10.20. Form of Amendment No. 9 to the Revolving Credit Agreement, among the
parties thereto.
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AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
GUESS ?, INC.
DATED AS OF MARCH 28, 1997
THE FIRST NATIONAL BANK OF BOSTON, AS AGENT
SANWA BANK CALIFORNIA, AS CO-AGENT
AND A GROUP OF FINANCIAL INSTITUTIONS PARTY HERETO
TABLE OF CONTENTS
SECTION 1 - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Accounting Terms. . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2 - DESCRIPTION OF CREDIT . . . . . . . . . . . . . . . . . . . . . . 13
2.1. The Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.2. Notice and Manner of Borrowing or Conversion of Loans . . . . . . 14
2.3. Agent's Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.4. Commitment Fee. . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.5. Reduction of Commitment Amount. . . . . . . . . . . . . . . . . . 15
2.6. The Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.7. Duration of Interest Periods. . . . . . . . . . . . . . . . . . . 15
2.8. Interest Rates and Payments of Interest . . . . . . . . . . . . . 16
2.9. Changed Circumstances . . . . . . . . . . . . . . . . . . . . . . 16
2.10. Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.11. Capital Requirements. . . . . . . . . . . . . . . . . . . . . . . 18
2.12. Prepayments of the Loans. . . . . . . . . . . . . . . . . . . . . 18
2.13. Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . 18
2.14. Overdue Payments and Default Rate . . . . . . . . . . . . . . . . 19
2.15. Payments Not at End of Interest Period. . . . . . . . . . . . . . 19
2.16. Issuance of Letters of Credit . . . . . . . . . . . . . . . . . . 20
2.17. Payments under Letters of Credit and Reimbursement by the
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.18. Outstanding Letters of Credit and Event of Default. . . . . . . . 21
2.19. Computation of Interest and Fees. . . . . . . . . . . . . . . . . 21
2.20. Payment Free of Taxes . . . . . . . . . . . . . . . . . . . . . . 21
2.21. Provisions Applicable to Certain Payments . . . . . . . . . . . . 22
SECTION 3 - CONDITIONS OF LOANS . . . . . . . . . . . . . . . . . . . . . . . 23
3.1. Conditions Precedent to Initial Loan. . . . . . . . . . . . . . . 23
3.2. Conditions Precedent to all Loans . . . . . . . . . . . . . . . . 24
SECTION 4 - REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . 24
4.1. Organization and Qualification. . . . . . . . . . . . . . . . . . 24
4.2. Corporate Authority . . . . . . . . . . . . . . . . . . . . . . . 24
4.3. Valid Obligations . . . . . . . . . . . . . . . . . . . . . . . . 25
4.4. Consents or Approvals . . . . . . . . . . . . . . . . . . . . . . 25
4.5. Title to Properties; Absence of Encumbrances. . . . . . . . . . . 25
4.6. Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.7. Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.8. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.9. Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.10. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.11. Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.12. Investment Company Act. . . . . . . . . . . . . . . . . . . . . . 26
4.13. Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . 26
4.14. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . 26
4.15. Employee Matters. . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5 - AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . 28
5.1. Financial Statements and other Reporting Requirements . . . . . . 28
5.2. Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . 30
5.3. Maintenance and Insurance . . . . . . . . . . . . . . . . . . . . 31
5.4. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.5. Inspection by the Agent and Lenders . . . . . . . . . . . . . . . 31
5.6. Maintenance of Books and Records. . . . . . . . . . . . . . . . . 32
5.7. Current Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.8. Leverage Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.9. Total Interest Coverage . . . . . . . . . . . . . . . . . . . . . 32
5.10. Total Fixed Charge Coverage . . . . . . . . . . . . . . . . . . . 32
5.11. Profitability . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.12. Inventory Turnover. . . . . . . . . . . . . . . . . . . . . . . . 32
5.13. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.14. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . 33
5.15. Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6 - NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . 33
6.1. Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.2. Guarantees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.3. Sale and Leaseback. . . . . . . . . . . . . . . . . . . . . . . . 35
6.4. Encumbrances. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.5. Merger; Consolidation; Sale or Lease of Assets. . . . . . . . . . 38
6.6. Additional Stock Issuance . . . . . . . . . . . . . . . . . . . . 38
6.8. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.9. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.10. Change in Terms and Prepayment of Subordinated INDEBTEDNESS . . . 40
6.11. Transactions with Affiliates. . . . . . . . . . . . . . . . . . . 40
6.12. Nature of Business. . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 7 - DEFAULTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . 41
7.2. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 8 - CONCERNING THE AGENT AND THE LENDERS. . . . . . . . . . . . . . . 44
8.1. Appointment and Authorization . . . . . . . . . . . . . . . . . . 44
8.2. Agent and Affiliates. . . . . . . . . . . . . . . . . . . . . . . 44
8.3. Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.4. Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.5. Interest, Fees and Other Payments . . . . . . . . . . . . . . . . 46
8.6. Action by Agent . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.7. Consultation with Experts . . . . . . . . . . . . . . . . . . . . 47
8.8. Liability of Agent. . . . . . . . . . . . . . . . . . . . . . . . 47
8.9. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.10. Independent Credit Decision . . . . . . . . . . . . . . . . . . . 48
8.11. Consents of Lenders . . . . . . . . . . . . . . . . . . . . . . . 48
8.12. Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 9 - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.1. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.2. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.3. Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.4. Term of Agreement . . . . . . . . . . . . . . . . . . . . . . . . 51
9.5. No Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.6. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.7. AMENDMENTS, WAIVERS, ETC. . . . . . . . . . . . . . . . . . . . . 51
9.8. Assignment and Participation. . . . . . . . . . . . . . . . . . . 52
9.9. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.10. Binding Effect of Agreement . . . . . . . . . . . . . . . . . . . 54
9.11. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . 54
9.12. Partial Invalidity. . . . . . . . . . . . . . . . . . . . . . . . 54
9.13. Captions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
9.14. Nature of Lender's Obligations. . . . . . . . . . . . . . . . . . 54
9.15. Nonliability of Lenders . . . . . . . . . . . . . . . . . . . . . 54
9.16. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.17. Purported Oral Amendments . . . . . . . . . . . . . . . . . . . . 55
9.18. Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . . . . 56
9.19. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 56
EXHIBITS
EXHIBIT A - Form of Promissory Note
EXHIBIT B - Form of Notice of Borrowing or Conversion
EXHIBIT C - Indebtedness; Encumbrances
EXHIBIT D - Litigation
EXHIBIT E - Subsidiaries
EXHIBIT F - Form of Report of Chief Financial Officer
EXHIBIT G - Form of Opinion of Inside Counsel to Company
EXHIBIT H - Standby Letter of Credit Agreement
EXHIBIT I - Documentary Letter of Credit Agreement
EXHIBIT J - Form of Lender's Percentages
EXHIBIT K - Transactions with Affiliates
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
DATED AS OF MARCH ___, 1997
THIS AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT is made as of March
___, 1997, by and between GUESS ?, INC. (the "COMPANY"), a Delaware
corporation having its chief executive office at 0000 X. Xxxxxxx Xxxxxx, Xxx
Xxxxxxx, Xxxxxxxxxx, 00000 and THE FIRST NATIONAL BANK OF BOSTON, AS AGENT
(the "AGENT"), a bank with its head office at 000 Xxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, SANWA BANK CALIFORNIA, a bank with its head offices at
000 Xxxxx Xxxxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000 (the "CO-AGENT") and
the group of financial institutions party hereto (collectively, the
"LENDERS").
WHEREAS, the Company, the Agent, the Co-Agent and the Lenders are
parties to a Revolving Credit Agreement dated as of December 20, 1993 as
amended by a First Amendment to Revolving Credit Agreement dated as of
January 20, 1994, by a Second Amendment and Waiver to Revolving Credit
Agreement dated as of April 1, 1994, by a Third Amendment and Waiver to
Revolving Credit Agreement dated as of July 18, 1994, by a Fourth Amendment
and Waiver to Revolving Credit Agreement dated as of October 24, 1994, by a
Fifth Amendment to Revolving Credit Agreement dated as of February 13, 1995,
by a Sixth Amendment to Revolving Credit Agreement dated as of September 14,
1995, by a Seventh Amendment to Revolving Credit Agreement dated as of
December 22, 1995 and by an Eighth Amendment to Revolving Credit Agreement
dated as of February 13, 1996. (collectively, the "EXISTING LOAN AGREEMENT");
and
WHEREAS, the Company, the Agent, the Co-Agent and the Lenders desire (i)
to extend the maturity date under the Existing Loan Agreement, (ii) to make
certain other changes under the Existing Loan Agreement, and (iii) to amend
and restate the Existing Loan Agreement;
NOW THEREFORE, the parties hereto hereby agree as follows:
1 - DEFINITIONS
1. DEFINITIONS.
All capitalized terms used in this Agreement or in the Notes or in any
certificate, report or other document made or delivered pursuant to this
Agreement (unless otherwise defined therein) shall have the meanings assigned
to them below:
ADJUSTED EURODOLLAR RATE. Applicable to any Interest Period, shall mean
a rate per annum determined pursuant to the following formula:
AER =[ IOR ]*
-----------------
* The amount in brackets shall be rounded upwards, if necessary,
to the next higher 1/100 of 1%.
1
[ 1.00 - RP ]
AER =Adjusted Eurodollar Rate
IOR =Interbank Offered Rate
RP =Reserve Percentage
Where:
"Interbank Offered Rate" applicable to any Eurodollar Loan for any
Interest Period means the rate of interest determined by the Agent
to be the prevailing rate per annum at which deposits in U.S.
dollars are offered to the Agent by first-class banks in the
interbank Eurodollar market in which it regularly participates on
or about 10:00 a.m. (Boston time) two Business Days before the
first day of such Interest Period in an amount approximately equal
to the principal amount of the Eurodollar Loan to which such
Interest Period is to apply for a period of time approximately
equal to such Interest Period.
"Reserve Percentage" applicable to any Interest Period means the
rate (expressed as a decimal) applicable to the Agent during such
Interest Period under regulations issued from time to time by the
Board of Governors of the Federal Reserve System for determining
the maximum reserve requirement (including, without limitation, any
basic, supplemental, emergency or marginal reserve requirement) of
the Agent with respect to "Eurocurrency Liabilities" as that term
is defined under such regulations.
The Adjusted Eurodollar Rate shall be adjusted automatically as of the
effective date of any change in the Reserve Percentage.
AFFECTED PARTY. See SECTION 2.21.
AFFILIATE. With reference to any Person, (i) any director, officer or
employee of that Person, (ii) any other Person controlling, controlled by or
under direct or indirect common control of that Person, (iii) any other
Person directly of indirectly holding 5% or more of any class of the Capital
Stock or other equity interests (including options, warrants, convertible
securities and similar rights) of that Person, and (iv) any other Person
holding 5% or more of any class of whose Capital Stock or other equity
interests (including options, warrants, convertible securities and similar
rights) is held directly or indirectly by that Person.
AGENT. The Agent as defined in the preamble or any successor agent
appointed under the terms hereof.
AGENT'S FEE. The annual fee of $25,000 payable by the Company to the
Agent at Closing and on every anniversary thereof as long as this Agreement
is in effect.
AGREEMENT. This Agreement, as the same may be supplemented or amended
from time to time.
2
APPAREL BUSINESS. Collectively, (a) the business of the manufacture,
wholesale sale and/or retail sale of clothing garments and other wearing
apparel or allied or complementary products for men, women or children,
including accessories, fragrances, eyewear, watches and footwear, or of any
component materials thereof, and (b) the business of granting licenses of the
trademarks, tradenames and other similar property to other Persons for the
manufacture and/or sale of such products of any nature by such persons.
BANKRUPTCY CODE. Title 11 of the U.S. Code (11 U.S.C Section 101 et.
seq.).
BASE RATE. The rate of interest announced from time to time by the
Agent at its head office as its Base Rate minus Fifty (50) basis points.
BASE RATE LOAN. Any Revolving Loan bearing interest determined with
reference to the Base Rate.
BUSINESS DAY. (i) For all purposes other than as covered by clause (ii)
below, any day other than a Saturday, Sunday or legal holiday on which banks
in each of Boston, Massachusetts, Los Angeles, California and New York, New
York are open for the conduct of their commercial banking business; and (ii)
with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Loans, any day that is a
Business Day described in clause (i) that is also a day for trading by and
between banks in U.S. Dollar deposits in the interbank Eurodollar market.
CAPITAL EXPENDITURE. Any expenditure that is considered a capital
expenditure under GAAP.
CAPITAL STOCK. With respect to any Person, any and all shares,
interests, participations, rights in or other equivalents (however
designated) of such Person's capital stock or equity interests, and any
rights (other than debt securities convertible into capital stock), warrants
or options exchangeable for or convertible into such capital stock or equity
interests.
CAPITAL LEASE. Any lease of any property (whether real, personal or
mixed) by any Person as lessee, which lease should, in accordance with GAAP,
be accounted for as a capital lease on the balance sheet of such Person.
CO-AGENT. As defined in the preamble.
COLLATERAL. The meaning set forth in the Security Agreement.
CODE. The Internal Revenue Code of 1986 and the rules and regulations
thereunder, collectively, as the same may from time to time be supplemented
or amended and remain in effect.
COMMITMENT AMOUNT. $100,000,000 or any lesser amount, including zero,
resulting from a termination or reduction of such amount in accordance with
SECTION 2.5 or SECTION 7.2.
COMMITMENT FEE. See SECTION 2.4.
3
COMPANY. See Preamble.
CONSOLIDATED CASH FLOW. For any fiscal period an amount equal to
Consolidated EBITDA for such period, minus Capital Expenditures made during
such period.
CONSOLIDATED CURRENT ASSETS. Consolidated current assets as determined
for the Company and its Subsidiaries, if any, in accordance with GAAP.
CONSOLIDATED CURRENT LIABILITIES. At any date as of which the amount
thereof shall be determined, all amounts that should, in accordance with
GAAP, be included as current liabilities on the consolidated balance sheet of
the Company and its Subsidiaries as at such date, plus, to the extent not
already included therein, all Loans, and all Indebtedness that is payable
upon demand or within one year from the date of determination thereof unless
such Indebtedness is renewable or extendable at the option of the Company or
any Subsidiary to a date more than one year from the date of determination.
CONSOLIDATED EBITDA. For any period, an amount equal to Consolidated
Net Income for such period plus, (a) to the extent deducted in computing such
Consolidated Net Income, (i) Consolidated Total Interest Expense, (ii) taxes
and (iii) all depreciation, amortization and other non-cash charges taken in
accordance with GAAP and deducted in computing Consolidated Net Income for
such period and minus (b) to the extent included in computing such Net
Income, all extraordinary and unusual gains.
CONSOLIDATED NET INCOME. The gross revenues of the Company (on a
consolidated basis if and when the Company has any Subsidiaries) for the
period in question, less all expenses and other proper charges (including
taxes on income), all determined in accordance with GAAP, but in any event,
excluding from Consolidated Net Income: (i) any gain or loss arising from any
write-up of assets, except to the extent inclusion thereof shall be approved
in writing by the Majority Lenders; (ii) earnings of any Subsidiary accrued
prior to the date it became a Subsidiary; (iii) the net earnings of any
business entity (other than a Subsidiary) in which the Company or any
Subsidiary has an ownership interest, except to the extent such net earnings
shall have actually been received by the Company or such Subsidiary in the
form of cash or other marketable property distributions; (iv) the proceeds of
any life insurance policy; (v) any deferred or other credit representing any
excess of the equity of any Subsidiary at the date of acquisition thereof
over the amount invested in such Subsidiary; and (vi) any reversal of any
contingency reserve, except to the extent that provision for such contingency
reserve shall be made from income arising during such period.
CONSOLIDATED TOTAL DEBT SERVICE. For any period, all interest which has
accrued (whether actually paid or not), for such period, and all scheduled
payments of principal due during the one year period preceding the end of
such period, on all obligations for borrowed money, capitalized leases or
otherwise, except for the principal amounts outstanding under the Revolving
Loans.
4
CONSOLIDATED TOTAL INTEREST EXPENSE. For any period, all interest which
has accrued (whether actually paid or not), for such period on all
Indebtedness for Money Borrowed, Capitalized Leases or otherwise.
CONTROLLED GROUP. All trades or businesses (whether or not
incorporated) under common control that, together with the Company, are
treated as a single employer under Section 414(b) or 414(c) of the Code or
Section 4001 of ERISA.
DEFAULT. An event or condition that, but for the requirement that time
elapse or notice be given, or both, would constitute an Event of Default.
DOCUMENTARY LETTER OF CREDIT. A Letter of Credit issued for the account
of the Company for the purchase of goods and payable upon the presentation of
documents.
ENCUMBRANCES. See SECTION 6.4.
ERISA. The Employee Retirement Income Security Act of 1974 and the
rules and regulations thereunder, collectively, as the same may from time to
time be supplemented or amended and remain in effect.
ENVIRONMENTAL LAWS. Any and all applicable federal, state and local
environmental, health or safety statutes, laws, regulations, rules,
ordinances, policies and rules (whether now existing or hereafter enacted or
promulgated), of all governmental agencies, bureaus or departments which may
now or hereafter have jurisdiction over the Company or any of its
Subsidiaries and all applicable judicial and administrative and regulatory
decrees, judgments and orders, including common law rulings and
determinations, relating to injury to, or the protection of, real or personal
property or human health or the environment, including, without limitation,
all requirements pertaining to reporting, licensing, permitting,
investigation, remediation and removal of emissions, discharges, releases or
threatened releases of Hazardous Materials into the environment or relating
to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of such Hazardous Materials.
EURODOLLAR LOAN. Any Revolving Loan bearing interest at a rate
determined with reference to the Adjusted Eurodollar Rate.
EURODOLLAR SPREAD. Equal to (a) until June 30, 1994, 1.50% per annum,
and (b) after June 30, 1994, the following percentages for each and every
quarter in which the Company falls within the following range of ratios for
the fiscal quarter then most recently ended, as certified by the chief
financial officer of the Company to the Agent pursuant to Section 5.1(c), of
both Indebtedness for Money Borrowed less the Fair Market Value (as
hereinafter defined) of the Senior Subordinated Notes held by the Company or
any of its Wholly Owned Subsidiaries (to the extent such Senior Subordinated
Notes are included in the calculation of Indebtedness for Money Borrowed; but
only so long as the Fair Market Value of such Senior Subordinated Notes so
held is not less than 80% of the principal amount of such Senior Subordinated
Notes), as of the fiscal quarter then ended to Consolidated Cash Flow less
Excess Dividends ("LEVERAGE") for the prior four fiscal quarters and
Consolidated EBITDA less Capital Expenditures to Consolidated Total Interest
Expense ("COVERAGE") for the prior four fiscal quarters:
5
PERCENTAGE LEVERAGE COVERAGE
1.25% greater than 2.25 greater than or equal to
4.0 to 1
1.00% greater than 1.75 to 1 greater than or equal to
less than or equal to 2.25
to 14.0 to 1
.75% greater than 1.25 to 1 greater than or equal to
less than or equal to 1.75
to 14.5 to 1
.625% greater than 1 to 1 greater than or equal to
less than or equal to 1.25
to 15.0 to 1
.50% less than or equal to 1 to 1 greater than or equal to
5.0 to 1
PROVIDED, any such pricing shall be effective on and after receipt by the
Agent of the financial statement showing such ratio. If financial statements
are not received as provided in Section 5.1, the Eurodollar spread shall be
1.25% until such compliance statement is received. The term "Fair Market
Value" as used herein with respect to the Senior Subordinated Notes shall
mean the price for such notes quoted by PaineWebber, Inc. on the date of such
calculation of the Eurodollar Spread.
EVENT OF DEFAULT. Any event described in SECTION 7.1.
EXCESS DIVIDENDS. For any fiscal period the amounts calculated under and
defined in SECTION 6.7(a).
FOUR WALL CONTRIBUTION REPORT. For any retail or outlet store of the
Borrower, a report of results of operations for that store taking into
account gross sales, cost of goods sold and overhead expenses including rent,
payroll and tenant improvements, in each case related only that store and
excluding charges relating to the other operations and store locations of the
Borrower.
GAAP. See SECTION 1.2.
GUARANTEES. As applied to any Person, all guarantees, endorsements or
other contingent or surety obligations with respect to obligations of others
whether or not reflected on the consolidated balance sheet of such Person,
including any obligation to furnish funds, directly or indirectly (whether by
virtue of partnership arrangements, by agreement to keep-well or otherwise),
through the purchase of goods, supplies or services, or by way of stock
purchase, capital contribution, advance or loan, or to enter into a contract
for any of the foregoing, for the purpose of payment of obligations of any
other person or entity.
6
HAZARDOUS MATERIAL. Any substance (i) the presence of which requires or
may hereafter require notification, investigation or remediation under any
Environmental Law, (ii) which is or becomes regulated as a "hazardous waste",
"hazardous material," "hazardous substance," "pollutant" or "contaminant"
under any present or future Environmental Law or amendments thereto
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. Section 9601 ET SEQ.) and any
applicable local statutes and the regulations promulgated thereunder, (iii)
which is toxic, explosive, corrosive, flammable, infectious, radioactive or
otherwise hazardous and is or becomes regulated by any governmental
authority, agency, department, commission, board, agency or instrumentality
of any foreign country, the United States, any state of the United States, or
any political subdivision thereof to the extent any of the foregoing has or
had jurisdiction over the Company, or (iv) without limitation, which contains
gasoline, diesel fuel or other petroleum products, asbestos or
polychlorinated biphenyls.
INDEBTEDNESS. As applied to the Company and its Subsidiaries means
without duplication, (i) all obligations for borrowed money or other
extensions of credit whether or not secured or unsecured, absolute or
contingent, including, without limitation, unmatured reimbursement
obligations with respect to letters of credit or guarantees issued for the
account of or on behalf of the Company and its Subsidiaries and all
obligations representing the deferred purchase price of property, other than
accounts payable and accrued expenses arising in the ordinary course of
business, (ii) all obligations evidenced by bonds, notes, debentures or other
similar instruments, (iii) all obligations secured by any mortgage, pledge,
security interest or other lien on property owned or acquired by the Company
or any of its Subsidiaries whether or not the obligations secured thereby
shall have been assumed, PROVIDED, HOWEVER, that if the obligation secured
thereby has not been assumed, the amount of such obligation deemed
Indebtedness under this clause shall be equal to the lesser of the amount of
such obligation and the value of the property of the Company or any of its
Subsidiaries securing such obligation, (iv) that portion of all obligations
arising under Capital Leases that is required to be capitalized on the
consolidated balance sheet of the Company and its Subsidiaries, and (v) all
Guarantees to the extent of unpaid obligations under such Guarantees.
INDEBTEDNESS FOR MONEY BORROWED. As applied to the Company and its
Subsidiaries, means without duplication all Indebtedness for borrowed money
or other extensions of credit, whether or not secured or unsecured, absolute
or contingent, other than (i) unmatured reimbursement obligations with
respect to letters of credit or guarantees, (ii) Indebtedness owing to the
Company or any of its Subsidiaries from the Company or any of its
Subsidiaries which Subsidiaries may, in accordance with GAAP, be consolidated
with the Company for financial reporting purposes, and (iii) accounts payable
and accrued expenses arising in the ordinary course of business.
INDUSTRIAL. The Industrial Bank of Japan, Limited, Los Angeles Agency.
INTEREST PERIOD.
7
(a) With respect to each Eurodollar Loan, the period commencing on
the date of the making or continuation of or conversion to such Eurodollar
Loan and ending one, two, three or six months thereafter, as the Company may
elect in the applicable Notice of Borrowing or Conversion; and
(b) With respect to each Base Rate Loan, the period commencing on
the date of the making of or conversion to such Base Rate Loan and ending on
the date such Base Rate Loan is repaid or converted to a Eurodollar Loan;
PROVIDED that:
(ii) Any Interest Period (other than an Interest Period determined
pursuant to clause (iii) below) that would otherwise end on a day that is not
a Business Day shall be extended to the next succeeding Business Day unless,
in the case of Eurodollar Loans, such Business Day falls in the next calendar
month, in which case such Interest Period shall end on the immediately
preceding Business Day;
(iii) Any Interest Period applicable to a Eurodollar Loan that
begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end of
such Interest Period) shall, subject to clause (iii) below, end on the last
Business Day of a calendar month; and
(iv) Any Interest Period during the Revolving Credit Period that
would otherwise end after the Revolving Credit Termination Date shall end on
the Revolving Credit Termination Date (PROVIDED, HOWEVER, that this
subsection (iii) shall not permit the Company to select an Interest Period
applicable to a Eurodollar Loan which shall have an initial duration of less
than one month).
INVENTORY TURNOVER. As of the last day of each fiscal quarter, the
result obtained (expressed as the number of turns) by dividing (i) the total
cost of sales of the Company for the four fiscal quarters then ended,
determined in accordance with GAAP, by (ii) the average inventory of the
Company for the four fiscal quarters then ended (calculated by adding the
book value of the inventory of the Company as of the end of the most recently
ended fiscal quarter to the book value of the inventory of the Company at the
beginning of the measurement period and dividing the result by 2) all as
determined in accordance with GAAP.
INVESTMENT. As applied to the Company and its Subsidiaries, the
purchase or acquisition of any share of capital stock, partnership interest,
evidence of indebtedness or other equity security of any other Person or
entity, any loan, advance or extension of credit to, or contribution to the
capital of, any other Person or entity, any real estate held for sale or
investment (other than real property used at some point in the operations of
the Company or its Subsidiaries), any commodities futures contracts held
other than in connection with bona fide hedging transactions, any other
investment in any other person or entity.
LENDERS. The Agent, the Co-Agent, Industrial, Lyonnais, Sumitomo and
each other entity which acquires an interest pursuant to SECTION 9.8(i) of
this Agreement.
8
LENDER'S PERCENTAGE. The percentage of all Loans and Letter of Credit
risk and income taken by each of the Lenders as set forth on EXHIBIT J hereto
as it may be adjusted from time to time pursuant to the terms hereof.
LETTERS OF CREDIT. Documentary Letters of Credit or Standby Letters of
Credit issued by the Agent for the account of the Company, subject to the
terms of SECTION 2.16 hereof.
LETTER OF CREDIT AGREEMENT. Any of the one or more agreements by and
between the Agent and the Company providing for the issuing and administering
of Letters of Credit, together with any replacements, extensions,
modifications or amendments thereto substantially in the forms appended
hereto as EXHIBIT H and EXHIBIT I.
LETTER OF CREDIT SUBLIMIT. The sum of the outstanding amount of all
Letters of Credit, which shall not exceed $20,000,000 at any time.
LOAN. A loan made to the Company by the Lenders pursuant to SECTION 2.1
of this Agreement, and "Loans" means all of such loans, collectively.
