
determined in accordance with generally accepted accounting principles.
The foregoing definitions shall be equally applicable to both the
singular and plural of the defined terms.
ARTICLE II
THE LOANS
SECTION 2.1 Commitment to Lend Fed Funds Loans. Subject to the terms
and conditions of this Agreement, (including, without limitation, the limitation
set forth in Section 4.1(b) as to the aggregate principal amount of Revolving
Loans at any time outstanding hereunder), the Bank agrees to make Fed Funds
Loans to the Company from time to time during the Availability Period in an
aggregate principal amount at any one time outstanding not exceeding the
Commitment. Fed Funds Loans made on any one occasion shall be in the principal
amount of $25,000. Within these limits, the Company may borrow under this
Section 2.1, prepay Revolving Loans to the extent permitted under Section 2.9
and reborrow during the Availability Period under this Section.
SECTION 2.2 Letters of Credit. At the Borrower's request, the Bank may,
in its discretion, issue letters of credit on the Borrower's behalf so long as
all conditions pursuant to Article IV have been satisfied. The undrawn amounts
of such letters of credit shall be treated as Loans hereunder for so long as the
letters of credit remain outstanding, except that interest shall not accrue on
such amounts until advances are made thereon and shall thereafter accrue only on
the unreimbursed amount of such advances. Amounts advanced pursuant to such
letters of credit shall in all respects be treated as Loans hereunder. Each such
letter of credit shall be issued subject to additional terms and conditions
contained in the Bank's standard letter of credit application and reimbursement
agreement (which includes a letter of credit fee in addition to amounts
otherwise payable hereunder), and such letters of credit shall be in form and
substance satisfactory to the Bank.
SECTION 2.3 Money Market Loans.
(a) Parties' Option. In addition to Fed Funds Loans pursuant to Section
2.1, but subject to the terms and conditions of this Agreement (including,
without limitation, the limitation set forth in Section 4.1(b) as to the
aggregate principal amount of Revolving Loans at any time outstanding
hereunder), from time to time the Company may request the Bank to make offers to
make to the Company Revolving Loans which are designated as Money Market Loans.
The Bank may, but shall have no obligation to, make such offers, and the Company
may, but shall have no obligation to, accept any such offers.
(b) Rate Quote Requests. When the Company wishes to request an offer
from the Bank to make Money Market Loans, it shall notify the Bank by telephone
(each such telephonic request a "Rate Quote Request") not later than 10:30 a.m.
(Eastern time) on the day of the proposed borrowing (or such other time and date
as the Company and the Bank shall agree), specifying:
(i) the proposed date of borrowing, which shall be a
Business Day;
(ii) the amount of such borrowing, which shall be at least
$1,000,000; and
(iii) the duration of the Interest Period or Interest Periods
applicable thereto, subject to the definition of
Interest Period.
The Company may request an offer to make Money Market Loans for more than one
Interest Period in a single Rate Quote Request. Each Rate Quote Request shall
constitute an invitation by the Company to the Bank to submit a rate quote
offering to make a Money Market Loan or Money Market Loans to which the
applicable Rat Quote Request relates.
(c) Submission of Rate Quotes. The Bank may submit a quotation
responding to a Rate Quote Request (each, a "Rate Quote") containing an offer or
offer to make Money Market Loans. Each Rate Quote shall be submitted to the
Company by telephone not later than 11:00 a.m. (Eastern time) on the day of the
proposed borrowing (or such other time and date as the Company and the Bank
shall agree), specifying the interest rate or rates applicable to the Money
Market Loan (or Money Market Loans) specified in the Rate Quote Request.
(d) Acceptance of Rate Quotes and Notice of Borrowing. Not later than
11:30 a.m. (Eastern time) on the day of the proposed borrowing (or such other
day and time as the Company and the Bank may agree), the Company shall notify
the Bank of its acceptance or non-acceptance of the offers for the Money Market
Loans submitted to it in the Rate Quotes delivered pursuant to subparagraph (c)
above. In the case of acceptance, such notice (a "Notice of Money Market
Borrowing") shall specify the offers of the Bank to make Money Market Loans for
each Interest Period that are accepted in whole or in part; provided that:
(i) the principal amount of each Money Market Loan may not
exceed the applicable amount set forth in the related Rate Quote Request; and
(ii) the principal amount of each Money Market Loan must be at
least $1,000,000.
(e) Funding of Money Market Loans.
(i) Not later than 12:30 P.M. (Richmond time) on the date of
each Money Market Loan, the Bank will (except as provided in subparagraph (ii)
below make available the amount of such Money Market Loan, in Federal or other
funds immediately available in Richmond, Virginia, by depositing the amount
thereof in the general deposit account of the Company at the Bank.
(ii) If the Bank makes a new Money Market Loan hereunder on
the day on which the Company is to repay all or any part of an outstanding Money
Market Loan, the Bank shall apply the proceeds of the new Money Market Loan to
make such repayment, and only an amount equal to the difference (if any) between
the amount being borrowed and the amount being repaid shall be made available by
the Bank to the Company as provided in subsection (i) of this Section, or
remitted by the Company to the Bank as the case may be.
SECTION 2.4 Method of Fed Funds Borrowing. (a) The Company shall give
the Bank notice (which may be oral) (a "Notice of Fed Funds Borrowing") on or
before 1:00 p.m. (Richmond time), specifying:
(i) the date of such Fed Funds Loan, which shall be a Business
Day; and
(ii) the amount of such Loan.
(b) Unless the Bank determines that any applicable condition specified
in this Agreement has not been satisfied, the Bank will credit the amount of
each requested Revolving Loan to the general deposit account of the Company with
the Bank or, at the Company's request delivered in writing not later than
contemporaneously with the related Notice of Borrowing, the Bank will wire
transfer immediately available funds in the amount of such Revolving Loan to
such other bank account of the Company as may be specified in such request.
SECTION 2.5 Maturity of Loans. Each Revolving Loan shall mature, and
the principal amount thereof shall be due and payable, on the last day of the
Interest Period applicable thereto.
SECTION 2.6 Revolving Note. The Revolving Loans shall be evidenced by
a single Revolving Note of the Company substantially in the form of Exhibit A
(the "Revolving Note") payable to the order of the Bank in an amount equal to
the aggregate unpaid principal amount of the Revolving Loans. The Bank shall
record, and prior to any transfer of the Revolving Note shall endorse on the
schedule forming a part thereof appropriate notations to evidence, the date,
amount and maturity of each Revolving Loan and the date and amount of each
payment of principal made by the Company with respect thereto; provided,
however, that any failure by the Bank to make such a notation or any error
therein shall not in any manner affect the obligation of the Company to repay
the Revolving Loans in accordance with the terms hereof and of the Revolving
Note. The Bank is hereby irrevocably authorized by the Company so to endorse the
Revolving Note and to attach to and make a part of the Revolving Note a
continuation of any such schedule as and when required.
SECTION 2.7 Interest Rates; Payments. (a) The Fed Funds Loans shall
bear interest on the outstanding principal balance thereof for each day at a
fluctuating rate per annum, calculated in accordance with Section 10.5, equal to
the lower of (i ) the Prime Rate; or (ii) the sum of the Fed Funds Rate plus
three quarters of one percent (3/4%) (the Prime Rate and the Fed Funds Rate are
individually referred to as an "Index"). Each change in the interest rate
affecting the Revolving Loans shall be effective as of the opening of business
on the effective date of each change in the lower applicable Index. Payments of
interest shall be made monthly, on the first day of each calendar month
commencing July 1, 1997, and continuing until the Revolving Note has been repaid
in full. The Prime Rate is a rate set by the Bank in Richmond, Virginia, based
upon various factors including the Bank's costs and desired return, general
economic conditions, and other factors, and is used as a reference point for
pricing some loans. The Bank may price loans to other customers at, above, or
below the Prime Rate.
(b) Interest on each Money Market Loan shall be payable on the last day
of the Interest Period applicable thereto, and if any Interest period is longer
than 30 days, then 30 days after the first day thereof.
SECTION 2.8 Overdue Interest Rates. Any overdue principal of and, to
the extent permitted by law, overdue interest on any Loan shall bear interest,
payable on demand, for each day from and including the date payment thereof was
due to but excluding the date of actual payment, at a rate per annum equal to
the rate of 1% plus the interest rate then in effect for such Loan.
SECTION 2.9 Prepayment. Money Market Loans may not be prepaid prior to
the end of the Interest Period applicable thereto. The Company may at any time
prepay Fed Funds Loans in whole or in part without premium or penalty, provided
such prepayment is in the aggregate amount of $25,000 or any higher integral
multiple of $25,000.
SECTION 2.10 Funding Losses. If the Company makes any payment of
principal with respect to any Money Market Loan on any day other than the last
day of an Interest Period applicable thereto, or if the Company fails to borrow
any Money Market Loan after the related Notice of Borrowing therefor has been
given to the Bank, the Company shall reimburse the Bank on demand for any
resulting loss or expense incurred by it, including (without limitation) any
loss incurred in obtaining, liquidating or employing deposits from third
parties, but excluding loss of margin for the period after any such payment;
provided that the Bank shall have delivered to the Company a certificate as to
the amount of any loss or expense, which certificate shall be conclusive in the
absence of manifest error.
SECTION 2.11 Commitment Fees. The Company hereby agrees to pay to the
Bank an annual commitment fee in an amount equal to 13/100ths of one percent
(0.13%) of the Commitment (the "Commitment Fee"), payable in equal quarterly
installments in arrears, with the first of said installments due on September 1,
1997, and the remaining installments due and payable on the first day of each
December, March, June and September thereafter. In the event the Commitment is
available to the Company for a period less than a full calendar quarter, the
Company agrees to pay to the Bank a pro-rata portion of the aforesaid quarterly
installment based on the number of days in the calendar quarter the Commitment
is available to the Company. In the event, pursuant to Section 2.12, the
Commitment is reduced during any calendar quarter, the Company agrees to pay to
the Bank a pro-rata portion of the aforesaid quarterly installment based on the
actual amount of the Commitment available to the Company for each day in such
calendar quarter. The obligation of the Company to pay the Commitment Fee shall
terminate upon the termination of the Commitment.
SECTION 2.12 Optional Termination or Reduction of Commitment. The
Borrower may, upon at least 2 Business Days' notice to the Bank, (i) terminate
the Commitment at any time or (ii) reduce by $1,000,000 or any larger multiple
thereof the aggregate amount of the Commitment in excess of the aggregate
outstanding amount of the Revolving Loans. If the Commitment is terminated in
its entirety, any accrued Commitment Fee shall be payable on the effective date
of such termination.
SECTION 2.13 Extension of Availability Period. The Availability Period
shall expire automatically unless the Borrower makes a written request to the
Bank not later than 90 days prior to expiration of the Availability Period
requesting an extension of the Availability Period and such request is approved
by the Bank prior to expiration of the Availability Period. The right of the
Bank not to extend the Availability Period shall be unconditional and within its
sole discretion, notwithstanding that no Event of Default exists under this
Agreement.
ARTICLE III
TERM LOAN
SECTION 3.1 Amount. The Bank agrees to make a term loan (the "Term
Loan") to the Company on the Termination Date, in a principal amount equal to
the amount of the Revolving Note outstanding on such date, or any part thereof,
as may be specified orally in advance by the Company. Upon the making of the
Term Loan, the Commitment shall terminate.
SECTION 3.2 Proceeds. The proceeds of the Term Loan shall be applied
first to payment of the Revolving Note. Any unpaid balance of such Revolving
Note thereafter remaining, together with accrued interest, shall be
contemporaneously paid by the Company to the Bank. Upon expiration or
termination of the Commitment and payment by the Company of all obligations on
the Revolving Note Company held by the Bank, the Bank shall deliver the
Revolving Note to the Company with a notation that it has been canceled.
SECTION 3.3 Term Note. On the Termination Date the Company shall
deliver to the Bank a note in the form of Exhibit B attached hereto (the "Term
Note") dated such date and in a principal amount equal to the principal amount
of the Term Loan to be made by the Bank. The principal of the Term Note shall be
payable in sixteen (16) consecutive equal quarterly installments on the first
day of each quarter (December, March, June and September) commencing the first
day of the month following the first quarter after the Termination Date with the
final installment due within 4 years of the Termination Date when the unpaid
principal amount and all accrued and unpaid interest on the Term Note shall be
payable in full.
SECTION 3.4 Interest. The Term Note shall bear interest calculated in
accordance with Section 10.5 hereof from the date thereof on the unpaid
principal balance from time to time outstanding at a per annum rate equal to (i)
the Prime Rate, adjusted from time to time on the day of any change in such
Prime Rate or (ii) the Feds Funds Rate plus one percent (1%), as selected by the
Company. Accrued interest on the Term Note shall be paid monthly on the first
day of each month commencing on the first day of the month following the
Termination Date.
SECTION 3.5 Voluntary Prepayments. The Company may make full or
partial prepayments for application to the Term Note without premium or penalty,
provided that (i) the Company pays accrued interest on the principal prepaid to
the date of prepayment, and (ii) any partial prepayment shall be in an aggregate
principal amount equal to $25,000 or any higher integral multiple of $25,000.
Each partial prepayment shall be applied first to the payment of accrued
interest and then to installments of principal in the inverse order of maturity.
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING AGREEMENT AND MAKING LOANS
The obligation of the Bank to make a Loan is subject to the
satisfaction of the following conditions:
SECTION 4.1 All Revolving Loans. In the case of each Revolving Loan:
(a) receipt by the Bank of a Notice of Borrowing as required by Section
2.3(d) or 2.4, as the case may be;
(b) the fact that, immediately after such Loan, the aggregate
outstanding principal amount of the Revolving Loans will not exceed the
Commitment;
(c) the fact that immediately after such Loan, no Potential Default (or
in the case of a Refunding Loan, Default or Potential Default under Section
8.1(b) has occurred and is continuing or would result from such loan;
(d) the fact that the representations and warranties contained in
Article VI hereof (except, in the case of a Refunding Loan, the representations
and warranties set forth in Sections 6.6, 6.7, 6.8, 6.9, 6.10 and in the second
sentence of Section 6.5), shall be true and correct on and as of the date of the
proposed Loan as though made on and as of such date; and
(e) no change shall have occurred in any law or regulation thereunder
or interpretation thereof which in the opinion of counsel for the Bank would
make it illegal for the Bank to make the Loans as provided herein.