LOAN DOCUMENTS. Collectively, this Agreement, the Notes, the Security
Agreement, any Letters of Credit, any Letter of Credit Agreement and any
guaranties or other document required by any such Loan Document together with
any amendments, modifications or replacements thereto.
LYONNAIS. Credit Lyonnais Los Angeles Branch.
MAJORITY LENDERS. Lenders representing, in the aggregate, not less than
51% of the outstanding principal amount of the Loans and Letters of Credit,
but in no event (other than if there is only one Lender) less than two
Lenders.
NEWTIMES GUESS. Newtimes Guess ?, Limited. a corporation owned 100% by
the Newtimes Guess Parent.
NEWTIMES GUESS PARENT. Newtimes Guess ?, Limited. a corporation owned
50% by the Guess? Europe, B.V. and 50% by Indigo Consultants, Ltd.
NOTES. Promissory notes issued to each of the Lenders in respect of
their respective Lender's Percentage of the Commitment Amount, substantially
in the form of EXHIBIT A hereto, evidencing the obligations of the Company to
the Lenders to repay the Loans.
NOTICE OF BORROWING OR CONVERSION. See SECTION 2.2.
OBLIGATIONS. Any and all obligations of the Company to the Lenders of
every kind and description arising under the Loan Documents, whether direct
or indirect, absolute or contingent, primary or secondary, due or to become
due, now existing or hereafter arising, and including obligations to perform
acts and refrain from taking action as well as obligations to pay money.
9
OPERATING LEASE. Any lease of property (whether real, personal or
mixed) which should, in accordance with GAAP, be accounted for as an
operating lease of the Company or any Subsidiary of the Company.
PBGC. The Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA.
PERMITTED ENCUMBRANCES. See SECTION 6.4.
PERSON. Any entity, whether an individual, trustee, corporation,
general partnership, limited partnership, limited liability company, limited
liability partnership, joint stock company, trust, estate, unincorporated
organization, business association, tribe, firm, joint venture, governmental
agency or otherwise.
PLAN. At any time, an employee pension or other benefit plan that is
subject to Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code and is either (i) maintained by the Company or
any member of the Controlled Group for employees of the Company or any member
of the Controlled Group, or (ii) if such Plan is established, maintained
pursuant to a collective bargaining agreement or any other arrangement under
which more than one employer makes contributions and to which the Company or
any member of the Controlled Group is then making or accruing an obligation
to make contributions or has within the preceding five Plan years made
contributions.
QUALIFIED INVESTMENTS. As applied to the Company and its Subsidiaries,
investments in (i) notes, bonds or other obligations of the United States of
America or any agency thereof that as to principal and interest constitute
direct obligations of or are guaranteed by the United States of America; (ii)
certificates of deposit or other deposit instruments or accounts of banks or
trust companies organized under the laws of the United States or any state
thereof that have capital and surplus of at least $100,000,000, (iii)
commercial paper that is rated not less than prime-one or A-1 or their
equivalents by Xxxxx'x Investors Service, Inc. or Standard & Poor's
Corporation, respectively, or their successors, and (iv) any repurchase
agreement secured by any one or more of the foregoing.
REDEEMABLE CAPITAL STOCK. Any Capital Stock that, either by its terms,
by the terms of any security into which it is convertible or exchangeable or
otherwise, is, or upon the happening of an event or passage of time would be,
required to be redeemed prior to any stated maturity of the principal of such
Capital Stock or is redeemable at the option of the holder thereof at any
time prior to any such stated maturity, or is convertible into or
exchangeable for debt securities at any time prior to any such stated
maturity at the option of the holder thereof.
REVOLVING CREDIT PERIOD. The period beginning on the date of this
Agreement and extending through and including the Revolving Credit
Termination Date or such earlier date on which the commitment to make
Revolving Loans is terminated or the Commitment Amount is reduced to zero in
accordance with the terms hereof.
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REVOLVING CREDIT TERMINATION DATE. December 31, 1999; PROVIDED,
HOWEVER, that at the second anniversary of the Agreement and each anniversary
thereafter, the Company may request that the Agent and the Lenders extend the
Revolving Credit Termination Date of the facility hereunder by an additional
year and if all of the Lenders hereto so agree, "Revolving Credit Termination
Date" shall mean that date which is one year after the date which was the
"Revolving Credit Termination Date" immediately prior to the parties'
agreement to change such date. The Agent and Lenders shall have the right in
their sole discretion to grant such request and shall not receive a fee in
connection with any such extension provided that there are no material
modifications to the Loan Documents in connection with such extension.
REVOLVING LOANS. The Loans made to the Company pursuant to SECTION
2.1(a) of this Agreement.
SECURITY AGREEMENT. The security agreement dated as of the date hereof
executed by the Company in favor of the Agent, as the same may be amended,
supplemented or otherwise modified from time to time.
STANDBY LETTER OF CREDIT. A Letter of Credit issued on behalf of the
Company to secure payment of an obligation to any Person; PROVIDED such
Letter of Credit is not generally drawable until such time as there is a
failure to perform an obligation due the beneficiary of the Letter of Credit
in accordance with the terms of the underlying agreement secured by such
Letter of Credit.
SUBORDINATED INDEBTEDNESS. Indebtedness, the payment of principal of
and interest on which is expressly subordinated in right of payment of the
Obligations, in form and on terms approved by the Majority Lenders in
writing, and specifically including the 9 1/2% Senior Subordinated Notes due
2003 and the 9 1/2% Series B Senior Subordinated Notes due 2003 (collectively
the "SENIOR SUBORDINATED NOTES") issued by the Company pursuant to an
indenture dated as of August 23, 1993 with First Trust National Association,
as Trustee, PROVIDED that any Indebtedness which is subordinated to the
Obligations in a manner which is substantially identical to the manner in
which the Senior Subordinated Notes are subordinated to the Obligations shall
be Subordinated Indebtedness hereunder without the prior written consent of
the Majority Lenders.
SUBSIDIARY. Any corporation, association, joint stock company, business
trust or other similar organization of which 50% or more of the ordinary
voting power for the election of a majority of the members of the board of
directors or other governing body of such entity is held or controlled by the
Company or a Subsidiary of the Company; or any other such organization the
management of which is directly or indirectly controlled by the Company or a
Subsidiary of the Company through the exercise of voting power or otherwise;
or any joint venture, whether incorporated or not, in which the Company has a
50% ownership interest. Notwithstanding the forgoing, each of Newtimes Guess
Parent and Newtimes Guess shall not be a Subsidiary unless Guess Europe, B.V.
at anytime owns more than 50% of the shares or ownership interests in
Newtimes Guess Parent.
SUMITOMO. Sumitomo Bank of California.
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SWAP AGREEMENT. One or more written agreements between the Company and
one or more financial institutions providing for "swap," "cap," "collar" or
other interest rate protection with respect to any Indebtedness.
TAXES. See SECTION 2.20.
WHOLLY-OWNED SUBSIDIARY. Any Subsidiary of which 100% of the ordinary
voting power (other than voting power held by a person holding only
directors' qualifying shares) for the election of a majority of the members
of the board of directors of or other governing body of such entity is held
or controlled by the Company, or a joint venture, organization or other
association, whether incorporated or not, in which the Company has a 100%
ownership interest.
ACCOUNTING TERMS. All terms of an accounting character shall have
the meanings assigned thereto by generally accepted accounting principles in
effect from time to time applied on a basis consistent with the financial
statements referred to in SECTION 4.6 of this Agreement ("GAAP"), modified to
the extent, but only to the extent, that such meanings are specifically
modified herein. In the event that GAAP changes during the term of this
Agreement such that the financial covenants contained herein would then be
calculated in a different manner or with different components or would render
the same not meaningful criteria for evaluating the Company's financial
condition, (a) the Company and the Lenders agree to negotiate in good faith
in order to amend this Agreement in such respects as are necessary to conform
those covenants as criteria for evaluating the Company's financial condition
to substantially the same criteria as were effective prior to such change in
GAAP, and (b) during the period pending negotiation of such amendments, the
Company shall be deemed to be in compliance with the financial covenants
contained herein following any such change in GAAP if and to the extent that
the Company would have been in compliance therewith under GAAP as in effect
immediately prior to such change.
2 - DESCRIPTION OF CREDIT
.1. THE LOANS.
(a) Subject to the terms and conditions hereof, the Lenders will
make Revolving Loans to the Company, from time to time until the close
of business on the Revolving Credit Termination Date, in such sums as
the Company may request, PROVIDED that the aggregate principal amount of
all Loans plus the outstanding amount of all Letters of Credit at any
one time outstanding hereunder shall not exceed the Commitment Amount.
The Company may borrow, prepay pursuant to SECTION 2.12 and reborrow,
from the date of this Agreement until the Revolving Credit Termination
Date, the full amount of the Commitment Amount or any lesser sum that is
at least $500,000 and an integral multiple of $100,000. Any Revolving
Loan not repaid by the Revolving Credit Termination Date shall be due
and payable on the Revolving Credit Termination Date.
(b) The Company may convert all or any part (in integral multiples
of $100,000) of any outstanding (i) Eurodollar Loan into a Base Rate
Loan at any time, and (ii) a Base Rate Loan into a Eurodollar Loan, each
in the same aggregate principal amount, on any Business Day (which, in
the case of
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a conversion of a Eurodollar Loan, shall be the last day of the Interest
Period applicable to such Eurodollar Loan). The Company shall give the
Agent prior notice of each such conversion (which notice shall be effective
upon receipt) in accordance with SECTION 2.2.
(c) The proceeds of the Revolving Loans shall be used by the
Company exclusively for working capital purposes, EXCEPT THAT, up to
$75,000,000 (reduced as provided in SECTION 5.13) of the Commitment
Amount may be used, in the aggregate, to repurchase some or all of the
Senior Subordinated Notes, PROVIDED that the Company shall demonstrate
that it will comply with provisions of SECTIONS 5.13 AND 6.8 (xiv)
of this Agreement.
.2. NOTICE AND MANNER OF BORROWING OR CONVERSION OF LOANS. (a)
Whenever the Company desires to obtain or continue a Loan hereunder or
convert an outstanding Loan into a Loan of another type provided for in this
Agreement, the Company shall notify the Agent (which notice shall be
irrevocable) by facsimile, telex, telegraph or telephone received no later
than 1:00 p.m. Boston time on the day on which the requested Loan is made or
continued as or converted to a Base Rate Loan, and received no later than
3:00 p.m. Boston time on the date three Business Days before the day on which
the requested Loan is to be made or continued as or converted to a Eurodollar
Loan. Such notice shall specify (i) the effective date and amount of each
Loan or portion thereof to be continued or converted, subject to the
limitations set forth in SECTION 2.1, (ii) the interest rate option to be
applicable thereto, and (iii) the duration of the applicable Interest Period,
if any (subject to the provisions of the definition of Interest Period and
SECTION 2.7). Each such notification (a "NOTICE OF BORROWING OR CONVERSION")
shall be immediately followed by a written confirmation thereof by the
Company in substantially the form of EXHIBIT B hereto, PROVIDED that if such
written confirmation differs in any material respect from the action taken by
the Agent, the records of the Agent shall control absent manifest error.
(a) Subject to the terms and conditions hereof, each of the Lenders
shall make such Lender's Lender's Percentage of each Loan on the effective
date specified therefor by delivering good funds to the Agent in the amount
of such Lender's Percentage of such Loan in accordance with SECTION 8.3
hereto. The Agent shall then credit the amount of such Loan to the Company's
designated demand deposit account in immediately available funds as provided
in SECTION 8.3 hereof.
13
.3. AGENT'S FEE. The Agent shall have received the Agent's Fee which
is payable at closing from the Company. The Company shall pay the Agent's
Fee to the Agent on each anniversary of this Agreement as long as this
Agreement is in effect. The Agent's Fee is not refundable or subject to
proration.
.4. COMMITMENT FEE. The Company shall pay to the Agent for the
benefit of the Lenders during the Revolving Credit Period a commitment fee
(the "COMMITMENT FEE") computed at the rate of 0.25% per annum on the average
daily amount of the unborrowed portion of the Commitment Amount less the
average daily amount of the outstanding amount of Standby Letters of Credit
during each quarter or portion thereof. Commitment fees shall be payable
quarterly in arrears, on the last Business Day of each of March, June,
September and December of each year and on the last day of the Revolving
Credit Period.
.5. REDUCTION OF COMMITMENT AMOUNT. The Company may from time to time
by written notice delivered to the Agent at least five Business Days prior to
the date of the requested reduction, reduce by integral multiples of
$1,000,000 any unborrowed portion of the Commitment Amount. No reduction of
the Commitment Amount shall be subject to reinstatement.
.6. THE NOTES.
(a) The Loans shall be evidenced by the Notes, payable to the
order of each Lender in its Lender's Percentage and having a final
maturity of December 31, 1999. The Notes shall be dated on or before
the date of the first Loan and shall have the blanks therein
appropriately completed.
(b) Each Lender shall, and is hereby irrevocably authorized by the
Company to, enter on the schedule forming a part of each Note or
otherwise in its records appropriate notations evidencing the date and
the amount of each Loan, the interest rate applicable thereto and the
date and amount of each payment of principal made by the Company with
respect thereto; and in the absence of manifest error, such notations
shall constitute conclusive evidence thereof. Each Lender is hereby
irrevocably authorized by the Company to attach to and make a part of
each Note a continuation of any such schedule as and when required. No
failure on the part of any Lender to make any notation as provided in
this subsection (b) shall in any way affect any Loan or the rights or
obligations of the Lenders or the Company with respect thereto.
.7. DURATION OF INTEREST PERIODS.
(a) Subject to the provisions of the definition of Interest
Period, the duration of each Interest Period applicable to a Loan shall
be as specified in the applicable Notice of Borrowing or Conversion.
The Company shall have the option to elect a subsequent Interest Period
to be applicable to such Loan by giving notice of such election to the
Agent received no later than 2:00 p.m. Boston time on the date one
Business Day before the end of the then applicable Interest Period if
such Loan is to be converted to a Base Rate Loan and three Business Days
before the end of the then applicable Interest Period if such Loan is to
be continued as or converted to a Eurodollar Loan.
14
(b) If the Agent does not receive a notice of election of duration
of an Interest Period for a Eurodollar Loan pursuant to subsection (a)
above within the applicable time limits specified therein, the Company
shall be deemed to have elected to convert such Loan in whole into a Base
Rate Loan on the last day of the then current Interest Period with respect
thereto.
(c) Notwithstanding the foregoing, the Company may not select an
Interest Period that would end, but for the provisions of the definition
of Interest Period, after the Revolving Credit Termination Date.
.8. INTEREST RATES AND PAYMENTS OF INTEREST.
(a) Each Base Rate Loan shall bear interest on the outstanding
principal amount thereof at a rate per annum equal to the Base Rate,
which rate shall change contemporaneously with any change in the Base
Rate. Such interest shall be payable on the last day of each month, and
when such Loan is due (whether at maturity, by reason of acceleration or
otherwise).
(b) Each Eurodollar Loan shall bear interest on the outstanding
principal amount thereof, for each Interest Period applicable thereto,
at a rate per annum equal to the Adjusted Eurodollar Rate plus the
applicable Eurodollar Spread. Such interest shall be payable for such
Interest Period on the last day thereof and when such Eurodollar Loan is
due (whether at maturity, by reason of acceleration or otherwise) and,
if such Interest Period is longer than three months, at intervals of
three months after the first day thereof.
.9. CHANGED CIRCUMSTANCES.
(a) In the event that:
(ii) on any date on which the Adjusted Eurodollar Rate would
otherwise be set, the Agent shall have determined in good faith (which
determination shall be final and conclusive) that adequate and fair
means do not exist for ascertaining the Interbank Offered Rate, or
(iii) at any time the Agent shall have determined after
consultation with the Lenders and in good faith (which determination
shall be final and conclusive) that:
(A) the making or continuation of or conversion of any Loan
to a Eurodollar Loan has been made impracticable or unlawful by (l)
the occurrence of a contingency that materially and adversely
affects the interbank Eurodollar market, or (2) compliance by the
Lenders or any of them in good faith with any applicable law or
governmental regulation, guideline or order or interpretation or
change thereof by any governmental authority charged with the
interpretation or administration thereof or with any request or
directive of any
15
such governmental authority (whether or not having the force of law);
or
(B) the Adjusted Eurodollar Rate shall no longer represent
the effective cost to the Lenders or any of them for U.S. dollar
deposits in the interbank market for deposits in which they
regularly participate;
then, and in any such event, the Agent shall forthwith so notify the Company
thereof. Until the Agent notifies the Company that the circumstances giving
rise to such notice no longer apply, the obligation of the Lenders to allow
selection by the Company of Eurodollar Loans shall be suspended. If at the
time the Agent so notifies the Company and the Company has previously given
the Agent a Notice of Borrowing or Conversion with respect to one or more
Eurodollar Loans but such Loans have not yet gone into effect, such
notification shall be deemed to be void and the Company may borrow Loans at
the Base Rate pursuant to SECTION 2.2 hereof.
Upon such date as shall be specified in such notice (which shall not be
earlier than the date such notice is given) the Company shall, with respect
to the outstanding Eurodollar Loans, prepay the same, together with interest
thereon and any amounts required to be paid pursuant to SECTION 2.15, and may
borrow a Loan at the Base Rate in accordance with SECTION 2.1 hereof by
giving a Notice of Borrowing or Conversion pursuant to SECTION 2.2 hereof.
.10. INCREASED COSTS. Except in the case of any increased cost
attributable to the imposition of taxes as to which the Company's liability
therefor is governed by SECTION 2.20, if any change in any law, regulation,
treaty or official directive or the interpretation or application thereof by
any court or by any governmental authority charged with the administration
thereof or the compliance with any guideline or request of any central bank
or other governmental authority (whether or not having the force of law)
which becomes effective after the date hereof and (i) which change did not
occur prior to the date hereof (in the case of any law, regulation, treaty or
official directive or interpretation or application thereof), or (ii) which
guideline or request was not issued or published prior to the date hereof:
(a) imposes, modifies or deems applicable any deposit insurance,
reserve, special deposit or similar requirement against assets held by,
or deposits in or for the account of, or loans by, the Agent or any of
the Lenders (other than such requirements as are already included in the
determination of the Adjusted Eurodollar Rate), or
(b) imposes upon the Agent or any of the Lenders any other
condition with respect to its performance under this Agreement,
and the result of any of the foregoing is to increase the cost to the Agent
or any of the Lenders, reduce the income receivable by the Agent or any of
the Lenders or impose any expense upon the Agent or any of the Lenders with
respect to any Loans, then the Company agrees to pay to the Agent on behalf
of the Affected Party the amount of such increase in cost, reduction in
income or additional expense as and when such cost, reduction or expense is
incurred or determined, within five (5) Business Days of the presentation by
the Lender of a
16
statement of such amount and setting forth in reasonable detail the Affected
Party's calculation thereof, which statement shall be deemed true and correct
absent manifest error.
.11. CAPITAL REQUIREMENTS. Except in the case of any increased cost
attributable to the imposition of taxes as to which the Company's liability
therefor is governed by SECTION 2.20, if after the date hereof the Agent
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies,
or any change in the interpretation or application thereof by any
governmental authority charged with the administration thereof which becomes
effective after the date hereof and which adoption or change did not occur
prior to the date hereof as of the date hereof, or (ii) compliance by the
Agent or any of the Lenders or their respective parent bank holding companies
with any guideline, request or directive of any such governmental authority
regarding capital adequacy (whether or not having the force of law) which
becomes effective after the date hereof and which was not issued or published
(in the case of any guideline or request) as of the date hereof, has the
effect of reducing the return on any of the Lender's or such holding
company's capital as a consequence of the Lender's respective commitment to
make Loans hereunder to a level below that which such Lender or such holding
company could have achieved but for such adoption, change or compliance
(taking into consideration such Lender's or such holding company's then
existing policies with respect to capital adequacy and assuming the full
utilization of such entity's capital) by any amount deemed by such Lender to
be material, then the Agent shall notify the Company thereof. The Company
agrees to pay to the affected Lender, as the case may be, the amount of such
reduction of the return on capital as and when such reduction is determined,
within five (5) Business Days of presentation by the Lender of a statement of
such amount and setting forth in reasonable detail the affected Lender's
calculation thereof, which statement shall be deemed true and correct absent
manifest error. In determining such amount, the affected Lender may use any
reasonable averaging and attribution methods.
.12. PREPAYMENTS OF THE LOANS. Revolving Loans that are Eurodollar
Loans may be prepaid at any time upon three Business Days' notice and the
payment of any amount due pursuant to SECTION 2.15 as a result of such
prepayment. Revolving Loans that are Base Rate Loans may be prepaid at any
time, without premium or penalty. Any interest accrued on the amounts so
prepaid to the date of such payment must be paid at the time of any such
payment. No prepayment of the Revolving Loans during the Revolving Credit
Period shall affect the Commitment Amount or impair the Company's right to
borrow as set forth in SECTION 2.1.
.13. METHOD OF PAYMENT. All payments and prepayments of principal and
all payments of interest shall be made by the Company to the Agent, on behalf
of the Lenders, at the Agent's address set forth above in immediately
available funds, on or before 2:00 p.m. (Boston time) on the due date
thereof, free and clear of, and without any deduction or withholding for, any
taxes or other payments. The Agent may, and the Company hereby authorizes
the Agent to, debit the amount of any payment not made by such time to the
demand deposit account of the Company with the Agent or any of the Lenders.
17
.14. OVERDUE PAYMENTS AND DEFAULT RATE. Overdue, and after the
occurrence of and during the continuance of an Event of Default at the
direction of the Majority Lenders all, principal (whether at maturity, by
reason of acceleration or otherwise) and, to the extent permitted by
applicable law, overdue, and after the occurrence of and during the
continuance of an Event of Default at the direction of the Majority Lenders,
interest and fees or any other amounts payable hereunder or under the Notes
shall bear interest from and including the due date thereof until paid,
compounded daily and payable on demand, at a rate per annum equal to (i) if
such event occurs prior to the end of an Interest Period, 2% above the
interest rate applicable to such Loan for such Interest Period until the
expiration of such Interest Period, and thereafter, 2% above the Base Rate,
and (ii) in all other cases, 2% above the rate then applicable to Base Rate
Loans, which interest shall be compounded daily and payable on demand.
.15. PAYMENTS NOT AT END OF INTEREST PERIOD. If the Company makes any
payment of principal with respect to any Eurodollar Loan pursuant to SECTION
2.12 on any day other than the last day of an Interest Period applicable to
such Eurodollar Loan, or fails to borrow or continue or convert to a
Eurodollar Loan after giving a Notice of Borrowing or Conversion pursuant to
SECTION 2.2, the Company shall pay to the Agent, for the benefit of the
Lenders, an amount computed pursuant to the following formula:
L = (R - T) X P X D
360
L = amount payable to the Lenders
R = Adjusted Eurodollar Rate applicable to such Loan
T = effective interest rate per annum at which any readily marketable
bond or other obligation of the United States, selected at the
Agent's sole discretion, maturing on or near the last day of the
then applicable Interest Period of such Loan and in approximately
the same amount as such Loan can be purchased by the Agent on the
day of such payment of principal or failure to borrow or continue
or convert
P = the amount of principal prepaid or the amount of the requested
Loan
D = the number of days remaining in the Interest Period as of the
date of such payment or the number of days of the requested
Interest Period
The Company shall pay such amount upon presentation by the Agent of a
statement setting forth the amount and the Agent's calculation thereof
pursuant hereto, which statement shall be deemed true and correct absent
manifest error.
18
.16. ISSUANCE OF LETTERS OF CREDIT.
(a) At the request of the Company and provided no Event of Default
or Default shall have occurred and is continuing, the Agent (from time
to time prior to the Revolving Credit Termination Date) shall issue one
or more Letters of Credit; PROVIDED, HOWEVER, (i) the outstanding and
undrawn amount of all Letters of Credit, including the requested Letter
of Credit, plus all outstanding Loans shall not exceed the Commitment
Amount, (ii) the Company shall make application for issuance of any such
Letters of Credit by execution of a Letter of Credit Agreement, (iii)
the maturity date of any Letters of Credit shall not extend beyond the
Revolving Credit Termination Date, and (iv) no Documentary Letter of
Credit may have a term of greater than 180 days.
(b) In connection with this Agreement, the fees due and payable to
the Agent for (i) opening Documentary Letters of Credit shall be 0.125%
of the face amount thereof, but in no event less than $60.00, and shall
be payable upon such opening, (ii) negotiating Documentary Letters of
Credit shall be an additional 0.125% of the face amount thereof, but in
no event less than $60.00, and shall be payable upon such negotiation,
and (iii) issuing Standby Letters of Credit shall be payable quarterly
in arrears at the Eurodollar Spread then in effect as a percent per
annum of the face amount thereof. The foregoing fees shall also be
payable in connection with any increase in the face amount of a Letter
of Credit, in which case the respective percentages shall be applied
only to the incremental increase in the face amount of such Letters of
Credit.
(c) After the issuance of each Letter of Credit pursuant to
SECTION 2.16(a), the Agent shall notify each of the Lenders of the
issuance of one or more Letters of Credit. The Letters of Credit shall
be shared ratably on a risk and income participation basis by each of
the Lenders, except that (i) all application and processing fees payable
in connection with any Letters of Credit shall be paid to and retained
by the Agent, and (ii) the Agent shall retain (A) all fees paid under
Documentary Letters of Credit as its fee for issuing such Documentary
Letters of Credit and (B) one-quarter percent per annum of the face
amount of all Standby Letters of Credit, but in no event less than
$250.00, as its exclusive fee for issuing such Standby Letters of Credit.
(d) The Agent shall not issue any Letter of Credit which would
cause the outstanding amount of Letters of Credit to exceed the Letter
of Credit Sublimit.
19
.17. PAYMENTS UNDER LETTERS OF CREDIT AND REIMBURSEMENT BY THE
COMPANY. In the event of a drawing under any Letters of Credit and
payment by the Agent therefor (as the case may be), the Agent shall
promptly notify the Company of such drawing and the amount and date of
such drawing and in the event that the Company has not either paid or
caused to be paid the amount thereof to the Agent, the Company
authorizes the Agent to make a Base Rate Loan in the amount of such
drawing and all fees and charges related thereto to reimburse the Agent
and the Lenders for such drawing. If such drawing is made after an
Event of Default has occurred and is continuing, the Company shall
immediately reimburse the Agent for the amount of the drawing plus all
fees and charges related thereto, together with interest on the amount
of such payment from the date of such payment by the Agent through and
including the date of such reimbursement at the rate as set forth in
SECTION 2.14. Notwithstanding the foregoing, the Company shall pay the
Agent all fees as set forth in SECTION 2.16 due under any Letter of
Credit when the same are payable. Failure to make such payment shall be
the failure to pay an Obligation hereunder.