SECTION 4.2 First Borrowing. In the case of the first Revolving Loan:
(a) receipt by the Bank of a duly executed Revolving Note, dated on or
before the date of such Loan, complying with the provisions of Section 2.6;
(b) receipt by the Bank of an opinion addressed to the Bank from
Messrs. McGuire, Woods, Battle & Xxxxxx, counsel for the Company, substantially
in the form of Exhibit C attached hereto; and
(c) receipt by the Bank of such other documents as the Bank shall
require, all in form and substance satisfactory to the Bank, including, without
limitation, appropriate corporate resolutions and certificates of incumbency.
SECTION 4.3 Term Loan. Prior to making the Term Loan, the Bank shall
receive an appropriately completed and executed Term Note, and the following
conditions shall have been satisfied:
(a) no event shall have occurred and be continuing or condition shall
exist, or would result from the proposed Loan, which constitutes or, with lapse
of time or the giving of notice, or both, would constitute a Default (as defined
in Section 8.1); and
(b) no change shall have occurred in any law or regulation thereunder
or interpretation thereof which in the opinion of counsel for the Bank would
make it illegal for the Bank to make the Loans as provided herein.
ARTICLE V
BORROWING PROCEDURES
The following procedures shall be applicable to each Revolving Loan.
SECTION 5.1 Authorized Representatives. The Company shall certify to
the Bank the name, title and true signature of each officer of the Company
authorized to sign the Notes and give Notice of Borrowing hereunder. The Bank
may conclusively rely on such certification until it receives written notice to
the contrary from the Company.
SECTION 5.2 Funds. The Bank shall make available to the Company on the
date of borrowing the amount of such borrowing in immediately available funds at
its main office in Richmond, Virginia, during its normal business hours.
SECTION 5.3 Method of Payment All payments of principal, interest and
fees shall be made by the Company to the Bank in immediately available funds and
in U. S. Dollars.
ARTICLE VI
REPRESENTATION AND WARRANTIES
The Company represents and warrants to the Bank, as of the date of this
Agreement, that
SECTION 6.1 Corporate Existence And Standing. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of Virginia and the Company has all requisite authority to conduct its
business in each jurisdiction in which its business is conducted and whether
failure to have such authority would have a material adverse effect on the
Company.
SECTION 6.2 Authorization and Validity. The execution and delivery by
the Company of this Agreement and the Notes (together, the "Loan Documents")
have been duly authorized by proper corporate proceedings and this Agreement and
the Revolving Note constitute, and the Term Note when executed and delivered for
value will constitute, legal, valid and binding obligations of the Company
enforceable in accordance with their respective terms except as the same may be
limited by bankruptcy, insolvency, reorganization and other laws affecting the
enforcement of creditors' rights generally and by usual equity principles.
SECTION 6.3 Compliance with Laws and Contracts. Neither the execution
and delivery by the Company of the Loan Documents, the consummation of the
transactions herein contemplated, nor compliance with the provisions thereof
will violate any law, rule, regulation, order, writ, judgment, injunction,
decree or award binding on the Company or the Company's articles of
incorporation or by-laws or the provisions of any indenture, instrument or
agreement to which the Company is a party or conflict with or constitute a
default thereunder, or result in the creation or imposition of any Lien pursuant
to the terms of any such indenture, instrument or agreement.
SECTION 6.4 No Governmental or Other Approvals. The execution,
delivery and performance of the Loan Documents and the transactions contemplated
hereby do not require any approval or consent of, or filing or registration
with, any governmental agency, stockholders, or any other party, except for the
filing of this Agreement with the Securities and Exchange Commission as an
exhibit to any report of the Company pursuant to ss.13 of the Securities
Exchange Act of 1934.
SECTION 6.5 Financial Statements. The financial statements of the
Company contained in the Company's Form 10-K Annual Report for the fiscal year
ended January 25, 1997, and in the Company's 10-Q Quarterly Report for the
fiscal quarter ended April 26, 1997, filed with the Securities and Exchange
Commission, copies of which have been heretofore delivered to the Bank, were
prepared in accordance with generally accepted accounting principles in effect
on the dates such statements were prepared and fairly present the financial
condition of the Company at the dates of such statements and the results of its
operations for the periods then ended. No material adverse change in the
condition of the Company as shown on such financial statements has occurred
since the dates thereof.
SECTION 6.6 Taxes. The Company has filed all United States Federal
income tax returns and all other tax returns which are required to be filed and
has paid all taxes due pursuant to said returns or pursuant to any assessment
received by the Company, except such taxes, if any, as are being contested in
good faith and as to which adequate reserves have been provided. The charges,
accruals and reserves on the books of the Company in respect of any taxes or
other governmental charges are adequate.
SECTION 6.7 Litigation. There is no litigation or proceeding pending
or, to the knowledge of any of its officers, threatened against the Company
which might materially adversely affect the condition of the Company or the
ability of the Company to perform the Obligations.
SECTION 6.8 ERISA. As of the date of this Agreement, the Company does
not maintain or contribute to a "multiemployer plan" as defined in Section 37(A)
of ERISA, as amended in 1980 or any Plan. The Company is not in the process of
terminating any Plan. To the best of the Company's knowledge and belief, no
fact, including any event described in Section 4043 of ERISA (a "Reportable
Event"), exists in connection with any Plan which might constitute grounds for
the termination of any Plan by the Pension Benefit Guaranty Corporation or the
appointment by the appropriate United States district court of a trustee to
administer any Plan.
SECTION 6.9 Defaults. No Default or Potential Default has occurred and
is continuing. The Company is not in default in respect of any of its
Indebtedness for borrowed money and no holder of any such Indebtedness has given
notice of an asserted default thereunder. No liquidation, dissolution or other
winding up of the Company and no bankruptcy or similar proceedings relative to
the Company are pending or, to the Company's knowledge, threatened.
SECTION 6.10 Accuracy of Information. No information, exhibit or report
furnished by the Company to the Bank in connection with the negotiation of the
Loan Documents contains any untrue statement of a material fact or Omits to
state a material .act necessary to make the statements contained therein in the
light of the circumstances under which they were made not misleading.
SECTION 6.11 Regulation U. The Company is not engaged principally, or
as one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying "margin stock" (as defined in Regulation U of
the Board of Governors of the Federal Reserve System).