.18. OUTSTANDING LETTERS OF CREDIT AND EVENT OF DEFAULT. Upon
an Event of Default and a demand for payment of any Loan, any sum
collected from the Company (including, without limitation, by setoff or
banker's lien) or the Collateral over and above the Obligations for
Loans, interest, fees, charges and drawings under Letters of Credit, up
to the amount of any undrawn Letters of Credit and any related fees,
shall be held by the Agent in an interest bearing account for the
ratable benefit of the Lenders as collateral against the obligation to
pay such Letters of Credit in the event of any draw with respect
thereto. The Agent shall return to the Company amounts deposited with
it pursuant to this SECTION 2.18 (and any and all interest earned
thereon) promptly upon the expiration or cancellation of any and all
Letters of Credit in an amount equal to the amount of each such expired
or cancelled Letter of Credit.
.19. COMPUTATION OF INTEREST AND FEES. Interest and all fees
payable hereunder shall be computed daily on the basis of a year of 360
days and paid for the actual number of days elapsed. 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 required by
this Agreement becomes due on a day that is not a Business Day such
payment may be made on the next succeeding Business Day (subject to
clause (i) of the definition of Interest Period), and such extension
shall be included in computing interest in connection with such payment.
.20. PAYMENT FREE OF TAXES. To the extent permitted by
applicable law, any payments made by the Company under any of the Loan
Documents shall be made free and clear of, and without reduction by
reason of, any tax, assessment or other charge imposed by the United
States of America or any political subdivision or taxing authority
thereof or therein ("TAXES"), PROVIDED, HOWEVER, that Taxes shall not
include taxes (whether imposed directly or by means of withholdings)
imposed on or measured by (i) the overall net income of any Lender by
the United States of America or any political subdivision or taxing
authority thereof or therein, or (ii) gross receipts generally
applicable to banks. To the extent that the Company is obligated by
applicable laws to make any deduction or withholding on account of Taxes
from any amount payable to any Lender under this Agreement, the Company
shall (a) make such deduction or withholding and pay the
20
same to the relevant governmental agency, and (b) pay such additional
amount to that Lender as is necessary to result in that Lender's
receiving a net after-tax (or after-assessment or after-charge) amount
equal to the amount to which that Lender would have been entitled under
this Agreement absent such deduction or withholding. If and when
receipt of such payment results in an excess payment credit to that
Lender on account of such Taxes, that Lender shall refund such excess to
the Company. Each Lender that is incorporated under the laws of a
jurisdiction other than the United States of America or any state
thereof shall deliver to the Company, with a copy to the Agent, within
twenty days after such Lender becomes a Lender hereunder, a certificate
signed by a duly authorized official of that Lender to the effect that
such Lender is entitled to receive payments of interest and other
amounts payable under this Agreement without deduction or withholding on
account of United States of America federal income taxes, which
certificate shall be accompanied by (x) two copies of Internal Revenue
Service Form 1001 or Form 4224, as applicable, duly executed by a duly
authorized official of that Lender accurate and complete in all material
respects and indicating such Lender's complete exemption from United
States withholding taxes, and (y) other appropriate evidence supporting
such exemption from withholding taxes as the Company may reasonably
request; PROVIDED that if any such Lender fails to so provide such a
certificate with such accompanying Form or other reasonably requested
evidence of exemption from withholding or if such certificate or such
Form contains a material error or a materially false representation by
such Lender, then such Lender shall not be entitled to the benefits of
this SECTION 2.20 until such failure or misrepresentation or error is
cured. Each such Lender agrees (i) promptly to notify the Company if
any fact set forth in such certificate ceases to be true and correct,
(ii) to take such steps as may be reasonably necessary to (x) maintain
all exemptions available to it from United States withholding taxes, and
(y) avoid any requirement of applicable laws that the Company make any
deduction or withholding for taxes from amounts payable to that Lender
under this Agreement, and (iii) otherwise cooperate with the Company to
minimize any amounts payable by the Company under this SECTION 2.20.
PROVISIONS APPLICABLE TO CERTAIN PAYMENTS. Each Lender (an "AFFECTED
PARTY") shall promptly notify the Company, with a copy to the Agent,
upon becoming aware that the Company may be required to make any payment
to such Affected Party pursuant to SECTIONS 2.10, 2.11 or 2.20. Before
the Affected Party gives any notice to the Company pursuant to this
SECTION 2.21, the Affected Party shall, if possible, designate a
different lending office if such designation will avoid the need for
giving such notice and will not, in the reasonable judgment of such
Affected Party, be otherwise materially disadvantageous to such Affected
Party. When requesting payment pursuant to SECTIONS 2.10, 2.11, or
2.20, each Affected Party shall provide to the Company, with a copy to
the Agent, a certificate, signed by an officer of such Affected Party,
setting forth the amount required to be paid by the Company to such
Affected Party and the computations made by such Affected Party to
determine such amount. Upon a request for any additional payment under
SECTIONS 2.10, 2.11 or 2.20, the Affected Party requesting such payment
shall certify to the Company that such requested payment represents a
payment requested of all similarly situated borrowers from such Affected
Party and that the Affected Party has taken reasonable steps to mitigate
or avoid the condition requiring such additional payment.
21
3 - CONDITIONS OF LOANS
.1. CONDITIONS PRECEDENT TO INITIAL LOAN. The obligation of the
Lenders to make the initial Loan hereunder is subject to the condition
precedent that the Agent shall have received, in form and substance
satisfactory to the Agent and its counsel, the following:
(a) this Agreement, the Security Agreement and the Notes, duly
executed by the Company;
(b) a certificate of the Secretary or an Assistant Secretary of
the Company with respect to resolutions of the Board of Directors
authorizing the execution and delivery of this Agreement, the Security
Agreement and the Notes and identifying the officer(s) authorized to
execute, deliver and take all other actions required under this
Agreement, and providing specimen signatures of such officers;
(c) the certificate of incorporation of the Company and all
amendments and supplements thereto, filed in the office of the Secretary
of State of Delaware, each certified by said Secretary of State of
Delaware as being a true and correct copy thereof;
(d) the Bylaws of the Company and all amendments and supplements
thereto, certified by the Secretary or an Assistant Secretary of the
Company as being a true and correct copy thereof;
(e) a certificate of the Secretary of State of Delaware, as to
legal existence and good standing and tax good standing in such state
and listing all documents on file in the office of said Secretary of
State;
(f) a legal opinion addressed to it from in-house counsel to the
Company, substantially in the form of EXHIBIT G hereto;
(g) certificates of foreign qualification and good standing,
including tax good standing, from the State of California and such other
states as are appropriate;
(h) UCC Financing Statements, duly executed and in form and number
sufficient to perfect the Agent's and Lender's security interest in the
Collateral or evidence that such Financing Statements are already on
file in each jurisdiction and office necessary to so perfect such
security interests; and
(i) such other documents, and completion of such other matters, as
counsel for the Agent and Lenders may deem necessary or appropriate.
.2. CONDITIONS PRECEDENT TO ALL LOANS. The obligations of the Lenders
to make each Loan, including the initial Loan, or convert Loans to Loans of
another type, is further subject to the following conditions:
(a) timely receipt by the Agent of the Notice of Borrowing or
Conversion as provided in SECTION 2.2;
22
(b) the representations and warranties contained in SECTION
4 shall be true and accurate in all material respects on and as of the
date of such Notice of Borrowing or Conversion and on the effective date
of the making or conversion of each Loan as though made at and as of
each such date (except to the extent that such representations and
warranties expressly relate to an earlier date), and no Default or Event
of Default shall have occurred and be continuing, or would result from
such Loan;
(c) the resolutions referred to in SECTION 3.1(B) shall remain
in full force and effect; and
(d) no change shall have occurred in any law or regulation or
interpretation thereof that, in the opinion of counsel for the Agent and
Lenders, would make it illegal or against the policy of any governmental
agency or authority with jurisdiction over the Agent or the Lenders to
make Loans hereunder.
The making or conversion of each Loan shall be deemed to be a
representation and warranty by the Company on the date of the making,
continuation or conversion of such Loan as to the accuracy of the facts
referred to in subsection (b) of this SECTION 3.2.
4 - REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and the Lenders to enter into this
Agreement and to make Loans hereunder, the Company represents and warrants to
the Agent and the Lenders that:
.1. ORGANIZATION AND QUALIFICATION. Each of the Company and its
Subsidiaries, if any, (a) is a corporation duly organized, validly existing
and in good standing and tax good standing under the laws of its jurisdiction
of incorporation, (b) has all requisite corporate power and authority to own
its property and to conduct its business as now conducted and as presently
contemplated, and (c) is duly qualified and in good standing as a foreign
corporation and is duly authorized to do business in each jurisdiction where
the nature of its properties or business requires such qualification, except
where the failure to be so qualified or in good standing would not have a
material adverse effect on the business, financial condition, assets or
properties of the Company or of the Company and its Subsidiaries, if any,
taken as a whole.
.2. CORPORATE AUTHORITY. The execution, delivery and performance of
the Loan Documents and the transactions contemplated hereby are within the
corporate power and corporate authority of the Company and have been
authorized by all necessary corporate proceedings, and do not and will not
(a) require any consent or approval of the stockholders of the Company, (b)
contravene any provision of the charter documents or by-laws of the Company
or any material law, rule or regulation applicable to the Company, (c)
contravene any provision of, or constitute an event of default or event that,
but for the requirement that time elapse or notice be given, or both, would
constitute an event of default under, any other material agreement,
instrument, order or undertaking binding on the
23
Company, or (d) result in or require the imposition of any Encumbrance on any
of the material properties, assets or rights of the Company, other than the
Encumbrances contemplated and created by the Security Agreement.
.3. VALID OBLIGATIONS. The Loan Documents and all of their
respective terms and provisions are the legal, valid and binding obligations
of the Company, enforceable in accordance with their respective terms except
as limited by bankruptcy, insolvency, reorganization, moratorium or other
laws affecting the enforcement of creditors' rights generally, and except as
the remedy of specific performance or of injunctive relief is subject to the
discretion of the court before which any proceeding therefor may be brought.
.4. CONSENTS OR APPROVALS. The execution, delivery and performance
of the Loan Documents and the transactions contemplated therein do not
require any approval or consent of, or filing or registration with, any
governmental or other agency or authority, other than Uniform Commercial Code
financing statements.
.5. TITLE TO PROPERTIES; ABSENCE OF ENCUMBRANCES. Each of the
Company and its Subsidiaries, if any, has good title to all of the material
properties, assets and rights of every name and nature now purported to be
owned by it, including, without limitation, such properties, assets and
rights as are reflected in the financial statements referred to in SECTION
4.6 (except such properties, assets or rights as have been disposed of in the
ordinary course of business since the date thereof), free from all
Encumbrances except Permitted Encumbrances or those Encumbrances disclosed in
EXHIBIT C hereto, and, except as so disclosed, free from all defects of title
that are reasonably expected to have a material adverse effect on such
properties, assets or rights, taken as a whole.
.6. CHANGES. Since the date of the most recent financial statements
delivered in accordance with SECTION 5.1, there have been no changes in the
assets, liabilities, financial condition or business of the Company or any of
its Subsidiaries, if any, other than changes, the effect of which has not, in
the aggregate, been materially adverse.
.7. DEFAULTS. As of the date of this Agreement, no Default exists.
.8. TAXES. The Company and each Subsidiary, if any, have filed all
material federal, state and other tax returns required to be filed, and all
material taxes, assessments and other governmental charges due from the
Company and each Subsidiary, if any, have been fully paid, except for any
such taxes, assessments, or other governmental charges being contested in
good faith by appropriate proceedings. The Company and each Subsidiary, if
any, have established on their books reserves adequate for the payment of all
federal, state and other tax liabilities.
.9. LITIGATION. As of the date of this Agreement and except as set
forth on EXHIBIT D hereto, there is no litigation, arbitration, proceeding or
investigation pending, or, to the knowledge of the Company's or any
Subsidiary's officers or directors, threatened, against the Company or any
Subsidiary that could result in a material judgment not fully covered by
insurance and which could reasonably be expected to have a material adverse
effect on the assets or business of the Company and its Subsidiaries, taken
as a whole.
24
.10. USE OF PROCEEDS. No portion of any Loan is to be used for the
"purpose of purchasing or carrying" any "margin stock" as such terms are used
in Regulations U and X of the Board of Governors of the Federal Reserve
System, 12 C.F.R. 221 and 224, as amended.
.11. SUBSIDIARIES. As of the date of this Agreement, all the
Subsidiaries of the Company are listed on EXHIBIT E hereto. The Company or a
Subsidiary of the Company is the owner, free and clear of all liens and
encumbrances, of all such stock of each Subsidiary owned by the Company or
such Subsidiary. All shares of such stock have been validly issued and are
fully paid and nonassessable, and no rights to subscribe for any additional
shares have been granted, and no options, warrants or similar rights are
outstanding.
.12. INVESTMENT COMPANY ACT. Neither the Company nor any of its
Subsidiaries, if any, is an "investment company" or a company "controlled" by
an "investment company" (as each such term is defined or used in the
Investment Company Act of 1940, as amended).
.13. COMPLIANCE WITH ERISA. The Company and each member of the
Controlled Group have fulfilled their obligations, if any, under the minimum
funding standards of ERISA and the Code with respect to each Plan and are in
compliance in all material respects with the applicable provisions of ERISA
and the Code, and have not incurred any liability to the PBGC or a Plan under
Title IV of ERISA, and no "prohibited transaction" or "reportable event" (as
such terms are defined in ERISA) has occurred with respect to any Plan.
.14. ENVIRONMENTAL MATTERS.
(a) To the best of the Company's knowledge, the Company and
each of its Subsidiaries, if any, have obtained all permits, licenses
and other authorizations which are required under all Environmental
Laws, except to the extent failure to have any such permit, license or
authorization could not reasonably be expected to have a material
adverse effect on the business, financial condition or operations of the
Company and its Subsidiaries, taken as a whole. To the best of the
Company's knowledge, the Company and each of its Subsidiaries, if any,
are in compliance with the terms and conditions of all such permits,
licenses and authorizations, and are also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in any
applicable Environmental Law or in any regulation, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except to the extent failure to
comply could not reasonably be expected to have a material adverse
effect on the business, financial condition or operations of the Company
and its Subsidiaries, taken as a whole.
(b) To the best of the Company's knowledge, no notice,
notification, demand, request for information, citation, summons or
order (together "notice") has been issued, no complaint has been filed
and is still pending, no penalty has been assessed and is still pending
and no investigation is pending or threatened by any governmental or
other entity with respect to any alleged failure by the Company or any
of its
25
Subsidiaries to have any permit, license or authorization required in
connection with the conduct of its business or with respect to any
Environmental Laws, including, without limitation, Environmental Laws
relating to the generation, treatment, storage, recycling,
transportation, disposal or release of any Hazardous Materials, except
to the extent that such notice, complaint, penalty or investigation
could not reasonably be expected to have a material adverse effect on
the business, financial condition or operations of the Company and its
Subsidiaries, taken as a whole.
(c) To the best of the Company's knowledge no material oral or
written notification of a release of a Hazardous Material has been filed
by or on behalf of the Company or any of its Subsidiaries and no
property now or previously owned, leased or operated by the Company or
any of its Subsidiaries is listed or proposed for listing on the
National Priorities List under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, or on any similar
state list of sites requiring investigation or clean-up, except to the
extent any such notification, listing or proposed listing could not be
reasonably be expected to have a material adverse effect on the Company
and its Subsidiaries, taken as a whole.
(d) To the best of the Company's knowledge, there are no liens
or encumbrances arising under or pursuant to any Environmental Laws on
any of the real property or properties owned, leased or operated by the
Company or any of its Subsidiaries and no governmental actions have been
taken or are in process which could subject any of such properties to
such liens or encumbrances or, as a result of which the Company or any
of its Subsidiaries would be required to place any notice or restriction
relating to the presence of Hazardous Materials at any property owned by
it in any deed to such property, except to the extent any such liens,
encumbrances or actions could not reasonably expected to have a material
adverse effect on the Company and its Subsidiaries, taken as a whole.
(e) Neither the Company nor any of its Subsidiaries has (i)
engaged in or permitted any operations or activities upon or any use or
occupancy of property owned, leased or operated by the Company or any of
its Subsidiaries, or any portion thereof, for the purpose of or in any
way involving the handling, manufacture, treatment, storage, use,
generation, release, discharge, refining, dumping or disposal of any
Hazardous Materials on, under or in such property, except to the extent
commonly used in day-to-day operations of any such property and in such
case only in compliance with all Environmental Laws and except as could
not reasonably be expected to have material adverse effect on the
Company and its Subsidiaries taken as a whole, or (ii) transported any
Hazardous Materials to, from or across such property, except to the
extent commonly used in day-to-day operations of such property and, in
such case, in compliance with, all Environmental Laws; nor to the best
knowledge of the Company have any Hazardous Materials migrated from
other properties upon, about or beneath such property, nor, to the best
knowledge of the Company, are any Hazardous Materials currently
deposited or otherwise located on, under, in or about such property
except to the extent commonly used in day-to-day
26
operations of such property and, in such case, in compliance with, all
Environmental Laws and except as could not reasonably be expected to
have material adverse effect on the Company and its Subsidiaries taken
as a whole.
.15. EMPLOYEE MATTERS. There is no strike, work stoppage or labor
dispute with any union or group of employees that would result in a
materially adverse effect on the business or operations of the Company and
its Subsidiaries, taken as a whole. To the best of the Company's knowledge,
the Company is in substantial compliance with all state or federal labor laws.
5 - AFFIRMATIVE COVENANTS
Until such time as (i) no Lender has any commitment to make Loans or
issue Letters of Credit hereunder, (ii) no Loan or Letter of Credit hereunder
remains outstanding, and (iii) no Obligation is due hereunder, the Company
covenants as follows:
.1. FINANCIAL STATEMENTS AND OTHER REPORTING REQUIREMENTS. The
Company shall furnish to the Agent and each of the Lenders:
(a) as soon as available to the Company, but in any event
within 90 days after the end of each of its fiscal years, a consolidated
and consolidating balance sheet as of the end of, and a related
consolidated and consolidating statement of income, changes in
stockholders' equity and cash flows for, such year, audited and
certified by KPMG Peat Marwick (or other independent certified public
accountants acceptable to the Agent) in the case of such consolidated
statements, and certified by the chief financial officer in the case of
such consolidating statements, and a report by such accountants stating
whether, in connection with the completion of their audit, any matters
that came to their attention that caused them to believe that the
Company failed to comply with the terms, covenants, provisions or
conditions of SECTIONS 5.7 through 5.12, inclusive, insofar as they
relate to accounting matters; IN ADDITION, a breakdown of the Four Wall
Contribution Report which shows sales and income before and after
allocated expenses for each retail and outlet store that reported a loss
during either (i) the immediately preceding fiscal quarter or (ii) the
immediately preceding twelve month period, with a comparison against
last year and the plan for the current year and on a consolidated basis;
(b) as soon as available to the Company, but in any event
within 45 days after the end of each of the first three fiscal quarters
of each fiscal year, a consolidated and consolidating balance sheet as
of the end of, and a related consolidated and consolidating statement of
income and cash flows for, the period and year to date period then
ended, certified by the principal financial officer of the Company but
subject, however, to normal, recurring year-end adjustments that shall
not in the aggregate be material in amount; IN ADDITION, a breakdown of
the Four Wall Contribution Report which shows sales and income before
and after allocated expenses for each retail and outlet store that
reported a loss during either (i) the immediately preceding fiscal
quarter or (ii) the immediately preceding
27
twelve month period, with a comparison against last year and the plan for
the current year and on a consolidated basis;
(c) concurrently with the delivery of each financial
statement pursuant to subsections (a) and (b) of this SECTION 5.l, a
report in substantially the form of EXHIBIT F hereto signed on behalf of
the Company by its chief financial officer; IN ADDITION, a report of the
actual results of composite store sales on a consolidated basis for each
retail and outlet store for the preceding twelve months;
(d) any management letter issued by the Company's independent
certified public accounting firm in conjunction with the audit of the
year end financial statements of the Company;
(e) promptly upon Agent's request and after the same are
available, copies of all proxy statements, financial statements and
reports as the Company shall send to its stockholders or as the Company
may file with the Securities and Exchange Commission or any governmental
authority at any time having jurisdiction over the Company or its
Subsidiaries;
(f) if and when the Company gives or is required to give
notice to the PBGC of any "Reportable Event" (as defined in Section 4043
of ERISA) with respect to any Plan that might constitute grounds for a
termination of such Plan under Title IV of ERISA, or knows that any
member of the Controlled Group or the plan administrator of any Plan has
given or is required to give notice of any such Reportable Event, a copy
of the notice of such Reportable Event given or required to be given to
the PBGC;
(g) promptly upon any executive officer of the Company
obtaining knowledge of the existence of any condition or event that
constitutes a Default, written notice thereof specifying the nature and
duration thereof and the action being or proposed to be taken with
respect thereto;
(h) promptly upon becoming aware of any litigation or of any
investigative proceedings by a governmental agency or authority
commenced or threatened against the Company or any of its Subsidiaries
of which it has notice, the outcome of which would reasonably be
expected to have a materially adverse effect on the assets or business
of the Company or the Company and its Subsidiaries on a consolidated
basis, written notice thereof and the action being or proposed to be
taken with respect thereto;
(i) promptly after an executive officer of the Company or the
designated compliance employee of the Company receives actual notice of
any investigative proceedings by a governmental agency or authority
commenced or threatened against the Company or any of its Subsidiaries
regarding any actual or alleged violation of Environmental Laws or any
spill, release, discharge or disposal of any Hazardous Material, written
notice thereof and the action being or proposed to be taken with respect
thereto;
(j) annual financial forecasts and projections to be
delivered no later than 120 days after the end of each fiscal year; and
28
(k) from time to time, such other financial data and
information about the Company or its Subsidiaries as the Agent may
reasonably request.
.2. CONDUCT OF BUSINESS. Each of the Company and its Subsidiaries, if
any, shall:
(a) duly observe and comply in all material respects with all
applicable laws and valid requirements of any governmental authorities
relative to its corporate existence, rights and franchises, to the
conduct of its business and to its property and assets (including
without limitation all material Environmental Laws and ERISA), and shall
maintain and keep in full force and effect all licenses and permits
necessary in any material respect to the proper conduct of its business;
and
(b) other than in connection with a transaction not prohibited
by SECTION 6.6 hereof, maintain its corporate existence; PROVIDED, that
the Company may permit the dissolution or liquidation of any Subsidiary
if such dissolution or liquidation is not reasonably likely to have a
material adverse effect on the Company and its Subsidiaries taken as a
whole.
.3. MAINTENANCE AND INSURANCE. Each of the Company and its
Subsidiaries, if any, shall maintain its material properties in good repair,
working order and condition as required for the normal conduct of its
business. As long as the Security Agreement is in full force, the Company
and each of its Subsidiaries will keep the Collateral insured at all times by
insurance with financially sound and reputable insurers and in such amounts
and against such risks as are customarily insured by companies engaged in a
similar business with respect to properties of a similar character. Such
insurance shall be payable to the Agent and the Lenders as an additional
insured and the Company, as their respective interests may appear. Such
insurance shall provide for not less than 30 days' notice of cancellation,
change in form or non-renewal to the Agent, and shall insure the interest of
the Agent and the Lenders regardless of any breach or violation by the
Company or any other person of the warranties, declarations or covenants
contained in such policies. Such insurance shall be primary and not
contributory. The Company shall evidence its compliance with the foregoing
by delivering a certificate with respect to each policy concurrently with the
execution hereof, and from time to time upon the request of the Agent (but
not more frequently than annually). If the Agent or the Lenders insure the
Collateral or pay for the Company's insurance of the Collateral, because of
the failure of the Company to obtain such insurance or make any such payment
and to prevent the Collateral from being uninsured, any such cost by the
Agent shall be an Obligation. The Agent and the Lenders shall be under no
obligation to obtain or pay for any such insurance and any such action shall
not relieve the Company of its Obligation hereunder to obtain and pay for
such insurance. As to the Company at any time the Security Agreement is no
longer in effect and at all times as to the Subsidiaries, each of the Company
and its Subsidiaries, if any, shall at all times maintain liability and
casualty insurance with financially sound and reputable insurers in such
amounts as the officers of the Company in the exercise of their reasonable
judgment deem to be adequate. In the event of failure to provide and
maintain insurance as herein provided, the Agent may, upon five days notice
to the Company at its option, provide such insurance and charge
29
the amount thereof to the account of the Company or any of its Subsidiaries
with the Agent or any of the Lenders. The Company shall furnish to the Agent
certificates or other evidence reasonably satisfactory to the Agent of
compliance with the foregoing insurance provisions.
.4. TAXES. The Company shall pay or cause to be paid all material
taxes, assessments or governmental charges on or against it or any of its
Subsidiaries or its or their material properties on or prior to the time when
they become delinquent; PROVIDED that this covenant shall not apply to any
tax, assessment or charge that is being contested in good faith by
appropriate proceedings and with respect to which adequate reserves have been
established and are being maintained in accordance with GAAP if no lien shall
have been filed against any of the Collateral to secure such tax, assessment
or charge.
.5. INSPECTION BY THE AGENT AND LENDERS. The Company shall permit
the Agent accompanied by one or more of the Lenders or their designees,
during the Company's normal business hours, and upon reasonable notice (or if
an Event of Default shall have occurred and is continuing, at any time and
without prior notice and at any reasonable time), for the purpose of
ascertaining compliance with this Agreement, to (i) visit and inspect the
properties of the Company and its Subsidiaries, if any, (ii) examine and make
copies of and take abstracts from the books and records of the Company and
its Subsidiaries, if any, and (iii) discuss the affairs, finances and
accounts of the Company and its Subsidiaries, if any, with their appropriate
officers, employees and accountants.
.6. MAINTENANCE OF BOOKS AND RECORDS. Each of the Company and its
Subsidiaries, if any, shall keep adequate books and records of account, in
which true and complete entries will be made reflecting all of its business
and financial transactions, and such entries will be made in accordance with
GAAP.
.7. CURRENT RATIO. The Company shall at all times maintain the
ratio of Consolidated Current Assets to Consolidated Current Liabilities less
the current portion of Indebtedness for Money Borrowed of the Company and its
Subsidiaries on a consolidated basis to be at least 1.75:1.00 for each fiscal
quarter of the Company. For purposes of calculating the Current Ratio only,
Indebtedness for Money Borrowed shall not include the principal amounts
outstanding from time to time under the Loans.
.8. LEVERAGE RATIO. The Company shall maintain at the end of each
fiscal quarter Indebtedness for Money Borrowed at the end of such fiscal
quarter no greater than 2.75 times Consolidated Cash Flow less dividends
permitted hereunder calculated for such four fiscal quarters then ended.