ARTICLE VII
COVENANTS
During the term of this Agreement, and until the Obligations are paid
in full, unless the Bank shall otherwise consent in writing:
SECTION 7.1 Financial Reporting. The Company will maintain, for itself
and each Subsidiary, a modern system of accounting, and furnish to the Bank:
(a) Within 90 days after the close of each of its fiscal years, an
unqualified audit report certified by Price Waterhouse or other accountants of
recognized national standing, prepared in accordance with generally accepted
accounting principles, consistently applied (except for changes in such
principles or their application as approved by such accountants), on a
Consolidated basis for itself and the Subsidiaries, including balance sheets as
of the end of such period, related profit and loss and reconciliation of surplus
statements, and a statement of change in cash flow, accompanied by a certificate
of such accountants that, in the course of their examination necessary for,
their certification of the foregoing, they have obtained no knowledge of any
Default or Potential Default, or if, in the opinion of such accountants, any
Default or Potential Default shall exist, such certificate shall state the
nature and status thereof;
(b) Within 60 days after the close of the first three quarterly periods
of each of its fiscal years, for itself and the Subsidiaries, Consolidated
unaudited balance sheets as at the close of each such period and Consolidated
profit and loss and reconciliation of surplus statements and a statement of
change in cash flow for the period from the beginning of such fiscal year to the
end of such quarter, all prepared in accordance with generally accepted
accounting principles, consistently applied (except for changes in such
principles or their application as approved by the Company's chief financial
officer), and certified by its chief financial officer;
(c) Together with the financial statements required under Section
7.1(a) and (b) above, a certificate, dated as of the end of the fiscal period to
which the financial statements apply, signed by the Company's chief financial
officer stating that to the best of his knowledge and belief there neither
exists on the date of such certificate, nor existed during such period, any
Default or Potential Default, or if any such Default or Potential Default
existed or exists, the certificate shall specify the nature thereof, the period
of existence thereof and what action the Company has taken, is taking or
proposes to take with respect thereto;
(d) Within 90 days after the close of each fiscal year, a statement of
the Unfunded Liabilities of each Plan which exceed $100,000, certified as
correct by an actuary enrolled under ERISA;
(e) As soon as possible and in any event within 10 days after the
Company knows that any Reportable Event (as described in Section 4043 of ERISA)
has occurred with respect to any Plan and is required to report the same to the
Pension Benefit Guaranty Corporation, a statement, signed by the chief financial
officer of the Company, describing such Reportable Event and the action which
the Company proposes to take with respect thereto;
(f) Promptly upon their becoming available, (i) copies of all financial
statements, proxy statements and reports which the Company shall send to its
stockholders, and (ii) copies of all regular and periodic financial reports, if
any, which the Company shall file with the Securities and Exchange Commission,
or any governmental agency or agencies substituted therefor, or any similar or
corresponding governmental department, commission, board, bureau or agency, or
with any national securities exchange; and
(g) Such other information (including non-financial information) as the
Bank may from time to time reasonably request.
SECTION 7.2 Use of Proceeds. The Company will use the proceeds of the
Loans only for working capital and other general corporate purposes.
SECTION 7.3 Consolidated Tangible Net Worth. The Company will maintain
Consolidated Tangible Net Worth (i) for the fiscal year beginning January 25,
1997, of not less than $40,500,000 and (ii) for each fiscal year thereafter, of
not less than $40,500,000 plus eighty percent (80%) of each successive year's
net income. In no event, however, shall the Consolidated Tangible Net Worth as
calculated herein be reduced in the event of any net loss for any fiscal year.
SECTION 7.4 Current Ratio. The Company will maintain as of the end of
each of its fiscal quarters a ratio of Consolidated current assets to
Consolidated current liabilities of not less than 2.5 to 1. For purposes of this
ratio, the principal amount of Loans outstanding hereunder and the principal
amount of loans outstanding under the credit agreement dated as of August 31,
1990 between the Company and Crestar Bank (in each case, except the current
portion thereof) shall be classified as Funded Debt.
SECTION 7.5 Ratio of Consolidated Unsubordinated Liabilities to
Consolidated Effective Tangible Net Worth. The Company will maintain at the end
of each fiscal quarter a ratio of Consolidated Unsubordinated Liabilities to
Consolidated Effective Tangible Net Worth of not greater than 1.25 to 1.
SECTION 7.6 Fixed Charge Coverage Ratio. The Company will not, nor will
it permit any Subsidiary to, permit, as of the end of each fiscal quarter, the
ratio of (a) the sum of profit before tax, non-cash charges, interest expense
(including interest on Capitalized Lease Obligations) and operating lease
payments (all for the four most recent fiscal quarters ending prior to the
quarter in which the determination is made) to (b) the sum of interest expense
(including interest on Capitalized Lease Obligations), operating lease payments,
Capitalized Lease Obligations and payments due on Funded Debt for the four
ensuing fiscal quarters (including the quarter in which the determination is
made), and one (1) times cash dividends for the four most recent fiscal
quarters, to be less than 1.25 to 1.
SECTION 7.7 Notice of Default. The Company will and will cause each
Subsidiary to give prompt notice in writing to the Bank of the occurrence of any
Default or Potential Default and of any other development, financial or
otherwise, which might materially and adversely affect its business, properties
or affairs or the ability of the Company to perform the Obligations.
SECTION 7.8 Conduct of Business and Maintenance of Existence. The
Company will and will cause each Subsidiary to carry on and conduct its business
in substantially the same manner and in substantially the same fields of
enterprise as it is presently conducted and related fields; and do all things
necessary to remain duly incorporated, validly existing and in good standing as
a domestic corporation in its jurisdiction of incorporation and maintain all
requisite governmental authority to conduct its business in each jurisdiction in
which failure to maintain such authority would have a material adverse effect on
the Company. Notwithstanding the above, a Subsidiary may be dissolved if the
continued existence of such Subsidiary is not material to the business or
consolidated financial condition of the Company and its remaining Subsidiaries.
SECTION 7.9 Taxes. The Company will and will cause each Subsidiary to
pay when due all taxes, assessments and governmental charges and levies upon it
or its income, profits or property, except those which are being contested in
good faith by appropriate proceedings and with respect to which adequate
reserves have been set aside.
SECTION 7.10 Insurance. The Company will and will cause each Subsidiary
to maintain insurance in such amounts and covering such risks as is consistent
with sound business practice.
SECTION 7.11 Inspection. The Company will and will cause each
Subsidiary to permit the Bank by its representatives and agents and at its
expense, to inspect any of the properties, corporate books and financial records
of the Company and each Subsidiary, to examine and make copies of the books of
account and other financial records of the Company and each Subsidiary, and to
discuss the affairs, finances and accounts of the Company and each Subsidiary
with, and to be advised as to the same by, its officers at such reasonable times
in intervals as the Bank may designate.
SECTION 7.12 Mergers, Acquisitions and Sale of Assets. The Company will
not, nor will it permit any Subsidiary to:
(a) Merge or consolidate with or into any other Person;
(b) lease, sell or otherwise dispose of all, or a substantial portion
of, its property, assets or business to any other Person; or
(c) lease, purchase or otherwise acquire all, or a substantial portion
of, the property, assets or business of any other Person, except that (i) any
wholly-owned Subsidiary may merge with, or transfer its assets to, another
wholly-owned Subsidiary or to the Company, (ii) the Company may merge or
consolidate with another Person if the Company is the surviving entity and if,
after giving effect to the merger or consolidation, there would exist no Default
or Potential Default hereunder, (iii) assets may be leased, sold or otherwise
disposed of provided such assets are not material to the business or
Consolidated financial condition of the Company and its Subsidiaries, (iv) the
Company may purchase or acquire its inventory from a Person even if such
inventory constitutes all or a substantial portion of the property, assets or
business of such Person, (v) inventory may be sold in the ordinary course of
business of the Company or any Subsidiary, and (vi) sales, lease or other
dispositions in any fiscal year of the Company in an aggregate amount for the
Company and all Subsidiaries not to exceed $2,000,000 shall be permitted.
SECTION 7.13 Sale of Accounts. The Company will not, nor will it permit
any Subsidiary to, sell or otherwise dispose of any notes receivable or accounts
receivable, with or without recourse, having an aggregate face value of more
than $400,000.
SECTION 7.14 Investments. The Company will not, nor will it permit any
Subsidiary to, make or suffer to exist any Investments, or commitments therefor,
except:
(a) Short-term obligations of, or fully guaranteed as to interest and
principal by, the United States of America.
(b) Commercial paper of any Person rated at least A2 by Standard and
Poor's or P2 by Xxxxx'x Investors Service, Inc.
(c) Demand deposit accounts maintained in the ordinary course of its
business, or that of its Subsidiaries.
(d) Certificates of deposit issued by commercial banks having capital
and surplus in excess of $100,000,000.
(e) Investments in Subsidiaries, if, after giving effect thereto, there
would exist no Default or Potential Default hereunder.
(f) Repurchase of the Company's outstanding shares, if, after giving
effect thereto, there would not exist any Default or any Potential Default
hereunder.
(g) Notes or other securities of any Person issued in connection with
any disposition of assets permitted by this Agreement.
(h) Any other Investments which, in the aggregate, are less than 5% of
the Consolidated Tangible Net Worth of the Company and its Subsidiaries.
SECTION 7.15 Guaranties. The Company will not, nor will it permit any
Subsidiary to, make or suffer to exist any Guaranties, other than for the
benefit of the Bank (which includes the Company's guaranty of loans made by the
Bank to officers of the Company), except (a) by endorsement of instruments for
deposit or collection in the ordinary course of business and (b) the guaranty by
the Company of the obligations of any Subsidiary or issuing authority in
connection with any industrial revenue bonds issued to finance the purchase or
construction of facilities to be purchased by or leased to the Company or any
Subsidiary.
SECTION 7.16 Liens. The Company will not, nor will it permit any
Subsidiary to, create, incur, or suffer to exist any Lien, except,
(a) Those in favor of the Company by its Subsidiaries.
(b) Those for taxes, assessments or governmental charges or levies on
its property if the same shall not at the time be delinquent or thereafter can
be paid without penalty, or are being contested in good faith and by appropriate
proceedings.
(c) Those imposed by law, such as liens in favor of lessors for
distraint and similar remedies and carriers', warehousemen's and mechanics'
liens and other similar liens arising in the ordinary course of business which
secure payment of obligations not more than 90 days past due, or, if the same
are more than 90 days past due, if they are being contested in good faith and by
appropriate proceedings.
(d) Those arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or other social
security or retirement benefits, or similar legislation.
(e) Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character and which do not in
any material way affect the salability of the same or interfere with the use
thereof in the business of the Company or the Subsidiaries.
(f) Liens and charges for maintenance, repairs and operation of
facilities owned or leased by the Company or its Subsidiaries or used in
connection therewith, arising under joint easement and maintenance agreements,
reciprocal easement agreements or similar documents governing the use or
occupancy of such facilities.
(g) Judgment liens not in existence for a period longer than 60 days
after the creation thereof, or, if a stay of execution shall have been obtained,
for a period longer than 60 days after the expiration of such stay.
(h) Lessors' interest under Financing Leases.
(i) Liens securing the purchase or deferred price of fixed assets if
the Lien extends only to the property acquired.
(j) Equitable liens in favor of dissenting shareholders of acquired
corporations for the fair market value of their shares of stock of such
corporations.
(k) Liens in addition to those permitted above securing an aggregate
amount not exceeding 1% of the Consolidated Tangible Net Worth of the Company
and its Subsidiaries at any one time.
(l) Liens securing the repayment of indebtedness evidenced by two (2)
industrial development bonds issued by the Industrial Development Authority of
the County of Henrico, Virginia, the first in the original principal amount of
$3,000,000 dated December 1, 1983, and the second in the original principal
amount of $1,500,000 dated November 1, 1984.
SECTION 7.17 Prepayment of Subordinated Debt. The Company will not, nor
will it permit any Subsidiary to, prepay, in whole or in part (or upon the
occurrence and continuation of a Default, repay), the principal amount of any of
its Subordinated Debt without the prior written consent of the Bank.
SECTION 7.18 Purchase of Stock, Money Market Instruments . The Company
will not, nor will it permit any Subsidiary to, extend credit to others for the
purpose of purchasing or carrying any "margin stock" (as defined in Regulation U
promulgated by the Board of Governors of the Federal Reserve system) or use any
of the proceeds of the Loans made under this Agreement to purchase or carry any
"margin stock", or to invest in money market investments of the Bank or any of
its affiliates.
ARTICLE VIII
DEFAULTS
SECTION 8.1 Events of Default. The occurrence of any one or more of
the following events shall constitute a Default:
(a) Any material representation or warranty made by the Company to the
Bank under or in connection with any Loan Document shall be materially false as
of the date on which made.
(b) Nonpayment of principal of or interest on any of the Notes or of
the Commitment Fee within 10 days after the same becomes due.
(c) The breach by the Company of any of the terms or provisions of
Sections 7.2, 7.3, 7.5, 7.11, 7.12, 7.13, 7.14, 7.15, 7.16 or 7.17.
(d) The breach by the Company (other than a breach which constitutes a
Default under Sections 8.1(a), (b), or (c)) of any of the other terms or
provisions of this Agreement which is not remedied within 45 days (or, in the
case of Section 7.4, 30 days) after written notice from the Bank.
(e) Failure of the Company or any Subsidiary to pay any Indebtedness in
a principal amount exceeding $400,000 when due, including any grace period
permitted under the terms of such Indebtedness.
(f) The Company or any Subsidiary shall (i) not pay, or admit in
writing its inability to pay, its debts generally as they become due, (ii) make
an assignment for the benefit of creditors, (iii) apply for, seek, consent to,
or acquiesce in, the appointment of a receiver, custodian, trustee, examiner,
liquidator or similar official for it or any substantial part of its property,
(iv) institute any proceeding seeking to adjudicate it insolvent, or seeking a
decree or order for relief in bankruptcy or dissolution, winding up,
liquidation, reorganization, arrangement, adjustment or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors or fail to file an answer or other pleading denying the
material allegations of any such proceeding filed against it, (v) take any
corporate action to authorize or effect any of the foregoing actions set forth
in this Section 8.1(f), or (vi) fail to contest in good faith any appointment or
proceeding described in Section 8.1(g).
(g) Without the application, approval or consent of the Company or any
Subsidiary, a receiver, custodian, trustee, examiner.' liquidator or similar
official shall be appointed for the Company or any Subsidiary or any substantial
part of its property, or a proceeding described in Section 8.1.6(d) shall be
instituted against the Company or any Subsidiary and such appointment continues
undischarged or such proceeding continues undismissed or unstayed for a period
of 60 days.
(h) Any court, government or governmental agency shall condemn, seize
or otherwise appropriate, or take custody or control of all or any portion of
the property of the Company or any Subsidiary which is material to the conduct
of the business of the Company and the Subsidiaries on a Consolidated basis and
for which the Company does not receive fair market compensation therefor.
(i) The Company or any Subsidiary shall fail within 60 days to pay,
bond or otherwise discharge any judgment or order for the payment of money in
excess of $400,000, which is not stayed on appeal or otherwise being
appropriately contested in good faith.
(j) The Unfunded Liabilities of all Plans shall exceed in the aggregate
$500,000.