.9. TOTAL INTEREST COVERAGE. The Company shall maintain, at the end
of each fiscal quarter for the four fiscal quarters then ended, a ratio of
Consolidated EBITDA less Capital Expenditures for the period to Consolidated
Total Interest Expense for the period of at least 3:1.
.10. TOTAL FIXED CHARGE COVERAGE. The Company shall maintain, at the
end of each fiscal quarter for the four fiscal quarters then ended, a ratio
of Consolidated Cash Flow plus payments on Operating Leases for the period to
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Consolidated Total Debt Service plus payments on Operating Leases for the
period of not less than 2:1.
.11. PROFITABILITY. The Company shall have Consolidated Net Income
at the end of each fiscal quarter for the four fiscal quarters then ending on
a cumulative basis of at least $1.00.
.12. INVENTORY TURNOVER. For each fiscal quarter, the Inventory
Turnover shall be at least 2.25 turns for the four fiscal quarters then ended.
.13. USE OF PROCEEDS. The Company will use the proceeds of the
Revolving Loans for the ongoing working capital needs of the Company.
Notwithstanding the foregoing, the Company may use up to $75,000,000, in the
aggregate, of the Commitment Amount reduced by all purchases of Senior
Subordinated Notes prior to the date of this Agreement as set forth on
EXHIBIT C and further reduced by all purchases made on and after the date
hereof to repurchase a portion of the Senior Subordinated Notes, PROVIDED,
(i) that the Company shall satisfy on a pro forma basis, all of the covenants
made herein for the next four (4) fiscal quarters from the date hereof, (ii)
that the Company's repurchase of the Senior Subordinated Notes in any fiscal
quarter shall be limited to the amount of the Company's positive net income
based on the average of net income for the proceeding four fiscal quarters,
as previously reported to the Agent and using the current quarter as the
fourth quarter for purposes of the calculation and (iii) that such repurchase
complies with the provisions of SECTION 6.8(xiv) hereof.
.14. FURTHER ASSURANCES. At any time and from time to time the
Company shall, and shall cause each of its Subsidiaries to, execute and
deliver such further instruments and take such further action as may
reasonably be requested by the Agent to effect the purposes of the Loan
Documents.
.15. COMPLIANCE WITH LAW. The Company shall comply in all material
respects with any applicable law, regulation, ordinance, statute or directive
of any governmental body, the violation of which would have a material
adverse effect on the Company and its Subsidiaries taken as a whole.
6 - NEGATIVE COVENANTS
Until such time as (i) no Lender has any further commitment to make
Loans or issue Letters of Credit hereunder, (ii) no Loan or Letter of Credit
hereunder remains outstanding and (iii) no Obligation is then due hereunder,
the Company covenants as follows:
.1. INDEBTEDNESS. Neither the Company nor any of its Subsidiaries
shall create, incur, assume, guarantee or be or remain liable with respect to
any Indebtedness other than the following:
(a) Indebtedness of the Company or any of its Subsidiaries
(i) to the Agent or any of its Affiliates or to the Lenders under the
Loan Documents, or (ii) due from any Subsidiary of the Company to the
Company as long as such Indebtedness was not, at the time it was
incurred, prohibited under SECTION 6.8, or (iii) to any Subsidiary of
the Company, unless such Subsidiary cannot, in accordance with GAAP, be
consolidated with the Company for financial reporting purposes;
31
(b) (i) Indebtedness existing as of March ___, 1997 and
disclosed on EXHIBIT C hereto or in the financial statements referred to
in SECTION 4.6, and (ii) Subordinated Indebtedness and any amendments,
modifications, restatements, refundings, extensions, renewals,
substitutions, refinancings or replacements of any or all of the
foregoing, so long as such amendment, modification, restatement,
refunding, extension, renewal, substitution, refinancing or replacement
does not (i) result in an increase in the aggregate Indebtedness of the
Company, (ii) result in the shortening of the aggregate weighted average
maturity of such Indebtedness, (iii) impose new or additional material
restrictions on the Company, (iv) grant any new or additional collateral
rights or remedies to any lender of such Indebtedness, (v) change or add
an obligor to such Indebtedness, or (vi) increase the rate of interest
payable with respect to such Indebtedness;
(c) Indebtedness under Swap Agreements;
(d) Indebtedness incurred to finance the purchase of aircraft
that replace aircraft then owned by the Company in an aggregate amount
not to exceed $10,000,000 outstanding at any time;
(e) Guarantees not prohibited by SECTION 6.2 hereof;
(f) Indebtedness of the Company to any or all shareholders of
the Company to the extent that the distribution of such Indebtedness to
shareholders of the Company was not, at the time such distribution was
made, prohibited by SECTION 6.8 hereof;
(g) Other Indebtedness of the Company, including, without
limitation, Capital Leases, Indebtedness for the purchase price of
assets, Guarantees not specifically permitted by SECTION 6.2 not
exceeding an aggregate outstanding principal amount of $15,000,000 less
Indebtedness listed on Exhibit C other than Subordinated Indebtedness at
any one time outstanding, exclusive of the Indebtedness already
permitted under SECTION 6.1(a) through 6.1(f), 6.1(h) and 6.1(i) hereof;
(h) Indebtedness of Guess Italia or Xxxxxxxx, provided such
Indebtedness does not exceed $12,000,000 in the aggregate less the total
face amount of all accounts receivable sold by Guess Italia or Xxxxxxxx
or pledged to lenders as permitted under SECTION 6.5(i); and
(i) All Indebtedness of the Company to The First National Bank of
Boston arising under a certain letter of credit facility made available
to the Company by the First National Bank of Boston up to a maximum
amount of $25,000,000 pursuant to a certain Continuing Commercial Letter
of Credit Reimbursement Agreement dated as of December ___, 1995 (the
"GUESS LETTER OF CREDIT AGREEMENT") shall be permitted hereunder, BUT
ONLY to the extent that the sum of the letters of credit under the
Ranche Letter of Credit Facility (as hereinafter defined) and the
letters of credit under the Guess Letter of Credit Facility shall not
exceed $25,000,000. As used herein the term "Ranche Letter of Credit
Facility" shall mean a certain letter of credit facility made available
to Ranche Limited by The First National Bank of Boston up to a maximum
amount of $25,000,000 pursuant to a certain
32
Continuing Commercial Letter of Credit Reimbursement and Security Agreement
dated as of November 22, 1994.
.2. GUARANTEES. Neither the Company nor any of its Subsidiaries
shall create, incur, assume, or remain liable with respect to any
Guarantees other than the following:
(a) Guarantees in favor of the Agent or any of its affiliates
or the Lenders hereunder;
(b) Guarantees existing on the date of this Agreement and
disclosed on EXHIBIT C hereto or in the financial statements referred to
in SECTION 4.6;
(c) Guarantees resulting from the endorsement of negotiable
instruments for collection in the ordinary course of business;
(d) Guarantees with respect to surety, appeal performance and
return-of-money and other similar obligations incurred in the ordinary
course of business (exclusive of obligations for the payment of borrowed
money) not exceeding in the aggregate at any time $2,000,000;
(e) Guarantees of normal trade debt relating to the acquisition
of goods, services and supplies;
(f) Guarantee of the obligations of Ranche Limited, doing
business as Guess International pursuant to a certain Guarantee
substantially in the form of EXHIBIT L hereto, but only to the extent of
the aggregate face amount of outstanding letters of credit issued by The
First National Bank of Boston for the benefit of Ranche Limited under
the Ranche Limited Credit Facility as of November 22, 1994; and as the
face amount of such outstanding letters of credit decrease, the
obligations of the Company under such guarantee shall decrease by a
corresponding amount; and such guarantee shall continue in effect only
for so long as any such letters of credit and/or obligations with
respect thereto remain outstanding, and when no such letters of credit
remain outstanding and all obligations with respect thereto have been
indefeasibly satisfied, such Guarantee shall no longer be permitted
hereunder;
(g) Guarantees of the obligations for loans, letters of credit
and other extensions of credit of Guess Italia or Xxxxxxxx permitted
under SECTION 6.1(h) which do not exceed $12,000,000 in the aggregate,
less the total face amount of all accounts receivable sold, factored or
pledged by Guess Italia or Xxxxxxxx to lenders to the extent permitted
under SECTION 6.5(i); and
(h) Guarantees of loans and other borrowings obtained by any of
the Company's Subsidiaries not to exceed $40,000,000 in the aggregate
less Guaranties under SECTION 6.2(g) and any other amount as listed on
EXHIBIT C.
33
.3. SALE AND LEASEBACK. Neither the Company nor any of its
Subsidiaries shall enter into any arrangement, directly or indirectly,
whereby it shall sell or transfer any property owned by it in order to lease
such property or lease other property that the Company or any such Subsidiary
intends to use for substantially the same purpose as the property being sold
or transferred; PROVIDED, HOWEVER, that the Company may enter into such sale
and leaseback transactions, other than with respect to the Company's existing
real property, automobiles and aircraft, that do not, in the aggregate exceed
$5,000,000.
.4. ENCUMBRANCES. Neither the Company nor any of its Subsidiaries
shall create, incur, assume or suffer to exist any mortgage, pledge, security
interest, lien or other charge or encumbrance, including the lien or retained
security title of a conditional vendor upon or with respect to any of its
property or assets including without limitation any trademark, tradename or
other intellectual property ("ENCUMBRANCES"), except the following
("PERMITTED ENCUMBRANCES"):
(a) Encumbrances in favor of the Agent or any of its affiliates
or Lenders under the Security Agreement;
(b) Encumbrances existing as of the date of this Agreement and
disclosed in EXHIBIT C and renewals, extensions or replacements thereof
reasonably acceptable to the Agent;
(c) liens for taxes, fees, assessments and other governmental
charges to the extent that payment of the same is not delinquent or is
not required in accordance with the provisions of SECTION 5.4;
(d) landlords' and lessors' liens in respect of rent not in
default or which are being contested in good faith or liens in respect
of pledges or deposits under workmen's compensation, unemployment
insurance, social security laws, or similar legislation (other than
ERISA) or in connection with appeal and similar bonds incidental to
litigation; mechanics', carriers', warehousemans', laborers', and
materialmen's and similar liens, if the obligations secured by such
liens are not then delinquent or are being contested in good faith;
liens securing the performance of bids, tenders, contracts (other than
for the payment of money); and statutory obligations incidental to the
conduct of its business and that do not in the aggregate materially
detract from the value of its property or materially impair the use
thereof in the operation of its business;
(e) judgment liens not in excess of $ 2,000,000 that shall not
have been in existence for a period longer than 30 days after the
creation thereof or, if a stay of execution shall have been obtained,
for a period longer than 30 days after the expiration of such stay;
(f) rights of lessors under Capital Leases to the extent
permitted under SECTION 6.1;
(g) Encumbrances in respect of any purchase money obligations
for tangible property used in its business to the extent permitted under
34
SECTION 6.1, PROVIDED that any such Encumbrances shall not extend to
property and assets of the Company or any such Subsidiary not financed
by such a purchase money obligation;
(h) easements, rights of way, restrictions and other similar
charges or Encumbrances relating to real property and not interfering in
a material way with the ordinary conduct of its business;
(i) Encumbrances on any property acquired after the date hereof
by the Company or any of its Subsidiaries created contemporaneously with
such acquisition to secure or provide for the payment or financing of
all or any part of the purchase price thereof, or the assumption of any
Encumbrance upon any property hereinafter acquired and existing at the
time of such acquisition, or the acquisition of such property subject to
an Encumbrance without the assumption thereof, and any refinancing
thereof to the extent the related Indebtedness is permitted under
SECTION 6.1;
(j) Encumbrances securing Indebtedness not prohibited by SECTION
6.1 hereto;
(k) inchoate Encumbrances incident to construction or
maintenance of real property, or Encumbrances incident to construction
or maintenance of real property now or hereafter filed of record for
which adequate reserves have been set aside and which are being
contested in good faith by appropriate proceedings and have not
proceeded to judgment;
(l) minor defects and irregularities in title to any real
property which in the aggregate do not materially impair the fair market
value of such real property;
(m) rights reserved to or vested in any governmental agency by
law or regulation to control or regulate, or obligations or duties under
law or regulation to any governmental agency with respect to, the use of
any real property;
(n) rights reserved to or vested in any governmental agency by
law or regulation to control or regulate, or obligations or duties under
law or regulation to any governmental agency with respect to any right,
power, franchise, grant, license, or permit;
(o) present or future zoning laws or regulations or other laws
or regulations restricting the occupancy, use, or enjoyment of real
property;
(p) liens consisting of deposits of property to secure (or in
lieu of) surety, appeal or customs bonds in proceedings to which the
Company is a party;
(q) rights of licensees under license agreements entered into in
the ordinary course of business; and
(r) the sale or factoring (including any conditional sale) by
Guess Italia or Xxxxxxxx of accounts receivable and the granting of liens
to
35
secure Indebtedness referred to in SECTION 6.1(h), provided it does not
violate SECTION 6.5(i) hereof.
.5. MERGER; CONSOLIDATION; SALE OR LEASE OF ASSETS. Neither the
Company nor any of its Subsidiaries shall sell, lease or otherwise dispose of
any assets or properties consisting of the trademarks "Guess," "Guess ?" or
the inverted triangle design or dispose of other assets or properties (valued
at the lower of cost or market), to the extent that the value of the assets
or properties so disposed during the then current fiscal year would exceed 5%
of the amounts shown as the total tangible assets of the Company on the then
most recent financial statements of the Company submitted pursuant to SECTION
5.1 hereof, other than (i) sales of inventory in the ordinary course of
business and sales or pledges of accounts receivable by Guess Italia and
Xxxxxxxx, for an initial payment of not less than 80% (or such lesser amount
as shall be agreed to by the Agent) of the outstanding unpaid amount of all
of the specific accounts receivable so sold or pledged, provided such sales
and pledges would not aggregate with the face amount of all other accounts
receivables sold or pledged by Guess Italia and Xxxxxxxx more than
$12,000,000, less the amount of any outstanding Indebtedness of Guess Italia
or Xxxxxxxx permitted under SECTION 6.1(h) hereof, (ii) sales, leases and
other dispositions of assets no longer useful in the conduct of the Company's
or such Subsidiary's business and not material in amount, (iii) sales,
leases, transfers and other dispositions of equipment so long as such
equipment is replaced with other equipment to be used in the conduct of the
Company's or such Subsidiary's business of comparable value, (iv) a
disposition consisting of a distribution in respect of its capital stock not
prohibited by SECTION 6.7 hereof and (v) licenses of trademark, tradenames
and other similar property in the ordinary course of the Company's business;
or liquidate, merge or consolidate into or with any other person or entity,
PROVIDED that any Subsidiary of the Company may merge or consolidate into or
with (i) the Company if no Default has occurred and is continuing or would
result from such merger and if the Company is the surviving company, or (ii)
any Wholly-Owned Subsidiary of the Company. In addition, as long as no
Default or Event of Default has occurred and is continuing, the Company may
dispose of any aircraft or work of art now or hereafter owned by the Company.
.6. ADDITIONAL STOCK ISSUANCE. The Company shall not permit any of
its Subsidiaries to issue any additional shares of its capital stock or other
equity securities, any options therefor or any securities convertible thereto
other than to the Company. Neither the Company nor any of its Subsidiaries
shall sell, transfer or otherwise dispose of any of the capital stock or
other equity securities of a Subsidiary, except (i) to the Company or any of
its Wholly-Owned Subsidiaries, or (ii) in connection with a transaction
permitted by SECTION 6.5.
.7. EQUITY DISTRIBUTIONS.
The Company shall not pay any dividends on any class of its Capital
Stock or make any other distribution or payment on account of or in
redemption, retirement or purchase of such Capital Stock without the prior
written consent of the Majority Lenders; PROVIDED that this Section shall not
apply to (i) the issuance, delivery or distribution by the Company of shares
of its common stock pro rata to its existing shareholders and (ii) the
purchase or redemption by the Company of its Capital Stock with the proceeds
of the issuance of additional
36
shares of Capital Stock. If an Event of Default or Default has occurred and
is continuing, then the Company shall not pay any dividends on any class of
its Capital Stock.
.8. INVESTMENTS. Neither the Company nor any of its Subsidiaries
shall make or maintain any Investments other than (i) Investments in
Subsidiaries and new Investments in Subsidiaries, Newtimes Guess Parent and
Newtimes Guess not to exceed $15,000,000 in the aggregate at any one time,
(ii) existing Investments as of the date hereof in The Xxxxxx Xxx Companies,
Inc., G&C Entertainment, Inc. and Guess Italia S.r.l.; (iii) existing
Investments in debt obligations of the State of Israel; (iv) Investments
consisting of advances to employees, officers and consultants of the Company
for travel, relocation or similar expenses in the ordinary course of business
not in excess of $500,000 outstanding at any one time; (v) Investments
consisting of loans to employees of the Company in the ordinary course of
business that do not exceed in the aggregate $1,000,000 outstanding at any
time; (vi) Investments consisting of advances to vendors of the Company and
other loans to vendors of the Company in the ordinary course of business that
do not exceed in the aggregate $1,000,000 outstanding at any time; (vii) if
no Default or Event of Default then exists, acquisitions, that do not violate
SECTION 6.1, of a Person engaged in the Apparel Business, PROVIDED that (a)
giving effect thereto on a pro forma combined basis as of the last day of the
most recently ended fiscal quarter, the Company would be in compliance with
SECTIONS 5.7 through 5.11, (b) if such acquisition consists of the
acquisition of capital stock or other equity ownership interests in a Person,
such Person is promptly thereafter merged with and into the Company; PROVIDED
that the Company may acquire capital stock of such Person, subject to the
limitation set forth in (c) and not merge such Person into the Company, if
such capital stock is held by the Company and is represented on the balance
sheet of the Company and (d) the cash paid for such acquisition does not
exceed $25,000,000 and when added to the cash paid for all other acquisitions
during such fiscal year does not exceed $50,000,000; PROVIDED that up to
$5,000,000 in the aggregate of such $50,000,000 may be used to acquire
capital stock of Person or Persons which are not merged into the Company;
(viii) Qualified Investments; (ix) in connection with purchases of inventory
occurring in the ordinary course of business consistent with the Company's
past practice; (x) lease, utility and other similar deposits to the extent
otherwise permitted hereunder; (xi) stock, obligations or securities received
in settlement of debts owing to the Company or a Subsidiary of the Company as
a result of foreclosure, perfection or enforcement of any lien; (xii)
negotiable instruments held for collection; (xiii) sales of goods or services
on trade credit terms consistent with the Company's and its Subsidiaries'
past practices or as otherwise consistent with trade credit terms in common
use in the industry; (xiv) redemption, retirement or repurchase by the
Company in the amount provided in SECTION 5.13 of this Agreement, but only on
the condition that (a) no Default exists at the time of such redemption,
retirement or repurchase or would be caused by any such redemption,
retirement or repurchase, (b) such redemption, retirement or repurchase of
Subordinated Indebtedness would not cause the representations in SECTIONS 4.10
and 4.12 to be untrue and (c) the Company is in compliance with SECTION 5.13
of this Agreement;
37
(xv) investments in licensees of the Company not to exceed $10,000,000 in the
aggregate; and (xvi) other Investments not to exceed $5,000,000 in the
aggregate.
.9. ERISA. Neither the Company nor any member of the Controlled
Group shall permit any Plan maintained by it to (i) engage in any "prohibited
transaction" (as defined in Section 4975 of the Code, (ii) incur any
"accumulated funding deficiency" (as defined in Section 302 of ERISA) whether
or not waived, or (iii) terminate any Plan in a manner that could result in
the imposition of a lien or encumbrance on the assets of the Company or any
of its Subsidiaries pursuant to Section 4068 of ERISA.
.10. CHANGE IN TERMS AND PREPAYMENT OF SUBORDINATED INDEBTEDNESS.
The Company shall not:
(a) effect or permit any change in or amendment to (i) the
terms by which any Subordinated Indebtedness purports to be subordinated
to the payment and performance of the Obligations, or (ii) the terms
relating to the repayment or interest rate of any Subordinated
Indebtedness other than to extend the terms of repayment thereof; or
(b) directly or indirectly, make any payment of any principal
of or in redemption, retirement or repurchase of Subordinated
Indebtedness except payments required by the instruments evidencing such
Indebtedness other than (i) payment of the Subordinated Indebtedness
from the proceeds of an initial public offering of the shares of the
Company, and (ii) the redemption, retirement or repurchase of
Subordinated Indebtedness as specifically permitted under SECTION
6.8(xiv) hereof.
.11. TRANSACTIONS WITH AFFILIATES. The Company and its Subsidiaries,
if any, shall not enter into any transaction of any kind with any Affiliate
of the Company OTHER THAN (i) continuation, renewals or extensions of the
transactions (a) described in the notes to the Company's audited financial
statements as at December 31, 1995 and for the fiscal year then ended or (b)
listed on EXHIBIT K hereto, (ii) distributions permitted under SECTION 6.7,
(iii) the lease assignment or subleasing by the Company of certain facilities
of the Company to one or more Affiliates of the Company, PROVIDED that such
facilities are concurrently subleased back to the Company at rents not in
excess of the rents reserved under the lease to the Company, and (iv)
transactions on terms at least as favorable to the Company as would be the
case in an arm's-length transaction between unrelated parties of equal
knowledge respecting the subject matter thereof and equal bargaining power.
38
.12. NATURE OF BUSINESS. The Company and its Subsidiaries, if any,
shall not engage in any business OTHER THAN the Apparel Business; PROVIDED
that the foregoing shall not prohibit the Company or any Subsidiary from
engaging in businesses OTHER THAN the Apparel Business so long as the
aggregate gross revenues of all such businesses in any fiscal year do not
exceed 10% of the consolidated gross revenues of the Company and its
Subsidiaries for that fiscal year.
7 - DEFAULTS
.1. EVENTS OF DEFAULT. There shall be an Event of Default hereunder
if any of the following events occurs:
(a) the Company shall fail to pay (i) when due any amount of
principal of any Obligations, or (ii) within four (4) days after the due
date therefor, any amount of interest thereon or any fees or expenses
payable hereunder or under the Notes; or
(b) the Company shall fail to perform any term, covenant or
agreement contained in SECTIONS 5.1(g), 5.5, 5.7 through 5.13 or 6.1
through 6.12; or
(c) the Company shall fail to perform any term, covenant or
agreement (other than in respect of SECTIONS 7.1(a) and (b) hereof)
contained in this Agreement and such Default shall continue for 30 days
after notice thereof has been sent to the Company by the Agent; or
(d) an event of default has occurred and is continuing under any
Subordinated Indebtedness; or
(e) any representation or warranty of the Company made in this
Agreement or in the Notes or any other documents or agreements executed
in connection with the transactions contemplated by this Agreement or in
any certificate delivered hereunder shall prove to have been false in
any material respect upon the date when made or deemed to have been
made; or
(f) the Company or any of its Subsidiaries shall fail to pay at
maturity and after any applicable period of grace, any obligations in
excess of $2,000,000 in the aggregate for borrowed monies or advances,
or fail to observe or perform any term, covenant or agreement evidencing
or securing such obligations for borrowed monies or advances, the result
of which failure is that the holder or holders of such Indebtedness
cause such Indebtedness to become due prior to its stated maturity upon
delivery of required notice, if any; or
(g) the Company or any of its Subsidiaries shall (i) apply for
or consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee, liquidator or similar official of itself
or of all or a substantial part of its property, (ii) be generally not
paying its debts as such debts become due, (iii) make a general
assignment for the benefit of its creditors, (iv) commence a voluntary
case under the Bankruptcy Code (as
39
now or hereafter in effect), (v) commence any case or proceeding under
any law relating to bankruptcy, insolvency, reorganization, winding-up
or composition or adjustment of debts, or any other law providing for
the relief of debtors, (vi) acquiesce in writing to, any petition filed
against it in an involuntary case under the Bankruptcy Code or other
law, or (vii) take any action under the laws of its jurisdiction of
incorporation or organization similar to any of the foregoing; or
(h) a proceeding or case shall be commenced, without the
application or consent of the Company or any of its Subsidiaries in any
court of competent jurisdiction, seeking (i) the liquidation,
reorganization, dissolution, winding up, or composition or readjustment
of its debts, (ii) the appointment of a trustee, receiver, custodian,
liquidator or the like of it or of all or any substantial part of its
assets, or (iii) similar relief in respect of it, under any law
relating to bankruptcy, insolvency, reorganization, winding-up or
composition or adjustment of debts or any other law providing for the
relief of debtors, and such proceeding or case shall continue
undismissed, or unstayed and in effect, for a period of 60 days; or an
order for relief shall be entered in an involuntary case under the
Bankruptcy Code, against the Company or such Subsidiary; or action under
the laws of the jurisdiction of incorporation or organization of the
Company or any of its Subsidiaries similar to any of the foregoing shall
be taken with respect to the Company or such Subsidiary and shall
continue unstayed and in effect for any period of 60 days; or
(i) a judgment or order for the payment of money shall be
entered against the Company or any of its Subsidiaries by any court, or
a warrant of attachment or execution or similar process shall be issued
or levied against property of the Company or such Subsidiary, that in
the aggregate exceeds $2,000,000 in value and such judgment or order
shall continue undischarged, unstayed, unsatisfied, undismissed or
unbonded for 30 days; or
(j) the Company or any member of the Controlled Group shall fail
to pay when due an amount or amounts aggregating in excess of $100,000
that it shall have become liable to pay to the PBGC or to a Plan under
Title IV of ERISA; or notice of intent to terminate a Plan or Plans
shall be filed under Title IV of ERISA by the Company, any member of the
Controlled Group, any plan administrator or any combination of the
foregoing; or the PBGC shall institute proceedings under Title IV of
ERISA to terminate or to cause a trustee to be appointed to administer
any such Plan or Plans or a proceeding shall be instituted by a
fiduciary of any such Plan or Plans against the Company and such
proceedings shall not have been dismissed within 30 days thereafter; or
a condition shall exist by reason of which the PBGC would be entitled to
obtain a decree adjudicating that any such Plan or Plans must be
terminated; or
(k) there are less than two (2) of the current executive
management officers (Xxxxxxx, Xxxx and Xxxxxx Xxxxxxxx) actively engaged
in the management of the Company or the shareholders actively engaged in
the management of the Company cease to own or control beneficially, in
the aggregate, common stock entitled to exercise a majority of the
voting power of the Company.
40
.2. REMEDIES. (a) Upon the occurrence of an Event of Default
described in SECTIONS 7.1 (g) and (h), immediately and automatically, and (b)
upon the occurrence of any other Event of Default, at any time thereafter
while such Event of Default is continuing, at the option of the Majority
Lenders and upon the Agent's declaration:
(a) the Lenders' commitment to make any further Loans or issue
Letters of Credit hereunder shall terminate;
(b) the unpaid principal amount of the Loans together with
accrued interest and all other Obligations shall become immediately due
and payable without presentment, demand, protest or further notice of
any kind, all of which are hereby expressly waived; and
(c) the Agent and the Lenders may exercise any and all rights
they have under this Agreement, the Notes or any other documents or
agreements executed in connection herewith, or at law or in equity, and
proceed to protect and enforce their rights by any action at law, in
equity or other appropriate proceeding.
(d) the order and manner in which the rights and remedies of the
Agent and the Lenders under the Loan Documents and otherwise are to be
exercised shall be determined by the Majority Lenders. All payments
received by the Agent and the Lenders, or any of them, shall be applied
FIRST to the costs and expenses (including reasonable attorneys' fees
and disbursements) of the Agent and of the Lenders, SECOND paid pro rata
to the Lenders in the same proportion that the aggregate of the unpaid
principal amount owing on the Obligations of the Company to each Lender,
plus accrued and unpaid interest thereon, bears to the aggregate of the
unpaid principal amount owing on all the Obligations, plus accrued and
unpaid interest thereon, AND THEREAFTER to the Company or whomsoever may
be lawfully entitled thereto. Regardless of how each Lender may treat
the payments for its own accounting purposes, for the purpose of
computing the Obligations hereunder and under the Notes, payments shall
be applied FIRST, to the costs and expenses of the Agent and the Lenders
as set forth above, SECOND, to the payment of accrued and unpaid
interest due under any Loan Documents, to and including the date of such
application (ratably, and without duplication, according to the accrued
and unpaid interest due under each of the Loan Documents), and THIRD, to
the payment of all other amounts (including principal and fees) then
owing to the Lenders under the Loan Documents. No such application of
payments will cure any Event of Default or prevent acceleration, or
continued acceleration, of amounts payable under the Loan Documents or
prevent the exercise, or continued exercise, of rights or remedies of
the Lenders hereunder or thereunder or at law or in equity.
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8 - CONCERNING THE AGENT AND THE LENDERS
.1. APPOINTMENT AND AUTHORIZATION. Each of the Lenders hereby
appoints the Agent, acting through its head office, to serve as the Agent
under this Agreement and the other Loan Documents and irrevocably authorizes
the Agent to take such action as the Agent on such Lender's behalf under this
Agreement and the other Loan Documents and to exercise such powers and to
perform such duties under this Agreement, the Loan Documents and the other
documents and instruments executed and delivered in connection with the
consummation of the transactions contemplated hereby as are delegated to the
Agent by the terms hereof or thereof, together with all such powers as are
reasonably incidental thereto.
.2. AGENT AND AFFILIATES. The Agent and the Co-Agent shall have the
same rights and powers under this Agreement and the Loan Documents as each
other Lender and may exercise or refrain from exercising the same as though
it were not the Agent or the Co-Agent, respectively, and the Agent and the
Co-Agent and their respective Affiliates may accept deposits from, lend money
to, and generally engage in any kind of business with the Company or any
Affiliate of the Company as if it were not the Agent or Co-Agent hereunder
and under the Loan Documents which would not cause the Company to violate
SECTION 6.1 hereof. Except as otherwise provided by the terms of this
Agreement, nothing herein shall prohibit any of the Lenders from accepting
deposits from, lending money to or generally engaging in any kind of business
with the Company or any Affiliate of the Company.
.3. LOANS.
(i) If on any Business Day, the Agent receives notice,
pursuant to SECTION 2.2 hereof, that the Company has requested a Loan,
the Agent shall promptly notify each Lender by telephone of such request
to be followed by a fax verifying such requested Loan. Such notice from
the Agent shall contain the amount of the requested Loan and the share
that each Lender is requested to fund as part of such Loan. Each Lender
shall, prior to 2:00 p.m. Boston time of the date on which the Loan is
requested, transfer to the Agent by wire through the Federal Reserve
System in immediately available funds the respective amount set forth in
the requested Loan for each such Lender. The Company and the Lenders
agree that if any of the Lenders fail to fund, the Agent and the Lenders
shall not be required to fund that portion of the Loan represented by
the amount due from any Lender who has not funded in accordance with
this subsection. Any Lender not funding a Loan shall not be permitted
to make any further Loans until such time as it has funded the portion
of any and all previous Loans which it failed to fund. On any Business
Day that the Agent receives a payment in immediately available funds
from the Company with respect to the Obligations hereunder, the Agent
shall, subject to the terms and conditions of this Agreement, notify
each Lender that it has received such payment and, by wire transfer
through the Federal Reserve System, wire each Lender's share of such
funds, net of any amount which such Lender is required to fund for any
Loan requested on the date of any such loan payment or any other sum due
from such Lender to the Agent. The Agent shall fax to each of the
Lenders notice of any such payment, at the time such payment is wired.
42
(ii) Funds provided by the Agent or the Co-Agent as payment
upon a sight or time draft presented to the Agent or Co-Agent under a
Letter of Credit issued pursuant to the terms of SECTION 2.16 hereof,
and any payments made by the Agent or Co-Agent on behalf of the Company,
shall constitute Loans made by the Lenders on a risk participation basis
in accordance with each Lenders' Percentage at such time as such funds
are actually provided, or such payments are made, by the Agent or
Co-Agent; PROVIDED that the Co-Agent shall receive such payment as
required from the other Lenders so that its percentage of the Loan so
made does not exceed its respective Lender's Percentage.
(iii) All Loans made by the Agent on behalf of any Lender shall
be, for purposes of interest income and other charges, considered Loans
from such Lender to the Company, at such time as the Agent receives from
such Lender funds as provided in SECTION 8.3(i), and prior to such time
such Loans shall be considered, for purposes of interest income and
other charges, Loans from the Agent or the other Lenders to the extent
reimbursed by such other Lenders as provided in SECTION 8.3(i) above.
(iv) The proceeds of Collateral, including, but not limited
to, any collections of accounts receivable, shall be applied first to
pay the expenses of the Agent and Lenders as herein provided, then to
equalize each Lender's share of the Loans so that each Lender's share of
the Loans equals such Lender's respective Lender's Percentage.
(v) The Agent may at any time refuse to make Loans on behalf
of any Lender unless such Lender shall have provided to the Agent
immediately available funds sufficient to cause such Lender's share of
the Loans to equal and reflect such Lender's Percentage at the time and
in the manner provided in SECTION 8.3(i).
(vi) Notwithstanding the provisions hereof, the obligations to
make Loans under the terms of this Agreement shall be the several and
not a joint obligation of the Lenders, and any Loans made by the Agent
on behalf of the Lenders are strictly for the administrative convenience
of the parties and shall in no way diminish any Lender's liability to
the Agent to repay the Agent for such Loans.
.4. PAYMENTS. All payments and prepayments of principal of Loans
received by the Agent shall be paid to each of the Lender's PRO RATA in
accordance with their respective Lender's Percentage. All such payments from
the Company or as proceeds of Collateral received by the Agent shall be held
in trust for the benefit of the Lenders. As each such payment is received by
the Agent, the Agent shall promptly charge or credit each of the Lenders to
the extent necessary to ensure that as between them, each of the Lenders
holds its respective Lender's Percentage of outstanding Loans, based on the
then unpaid aggregate principal amounts of the Loans outstanding.
.5. INTEREST, FEES AND OTHER PAYMENTS. (a) All payments of interest
received by the Agent in respect of Loans, except as otherwise provided by
the terms of this Agreement, and all other fees and premiums received by the
Agent
43
hereunder or in respect of Loans (other than the Agent's Fee which shall be
retained by the Agent) shall be shared by the Lenders pro rata in accordance
with their respective Lender's Percentages. (b) All payments received by the
Agent pursuant to SECTION 9.2 of this Agreement shall be applied by the Agent
to reimburse each Lender, as appropriate, on account of the tax, charge or
expense incurred by such Lender, if any, in respect of which such payment is
made. (c) Each of the Lenders and the Agent agree that if it should receive
any amount (whether by voluntary payment, by realization upon Collateral, by
the exercise of the right of set-off or banker's lien, by counterclaim or
cross action, by the enforcement of any right under the Loan Documents or
otherwise) in respect of principal of or interest on, the Loans, or any fees
which are to be shared PRO RATA among the Lenders, which, as compared to the
amounts theretofore received by other Lenders in respect to such principal,
interest or fees, is in excess of such Lender's Percentage of such principal,
interest or fees, such Lender shall share such excess, less the cost and
expenses (including, reasonable attorneys' fees and disbursements) incurred
by such Lender in connection with such realization, exercise, claim or
action, PRO RATA with all other Lenders in proportion to their respective
Lender's Percentage and such sharing shall be deemed a purchase (without
recourse) by such sharing party of a participation interest in the Loans or
in such fees, as the case may be, owed to the recipients of such shared
payments to the extent of such shared payments; PROVIDED, HOWEVER, that if
all or any portion of such excess amount is thereafter recovered from such
Lender, such purchase shall be rescinded and the purchase price restored to
the extent of such recovery, but without interest. The Lenders agree that any
payment obtained through the exercise of a right of set-off, bankers lien,
counterclaim or otherwise as to the funds of the Company shall be applied
first to Obligations owing to the Lenders under this Agreement.
.6. ACTION BY AGENT.
(i) The obligations of the Agent hereunder are only those
expressly set forth herein. The Agent shall have no duty to exercise
any right or power or remedy hereunder, under any Loan Document, or
under any other document or instrument executed and delivered in
connection with or as contemplated by this Agreement or to take any
affirmative action hereunder or thereunder.
(ii) The Agent shall keep the other records of the Loans and
payments hereunder, and shall give and receive notices and other
communications to be given or received by the Agent hereunder on behalf
of the Lenders.
(iii) Upon the occurrence of an Event of Default, the Agent
shall notify each of the Lenders and, upon the request of the Majority
Lenders, the Agent shall, if such Event of Default is continuing declare
all Obligations immediately due and payable and take such other action
as may appear necessary or desirable to collect the Obligations and
enforce the rights and remedies of the Agent or the Lenders with respect
to the Collateral.
44
(iv) Whether or not an Event of Default shall have occurred,
the Agent may, and upon the request of the Majority Lenders, shall from
time to time exercise the rights of the Agent and Lenders hereunder
under the Loan Documents, or under the other documents or instruments
executed or delivered in connection with or as contemplated by this
Agreement as may be necessary or desirable to protect the Collateral and
the interests of the Agent and the Lenders therein.
.7. CONSULTATION WITH EXPERTS. The Agent shall be entitled to
retain and consult with legal counsel, independent public accountants and
other experts selected by it and shall not be liable to the Lenders for any
action taken, omitted to be taken or suffered in good faith by it in
accordance with the advice of such counsel, accountants or experts. The
Agent may employ agents and attorneys-in-fact and shall not be liable to the
Lenders for the default or misconduct of any such agents or attorneys.
.8. LIABILITY OF AGENT. The Agent shall exercise the same care to
protect the interests of each of the Lenders as it does to protect its own
interests, so that so long as the Agent exercises such care it shall not be
under any liability to any of the Lenders, except for the Agent's gross
negligence or willful misconduct with respect to anything it may do or
refrain from doing. Subject to the immediately preceding sentence, neither
the Agent nor any of its directors, officers, agents or employees shall be
liable to any Lender for any action taken or not taken by it in connection
herewith in its capacity as Agent. Without limiting the generality of the
foregoing, neither the Agent nor any of its directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire
into or verify: (i) any statement, warranty or representation made in
connection with this Agreement, any Loan Document or any borrowing hereunder;
(ii) the performance or observance of any of the covenants or agreements of
the Company; (iii) the satisfaction of any condition specified in SECTION 3
hereof, except receipt of items required to be delivered to the Agent; (iv)
the validity, effectiveness, enforceability or genuineness of this Agreement,
the Notes, the Loan Documents or any other document or instrument executed
and delivered in connection with or as contemplated by this Agreement; (v)
the existence, value, collectibility or adequacy of the Collateral or any
part thereof or the validity, effectiveness, perfection or relative priority
of the liens and security interests of the Lenders therein; or (vi) the
filing, recording, refiling, continuing or re-recording of any financing
statement or other document or instrument evidencing or relating to the
security interests or liens of the Lenders in the Collateral. The Agent shall
not incur any liability by acting in reliance upon any notice, consent,
certificate, statement or other writing (which may be a bank wire, telex or
similar writing) believed by it to be genuine or to be signed by the proper
party or parties.
45
.9. INDEMNIFICATION. Each Lender agrees to indemnify the Agent (to
the extent the Agent is not reimbursed by the Company), ratably in accordance
with its Lender's Percentage, from and against any cost, expense (including
attorneys' fees and disbursements), claim, demand, action, loss or liability
which the Agent may suffer or incur in connection with this Agreement or any
Loan Document, or any action taken or omitted by the Agent hereunder or
thereunder, or the Agent's relationship with the Company hereunder,
including, without limitation, the costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance
of any of its powers and duties hereunder and of taking or refraining from
taking any action hereunder; PROVIDED that the Lenders shall not reimburse
the Agent for any such cost, expenses, claims or liability which arises from
or is related to the gross negligence or willful misconduct of the Agent. No
payment by any Lender under this SECTION 8.9 shall in any way relieve the
Company of its obligations under this Agreement with respect to the amounts
so paid by any Lender, and the Lenders shall be subrogated to the rights of
the Agent, if any, in respect thereto; PROVIDED such indemnification does not
arise from the gross negligence or willful misconduct of the Agent.
.10. INDEPENDENT CREDIT DECISION. Each of the Lenders represents and
warrants to the Agent that it has, independently and without reliance upon
the Agent or any other Lender and based on the financial statements referred
to in SECTION 4.6 and such other documents and information as it has deemed
appropriate, made its own independent credit analysis and decision to enter
into this Agreement. Each of the Lenders acknowledges that it has not relied
upon any representation by the Agent and that the Agent shall not be
responsible for any statements in or omissions from any documents or
information concerning the Company, this Agreement, the Notes, the Loan
Documents or any other document or instrument executed and delivered in
connection with or as contemplated by this Agreement. Each of the Lenders
acknowledges that it will, independently and without reliance upon the Agent
or any other Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decision in
taking or not taking action under this Agreement.
.11. CONSENTS OF LENDERS. Under any circumstances where the consent,
waiver, approval or similar decision of the Lenders must be requested by the
Company under the terms of this Agreement, each of the Lenders hereby agrees
that any response to any such consent, waiver, approval or otherwise will not
be unreasonably delayed by such Lender.
.12. SUCCESSOR AGENT. The Agent, or any successor Agent, may resign
as Agent at any time by giving written notice thereof to the Lenders and the
Company. Upon any such resignation, the Majority Lenders shall have the
right to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Majority Lenders, then within 30 days after the retiring
Agent's giving of notice of resignation, the retiring Agent may, on behalf of
the Lenders, appoint a successor Agent, which shall be a commercial lender
(or Affiliate thereof) or savings and loan association organized under the
laws of the United States of America or any State thereof or under the laws
of another country which is doing business in the United States of America or
any State thereof and having a combined capital, surplus and undivided
profits of at least $100,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such
46
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from all further duties and obligations under this
Agreement. After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Section 8 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.
9 - MISCELLANEOUS
.1. NOTICES. Unless otherwise specified herein, all notices
hereunder to any party hereto shall be in writing and shall be deemed to have
been given when delivered by hand, when properly deposited in the mail
postage prepaid, or electronic facsimile transmission, or when delivered to
the telegraph company or overnight courier, addressed to such party at its
address indicated below:
If to the Company, at:
GUESS ?, INC.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxx, Chairman or
Xxx Xxxxxx, Chief Financial Officer
Telecopier: (000) 000-0000
If to the Agent, at:
The First National Bank of Boston
000 Xxxxxxx Xxxxxx
Mail Stop 01-22-05
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxxxx, Vice President
Telecopier: (000) 000-0000
If to the Lenders, then to the addresses set forth on EXHIBIT J.
or at any other address specified by such party in writing.
.2. EXPENSES. The Company will pay (i) at closing all reasonable
out of pocket expenses and agreed upon fees of the Agent related to the
preparation of this Agreement and the Loan Documents and the syndication of
the Loans hereunder, including, without limitation, the fees of counsel to
the Agent (not to exceed $25,000.00 plus expenses of such counsel) and all
other related fees and charges, (ii) within five days of demand, all
reasonable out-of-pocket expenses of the Agent in connection with the waiver
or amendment of this Agreement, the Notes or other Loan Documents and other
documents executed in connection therewith and all reasonable out-of-pocket
expenses of the Lenders in connection with any material waiver or amendment
of this Agreement, the Notes or other Loan Documents, and (iii) on demand all
reasonable out-of-pocket expenses of the Agent or any of the Lenders related
to Default or collection of the Loans or other Obligations in connection with
the Agent's or the Lenders' exercise, preservation or enforcement of any of
its rights or remedies thereunder, including, without limitation,
47
reasonable fees of outside legal counsel, accounting, consulting, brokerage
or other similar professional fees or expenses, and any reasonable out of
pocket fees or expenses associated with any travel or other costs relating to
any appraisals or examinations conducted in connection with the Obligations
or any Collateral therefor, and the amount of all such expenses shall, until
paid, bear interest at the rate applicable to Base Rate Loans hereunder
(including any rate of interest provided in SECTION 2.14).
.3. SET-OFF.
(a) Regardless of the adequacy of any Collateral or other means of
obtaining repayment of the Obligations, any deposits, balances or other sums
credited by or due from the head office of the Agent or any of the Lenders or
any of their respective branch offices to the Company may, at any time and
from time to time after the occurrence and during the continuation of an
Event of Default hereunder, without notice to the Company or compliance with
any other condition precedent now or hereafter imposed by statute, rule of
law, or otherwise (all of which are hereby expressly waived) be set off,
appropriated, and applied by the Agent or any Lender against any and all
obligations of the Company to the Lenders in such manner as provided under
the terms of this Agreement. Nothing in this SECTION 9.3 shall limit or
restrict the exercise by a Lender of any rights to setoff or banker's lien
under applicable law. Promptly following each such setoff, appropriation and
application, the Agent or the applicable Lender shall notify the Company of
such setoff, appropriation or application (which notification shall contain a
description of the applicable account and applicable amount).
(b) Each Lender severally agrees that if it, through the exercise of
the right of setoff, banker's lien, or counterclaim against the Company or
otherwise, receives in payment of the Obligations due it hereunder and under
the Notes ratably more than any other Lender receives in payment of
Obligations held by that Lender, then: (a) the Lender exercising the right
of setoff, banker's lien, or counterclaim or otherwise receiving such payment
shall purchase, and shall be deemed to have simultaneously purchased, from
the other Lenders a participation in the Obligations held by the other
Lenders and shall pay to the other Lenders a purchase price in an amount so
that the share of the Obligations held by each Lender after the exercise of
the right of setoff, banker's lien, or counterclaim or receipt of payment
shall be in the same proportion that existed prior to the exercise of the
right of setoff, banker's lien, or counterclaim or receipt of payment, and
(b) such other adjustments and purchases of participations shall be made from
time to time as shall be equitable to ensure that all of the Lenders share
any payment obtained in respect of the Obligations ratably in accordance with
each Lender's share of the Obligations immediately prior to, and without
taking into account, the payment, PROVIDED that, if all or any portion of a
disproportionate payment obtained as a result of the exercise of the right of
setoff, banker's lien, counterclaim or otherwise is thereafter recovered from
the purchasing Lender by the Company or any Person claiming through or
succeeding to the rights of the Company, the purchase of a participation
shall be rescinded the purchase price thereof shall be restored to the extent
of the recovery, but without interest. The Company expressly consents to the
foregoing arrangements and agrees that any Lender holding a participation in
an Obligation so purchased pursuant to this SECTION 9 may exercise any and
all rights of setoff, banker's
48
lien or counterclaim with respect to the participation as fully as if the
Lender were the original owner of the Obligation purchased.
.4. TERM OF AGREEMENT. This Agreement shall terminate at such time
as (i) the Lenders have no commitment to make Loans or issue Letters of
Credit hereunder, (ii) no Loan or Letter of Credit shall be outstanding, and
(iii) no Obligation shall be due.
.5. NO WAIVERS. No failure or delay by the Agent or the Lenders in
exercising any right, power or privilege hereunder or under the Notes or
under any other documents or agreements executed in connection herewith 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, power or privilege. The rights and remedies herein and in the Loan
Documents provided are cumulative and not exclusive of any rights or remedies
otherwise provided by agreement or law.
.6. GOVERNING LAW. This Agreement and the Notes shall be deemed to
be contracts made under seal and shall be construed in accordance with and
governed by the laws the Commonwealth of Massachusetts (without giving effect
to any conflicts of laws provisions contained therein).
.7. AMENDMENTS, WAIVERS, ETC. Except as otherwise expressly
provided in this Agreement, or in any of the Loan Documents: (i) this
Agreement and each of the other Loan Documents may be modified, amended or
supplemented in any respect whatsoever only with the prior written consent or
approval of the Majority Lenders and the Company; and (ii) the performance or
observance by the Company of any of its covenants, agreements or obligations
under any of the Loan Documents may be waived only with the written consent
of the Majority Lenders; PROVIDED, HOWEVER, that the following changes shall
require the written consent, agreement or approval of the all of the Lenders:
(A) any change in the amount or the due date of the Loans; (B) any change in
the interest rates prescribed herein or in any of the Loan Documents; (C) any
change in the Commitment Amount or the Lender's Percentage of any of the
Lenders; (D) any release of Collateral securing the Obligations; (E) any
change in the terms of this SECTION 9.7 and (F) any change in the definition
of Majority Lenders. Neither this Agreement nor the Loan Documents nor any
provision hereof or thereof may be amended, waived, discharged or terminated
except by a written instrument signed by the Agent and, in the case of
amendments, by the Company.
49
.8. ASSIGNMENT AND PARTICIPATIONS.
(i) ASSIGNMENTS BY THE LENDERS. From and after the date
hereof, any of the Lenders may at any time assign all, or a
proportionate part of all, of its rights, interests and duties with
respect to such Lender's commitment to make Loans hereunder and the
Notes to one or more banks or other financial institutions (each, an
"Assignee") on such terms, as between such Lender and each of its
Assignees, as such Lender may think fit, and such Assignee shall assume
such rights, interests and duties pursuant to an instrument executed by
such Assignee and such Lender, and for this purpose such Lender may make
available to each of its potential Assignees such information relating
to the Company, this Agreement and the transactions contemplated hereby
as such Lender may think necessary or desirable, which information shall
be held by each potential Assignee strictly in confidence; PROVIDED,
HOWEVER, that prior to assigning any interest to any Assignee hereunder
such Lender (a) shall notify the Company and the Agent in writing
identifying the proposed Assignee and stating the aggregate principal
amount of the proposed interest to be assigned, (b) receive the prior
written consent of the Company, which shall not be unreasonably
withheld, and the Agent, which consent may not be unreasonably withheld
(c) shall not assign to any Assignee less than $10,000,000 of such
Lender's commitment to make Loans hereunder and interest in the Notes;
and (d) shall pay to the Agent a nonrefundable fee of $2500.00 per
assignment. It is understood and agreed that the proviso contained in
the immediately preceding sentence shall not be applicable in the case
of, and this paragraph (i) shall not restrict (1) a collateral
assignment or other similar transfer to any of the twelve Federal
Reserve Banks organized under Section 4 of the Federal Reserve Act, 12
U.S.C. Section 341 or (2) any assignment to any of a Lender's respective
branch operations or affiliates. Upon execution and delivery of such an
instrument and payment by such Assignee to such Lender of an amount
equal to the purchase price agreed between such Lender and such
Assignee, such Assignee shall be a Lender party to this Agreement and
shall have all the rights, interests and duties of a Lender with a
commitment to make Loans hereunder as set forth in such instrument of
assumption, and such Lender 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 paragraph (i), such Lender, the Agent and the Company
shall make appropriate arrangements so that, if required, a new Note is
issued to the Assignee.
(ii) PARTICIPATIONS BY THE LENDERS. From and after the date
hereof, any of the Lenders shall be at liberty to offer participations
in its commitment to make Loans hereunder and the Notes to one or more
banks or other financial institutions (each, a "PARTICIPANT") on such
terms as such Lender may think fit, and for this purpose such Lender may
make available to each of its potential Participants such information
relating to the Company, this Agreement and the transactions
contemplated hereby as such Lender may think necessary or desirable,
which information shall be held by each potential Participant strictly
in confidence; PROVIDED, HOWEVER, that (a) the amount of any
participation in such Lender's
50
commitment to make Loans hereunder and the Notes participated to each
Participant shall be in an aggregate amount equal to not less than
$5,000,000 of such commitment and the Notes, and (b) such Lender shall
retain the sole right to consent to amendments to, or waivers of, the
provisions of this Agreement and the Notes and the sole right and
responsibility to enforce the obligations of the Company hereunder,
under the Notes and the other Loan Documents; PROVIDED that such Lender
may agree with each of its Participants that such Lender will not agree,
without the consent of the Participant, to any amendment or waiver of
any provision of this Agreement which would increase or otherwise change
such Lender's Percentage or reduce the principal of or rate of interest
on the Loans subject to such participation, or postpone the date fixed
for any payment of principal or of interest on any Loans or terminate
its security interest with respect to or release of any Collateral
hereunder held by such Lender. Any Lender participating its commitment
to make Loans and the Notes under this SECTION 9.8(ii) will promptly
notify the Company of such participation and the name of any such
participant.
(iii) No Assignee, Participant or other transferee of any Lender's
rights shall be entitled to receive any greater payment under this
Agreement than the original Lender would have been entitled to receive
with respect to the rights transferred.
.9. INDEMNITY. The Company shall absolutely and unconditionally
indemnify and hold the Agent and each of the Lenders harmless against any and
all claims, demands, suits, actions, causes of action, damages, losses,
settlement payments, obligations, costs, expenses and all other liabilities
whatsoever which shall at any time or times be incurred or sustained by the
Lender or by any of its shareholders, directors, officers, employees,
subsidiaries, affiliates or agents (each an "INDEMNIFIED PARTY") (except any
of the foregoing incurred or sustained as a result of the gross negligence or
willful misconduct of the Agent, any Lender or any other Indemnified Party)
on account of, or in relation to, or in any way in connection with, any of
the arrangements or transactions contemplated by, associated with or
ancillary to either this Agreement or any of the other documents executed or
delivered in connection herewith (including, without limitation, those
arising as a violation by the Company of any Environmental Laws), whether or
not all or any of the transactions contemplated by, associated with or
ancillary to this Agreement or any of such documents are ultimately
consummated.
.10. BINDING EFFECT OF AGREEMENT. This Agreement shall be binding
upon and inure to the benefit of the Company, the Lenders and the Agent and
their respective successors and assigns; PROVIDED that the Company may not
assign or transfer its rights or obligations hereunder.