SECTION 8.2 Acceleration and Recourse. Upon the occurrence of any
event described in Section 8.1 hereof, the Bank may, at its option, by notice of
default given to the Company, terminate the Bank's Commitment and, if Loans are
then outstanding, declare the then outstanding Note to be forthwith due and
payable, whereupon the principal amount of such Note together with accrued
interest thereon shall become immediately due and payable without presentment,
demand, protest, or other notice of any kind, all of which are hereby expressly
waived by the Company. The Bank shall have the right to offset the amount owed
by the Company hereunder or under any other obligation to the Bank against any
account, checking, savings or otherwise, which the Company may have with the
Bank, or against any amounts owed by the Bank in any capacity to the Company,
whether or not due, and the Bank shall be deemed to have exercised such right of
offset and to have made a charge against any such account or amounts immediately
upon the occurrence of a Default hereunder even though such charge is made or
entered on the Bank's books subsequent thereto. The Bank agrees to use its best
efforts to notify the Company of the exercise of such right of offset, but the
failure to give any such notice shall not subject the Bank to any liability.
ARTICLE IX
CHANGE IN CIRCUMSTANCES
AFFECTING FED FUNDS LOANS
SECTION 9.1 Illegality. If, after the date of this Agreement, the
adoption of any applicable law, rule or regulation, or any change therein, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Bank with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency shall make it unlawful or impossible for the Bank to make,
maintain or fund the Fed Funds Loans and the Bank shall so notify the Company,
whereupon until the Bank notifies the Company that the circumstances giving rise
to such suspension no longer exist, the obligation of the Bank to make Fed Funds
Loans shall be suspended. If such notice is given, all Fed Funds Loans made
after the date of such notice shall bear interest at the applicable Prime Rate
less 1/2%.
SECTION 9.2 Increased Cost. If after the date hereof, the adoption of
any applicable law, rule or regulation, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Bank with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency:
(i) shall subject the Bank to any tax, duty or other charge with
respect to the Loans, the Notes or its obligation to make the Loans, or
shall change the basis of taxation of payments to the Bank of the
principal of or interest on the Loans or any other amounts due under
this Agreement in respect of its Loans or its obligation to make Loans
(except for changes in the rate of tax on the overall net income of the
Bank imposed by the jurisdiction in which the Bank's principal
executive office is located);
(ii) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve
system against assets of, deposits with or for the account of, or
credit extended by, the Bank or shall impose on the Bank any other
condition affecting the Loans, the Notes or its obligation to make the
Loans; or
(iii) has or would have the effect of reducing the rate of return on
the Bank's capital as a consequence of its obligations hereunder to a
level below that which the Bank could have achieved but for such
adoption, change or compliance (taking into consideration the Bank's
policies with respect to capital adequacy),
and the result of any of the foregoing is to increase the cost to the Bank or
making or maintaining any Loan, or to reduce the amount of any sum received or
receivable by the Bank under this Agreement or under the Notes with respect
thereto, by an amount deemed by the Bank to be material, then, within 15 days
after demand by the Bank, the Company shall pay to the Bank such additional
amount or amounts as will compensate the Bank for such increased cost or
reduction. The Bank will promptly notify the Company of any event of which it
has knowledge, occurring after the date hereof, which will entitle the Bank to
compensation pursuant to this Section. A certificate of the Bank claiming
compensation under this Section and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, the Bank may use any reasonable
averaging and attribution methods.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Notices. All written notices hereunder shall be deemed to
have been given (a) when delivered at the address specified on the signature
pages hereto or (b) three calendar days after the same shall have been deposited
in the United States mail, by certified or registered mail, return receipt
requested, postage prepaid, or (c) when delivered to the telegraph company
addressed to such party at its address set forth on the signature pages hereto,
or in any event at any other address specified in writing to the person giving
such notice.
SECTION 10.2 Term of Agreement. This Agreement shall continue in effect
so long as any Commitment, Loan, Note or obligation of the Company for any
interest shall be outstanding.
SECTION 10.3 No Waivers. No failure or delay by the Bank in exercising
any right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right. The rights and remedies herein provided are
cumulative and not exclusive of any rights or remedies otherwise provided by
law.
SECTION 10.4 Governing Law. This Agreement and each Note shall be
construed in accordance with and governed by the laws of the Commonwealth of
Virginia.
SECTION 10.5 Computation of Interest. Interest shall be calculated
daily on the unpaid principal balance of the outstanding Notes and shall be
computed on the basis of a year of 365 days and paid for the actual number of
days for which due. Such daily computation shall not be compounded. If the due
date for any payment of principal is extended by operation of law, interest
shall be payable for such extended time. If any payment becomes due on a day on
which banks generally in Richmond, Virginia are required or permitted by law to
remain closed, such payment may be made on the next succeeding day on which such
banks are open, and such extension shall be included in computing interest in
connection with such payment.
SECTION 10.6 Expenses, Taxes, etc. The Company agrees to pay all
reasonable out-of-pocket expenses of the Bank and the reasonable fees and
expenses of counsel to the Bank, in connection with the preparation of all
documentation in connection with this Agreement (including, without limitation,
any such fees and expenses incurred by the Bank in connection with an amendment
made pursuant to Section 10.11 hereof), the Loans and the enforcement thereof,
whether or not any Loans are made. The Company agrees to indemnify the Bank from
and hold it harmless against, any taxes, charges or penalties (other than in
respect of taxes imposed upon or measured by the income of the Bank) imposed by
any governmental authority by reason of the execution and delivery of this
Agreement or the issuance or the acquisition of the Notes or the making of any
Loans unless any such tax, charge or penalty shall be the result of the
negligence or misconduct of the Bank. In the event that the Bank shall retain at
any time an attorney to collect, enforce or protect its interest with respect to
this Agreement, any Loan or any Note, the Company shall pay all of the costs and
expenses of such collection, enforcement or protection, including reasonable
fees of attorneys, and the Bank may take judgment for all such amounts.
SECTION 10.7 Payments in Immediately Available Funds. All payments
required of the Company or the Bank under this Agreement or under a Note shall
be made in funds immediately available to the Bank at the prescribed place of
payment.
SECTION 10.8 Accounting Terms. Unless expressly otherwise defined in
this Agreement, all accounting terms shall be defined, and all account
computations shall be made, in accordance with generally accepted accounting
principles.
SECTION 10.9 Representations of the Bank. The Bank represents and
warrants to the Company that neither the Bank nor anyone acting on behalf of the
Bank has directly or indirectly offered any interest hereunder or the right to
purchase the Notes or any interest therein or solicited any offer to buy any
thereof, or otherwise negotiated with respect thereto, with anyone other than
the Company and the Bank. The Bank represents and warrants to the Company that
the Bank has no intention of participating and covenants that it will
participate with respect to the Loans only if and to the extent that such
participation is permitted under applicable state and federal securities laws
and the rules and regulations issued thereunder.
SECTION 10.10 Repayments in Bankruptcy. In the event any amount of the
indebtedness of the Company to the Bank hereunder is paid by the Company and
because of bankruptcy or other laws relating to creditors' rights the Bank
repays any such amounts to the Company or to any trustee, receiver or otherwise,
then the amounts so repaid shall again become part of the Loans payable by the
Company.
SECTION 10.11 Changes, Waivers, etc This Agreement may not be amended
or terminated, nor any term hereof waived, orally, but only by a statement in
writing signed by the parties hereto.
SECTION 10.12 Singular and Plural. Terms in the singular number shall
include the plural and those in the plural shall include the singular.
SECTION 10.13 Use of Defined Terms. All terms defined in this Agreement
shall have the defined meanings when used in the Notes and in other documents
delivered pursuant to this Agreement, unless the context shall otherwise
require.