.11. COUNTERPARTS. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures hereto and thereto
were upon the same instrument.
.12. PARTIAL INVALIDITY. The invalidity or unenforceability of any
one or more phrases, clauses or sections of this Agreement shall not affect
the validity or enforceability of the remaining portions of it.
51
.13. CAPTIONS. The captions and headings of the various sections and
subsections of this Agreement are provided for convenience only and shall not
be construed to modify the meaning of such sections or subsections.
.14. NATURE OF LENDER'S OBLIGATIONS. Each Lender's obligation to
make any Loan pursuant hereto is several and not joint or joint and several.
A default by any Lender will not increase the Lender's Percentage
attributable to any other Lender. Any Lender not in default may, if it
desires, assume (in such proportion as the nondefaulting Lenders agree) the
obligations of any Lender in default, but is not obligated to do so. The
Agent agrees that it will use its best efforts either to induce the other
Lenders to assume the obligations of a Lender in default or to obtain another
Lender, reasonably satisfactory to the Company, to replace such a Lender in
default.
.15. NONLIABILITY OF LENDERS. The Company acknowledges and agrees
that:
(a) Any inspections of any property of the Company made by or
through the Agent or the Lenders are for purposes of administration of
the Loan Documents only and the Company is not entitled to rely upon the
same;
(b) The relationship between the Company and the Lenders arising
out of or related to this Agreement is, and shall at all times remain,
solely that of a borrower and lender; neither the Agent nor any of the
Lenders shall under any circumstance be construed to be a partner or a
joint venturer of the Company or any of its Subsidiaries; neither the
Agent nor any of the Lenders shall under any circumstance be deemed to
be in a fiduciary relationship with the Company or any of its
Subsidiaries in connection with this Agreement, or to owe any fiduciary
duty to the Company or any of its Subsidiaries in connection with this
Agreement; neither the Agent nor any of the Lenders undertakes or
assumes any responsibility or duty to the Company or any of its
Subsidiaries to select, review, inspect, supervise, pass judgment upon
or inform the Company or any of its Subsidiaries of any matter in
connection with their property or the operations of the Company or any
of its Subsidiaries; the Company and its Subsidiaries shall rely
entirely upon their own judgment with respect to such matters; and any
review, inspection, supervision, exercise of judgment or supply of
information undertaken or assumed by the Lenders or the Agent in
connection with such matters is solely for the protection of the Agent
and the Lenders and neither the Company nor any other Person is entitled
to rely thereon; and
(c) Neither the Agent nor any of the Lenders shall be responsible
or liable to any Person for any loss, damage, liability or claim of any
kind relating to injury or death to Persons or damage to property or
other loss, damage, liability or claim caused by the actions, inaction
or negligence of the Company and/or any of its Subsidiaries.
.16. CONFIDENTIALITY. Each Lender agrees to hold any confidential
information which it may receive from the Company pursuant to or in
connection with this Agreement or the exercise of any rights hereunder in
confidence and to cause its officers, employees, agents and professional
advisors to do likewise.
52
The foregoing shall not, however, restrict disclosure of any such
confidential information by any Lender (a) to other Lenders; (b) to legal
counsel, accountants and other professional advisors to the Company or that
Lender retained in connection with this Agreement; (c) to regulatory
officials having jurisdiction over that Lender; (d) as required by law or
legal process or in connection with any legal proceeding to which that Lender
and the Company are adverse parties; or (e) to another financial institution
in connection with a disposition or proposed disposition to that financial
institution of an assignment of or a participation interest in its Note in
accordance with the terms of this Agreement, PROVIDED that such disclosure is
made subject to an appropriate written confidentiality agreement on terms
substantially similar to this Section and PROVIDED FURTHER that the Company
is advised substantially concurrently with such disclosure of the identity of
such financial institution. For purposes of the foregoing, "confidential
information" shall mean any information respecting the Company reasonably
considered by the Company to be confidential, OTHER THAN (i) information
previously filed with any governmental agency and available to the public
without filing a request under the Freedom of Information Act, (ii)
information previously published in any public medium not furnished directly
or indirectly, by that Lender and (iii) information previously disclosed by
the Company to any Person not associated or affiliated with the Company or
any of its officers, directors, agents, attorneys or employees without an
appropriate confidentiality agreement and subsequently disclosed by that
Person to a significant number of other Persons. Notwithstanding the
foregoing, in the event that any information respecting the Company is
published or disclosed to other Persons as described in clauses (ii) or (iii)
of the preceding sentence, each Lender agrees that it will not without the
Company's consent make any statement to a representative of a public medium
or to any such Person (EXCEPT as may be described in the second sentence of
this Section) which confirms or denies the accuracy of such information.
Nothing in this Section shall be construed to create or give rise to any
fiduciary duty on the part of the Agent or the Lenders to the Company.
.17. PURPORTED ORAL AMENDMENTS. THE AGENT, EACH OF THE LENDERS AND
THE COMPANY EXPRESSLY ACKNOWLEDGES THAT THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS MAY ONLY BE AMENDED OR MODIFIED, OR THE PROVISIONS HEREOF OR
THEREOF WAIVED OR SUPPLEMENTED, BY AN INSTRUMENT IN WRITING THAT COMPLIES
WITH SECTION 9.7. THE AGENT, EACH OF THE LENDERS AND THE COMPANY AGREES THAT
IT WILL NOT RELY ON ANY COURSE OF DEALING, COURSE OF PERFORMANCE, OR ORAL OR
WRITTEN STATEMENTS BY ANY REPRESENTATIVE OF THE AGENT, THE COMPANY OR ANY
LENDER THAT DOES NOT COMPLY WITH SECTION 9.7.
.18. WAIVER OF JURY TRIAL. THE AGENT, THE LENDERS AND THE COMPANY
AGREE THAT NEITHER OF THEM NOR ANY ASSIGNEE OR SUCCESSOR SHALL (A) SEEK A
JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER ACTION BASED
UPON, OR ARISING OUT OF, THIS AGREEMENT, ANY RELATED INSTRUMENTS, ANY
COLLATERAL OR THE DEALINGS OR THE RELATIONSHIP BETWEEN OR AMONG ANY OF THEM,
OR (B) SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A
JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS
PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE AGENT, THE LENDERS AND THE
COMPANY, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NEITHER THE
AGENT, THE LENDERS NOR THE COMPANY HAS AGREED WITH OR REPRESENTED TO THE
OTHER THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL
INSTANCES.
53
.19. ENTIRE AGREEMENT. This Agreement, the Notes and the documents
and agreements executed in connection herewith constitute the final agreement
of the parties hereto and supersede any prior agreement or understanding,
written or oral, with respect to the matters contained herein and therein.
54
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
GUESS ?, INC.
By:
Title:
THE FIRST NATIONAL BANK OF BOSTON
AS AGENT AND LENDER
By:
Title:
SANWA BANK CALIFORNIA,
AS CO-AGENT AND LENDER
By:
Title:
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
LOS ANGELES AGENCY, AS LENDER
By:
Title:
CREDIT LYONNAIS LOS ANGELES BRANCH AS LENDER
By:
Title:
SUMITOMO BANK OF CALIFORNIA, AS LENDER
By:
Title:
55
EXHIBIT A
GUESS ?, INC.
PROMISSORY NOTE
$ March __, 1997
For value received, the undersigned hereby promises to pay to (the
"Lender"), or order, at the head office of the First National Bank of Boston
(the "Agent") at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, the
principal amount of Dollars ($ ) or such lesser
amount as shall equal the principal amount outstanding hereunder on the
Revolving Credit Termination Date (as defined in the Agreement) in lawful
money of the United States of America and in immediately available funds, and
to pay interest on the unpaid principal balance hereof from time to time
outstanding, at said office and in like money and funds, for the period
commencing on the date hereof until paid in full, at the rates per annum and
on the dates provided in the Agreement (as defined below) including
additional interest due upon non-payment of principal or interest. Any
accrued but unpaid interest shall be due and payable on the Revolving Credit
Termination Date.
Nothing in the preceding sentence shall affect the Lender's rights to
exercise any of its rights and remedies provided in the Agreement if an Event
of Default (as defined in the Agreement) has occurred and is continuing.
This Note is issued pursuant to, and entitled to the benefits of, and is
subject to, the provisions of a certain Amended Restated Revolving Credit
Agreement dated as of March 28, 1997 by and between the undersigned, the
Agent, Sanwa Bank California as Co-Agent and the other financial institutions
party thereto, (herein, as the same may from time to time be amended or
extended, referred to as the "Agreement"), but neither this reference to the
Agreement nor any provision thereof shall affect or impair the absolute and
unconditional obligation of the undersigned maker of this Note to pay the
principal of and interest on this Note as herein provided.
As provided in the Agreement, this Note is secured by certain personal
property of the undersigned.
In case an Event of Default shall occur, the aggregate unpaid principal
of and accrued interest on this Note shall become or may be declared to be
due and payable in the manner and with the effect provided in the Agreement.
The undersigned may at its option prepay all or any part of the
principal of this Note before maturity upon the terms provided in the
Agreement.
Except as set forth in any Loan Document (as defined in the Agreement),
the undersigned maker hereby waives presentment, demand, notice of dishonor,
protest and all other demands and notices in connection with the delivery,
acceptance, performance and enforcement of this Note.
This promissory note shall have the effect of an instrument executed
under seal and shall be governed by and construed in accordance with the laws
of the Commonwealth of Massachusetts (without giving effect to any conflicts
of laws provisions contained therein).
GUESS ?, INC.,
By:
Title:
SCHEDULE I TO PROMISSORY NOTE
Type of Loan
Amount of (Eurodollar Interest Interest Amount Notation
DATE Loan or Base Rate Period* Paid Made By
Rate,
* For Eurodollar Loans only
EXHIBIT B
GUESS ?, INC.
Re: Amended and Restated Revolving Credit Agreement
Dated as of March ___, 1997 (the "Agreement")
Gentlemen:
Pursuant to Section 2.2 of the Agreement, the undersigned hereby
confirms its request made on , 19 for a [Base Rate] [Eurodollar]
Loan in the amount of $ on , 199 .
[The Interest Period applicable to said Loan will be [one] [two] [three]
[six] months [30] [60] [90] days.]*
[Said Loan represents a conversion/continuation of the [Base Rate]
[Eurodollar] Loan in the same amount made on .]**
[The representations and warranties contained or referred to in Section 4 of
the Agreement are true and accurate on and as of the effective date of the Loan
as though made at and as of such date (except to the extent that such
representations and warranties expressly relate to an earlier date); and no
Default has occurred and is continuing or will result from the Loan.]***
GUESS ?, INC.
By:
Title:
Date:
* To be inserted in any request for a Eurodollar Loan.
[** To be inserted in any request for a conversion or continuation.]
[*** To be inserted on any request other than for a continuation.]
EXHIBIT C
INDEBTEDNESS; ENCUMBRANCES
A. INDEBTEDNESS
1. $130,000,000 aggregate principal amount of 9-1/2% Senior
Subordinated Notes due 2003 and 9-1/2% Series B Senior Subordinated
Notes due 2003 issued pursuant to an Indenture with First Trust
National Association. Principal balance outstanding as of December
31, 1996, was $105,000,000.
2. A secured revolving credit facility in the aggregate principal
amount of up to $100,000,000 with The First National Bank of
Boston, as Agent, and certain commercial banks party thereto. As
of December 31, 1996, there was $16,000,000 principal balance
outstanding under such facility.
3. A loan in the original principal amount of $3,593,750 from Xxxxxxx
Xxxxx Capital Corporation (assigned from Sentry Financial
Corporation) relating to the financing of a Gulfstream Aerospace
G-II (serial number 167 and FAA registration N120GS) and two (2)
installed Rolls Royce Model Spey 511-8 jet engines (serial numbers
8854 and 8855). Principal balance outstanding as of December 31,
1996, was $1,039,954.
4. Guess Italia, S.r.l., a subsidiary of Guess?, Inc., has an
unsecured revolving credit facility in the aggregate principal
amount of up to $6,300,000 with Credito Bergamasco, as Agent. As
of December 31, 1996, there was $3,119,972 principal balance
outstanding under such facility.
5. Estimated $2,000,000 principal balance outstanding of S
Distribution Notes due January 1, 1997, issued in conjunction with
the Company's IPO. On December 31, 1996 the due date was extended
to April 1, 1997.
EXHIBIT D
LITIGATION
Xxxxxx Xxxxxxxx et al. v. Guess ?, Inc. et al. (Dist. Ct. Case No. 96-5484HLH
(Jgx)).
Xxxxxxxx, et al. v. Guess ?, Inc., et al., LASC Case No. BC 165 (State
Action).
NLRB Case No. 21-CA-31817.
NLRB Case No. 21-CA-31859.
NLRB Case No. 31-CA-22380.
NLRB Case No. 21-CA-31524.
NLRB Case No. 21-CA-31565.
NLRB Case No. 21-CA-31648.
NLRB Case No. 21-CA-31561.
NLRB Case No. 21-CA-31807.
EXHIBIT E
SUBSIDIARIES
Guess Europe, B.V.
Guess Italia, S.r.l.
Ranche, Limited
EXHIBIT F
GUESS ?, INC.
REPORT OF CHIEF FINANCIAL OFFICER
GUESS ?, INC. (the "Company") HEREBY CERTIFIES that:
This Report is furnished pursuant to Section 5.1(c) of the Amended and
Restated Revolving Credit Agreement dated as of March 28, 1997 by and
between the Company and The First National Bank of Boston (the "Bank of
Boston"), as Agent, Sanwa Bank California, as Co-Agent, and the other Lenders
party thereto (the "Agreement"). Unless otherwise defined herein, the terms
used in this Report have the meanings given to them in the Agreement.
As required by Section 5.1(a) and (b) of the Agreement, consolidated
financial statements of the Company and its Subsidiaries for the
[year/month/quarter] ended , 19 (the "Financial Statements")
prepared in accordance with GAAP consistently applied accompany this Report.
The Financial Statements present fairly the consolidated financial position
of the Company and its Subsidiaries as at the date thereof and the
consolidated results of operations of the Company and its Subsidiaries for
the period covered thereby (subject only to normal recurring year-end
adjustments).
The figures set forth in Schedule A for determining compliance by the
Company with the financial covenants contained in the Agreement are true and
complete as of the date hereof.
The activities of the Company and its Subsidiaries during the period
covered by the Financial Statements have been reviewed by the Chief Financial
Officer or by employees or agents under his immediate supervision. Based on
such review, to the best knowledge and belief of the Chief Financial Officer,
and as of the date of this Report, no Default has occurred and is
continuing.**
---------------
** If a Default has occurred, this paragraph is to be modified with
an appropriate statement as to the nature thereof, the period of
existence thereof and what action the Company has taken, is taking, or
proposes to take with respect thereto.
WITNESS my hand this day of , 19 .
GUESS ?, INC.
By:
Title:
SCHEDULE A
to
EXHIBIT F
FINANCIAL COVENANTS
CURRENT RATIO (SECTION 5.7)
REQUIRED:
1.75:1.00
ACTUAL:
(i) Consolidated Current Assets $
(ii) Consolidated Current Liabilities
(iii) Current portion of $
Indebtedness for Money Borrowed
(iv) Line (ii) less line (iii) $
(v) Line (i) divided by line (iv) :1.00
LEVERAGE RATIO (SECTION 5.8)
MAXIMUM:
2.75:1.00
ACTUAL:
(i) Indebtedness for Money Borrowed $
(ii) Consolidated Cash Flow $
(iii) Excess Dividends $
(iv) Line (ii) less line (iii) $
(vi) Line (i) divided by line (iv) :1.00
TOTAL INTEREST COVERAGE (SECTION 5.9)
REQUIRED:
3.00:1.00
ACTUAL: $
(i) Consolidated EBITDA
(ii) Capital Expenditures $
(iii) Line (i) less Line (ii) $
(iv) Consolidated Total Interest $
Expense
(v) Line (iii) divided by line (iv) :1.00
TOTAL FIXED CHARGE COVERAGE (SECTION 5.10)
REQUIRED:
2.00:1.00
ACTUAL:
(i) Consolidated Cash Flow $
(ii) Payments on Operating Leases $
(iii) Sum Total of Line (i) plus $
Line (ii)
(iv) Consolidated Total Debt Service $
(v) Payments on Operating Leases
(vi) Sum Total of Line (iv) plus Line
(v)
(vii) Line (iii) divided by Line :1.00
(iv)
PROFITABILITY (SECTION 5.11)
REQUIRED: $ 1.00
ACTUAL:
Consolidated net income $
INVENTORY TURNOVER (SECTION 5.12)
MINIMUM: 2.25 Turns
ACTUAL:
(i) Total cost of sales for the $
Company for the four fiscal
quarters ended
(ii) Book Value of inventory at end of $
current fiscal quarter
(iii) Book value of inventory at $
beginning of measurement period
(iv) Line (ii) plus line (iii) $
(v) Line (iv) divided by 2 $
(vi) Line (i) divided by line (v) ____ Turns
WITNESS my hand this ______ day of ____________, 19__.
GUESS ?, INC.
By:
Title:
EXHIBIT G
FORM OF OPINION OF INSIDE COUNSEL TO COMPANY
March 28, 1997
FORM OF INSIDE COUNSEL OPINION
The First National Bank of Boston,
as Agent
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
The Lenders listed on Schedule I hereto
Re: GUESS ?, INC. REVOLVING CREDIT AGREEMENT
____________________:
I am the General Counsel of Guess ?, Inc., a Delaware corporation (the
"Company"), and in such capacity I have served as counsel for the Company with
respect to that certain Amended and Restated Revolving Credit Agreement (the
"Credit Agreement") dated as of ______________, 1997 by and between the Company,
The First National Bank of Boston ("BKB"), as Agent (as defined therein), Sanwa
Bank California, as Co-Agent (as defined therein), and the financial
institutions party thereto (the "Lenders"). Capitalized terms used herein and
not otherwise defined herein shall have the same meanings herein ascribed
thereto in the Credit Agreement. This opinion is being delivered pursuant to
Section 3.1( ) of the Credit Agreement.
In my examination I have assumed the completeness and accuracy of the
Company's corporate records, the genuineness of all signatures (other than those
of officers of the Company), including endorsements, the legal capacity of
natural persons, the authenticity of all documents submitted to me as originals,
the conformity to original documents of all documents submitted to me as
certified or photostatic copies, and the authenticity of the originals of such
copies. As to any facts material to this opinion which I did not independently
establish or verify, with your permission, I have relied upon statements and
representations of the Company and its officers and other representatives and of
public officials, including, without limitation, the statements and
representations set forth in the Company's Certificate described below in clause
(d).
In regarding the opinions set forth herein, I have examined and relied on
originals or copies of the following:
(a) an executed copy of the Credit Agreement;
(b) an executed copy of the Amended and Restated Security Agreement;
(c) the Amended and Restated Notes;
(d) a certificate of the Company executed by Xxxxx X. Xxxxxxxx, Executive
Vice President and Chief Financial Officer, dated the date hereof, a
copy of which is attached hereto as Exhibit A (the "Company's
Certificate");
(e) a certificate from the Secretary of State of Delaware as to the good
standing of the Company in the State of Delaware;
(f) copies of the Restated Certificate of Incorporation and the Amended
and Restated Bylaws of the Company, in each case, as amended to date;
(g) a certified copy of certain resolutions of the Board of Directors of
the Company adopted as of ____________, 1997; and
(h) such other documents as I have deemed necessary or appropriate as a
basis for the opinions set forth below.
Whenever a statement herein is qualified by the phrase "to the best of my
knowledge, after due inquiry", it is intended to indicate that (a) no
information that would give me current actual conscious knowledge of the
inaccuracy of such statement has come to my attention, and (b) my inquiry has
been limited to officers of the Company.
The Credit Agreement, the Amended and Restated Notes and the Amended and
Restated Security Agreement shall hereinafter be referred to as the "Loan
Documents."
I am admitted to the Bar of State of California and I express no opinion as
to the laws of any jurisdiction other than the laws of the United States of
America to the extent specifically referred to herein.
My opinions are subject to the assumption and qualification that I have
assumed that no other agreements exist between or among the various parties that
would materially alter the terms or agreements set forth in any of the Loan
Documents.
Based upon the foregoing and subject to the limitations, qualifications,
exceptions and assumptions set forth herein, I am of the opinion that:
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware.
2. The Company is duly qualified as a foreign corporation and is in good
standing in each jurisdiction (other than the State of Delaware) in which the
conduct of its business or the ownership or leasing of its properties makes such
qualification necessary, EXCEPT where the failure so to qualify or to be in good
standing would not reasonably be likely to have a material
adverse effect on the business, financial condition, assets or
properties of the Company and its Subsidiaries, taken as a whole.
3. The Company has the requisite corporate power and authority to conduct
its business as now being conducted and to own its property.
4. The execution, delivery and performance by the Company of each of the
Loan Documents does not:
(a) require any consent or approval not heretofore obtained of any
partner, stockholder, security holder or to the best of my
knowledge, after due inquiry, any creditor of the Company; and
(b) to the best of my knowledge, after due inquiry, result in a
breach or default under, or would with the giving of notice or
the lapse of time or both constitute a breach of or default
under, any indenture or loan or credit agreement or any other
agreement to which the Company is a party or by which the Company
or any of its material property is bound or affected.
5. The execution and delivery by the Company of each of the Credit
Documents and the performance by the Company of its obligations under each of
the Credit Documents does not conflict with the Certificate of Incorporation or
Bylaws of the Company.
6. Neither the execution, delivery or performance by the Company of the
Credit Documents nor the compliance by the Company with the terms and provisions
thereof will contravene any provision of any Applicable Law. For purposes of
this paragraph 6 and paragraph 7 below, "Applicable Laws" shall mean those laws,
rules and regulations of the State of California and the United States of
America (including, without limitation, Regulations G and U of the Federal
Reserve Board) which, in our experience, are normally applicable to transactions
of the type contemplated by the Loan Documents and are not otherwise the subject
of a specific opinion herein that expressly refers to a particular law or laws.
7. No Governmental Approval, which has not been obtained or taken and is
not in full force and effect, is required to authorize or is required in
connection with the execution, delivery or performance of any of the Loan
Documents by the Company. For the purposes of this paragraph 7, the term
"Governmental Authority" means any federal or California legislative, judicial,
administrative or regulatory body and the term "Governmental Approval" means any
consent, approval, license, authorization or validation of, or filing, recording
or registration with, any Governmental Authority pursuant to Applicable Laws.
8. The Company is not required to be registered as an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
9. To the best of my knowledge, after due inquiry, EXCEPT for matters set
forth in Exhibit E to the Credit Agreement, there is no action, proceeding or
investigation pending as to which the Company has been served or
has received notice, affecting the Company or any of its property before
any governmental agency, governmental authority, court or administrative
tribunal which is reasonably likely to have a material adverse effect on
the business, financial condition, assets or properties of the Company
and its Subsidiaries, taken as a whole.
This opinion is rendered to you in connection with the transactions
referred to herein and may not be used, circulated, quoted, relied upon or
otherwise referred to by any other person without my prior written consent. All
statements herein are based upon information known to the undersigned as of the
date hereof and I do not undertake to make further inquiry nor to take further
steps or otherwise advise or update this opinion. I express no opinion
regarding the effects of agreements entered into or events occurring after the
date hereof, and I disclaim any responsibility to advise you of changes of facts
or law occurring after this date.
Very truly yours,
Xxxxx X. Xxxxxxx
Attachment
Schedule I
LENDERS
EXHIBIT "A"
GUESS ?, INC.
OFFICER'S CERTIFICATE
Reference is made to that certain Amended and Restated Revolving Credit
Agreement, (the "Credit Agreement") dated as of ____________, 1997 between Guess
?, Inc. (the "Company"), The First National Bank of Boston ("BKB") as Agent (as
defined therein), Sanwa Bank California, as Co-Agent (as defined therein), and
the financial institutions party thereto.
Terms defined in the Credit Agreement and not otherwise defined herein are
used herein with the meanings so defined therein.
The undersigned officer of the Company, for purposes of the opinion to be
delivered by Xxxxx Xxxxxxx, Esq., General Counsel of the Company, pursuant to
Section 3.1 (f) of the Credit Agreement, and recognizing that Xx. Xxxxxxx will
rely on this Certificate in delivering said opinion, hereby certifies to the
best of his knowledge and belief that:
1. The Company is engaged primarily in the business of designing,
manufacturing and the wholesale and retail sale of clothing and accessories and
licensing the use of its name and trademark for the manufacture and distribution
of merchandise; and the Company is not engaged primarily nor does it propose to
engage primarily in the business of investing, reinvesting, or trading in
securities.
2. The Company does not own nor does it propose to acquire investment
securities having a value exceeding forty percent (40%) of the value of the
Company's total assets (exclusive of government securities and cash items) on an
unconsolidated basis.
3. The Company is not engaged nor does it propose to engage in the
business of issuing face-amount certificates of the installment type, nor has it
been engaged in such business nor does it have any certificate outstanding.
4. The Company does not own or operate facilities used for the
generation, transmission, or distribution of electric energy for sale ("electric
utility facilities").
5. The Company does not own or operate facilities used for the
distribution at retail of natural or manufactured gas for heat, light, or power
("gas utility facilities").
6. The Company does not directly or indirectly, or through one or more
intermediary companies, own, control, or hold with power to vote (a) ten percent
(10%) or more of the outstanding securities, such as notes, drafts, stock
treasury stock, bonds, debentures, certificates of interest or participations in
any profit sharing agreements or in oil, gas, other mineral
royalties or leases, collateral-trust certificates, preorganization
certificates or subscriptions, transferable shares, investment
contracts, voting-trust certificates, certificates of deposit for a
security, receiver's or trustee's certificates, or any other instrument
commonly known as a "security" (including certificates of interest or
participation in, temporary or interim certificates, for receipt for,
guaranty of, assumption of liability on, or warrants or rights to
subscribe to or purchase any of the foregoing) presently entitling it to
vote in the direction or management of, or any such instrument issued
under or pursuant to any trust, agreement, or arrangement whereby a
trustee or trustees or agents or agents for the owner or holder of such
instrument is presently entitled to vote in the direction or management
of, any corporation, partnership, association, joint-stock company,
joint venture or trust that owns or operates any electric utility
facilities or gas utility facilities, or (b) any other interest,
directly or indirectly, or through one or more intermediary entities, in
(i) any corporation, partnership, association, joint-stock company,
joint venture or trust that owns or operates any electric utility
facilities or gas utility facilities, or in (ii) any of the foregoing
types of entities which have received notice of the sort described in
Paragraph 7 below.