SECTION 10.14 Binding Effect of Agreement. This Agreement shall be
binding upon and inure to the benefit of the Company, the Bank and their
respective successors and assigns, provided that the Company may not assign or
transfer its rights hereunder.
SECTION 10.15 Headings. Headings and captions have been inserted for
convenience only and shall not be construed as limiting or affecting in any way
the provisions of the Agreement.
SECTION 10.16 Counterparts. This Agreement may be signed in any number
of counterparts with the same effect as if such signatures were upon the same
instrument.
SECTION 10.17 Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that the Company may not
assign or otherwise transfer any of its rights under this Agreement without the
prior written consent of the Bank.
(b) The Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in the Commitment or
in any or all of the Loans or any Note. In the event of any such grant by the
Bank of a participating interest to a Participant, whether or not upon notice to
the Company, the Bank shall remain responsible for the performance of its
obligations hereunder, and the Bank shall continue to deal solely and directly
with the Company in connection with the Bank's rights and obligations under this
Agreement. Any agreement pursuant to which the Bank may grant such a
participation interest shall provide that the Bank shall retain the sole right
and responsibility to enforce the obligations of the Company hereunder
including, without limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement; provided that such participation
agreement may provide that the Bank will not agree to any modification,
amendment or waiver of this Agreement which would have the effect of increasing,
decreasing or extending the Commitment or subjecting the Bank to any additional
obligation, reducing the principal of or rate of interest on any Loan,
postponing the date fixed for any payment of principal of or interest on any
Loan or fees hereunder or under the Notes or of extending the Availability
Period without the consent of the Participant. An assignment or other transfer
which is not permitted by subsection (c) or (d) below shall be given effect for
purposes of this Agreement only to the extent of a participating interest
granted in accordance with this subsection (b).
(c) The Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part of all, of its
rights and obligations under this Agreement and the Notes, and such Assignee
shall assume such rights and obligations, pursuant to an instrument executed by
such Assignee and the Bank, with (and subject to) the consent of the Company;
provided that if an Assignee is an affiliate of the Bank, no such consent shall
be required. Upon execution and delivery of such an instrument and payment by
such Assignee to the Bank of an amount equal to the purchase price agreed
between the Bank and such Assignee, such Assignee shall become a Bank party to
this Agreement and shall have all the rights and obligations of a Bank with a
Commitment as set forth in such instrument of assumption, and the transferor
Bank shall be released from its obligations hereunder to a corresponding extent,
and no further consent or action by any party shall be required. Upon the
consummation of any assignment pursuant to this subsection (c), the transferor
Bank and the Company shall make appropriate arrangements so that, if required, a
new Note is issued to the Assignee. If the Assignee is not incorporated under
the laws of the United States of America or a state thereof, it shall, prior to
the first date on which interest or fees are payable hereunder for its account
deliver to the Company certification as to exemption from deduction or
withholding of any United States federal income taxes.
(d) The Bank may at any time assign all or any portion of its rights
under this Agreement and the Note to a Federal Reserve Bank. No such assignment
shall release the Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of the Bank's rights
shall be entitled to receive any greater payment under Section 9.3 than the Bank
would have been entitled to receive with respect to the rights transferred,
unless such transfer is made with the Company's prior written consent.
(f) The Bank may furnish any information concerning the Company in its
possession from time to time to Assignees and Participants (including
prospective Assignees and Participants) and may furnish such information in
response to credit inquiries consistent with general banking practice.
SECTION 10.18 Consent to Jurisdiction. The Company irrevocably submits
to the jurisdiction of any Virginia State or federal court sitting in the County
of Henrico, Virginia, over any suit, action, or proceeding arising out of or
relating to this Agreement. The Company irrevocably waives and agrees not to
assert, by way of motion, as a defense or otherwise, any claim that it is not
subject to the jurisdiction of any such court, any objection that it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
brought in any such court and any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
SECTION 10.19 Enforcement of Judgments. The Company agrees that a
judgment in any suit, action or proceeding referred to in Section 10.18 brought
in any such court shall be conclusive and binding upon the Company and may be
enforced in the courts of the United States of America or the Commonwealth of
Virginia (or any other courts to the jurisdiction of which the Company is or may
be subject) by a suit upon such judgment.
SECTION 10.20 Service of Process. The Company consents to process being
served in any suit, action or proceeding referred to in Section 10.18 by mailing
a copy thereof by registered or certified mail postage prepaid, return receipt
requested, to the Company's address specified in or designated pursuant to
Section 10.1. The Company agrees that such service (a) shall be deemed in every
respect effective service of process upon the Company in any such suit, action
or proceeding and (b) shall be taken and held to be valid personal service upon
and personal delivery to the Company.
SECTION 10.21 Completeness. This Agreement constitutes the entire
agreement between the parties hereto as to the transactions contemplated hereby
and supersedes all prior discussions, understandings of agreements between the
parties hereto.
SECTION 10.22 Waiver of Claims. As part of the consideration to the
Bank herein, the Borrower waives any claims and all other defenses of every
nature whatsoever they may have with respect to this Agreement or the Notes.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
S & K FAMOUS BRANDS, INC.
By:_____________________________________________
Xxxxxx X. Xxxxxxx
Executive Vice President and
Chief Financial Officer
Address: 00000 Xxxx Xxxxx Xxxxxx
P. 0. Xxx 00000
Xxxxxxxx, Xxxxxxxx 00000-0000
Attn: Executive Vice President and Chief Financial
Officer
With a copy to: McGuire, Woods, Battle & Xxxxxx, LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Xx.
SIGNET BANK (formerly Signet Bank/Virginia)
By:_______________________________________
R. Xxxxxxx Xxxx
Senior Vice President
Address: 000 Xxxx Xxxx Xxxxxx
P. 0. Xxx 00000
Xxxxxxxx, Xxxxxxxx 00000
Attn: Capital Commercial Division
EXHIBIT A
AMENDED AND RESTATED REVOLVING NOTE
$14,000,000.00 Richmond, Virginia
May 31,1997
FOR VALUE RECEIVED, S&K FAMOUS BRANDS, INC,, a Virginia corporation
(the "Borrower'), hereby promises to pay to the order of SIGNET BANK (the
"Bank") at its main office, in Richmond, Virginia, in lawful money of the United
States, the principal sum of Fourteen Million and No/100 Dollars
($14,000,000.00) or the aggregate unpaid principal amount of all Revolving Loans
made by the Bank to the Borrower pursuant to the Credit Agreement hereinafter
referred to, which ever is less (the "Principal"). The Borrower further promises
to pay interest on the first day of each month from the date hereof, commencing
July 1, 1997, and on May 31, 2000 on the amount of the Principal from time to
time outstanding during the period beginning on the date hereof and continuing
until the Note is paid in full, at the rate or rates provided for in the Credit
Agreement, Interest payable hereunder shall be calculated on the basis of a
365-day year and paid for the actual number of days for which due.
This Note is the Revolving Note issued pursuant to the provisions of a
certain Amended and Restated Credit Agreement dated as of May 31, 1997, as
amended from time to time, between the Borrower and the Bank (herein, as the
same may from time to time be amended, referred to as the "Credit Agreement"),
and is issued in substitution of a certain Revolving Note dated July 15, 1996,
made by the Borrower and payable to the order of the Bank.