7. The Company has not received notice that the Securities and Exchange
Commission has determined, or may determine, that the Company exercises a
controlling influence over the management or direction of the policies of a gas
utility company or an electric utility company as to make it subject to the
obligations, duties and liabilities imposed on holding companies by the Public
Utility Holding Company Act of 1935, as amended.
8. Except for matters set forth in Exhibit D to the Credit Agreement,
there are no actions, proceedings or investigations pending as to which the
Company has been served or has received notice or affecting the Company or any
of its property before any which is reasonably likely to have a material adverse
effect on the business, financial, condition, assets or properties of the
Company and its Subsidiaries, taken as a whole.
IN WITNESS WHEREOF, I have signed this Certificate on behalf of the Company
as of the 28th day of March, 1997.
GUESS ?, INC.
By: ______________________
Xxxxx X. Xxxxxxxx
Executive Vice President and
Chief Financial Officer
EXHIBIT H
STANDBY LETTER OF CREDIT AGREEMENT
"Application" means the written application by the Customer to the Bank for
the issuance of a letter of credit and includes all modifications made with
the Customer's written or oral agreement or consent.
"Bank" means the First National Bank of Boston and includes its overseas
branches.
"Collateral" includes all property in which the Bank at any particular time
has a security interest and the proceeds thereof.
"Credit" means a letter of credit issued pursuant to the Application,
including any amendments or modifications to such Credit.
"Customer" means the party or parties signing the Application jointly and
severally if more than one.
"Uniform Customs and Practice" means the "Uniform Customs and Practice for
Documentary Credits (1983 Revision), International Chamber of Commerce,
Publication No. 400, and any subsequent revisions thereof approved by the
International Chamber of Commerce.
__________________
In consideration of the Bank opening at the Customer's request, a Credit, the
Customer hereby agrees with the Bank as follows:
1. The Customer will pay the Bank, in United States currency, the amount of
each drawing under the Credit, together with interest, commissions, all
customary charges, and all other disbursements or payments by the Bank demand
with interest from the date of payment under the Credit to the date of
payment by the Customer to the Bank. If a drawing is payable in foreign
currency, the Customer will pay the Bank the equivalent of the amount of such
drawing in United States currency, at the Bank's then selling rate for cable
transfers to take the place of payment or to the place of the Bank's
settlement of its obligation, as the Bank may require. If there is no rate
of exchange for effecting such cable transfer, the Customer will pay the Bank
on demand the amount in United States currency equivalent to the Bank's
actual cost of settlement, with interest on the amount in United States
currency payable by the Customer from the date of settlement to the date of
payment by the Customer. Unless otherwise agreed, interest and commission
payable hereunder shall be at such rate as the Bank may deem appropriate:
provided however, that the rate of interest on default on any of the
Customer's obligations hereunder will be 125 percent of the Base Rate. The
Base Rate is the rate of interest announced from time to time by the Bank at
its head office as its Base Rate. Any amount which at any time may be owing
by the Customer to the Bank pursuant to this Agreement may be charged against
any funds held by the Bank for the account of the Customer.
2. The Customer will promptly examine (a) the copy of the Credit (and any
amendments thereof) sent to it by the Bank and (b) all instruments and
documents delivered to it from time to time by the bank, and the Customer
will within twenty-four (24) hours or receipt thereof, notify the bank of any
irregularity or claim of non-compliance with the Customer's instructions.
The Customer is conclusively deemed to have waived any such claim against the
Bank and its correspondents unless such notice is given as aforesaid.
3. The Customer agrees to indemnify the Bank and its correspondents for and
hold them harmless against any and all claims, loss, liability, or damage,
including reasonable attorney fees, howsoever arising from or in connection with
the Credit. The agreements in this paragraph will survive any payment under or
termination of this Agreement.
4. The Customer will pay the Bank on demand all charges, costs, and expenses
including reasonable attorney fees, incurred by paid by the Bank in connection
with the exercise of any right, power, or remedy hereunder, or in the
enforcement thereof.
5. Any deposits or other sums at any time credited by or due from the Bank to
the Customer and any securities or other property of the Customer in the
possession of the Bank or any of its correspondents may at all times be held and
treated as collateral for the payment of any obligations of the Customer to the
Bank hereunder, whether direct or indirect, absolute or contingent, due or to
become due, now existing of hereafter arising. Regardless of the adequacy of
any Collateral, any deposits or other sums credited by or due from the Bank to
the Customer may, at any time, be applied to or set off against such liabilities
and obligations without notice.
6. If the bank shall in good xxxxx xxxx itself insecure at any time, or upon
(1) failure of the Customer to perform any of its obligations under this
Agreement, or any of its obligations for borrowed money or in respect of any
extension of credit or accommodation under any lease, (2) the death,
insolvency, dissolution, termination of existence, suspension of business,
appointment of a receiver of any part of the property of, assignment for the
benefit of creditors by, or the commencement of any proceeding under any law
relating to Bankruptcy or insolvency by or against the Customer, (3) the
issuance of or application for a writ or order of attachment or garnishment
against any Collateral or a substantial part of the property or assets of the
Customer, or (4) any governmental authority, or any court at the instance of
any governmental authority, taking possession of any substantial part of the
property of the Customer or assuming control over the affairs or operations
of the Customer, thereupon, the Bank may, (a) without notice or demand,
declare any and all of the obligations and liabilities, direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter
arising, of the Customer to the Bank under this Agreement, to be immediately
due and payable, and the Bank will have all of the rights and remedies
provided hereunder and by law and/or (b) require the Customers to deliver to
the Bank to be held and treated as Collateral such other property of the
Customer equal in amount or value to 125% of the Credit, and the Customer
shall promptly deliver the same upon request.
7. Neither the Bank nor its correspondents shall be in any way responsible for
performance by any Beneficiary of its obligations to the Customer, nor for the
form, sufficiency, correctness, genuineness, authority of person signing,
falsification or legal effect of any documents called for under the Credit if
such documents on their face appear to be in order.
8. The Bank may honor, as complying with the terms of the Credit and of the
Application therefor, any drafts or other documents otherwise in order signed or
issued by an administrator, executor, conservator, trustee in Bankruptcy, debtor
in possession, assignee for benefit of creditors, liquidator, receiver, or other
legal representative of the party authorized under the Credit to draw or issue
such drafts or other documents.
9. Unless otherwise expressly agreed to, the Customer hereby authorizes the
Bank to (a) select an advising bank, if any, (b) authorize or restrict
negotiation under the Credit, and (c) waive any such restriction on
negotiation.
10. This Agreement and request or consent to any modification, change,
amendment, waiver, or any other action pursuant to the Agreement, will be
binding upon the Customer and its respective heirs, executors, administrators,
successors, and assigns and will inure to the benefit of and be enforceable by
the Bank, its successors, and assigns. In the event that any provision hereof
is determined by a court of competent jurisdiction to be invalid, such
invalidity will not affect any other provision of this Agreement, The Customer
represent and warrants that the execution, delivery, and performance by the
Customer hereof has been duly authorized by all necessary corporate and/or other
action and that the making and performance hereof by the Customer does not and
will not contravene the terms of any existing law, agreement, or instrument by
which t he Customer is bound or to which the Customer is subject.
11. The failure of the Bank to enforce at any time any provision hereof will
not be construed to be a waiver of such provision or of the right of the Bank
thereafter to enforce any such provision.
12. The credit will be subject to, and performance by the Bank, its
correspondents and Beneficiary thereunder will be governed by, the Uniform
Customs and Practice, except to the extent it is otherwise expressly agreed. In
the event the credit is subject to laws other than the Uniform Customs and
Practice, any action , inaction, or omission on the part of the Bank or its
correspondents in connection with the Credit, and in good faith reliance on such
laws, will be deemed to be in compliance with the credit and this Agreement and
Customer hereby indemnifies the Bank and its correspondents from and holds them
harmless against any and all loss, liability, damage, cost, or expense
(including reasonable attorney fees) incurred thereby.
13. It is agreed that all directions and correspondence relating to the Credit
are to be sent at the Customer's risk and that the Bank does not assume any
responsibility for any inaccuracy, interruption, error, or
delay in transmission or delivery by post, telegraph, cable, or courier for
any inaccuracy of translation.
14. This Agreement is made in the Commonwealth of Massachusetts and shall be
deemed to be a contract under seal to be governed by and construed in accordance
with the laws of said Commonwealth. The Bank's rights, powers, and remedies
specified herein are cumulative and are in addition to those otherwise created
or existing by law or agreement.
EXHIBIT I
DOCUMENTARY LETTER OF CREDIT AGREEMENT
This Agreement is made as of December 22, 1995 ("Effective Date") by and
between:
(1) THE FIRST NATIONAL BANK OF BOSTON, a national banking association with its
main offices located at 000 Xxxxxxx Xxxxxx Xxxxxx, Xxxxxxxxxxxxx, including its
overseas branches, affiliates, and subsidiaries ("Bank"): and
(2) GUESS?, INC., a Delaware corporation, having offices at 0000 Xx. Xxxxxxx
Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000 ("Customer").
"Application" means the written application by the Customer to the Bank for the
issuance of a letter of credit and includes all modifications made with the
Customer's written agreement or consent.
"Bank" means The First National Bank of Boston and includes its overseas
branches.
"Business Day" means any day in which banks located in Boston, Massachusetts,
Hong Kong and Los Angeles, California are generally transacting banking
business.
"Credit" means a commercial letter of credit issued pursuant to an Application,
including any amendments or modifications of such Credit.
"Customer" shall have the meaning set forth above.
"Designated Senior Indebtedness" means at any time (i) all Senior Indebtedness
under the Loan Agreement, and (ii) any other Senior Indebtedness which, at the
time of determination, has an aggregate principal amount outstanding of at least
$25,000,000 and is specifically designated in the instrument evidencing such
Senior Indebtedness as "Designated Senior Indebtedness."
"Indebtedness" means, with respect to any person, without duplication (a) all
indebtedness of such person (1) for borrowed money or for the deferred purchase
price of property of services (other than trade payables or current liabilities
arising in the ordinary course of business), (b) all obligations, contingent or
otherwise, of such person in connection with any letters of credit or
acceptances issued under letter of credit facilities, acceptance facilities or
other similar facilities, (c) all indebtedness created or arising under any
conditional sale or other title retention agreements with respect to property
acquired by such person (even if the rights and remedies of the seller or lender
under such agreement in the event of default are limited to repossession or sale
of such property), but excluding trade payables and other accrued current
liabilities of such person arising in the ordinary course of business, (d) all
obligations under interest rate contracts of such person, (e) all redeemable
capital stock of such person valued at the greater of its voluntary of
involuntary liquidation preference plus accrued and unpaid dividends, (f) any
liability of others described in the preceding clauses (a), (b), (c), (d) and
(e) that such person has guaranteed or that is otherwise its legal liability and
(g) any amendment, supplement, modification,
deferral, renewal, extension or refunding of any liability of the types
referred to in clauses (a), (b), (c), (d), (e) and (f) above.
"Indenture" means the Indenture dated as of August 23, 1993, between the
Customer and First Trust National Association, as trustee, pursuant to which
$130,000,000 aggregate principal amount of 92% Series B Senior Subordinated
Notes due 2003 of the Customer have been and/or will be issued.
"Non-payment Default" means any event (other than a Payment Default) the
occurrence of which entitles one or more persons to accelerate the maturity of
any Designated Senior Indebtedness.
"Payment Default" means any default in the payment or required prepayment of
principal of, premium, if any, or interest, on any Designated Senior
Indebtedness when due (whether at final maturity, upon scheduled installment,
mandatory prepayment, acceleration or otherwise).
"Ranche" means Ranche Limited, doing business as Guess International, a Hong
Kong corporation.
"Ranche Reimbursement Agreement" means the Continuing commercial Letter of
Credit Reimbursement and Security Agreement between Ranche and the Bank dated as
of November 22, 1994, and all amendments thereto.
"Securities" shall mean any of the $130,000,000 aggregate principal amount of
the Customer's 92% Senior Subordinated Notes due 2003 and 92% Series B Senior
Subordinated Notes due 2003 issuable as provided in the Indenture.
"Senior Indebtedness" means (i) the principal of, premium, if any, and interest
(including interest, to the extent allowable, accruing after the filing of a
petition initiating any proceeding under any state or federal bankruptcy law)
on, and other amounts due in connection with the Revolving Credit Agreement
dated as of December 20, 1993, among the Customer, The First National Bank of
Boston, as Agent, and the group of financial institutions party thereto, as
amended by the first Amendment to revolving Credit Agreement dated as of January
20, 1994, as further amended by the Second Amendment and Waiver to Revolving
Credit Agreement dated as of April 1, 1994, as further amended by the Third
Amendment and Waiver to Revolving Credit Agreement dated July 18, 1994, as
further amended by the Fourth Amendment and Waiver to Revolving Credit Agreement
dated as of February 13, 1995, as further amended by the Sixth Amendment to
Revolving Credit Agreement dated as of September 14, 1995, and as further
amended by the Seventh Amendment to Revolving Credit Agreement dated of even
date herewith, and as the same may be supplemented or amended from time to time
(collectively, the "loan Agreement") (including, without limitation, contingent
obligations with respect to undrawn letters of credit issued thereunder and
commitment fees, agency fees, costs and expense reimbursements and
indemnifications payable thereunder) (provided, however, that any Indebtedness
under any refinancing, refunding or replacement of the Loan Agreement shall not
constitute Senior Indebtedness to the extent that such Indebtedness is by its
terms subordinate to any other Indebtedness of the customer)and (ii) the
principal of, premium, if any, and interest (including interest, to the
Customer) and (ii) the principal of, premium, if any, and interest (including
interest, to the extent allowable, accruing after the filing of a petition
initiating any proceeding under any state of federal
bankruptcy law) on any Indebtedness of the Customer (other than as otherwise
provided in this definition), whether outstanding on the date of the
Indenture or thereafter created, incurred or assumed, unless, in the case of
any particular Indebtedness, the instrument creating or evidencing, or the
agreement governing, such Indebtedness or pursuant to which such Indebtedness
is outstanding expressly provides that such Indebtedness shall not be senior
in right of payment to the Securities. Notwithstanding the foregoing,
"Senior Indebtedness" shall not include (A) Indebtedness evidenced by the
Securities, (B) Indebtedness that is by its terms subordinate or junior in
right of payment to any Indebtedness of the Customer, (C) Indebtedness which,
when incurred and without respect to any election under Section 1111(b) of
Xxxxx 00, Xxxxxx Xxxxxx Code, as amended, is without recourse to the
Customer, (D) that portion of any Indebtedness which at the time of issuance
is issued in violation of the Indenture, (E) Indebtedness of the Customer to
a subsidiary of the Customer or any other affiliate of the Customer or any of
such affiliate's subsidiaries, (F) Indebtedness of the Customer which is
represented by redeemable capital stock, (G) any liability for federal,
state, local or other taxes owed or owing by the Customer, (H) Indebtedness
of the Customer for goods, materials or services purchased in the ordinary
course of business or Indebtedness of the Customer consisting of trade
payables or other current liabilities, (I) Indebtedness of or amounts owning
by the Customer for compensation to employees or for services and (J) amounts
owing by the Customer under leases (other than capital lease obligations).
"Subordinated Indebtedness" means any Indebtedness of the Customer subordinated
in right of payment of the Securities.
"Uniform Customs and Practices" means the "Uniform Customs and Practice for
Documentary credits" (1993 Revision), International Chamber of Commerce,
Publication No. 500, and any subsequent revisions thereof approved by the
International Chamber of Commerce.
In consideration of the Bank opening at the Customer's request, from time to
time, a Credit the Customer hereby agrees with the Bank as follows:
1. AGREEMENT TO PAY. The Customer will pay the Bank, in United States
currency, the amount of each drawing under any Credit, together with
commissions, all customary charges and all other payments by the Bank
pursuant to the Credit or this Agreement, such payment to be made (a) within
one Business Day of demand thereof in the case of each drawing at sight, with
interest, as provided below, from the date one Business Day after such
payment is due under the Credit to the date of payment by the Customer to the
Bank, and (b) in time for cover to reach the place of payment I the course of
ordinary mail no later than one Business Day prior to maturity in the case of
each acceptance. If a drawing is payable in foreign currency, the Customer
shall pay the Bank the equivalent of the amount of such drawing in United
States currency, at the Bank's then selling rate for cable transfers to the
place of payment or to the place of the Bank's settlement of its obligation,
as the Bank may require. If there is no rate of exchange for effecting such
cable transfer, the Customer will pay the Bank within one Business Day of
demand thereof the amount in United States currency equivalent to the Bank's
actual cost of settlement, with interest, as provided below, on the amount in
United States currency payable by the Customer from the date one Business Day
after the due date of such payment to the date of payment by the Customer.
If payment is not made within the time period provided in this paragraph, the
rate of interest on default on any of the Customer's obligations hereunder
will be the Base Rate. The Base Rate is the rate of interest announced from
time to time by the Bank at its head office as its Base Rate. Any amount
which at any time any be due and owing by the Customer to the Bank pursuant
to this Agreement may be charged against any funds held by the Bank for the
account of the Customer.
2. MAXIMUM AMOUNT OF CREDITS. The maximum aggregate face amount of Credits
outstanding hereunder shall not at anytime exceed $25,000,000. Notwithstanding
the foregoing, maximum aggregate face amount of Credits outstanding hereunder
shall not at any time exceed the difference between (i) $25,000,000 and (ii) the
aggregate face amount of Credits outstanding under the Ranche Reimbursement
Agreement at such time.
3. OBLIGATIONS PARI PASSU WITH SECURITIES. The obligations and liabilities of
the Customer hereunder and with respect to all Credits issued hereunder shall be
PARI PASSU with the Securities issued by the Customer pursuant to the Indenture.
4. APPROVAL OF CREDIT BY CUSTOMER. The Customer will promptly examine (a) the
copy of the Credit (and any amendments thereof) sent to it by the Bank and (b)
all instruments and documents delivered to it from time to time by the Bank, and
the Customer will, within one Business Day of receipt thereof, notify the Bank
of any irregularity or claim of noncompliance with the Customer's instructions.
The Customer is conclusively deemed to have waived any such claim against the
Bank and its correspondents unless such notice is given as aforesaid.
5. DOCUMENTATION. The Customer will procure promptly any necessary
documentation, permits or licenses for the import, export or shipping of the
property in connection with which the Credit is issued; will comply with all
foreign and domestic governmental requirements relating to the shipment or
financing of such property; and will furnish such evidence that the above
requirements have been fulfilled as the Bank may reasonably require. The
Customer will keep such property insured in amounts, against risks and with
companies reasonably satisfactory to the Bank; will name the Bank as loss payee
and additional insured under standard loss payable endorsements under all
policies insurance applicable to the Credits in the amount of the Credits and
will furnish the Bank on demand with evidence of endorsement. Should the
insurance upon such property for any reason be unsatisfactory to the Bank, the
Bank may, at the Customer's expense, upon five (5) days prior notice to the
customer, obtain insurance reasonably satisfactory to the Bank.
6. INDEMNITY. The Customer agrees to indemnify the Bank and its
correspondents for and hold them harmless against any and all claims, loss,
liability or damage, including reasonable attorney fees, howsoever arising from
or in connection with the Credit , including any such claim or loss in
connection with the surrender or endorsement of any xxxx of lading, warehouse
receipt or other document at any time held by the Bank or any of its
correspondents in connection with the Credit, other than as a result of the
gross negligence or willful misconduct of the Bank. The agreements in this
paragraph shall survive any payment under or termination of the Agreement, up to
the applicable statute of limitations.
7. COSTS AND EXPENSES. The Customer shall pay the Bank within one Business
Day of demand thereof all reasonable out-of-pocket expense, including reasonable
attorney fees, incurred or paid by the Bank in connection with the exercise of
any right, power or remedy hereunder, or in the enforcement thereof.
8. SET-OFF RIGHTS. Any deposits or other sums at any time credited by or due
from the Bank to the Customer and any securities or other property of the
Customer and any securities or other property of the Customer in the possession
of the Bank or any of its correspondents shall at all times be subject to the
rights of the Bank to set-off against such sums for the payment of any
obligations of the Customer to the Bank hereunder, if direct, absolute and due,
whether now existing or hereafter arising. Regardless of any other means of
obtaining repayment of the obligations hereunder, any deposits or other sums
redited by or due from the Bank of the Customer may, at any time and from time
to time after the occurrence and during the continuation of a Payment Default or
Non-payment Default hereunder, be applied to or set off against liabilities and
obligations of the Customer which are then due and payable, without notice or
compliance with any other condition precedent now or hereafter imposed by
statute rule of law or otherwise (all of which are hereby expressly waived).
Promptly following each setoff, appropriation or application, the Bank shall
notify the Customer of such setoff, appropriation or application (which
notification shall contain a description of the applicable account and
applicable amount). Notwithstanding anything to the contrary contained herein,
the Bank's set-off rights provided herein shall be fully subordinate in right of
payment and priority to the set-off rights granted to the holders of the Senior
Indebtedness.
9. OBLIGATIONS SUBORDINATE TO SENIOR INDEBTEDNESS.
9.1. The Customer covenants and agrees, and the Bank as evidenced by its
acceptance and execution of this Agreement likewise covenants and agrees, that,
to the extent and in the manner hereinafter set forth in THIS Agreement, the
Obligations and the payment and performance of the obligations of the Customer
to the Bank hereunder is hereby expressly made subordinate and subject in right
of payment, as provided in this Agreement, to the prior payment in full of all
Senior Indebtedness in cash or, as acceptable to the holders of Senior
Indebtedness, in any other manner; PROVIDED, HOWEVER, that the obligations of
the Customer and the payment of the Obligations hereunder in all respects shall
rank PARI PASSU with the Securities and all other existing and future senior
subordinated indebtedness of the Customer. The provisions of this Agreement are
for the express benefit of the holders from time to time of Senior Indebtedness,
each of which is entitled to enforce such holder's rights hereunder, without any
act or notice of acceptance hereof or reliance hereon. No amendment,
modification or discharge of any provision of this Agreement (or, to the extent
that any such amendment, modification or discharge thereof would change the
effect of this Agreement, or any of the definitions set forth herein) shall be
effective against any holder of Designated Senior Indebtedness who would be
materially adversely affected thereby unless expressly consented to in writing
by such holder.
9.2. Payment Over Of Proceeds Upon Dissolutions, Etc.
In the event of (a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or there similar case or
proceeding in connection therewith, relative to the Customer or to its
assets, or (b) any liquidation, dissolution or other winding up of the
Customer, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of creditors
or any other marshaling of assets or liabilities of the Customer, then and in
any such event:
(1) the holders of the Senior Indebtedness shall be entitled to
receive payment in full in cash or cash equivalents, or provision shall be
made for such payments, of all amounts due on or in respect of all Senior
Indebtedness before the Bank is entitled to receive any payment or
distribution of any assets of the Customer of any kind or character
(excluding securities of the Customer or any other corporation that are
equity securities or are subordinated in right of payment to all Senior
Indebtedness, that may at the time be outstanding, to substantially the
same extent as, or to a greater extent that, the Obligations are so
subordinated as provided in this Agreement (such securities being
hereinafter collectively referred to as "Permitted Junior Securities") on
account of any amounts payable with respect to the obligations of the
Customer hereunder;
(2) any payment or distribution of assets of the Customer of any kind
or character, whether in cash, property or securities (excluding Permitted
Junior Securities) by set-off or otherwise, to which the Bank, in its
capacity hereunder, would be entitled but for the provisions of this
Section 9 (including any such payment or other distribution which may be
received by the holders of Subordinated Indebtedness as a result of any
payment on such Subordinated Indebtedness) shall be paid by the liquidating
trustee or agent or other person making such payment or distribution,
whether a trustee in bankruptcy, a receiver or liquidating trustee or
otherwise, directly to the holders of Senior Indebtedness or their
representatives or to the trustee or trustees under any indenture under
which any instruments evidencing any of such Senior Indebtedness may have
been issued, ratably according to the aggregate amounts remaining unpaid on
account of the Senior Indebtedness held by each such holder or
representative, to the extent necessary to make payment in full of all
Senior Indebtedness remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of such Senior Indebtedness; and
(3) in the event that, notwithstanding the foregoing provisions of
this Section 9, the Bank, in its capacity hereunder, shall have received
any payment or distribution of assets of the Customer of any kind or
character, whether in cash, property or securities, under this Agreement in
respect of the obligations arising hereunder before all Senior Indebtedness
is paid in full, then and in such event such payment or distribution
(excluding Permitted Junior Securities, but including any payment or
distribution which may be received by the holders of the Securities or
Subordinated Indebtedness as a result of any payment on such Subordinated
Indebtedness), shall be paid over or delivered forthwith to the trustee in
bankruptcy, receiver, liquidation trustee, custodian, assignee, agent or
other person making payment or distribution of assets of the Customer for
application to the payment of all senior Indebtedness in full, after giving
effect to any concurrent payment or distribution to or for the holders of
Senior Indebtedness.
The consolidation of the Customer with, or the merger of the Customer
into, another person or entity or the liquidation or dissolution of the
Customer following the conveyance, transfer or lease of its properties and
assets substantially as an entirety to another person or entity upon the
terms and conditions set forth in Article Six of the Indenture shall not be
deemed a dissolution, winding up, liquidation, reorganization, assignment for
the benefit of creditors or marshalling of assets and liabilities of the
Customer of the purposes of this Section if the person or entity formed by
such consolidation into which the Customer is merged or the person or entity
which acquired by conveyance, transfer or lease such properties and assets
substantially as an entirety, as the case may be, shall, as a part of such
consolidation, merger, conveyance, transfer or lease, comply with the
conditions set forth in Article Six of the Indenture.
9.3 Suspension Of Payment When Senior Indebtedness In Default.
(a) Unless clause 9.2 shall be applicable, upon (1) the occurrence of a
Payment Default and (2) the giving of a written notice by the representative or
holder of Designated Senior Indebtedness of such occurrence under the Indenture,
then no payment or distribution of any assets of the Customer of any kind or
character (excluding payments in Permitted Junior Securities) shall be made by
the Customer hereunder on account of the obligations hereunder unless and until
such Payment Default shall have been cured, waived in writing or shall have
ceased to exist or such Designated Senior Indebtedness shall have been
discharged or paid in full in cash, or in any other manner as acceptable to the
holders of such Designated Senior Indebtedness, after which the Customer shall
resume making any and all required payments hereunder in respect of the
obligations arising hereunder.
(b) Unless clause 9.2 shall be applicable, upon (1) the occurrence of a
Non-payment Default and (2) and the giving of a written notice by the
representative or holder of Designated Senior Indebtedness of such occurrence
under the Indenture, then no payment or distribution of any assets of the
Customer of any kind or character (excluding payments in Permitted Junior
Securities) shall be made by the Customer hereunder for the period specified
below ("Payment Blockage Period").