This Note is subject to prepayment, in whole or in part, as specified
in the Credit Agreement. In case of Default, as defined in the Credit Agreement,
shall occur and be continuing, in the manner and with the effect provided in the
Credit Agreement, and the Borrower hereby agrees to pay all costs and expenses
in connection therewith, including reasonable attorney's fees, as provided in
the Credit Agreement.
The Borrower and all guarantors, endorsers and pledgors hereof hereby
waive presentment, demand, notice of dishonor, protest and all other demands and
notices in connection with the delivery, acceptance and performance of this
Note.
The Bank is hereby authorized to maintain records of the date and
amount of each Revolving Loan, the date and amount of any payment of principal
or interest and the principal balance then remaining unpaid hereon. The Borrower
hereby agrees that the amount so evidenced shall, for all purposes, constitute
prima facie evidence thereof.
This Note shall be governed by and interpreted in accordance with the
laws of the Commonwealth of Virginia.
[Signature appears on following page]
IN WITNESS WHEREOF the Borrower has caused its corporate name to be
signed by its duly authorized officer under seal as of the day and year first
above written.
S&K FAMOUS BRANDS, INC.
By:____________________________[SEAL]
Title:__________________________
EXHIBIT B
FORM OF TERM NOTE
$ Richmond, Virginia
May 31, ______
FOR VALUE RECEIVED S&K FAMOUS BRANDS, INC., a Virginia corporation (the
"Borrower"), hereby promises to pay to the order of SIGNET BANK (the "Bank") at
its main office, in Richmond, Virginia, in lawful money of the United States,
the principal sum of Dollars __________________________($____________ (the
"Principal"), in sixteen consecutive equal quarterly installments of principal
of _________________________ Dollars (__________) each, commencing on July 1,
____ and continuing on the first day of each month thereafter (each of such date
being hereinafter referred to as a "Quarterly Payment Date") and one final
payment of principal of _______________________ Dollars ($____________ on May
31, _____ (the "Final Payment Date") when the entire unpaid Principal and
accrued interest thereon shall be paid in full. The Borrower hereby further
promises to pay interest from the date hereof on the amount of Principal from
time to time outstanding at a rate per annum which at all times shall be equal
to (i) the Payee's announced prime rate in effect from time to time (the "Prime
Rate"), such interest to be payable monthly on the first day of each month
commencing July 1, , and on the Final Payment Date. Interest shall continue to
accrue on this Note after maturity at the rate set forth above and shall then be
payable on demand of the holder of this Note. Any change in the Prime Rate shall
result in a change on the same day in the rate of interest to accrue thereafter
on the unpaid Principal of this Note at the time outstanding. Interest payable
hereunder shall be calculated on the basis of a 365- day year and paid for the
actual number of days for which due.
This Note is issued pursuant to the provisions of a certain Amended and
Restated Credit Agreement dated as of May 31, 1997, as amended from time to
time, between the Borrower and the Bank (the "Credit Agreement").
This Note is subject to prepayment, in whole or in part, as specified
in the Credit Agreement, In case of Default, as defined in the Credit Agreement,
shall occur and be continuing, in the manner and with the effect provided in the
Credit Agreement, and the Borrower hereby agrees to pay all costs and expenses
in connection therewith, including reasonable attorney's fees, as provided in
the Credit Agreement.
The Borrower and all guarantors, endorsers and pledgors hereof hereby
waive presentment, demand, notice of dishonor, protest and all other demands and
notices in connection with the delivery, acceptance and performance of this
Note.
This Note shall be governed by and interpreted in accordance with the
laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the Borrower has caused its corporate name to be signed by
its duly authorized officer under seal as of the day and year first above
written.
S&K FAMOUS BRANDS, INC.
By:____________________________[SEAL]
Title:__________________________
EXHIBIT C
XXXXXXX XXXXX
BATTLE & XXXXXX LLP
One Xxxxx Center
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
May 27, 1997
Signet Bank
000 Xxxx Xxxx Xxxxxx
X.X. Xxx 0X000
Xxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
We have acted as counsel for S & K Famous Brands, Inc., a Virginia
corporation (the "Company"), in connection with the execution and delivery of
the Amended and Restated Credit Agreement dated as of May 31, 1997, (the "Credit
Agreement"), between the Company and you. At the request of the Company, we are
rendering to you this opinion, delivery of which is required by Section 4 of the
Credit Agreement.
We have examined originals or copies, which have been identified to our
satisfaction, of such documents, instruments, certificates and opinions as we
have deemed necessary in order to render the opinions herein expressed. We
assumed that all such documents, instruments, certificates and opinions are
authentic and that the signatures affixed thereto are genuine.
We call to your attention that, although this firm represents the
Company on a regular basis, our knowledge of its affairs is limited to specific
matters as to which we have been consulted by the Company. Matters of a legal
nature may exist, that would have a bearing on the Company's financial
Condition, with respect to which we have not been consulted. We do not purport
to be qualified as attorneys in any states other than Virginia and no opinion
herein is expressed on the basis of the laws of any other state.
Based upon the foregoing and having regard for such legal
considerations as we deem relevant, we are of the opinion that:
1. The Company (i) is a corporation duly organized, existing and in
good standing under the laws of the Commonwealth of Virginia and (ii) has all
requisite corporate power to own its property and conduct its business as
presently conducted and described in the Company's Form 10-K Annual Report for
the fiscal year ended January 25, 1997. The execution, delivery and performance
of the Credit Agreement and the transactions contemplated thereby are within the
scope of the corporate authority of the Company and have been duly authorized by
all necessary corporate proceedings.
Signet Bank
May 27, 1997
Page 2
2. The execution, delivery and performance of the Credit Agreement, the
notes to be issued thereunder (the "Notes"), and the transactions contemplated
thereby do not require the approval or consent of, or filing or registration
with any governmental agency, stockholders or any other party; except that the
Credit Agreement may need to be filed with the Securities and Exchange
Commission as an exhibit to a report of the Company pursuant to Section 513 of
the Securities Exchange Act of 1934.
3. To the best of our knowledge, there are no actions, suits or
proceedings pending or threatened against the Company in which there is a
reasonable possibility of an adverse outcome which may, in the aggregate, result
in any material liability on the part of or any material adverse change in the
business, properties, assets or condition, financial or otherwise, of the
Company, or which question the validity of the Credit Agreement, the Notes or
any action taken or to be taken in connection with the Credit Agreement.
4. Issuance of the Notes and performance of and compliance with the
provisions of the Credit Agreement and the Notes by the Company will not (i)
violate any provision of the articles of incorporation or by-laws of the Company
or (ii) to the best of our knowledge, violate any provision of law or (iii) to
the best of our knowledge, conflict with or breach any of the provisions of or
constitute a default under, or result in the creation or imposition of any
encumbrance upon any property of the Company pursuant to any agreement by which
the Company is bound; it being expressly understood that, insofar as the
Company's compliance with financial accounting tests and restrictions contained
in any such agreement is concerned, we are relying entirely upon a certificate
of the Chief Financial Officer of the Company.
5. The Credit Agreement constitutes, and each Note, when issued and
delivered pursuant thereto for value received, will constitute a valid and
binding obligation of the Company enforceable in accordance with their
respective terms (except as may be limited by any applicable bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or affecting
generally the enforcement of creditor's rights and except as may be limited by
general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law).
Very truly yours,
McGuire, Woods, Battle & Xxxxxx, L.L.P.