The Payment Blockage Period shall commence upon the receipt by the Customer
or the Trustee under the Indenture from a representative or the holder of any
Designated Senior Indebtedness of notice of the Non-payment Default by the
Customer and shall end on the earliest of (x) 179 days after receipt of such
notice by the Trustee under the Indenture (provided any Designated Senior
Indebtedness as to which notice was given shall not theretofore have been
accelerated), (y) the date on which the Non-payment Default shall have been
cured or waived in writing or shall have ceased to exist or the Designated
Senior Indebtedness related hereto shall have been discharged or paid in full or
(z) the date such Payment Blockage Period shall have been terminated by written
notice to the Customer at or after the initiation of such Payment.
Blockage Period, from the representative or the holder of Designated Senior
Indebtedness that gave notice of a Non-payment Default, after which, in the case
of any of clauses (x), (y), or (z), the Customer shall resume making any and all
required payments hereunder in respect of the obligations arising hereunder.
Notwithstanding any other provision of this Agreement, in no event
shall a Payment Blockage Period extend beyond 179 days from the date of
notice by or to the Bank of the Non-payment Default initiating such Payment
Blockage Period (such 179-day period referred to as the "Initial Blockage
Period"). Any number of notices of Non-payment Defaults may be given during
the Initial Blockage Period; provided that during any 365-day consecutive
period, only one such period during which payment on the obligations arising
hereunder may not be made, may commence and the duration of such period may
not exceed 179 days. No Non-payment Default with respect to Designated
Senior Indebtedness which existed or was continuing on the date of the
commencement of any Payment Blockage Period will be, or can be, made the
basis for the commencement of a second Payment Blockage Period (whether or
not within a period of 365 consecutive days) unless such default has been
cured or waived for a period of not less than 90 consecutive days.
(c) In the event that, notwithstanding the foregoing, the Customer shall
make any payment or distribution to the Bank, it its capacity hereunder,
prohibited by the foregoing provision of this Agreement, then and in such event
such payment shall be received and held in trust for the holders of the Senior
Indebtedness and shall be paid over and delivered forthwith by the Bank, it its
capacity hereunder, to the holders of the Senior Indebtedness.
9.4 Payment Permitted If No Default.
Nothing contained in this Agreement shall prevent the Customer, at any
time except as and to the extent during the pendency of any case, proceeding,
dissolution, liquidation or other winding up, assignment for the benefit of
creditors or other marshalling of assets and liabilities of the Customer
referred to in clauses 9.2 or under conditions described in clause 9.3, from
making payments hereunder at any time with respect to the obligations arising
hereunder.
9.5 Subrogation To Rights Of Holders Of Senior Indebtedness.
Subject to the payment in full in cash or cash equivalent of all Senior
Indebtedness, the Bank, in its capacity hereunder, and not as a holder of Senior
Indebtedness, shall be subrogated (I) to the rights of the holders of such
Senior Indebtedness to receive payments and distributions of cash, property and
securities applicable to the Senior Indebtedness and (ii) to the security
interests which have been or may hereafter be granted by the Customer to the
holders of Senior Indebtedness. until the obligations arising hereunder shall be
paid in full. For purposes of such subrogation, no payment or distributions to
the holders of Senior Indebtedness of any cash, property or securities to which
Bank, it its capacity hereunder, would be entitled except for the provisions of
this Agreement and no payments over pursuant to the provision of this Agreement
to the holders of Senior Indebtedness, and the Bank, in its capacity hereunder,
be deemed to be a payment or distribution by the Customer to or on account of
the Senior Indebtedness, thereto.
9.6 Provisions Solely To Define Relative Rights.
The provisions of this Agreement are intended solely for the purpose of
defining the relative rights of the bank, in its capacity hereunder, on the one
hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Agreement is intended to or shall (a) impair, as among the
Customer, its creditors other than holders of Senior Indebtedness and the
Bank, in its capacity hereunder, the obligation of the Customer, which is
absolute and unconditional, to pay the obligations arising hereunder as and
when the same shall become due and payable in accordance with the terms of
this Agreement; or (b) affect the relative rights against the Customer of the
Bank, it its capacity hereunder, and creditors of the Customer other than the
holders of Senior Indebtedness; or (c) prevent the Bank, in its capacity
hereunder, from exercising all remedies otherwise permitted by applicable law
upon an Event of Default under this Agreement, subject to the rights under
this Agreement of the holders of Senior Indebtedness in the circumstances
specified in this Agreement,
9.7 No waiver Of Subordination Provisions.
(a) No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Customer
or by any act or failure to act, in good faith, by any such holder, or by any
non-compliance by the Customer with the terms, provisions and covenants of this
Agreement, regardless of any knowledge thereof any such holder hay have or be
otherwise charged with.
(b) Without in any way limiting the generality of subclause (a) of this
clause 9.7, the holders of senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Bank, in its capacity hereunder,
without incurring responsibility to the Bank, in its capacity hereunder, and
without impairing or releasing the subordination provided in this Agreement or
the obligations hereunder of the Bank, in its capacity hereunder, to the holders
of senior Indebtedness, do any one or more of the following;
(1) change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, Senior Indebtedness or any instrument
evidencing the same or any agreement under which Senior Indebtedness is
outstanding;
(2) sell, exchange, release or otherwise deal with in any lawful
manner and in any order any property pledged, mortgaged or otherwise securing
any Senior Indebtedness;
(3) settle or compromise any Senior Indebtedness or any security
therefor or any guaranty thereof and apply any sums by whomever paid and however
lawfully realized to any Senior Indebtedness in any manner or order; and
(4) fail to take or to record or otherwise perfect, for any reason or
for no reason, any lien or security interest securing Senior Indebtedness by
whomever granted, exercise or delay in or refrain from exercising any right or
remedy against the Customer or any security or any guarantor of any other
person, elect any remedy and otherwise deal lawfully with the Customer and any
security for an any guarantor of Senior Indebtedness;
provided, however, that in no event shall any such actions limit the right of
the Bank, in its capacity hereunder, to pursue any rights or remedies hereunder
or under applicable laws if the taking of such action does not
otherwise violate the terms of this Agreement of the holders, from time to
time, or Senior Indebtedness to receive the cash, property of securities
receivable upon the exercise of such rights and remedies.
9.8 Notice to the Bank.
The Customer shall give prompt written notice to the Bank of any fact known to
the Customer that would prohibit the making of any payment to the Bank in
respect of the obligations arising hereunder pursuant to the provisions hereof.
10. Events of Default. The following shall be "Events of Default"
hereunder: (1) failure by the Customer to make payment as provided in
paragraph 1 hereof, or (2) failure by the Customer to pay at maturity and
after any applicable period of grace, any obligations in excess of $500,000
in the aggregate for borrowed monies or advances, or failure to observe or
perform any term, covenant or agreement evidencing or securing such
obligations for borrowed monies or advances, the result of which failure is
that the holder or holders of such obligations have the right to cause such
obligations to become due prior to their stated maturity upon delivery of
required notice, if any, or (3) the Customer's (I) application for or consent
to the appointment of, or the taking of possession by, a receiver, custodian,
trustee, liquidator or similar official of itself or of all or a substantial
part of the Customer's property, (ii) generally not paying its debts as such
debts become due, (iii) making a general assignment for the benefit of its
creditors, (iv) commencing a voluntary case under the Bankruptcy Code or
equivalent statute (as now or hereafter in effect), (v) commencing any case
or proceeding under any law relating to bankruptcy, insolvency,
reorganization, winding-up or composition or adjustment of debts, or any
other law providing for the relief of debtors, (vi) acquiescing in writing to
any petition filed against it in an involuntary case under the Bankruptcy
Code or other law, or (vii) taking any action under the laws of its
jurisdiction of incorporation or organization similar to any of the
foregoing, or (4) commencement of a proceeding or case, without the
application or consent of the Customer in any court of competent
jurisdiction, seeking (I) the liquidation, reorganization, dissolution,
winding up, or composition or readjustment of its debts, (ii) the appointment
of a trustee, receiver, custodian, liquidator or the like of it or of all or
any substantial part of its assets, or (iii) similar relief in respect of it,
under any law relating to bankruptcy, insolvency, reorganization, winding-up
or composition or adjustment of debts or any other law providing for the
relief of debtors, and such proceeding or case shall continue undismissed, or
unstayed and in effect, for a period of 60 days; or the entry of an order
for relief or equivalent order in an involuntary case under the Bankruptcy
Code or equivalent act against the Customer; or action under the laws of the
jurisdiction of incorporation or organization of the Customer similar to any
of the foregoing shall be taken with respect to the Customer and shall
continue undismissed or unstayed and in effect for any period of 60 days, or
(5) entry against Customer of a judgement or order for the payment of money
by any court, or issuance or levy against the property of the Customer of a
warrant of attachment or execution or similar process, that in the aggregate
exceeds $500,000 in value and such judgement or order shall continue
undischarged, unstayed, unsatisfied, undismissed or unbonded for 30 days of
the issuance of or application for a writ or order of attachment or
garnishment against any document of title or other similar document relating
to Credit's issued pursuant hereto or a substantial part of the property or
assets of the Customer, or (6) any governmental authority, or any court of at
the request of any governmental authority, taking possession of all or
substantially all of the property of the Customer or assuming control over
all of the material affairs or operations of the Customer, thereupon, the
Bank may, without notice or demand, declare any and all of the obligations
and liabilities, direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising, of the Customer to the Bank
under this Agreement, to be immediately due and payable, and the Bank shall
have all of the rights and remedies provided hereunder and by law subject,
however, to the provisions of Section 9 hereof.
11. Documents, etc. The Customer will, at its expense, promptly execute and
deliver to the Bank such trust receipts, documents of title and other documents
as the Bank may at any time reasonably request in order to carry out the intent
and purpose hereof and will promptly reimburse the Bank for the amount of any
filing or recording fees with respect thereto.
12. Power of Attorney. After the occurrence and during the continuance of an
Event of Default or unless otherwise consented to by the Customer, the Bank may,
with power of substitution and revocation, sign in the Customer's name as agent
on any document called for from the Customer and/or endorse in the Customer's
name any and all notes checks, drafts, documents of title or other instruments
documents in which the Bank may at any time have any interest; and may perform
any obligation or agreement in connection with the Credit or this Agreement
which the Customer has failed to perform and take any other action with the Bank
deems necessary or desirable to protect its rights, powers and remedies under
this Agreement.
13. Performance by Beneficiary. Neither the Bank nor its correspondents shall
be in any way responsible for performance by any beneficiary of its obligations
to the Customer, nor for the form, sufficiency, correctness, genuineness,
authority of persons, signing, falsification or legal effect of any documents
called for under the Credit if such documents on their face appear to be in
order.
14. Shipments in Excess of Quantity. Notwithstanding anything to the contrary
contained herein or in any Credit, although shipment(s) in excess of the
quantity called for under the Credit are made, the Bank may make payment under
the Credit in an amount or amounts not exceeding the amount of the Credit
(provided that such excess does not exceed by five percent (5%) the quantity
called for under the documents to be presented under the credit unless other
provided in the Application); and the Bank may honor, as complying with the
terms of the Credit and of the Application therefore, any drafts or other
documents otherwise in order signed or issued by an administrator, executor,
conservator, trustee in bankruptcy, debtor in possession, assignee for benefit
of creditors, liquidator, receiver or other legal representative of the party
authorized under the Credit to draw or issue such drafts or other documents.
15. While the Bank shall use best effort to comply with the request of the
Customer as to each of the following, the Customer authorizes the Bank to use
its reasonable discretion to (a) select, after due consultation with the
Customer, an advising bank if any, (b) select a paying bank, if any, (c)
authorize or restrict negotiation under the Credit, and (d) waive any such
restriction on negotiation.
16. Amendment. This Amendment and a request or consent to any modification,
change, amendment, waiver or any other action pursuant to this Agreement,
shall be binding upon the Customer and its respective heirs, executors,
administrators, successors and assigns and shall insure the benefit of and be
enforceable by the Bank, its successors and assigns. All modifications or
amendments of or to this Agreement must be in writing and signed by each of
the parties hereto. In the event that any position hereof is determined by a
court of competent jurisdiction to be invalid, such invalidity shall not
affect any other provision of this Agreement. The Customer represents and
warrants that the execution, deliver and performance by the Customer hereof
has been duly authorized by all necessary corporate and/or other action and
that the making and performance hereof by the Customer does not and will not
contravene the terms of any existing law, agreement or instrument by which
the Customer is bound or to which the Customer is subject.
17. Miscellaneous.
a. The failure of the Bank to enforce at any time any of the provisions
hereof shall not be construed to be a waiver of such provisions or of the right
of the Bank thereafter to enforce any such provisions.
b. Each Credit shall be subject to, and performance by the Bank, its
correspondent and the beneficiary thereunder shall be governed by, the Uniform
Customs and Practice, except to the extent it is otherwise expressly agreed.
c. It is agreed that all directions and correspondence relating to the
Credit are to be sent at the Customer's risk and that the Bank does not assume
any responsibility for any inaccuracy, interruption, error or delay in
transmission or delivery by post, telegraph or cable, or for any inaccuracy of
translation.
d. This Agreement is made in the Commonwealth of Massachusetts and shall
be deemed to be a contract under seal to be governed by and construed in
accordance with the laws of said Commonwealth. The Bank's rights, powers, and
remedies specified herein are cumulative and are in addition to those otherwise
created or existing by law or agreement.
e. The Customer hereby certifies, to the best of the customer's
knowledge, that transactions in the goods or services covered by any application
for a Credit are not prohibited under the Foreign Assets Control Regulations of
the United States Treasury Department or the Anti-Boycott Regulations of the
United States Department of Commerce, and that any United States inportation or
exportation of such goods and services conforms in every respect with all
existing United States Government regulations.
Executed under seal as of the date first written.
GUESS ?, INC. THE FIRST NATIONAL BANK OF BOSTON
By:/s/ XXXXX XXXXXXXX By: /s/ XXXXX XXXXX
------------------------- ------------------------------------
Xxxxx Xxxxxxxx Xxxxx Xxxxx
Executive Vice President and Vice President
Chief Financial Officer
EXHIBIT J
LENDER'S PERCENTAGES
Lender Maximum
Total Lender's
Commitment Percentages
The First National Bank of Boston
000 Xxxxxxx Xxxxxx
Mail Stop 01-22-05
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Assistant Vice President
Telecopier: (000)000-0000
Sanwa Bank California
Sanwa Bank Plaza
000 Xxxxx Xxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxx, Vice President
Telecopier: (000)000-0000
The Industrial Bank of Japan, Limited
Los Angeles Agency
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxx, Vice President
Telecopier: (000)000-0000
Credit Lyonnais
Los Angeles Branch
000 Xxxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxx, Vice President
Telecopier: (000) 000-0000
Sumitomo Bank of California
000 Xxxx 0xx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxx Xxxxxxxxxx
Telecopier: (000) 000-0000
EXHIBIT K
TRANSACTIONS WITH AFFILIATES
TRANSACTIONS WITH AFFILIATES
The Company is engaged in various transactions with entities affiliated with
trusts for the respective benefit of Xxxxxxx, Xxxx and Xxxxxx Xxxxxxxx (the
"Xxxxxxxx Trusts"). The Company believes that each of the companies, in which
the Marciano Trusts have an investment, and related party transactions discussed
below were entered into on terms no less favorable to the Company than could
have been obtained from an unaffiliated third party.
Mergers
On August 13, 1996, Marciano International, which was wholly owned by the
Marciano Trusts, was merged with and into the Company in connection with the
initial public offering. Consideration paid to the Marciano Trusts was
$300,000.
License Arrangements and Licensee Transactions
The Company has a licensing agreement with Xxxxxxx Xxxxx of California ("Xxxxxxx
Xxxxx"). Xxxxxxx Xxxxx is controlled by the father-in-law of Xxxxxxx Xxxxxxxx.
The Marciano Trusts and Xxxxxxxx Xxxxxxxx (the spouse of Xxxxxxx Xxxxxxxx)
together own 50% of Xxxxxxx Xxxxx, and the remaining 50% is owned by the father-
in-law of Xxxxxxx Xxxxxxxx. The license agreement grants Xxxxxxx Xxxxx the
rights to manufacture worldwide and distribute worldwide (except Japan) men's,
women's and some children's leather and rubber footwear, excluding athletic
footwear, which bear the Guess'r' logo and trademark. The license also includes
related shoe care products and accessories. Gross royalties earned by the
Company under such license agreement for the fiscal year ended December 31, 1996
was $1.5 million. Additionally, the Company purchased $6.0 million of product
from Xxxxxxx Xxxxx for resale in the Company's retail stores during the same
period.
On September 1, 1994, the Company entered into a licensing agreement with
California Sunshine Active Wear, Inc. ("California Sunshine"), granting it the
rights to manufacture and distribute men's and women's activewear, which bear
the Guess'r' logo and trademark, in the United States. The Marciano Trusts
together own 51% of California Sunshine. Gross royalties earned by the Company
under such license agreement for the fiscal year ended December 31, 1996 was
$742,000. Additionally, the Company purchased $1.4 million of product from
California Sunshine for resale in the Company's retail stores during the same
period.
Effective January 1, 1995, the Company entered into a licensing agreement with
Guess? Italia, S.r.l. ("Guess Italia"), granting it the exclusive right in Italy
and non-exclusive rights in other parts of Europe to manufacture and distribute
men's and women's apparel and accessories, which bear the Guess'r' logo and
trademark. Prior to the IPO, Guess Italia was owned 79% by the Company and 21%
by Marciano International, a company wholly owned by the Marciano Trusts. As
part of the reorganization, in connection with the IPO,
Guess Italia became a wholly-owned subsidiary of the Company when Marciano
International was merged with and into the Company. Gross royalties earned
by the Company under such license agreement for the fiscal year ended
December 31, 1996 was $766,000. Additionally, the Company purchased $327,000,
of product from Guess? Italia and sold $89,000, of product for resale in
Guess? Italia's retail store and to other wholesale customers during the
fiscal year ended December 31, 1996. All inter company transactions were
eliminated during consolidation.
Effective December 9, 1992, the Company entered into a licensing agreement with
Nantucket Industries ("Nantucket"), granting it the rights to manufacture and
distribute women's intimate apparel within the United States, which bear the
Guess'r' logo and trademark. Nantucket is owned 13.0% by the Company and 7.6%
by the Marciano Trusts. During the fiscal year ended December 31, 1996, the
Company recorded gross royalty income of $327,000, purchased $416,000 of product
for resale in its retail stores, and recorded an equity loss of $349,000.
Effective December 1, 1989, the Company entered into a licensing agreement with
Strandel, Inc. ("Strandel"), granting it the rights to manufacture and
distribute Men's, Women's and Children's Knits and woven sportswear in Canada,
which bear the Guess'r' logo and trademark. Strandel is owned 20% by the
Company. During the fiscal year ended December 31, 1996, the Company recorded
gross royalty income of $1.8 million and recorded an equity loss of $127,000.
On January 1, 1997, the Company acquired a Limited Partnership interest of
24.75% in S.W.P.I., Ltd., a California Limited Partnership in which the Marciano
Trusts have a 76.25% interest, from Pour Le Bebe, Inc., a California
Corporation, as payment in lieu of unpaid license fees due November 1, 1996.
The Limited Partnership interest of 24.75% in S.W.P.I., Ltd. was valued at $1.4
million by the Company.
Purchasing Agency Agreement
On May 3, 1994, the Company entered into an agreement with Ranche, Ltd.
("Ranche"), a wholly owned subsidiary of Guess Europe, BV ("GEBV") to serve as a
non-exclusive buying agent for the Company in Hong Kong, which agreement was
terminated in the first quarter of 1996 when certain of Ranche's assets were
transferred to Newtimes Guess, Ltd, a Hong Kong corporation ("Newtimes") in
which the Company and the Marciano Trusts then held indirect ownership interests
of 25% and 25%, respectively. In connection with the IPO, the Marciano Trusts'
indirect interest in Newtimes was transferred to the Company. Ranche earned
commissions of $192,000 during the period in 1996 in which the agreement was
still active. In addition, Ranche operates under a licensing arrangement to
distribute product to authorized distributors. Gross royalties earned by the
Company under such license for the fiscal year ended December 31, 1996 was
$383,000.
In February 1996, the Company entered into a buying agency agreement with
Newtimes. Pursuant to such agreement, the Company pays Newtimes a commission
based upon the cost of finished garments purchased for the Company by Newtimes.
Commissions earned by Newtimes during the fiscal year ended December 31, 1996
was $624,000. Additionally, the Company recorded $190,000 in equity losses
during 1996.
Leases
The Company leases manufacturing, warehouse and administrative facilities and
one retail administrative facility from partnerships affiliated with the
Principal Stockholders. The leases in effect at December 31, 1996 will expire
through July 2008. Aggregate lease payments under leases in effect for the
fiscal year ended December 31, 1996 were $2.9 million.
The Company currently rents, on a month-to-month basis, a portion of a remote
Guess facility to Southwest Pacific Investment Company ("SWPI"), an entity owned
by the Marciano Trusts. Monthly rental charges are $11,000, effective August 1,
1996. An aggregate of $57,000 was paid by SWPI to the Company during 1996.
THE FIRST NATIONAL BANK OF BOSTON
AMENDED AND RESTATED SECURITY AGREEMENT
THIS AMENDED AND RESTATED SECURITY AGREEMENT (the "Agreement") made this
28th day of March, 1997 by GUESS ?, INC., a Delaware corporation with its chief
executive offices at 0000 Xxxxx Xxxxxxx Xx., Xxx Xxxxxxx XX 00000 (the "DEBTOR")
in favor of THE FIRST NATIONAL BANK OF BOSTON, a national banking association
with its head office at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000
(sometimes referred to as the "AGENT") as agent for itself and for the lenders
parties to the Loan Agreement referred to below (the "LENDERS") (the "SECURED
PARTY").
WHEREAS, the Company, the Agent, and the Lenders are parties to a Revolving
Credit Agreement dated as of December 20, 1993 as amended by a First Amendment
to Revolving Credit Agreement dated as of January 20, 1994, by a Second
Amendment and Waiver to Revolving Credit Agreement dated as of April 1, 1994, by
a Third Amendment and Waiver to Revolving Credit Agreement dated as of July 18,
1994, by a Fourth Amendment and Waiver to Revolving Credit Agreement dated as of
October 24, 1994, by a Fifth Amendment to Revolving Credit Agreement dated as of
February 13, 1995, by a Sixth Amendment to Revolving Credit Agreement dated as
of September 14, 1995, by a Seventh Amendment to Revolving Credit Agreement
dated as of December 22, 1995 and by an Eight Amendment to Revolving Credit
Agreement dated as of February 13, 1996. (collectively, the "EXISTING LOAN
AGREEMENT"); and
WHEREAS, as a condition to the Existing Loan Agreement, the Company, the
Agent, and the Lenders entered into a Security Agreement, dated as of December
20, 1993, as amended (the "EXISTING SECURITY AGREEMENT"), pursuant to which the
Company granted to the Agent a continuing security interest in all of its right,
title and interest in all Inventory and Accounts (as defined herein) and all
proceeds and products thereof; and
WHEREAS, In connection with the execution of the Existing Security
Agreement, the Company caused Uniform Commercial Code Financing Statements to be
filed in all locations required to perfect the security agreements granted under
the Existing Security Agreement; and
WHEREAS, on the date hereof the parties are entering into an Amended and
Restated Revolving Credit Agreement (the "LOAN AGREEMENT") and, in connection
therewith are required to enter into this Agreement;
NOW THEREFORE, for value received, the receipt and legal sufficiency of
which is hereby acknowledged, including, without limitation, enabling the Debtor
to obtain credit or other financial accommodations from the Lenders under the
Loan Agreement and those certain Notes executed and delivered by the Debtor to
the Lenders (the "NOTES"), the Debtor hereby agrees as follows:
10 DEFINITIONS. All capitalized terms used herein or in any
certificate, report or other document delivered pursuant to this Agreement shall
have the meanings assigned to them below or in the Loan Agreement (unless
otherwise defined). Except as otherwise defined, terms defined in the Uniform
Commercial Code shall have the meanings set forth therein.
1
ACCOUNTS. All rights of the Debtor to payment for goods sold or leased or
for services rendered, all sums of money or other proceeds due or becoming due
thereon, all instruments evidencing any such right, all guarantees of and
security for any such right, and the Debtor's rights pertaining to and interest
in such goods, including the right of stoppage in transit, replevin or
reclamation, all chattel paper evidencing any such right and all other property
constituting "accounts" as such term is defined in the Uniform Commercial Code.
COLLATERAL. See Section 2.
GENERAL INTANGIBLES. All "general intangibles" as such term is defined in
the Uniform Commercial Code, but specifically excluding any trademarks, trade
names, patents, copyrights and any other intellectual property, other than an
Account arising from the licensing of any of the foregoing.
INVENTORY. All goods, merchandise and other personal property of the
Debtor that are held for sale, lease or other disposition, or for display or
demonstration, or leased or consigned, or that are raw materials, piece goods,
work-in-process or materials used or consumed or to be used or consumed in the
Debtor's business, whether in transit or in the possession of the Debtor or
another, including without limitation all goods covered by purchase orders and
contracts with suppliers and all goods billed and held by suppliers and goods
located on the premises of any carriers, forwarding agents, truckers,
warehousemen, vendors, selling agents or other third parties; all display
materials relating to any of the foregoing; all warehouse receipts and other
negotiable and non-negotiable documents of title covering any of the foregoing;
and all other property constituting "inventory" as such term is defined in the
Uniform Commercial Code.
OFFICER'S CERTIFICATE. A certificate signed by an officer of the Debtor
authorized in the resolution delivered herewith in the form attached hereto and
delivered concurrently herewith.
UNIFORM COMMERCIAL CODE. The Uniform Commercial Code as in effect in the
Commonwealth of Massachusetts.
11 GRANT. To secure the payment and performance of the Obligations,
the Debtor hereby assigns and pledges to the Secured Party and grants to the
Secured Party a continuing security interest in all of its rights, title and
interest in, whether now owned or existing or hereafter arising or acquired, all
Inventory and Accounts, and any and all additions, substitutions, replacements
and accessions to any of the foregoing; and all proceeds and products of any of
the foregoing (including, without limitation, proceeds which constitute
Accounts, Inventory or General Intangibles) (collectively, the "COLLATERAL").
12 REPRESENTATIONS, WARRANTIES AND COVENANTS. The Debtor makes the
following representations and warranties, and agrees to the following covenants,
each of which representations, warranties and covenants shall be continuing and
in force so long as this Agreement is in effect:
.1. NAME; DEBTOR/COLLATERAL LOCATION; CHANGES.
(a) The name of the Debtor set forth on the first page hereof is the true
and correct legal name of the Debtor, and except as otherwise disclosed to the
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Secured Party in the Officer's Certificate, the Debtor has not done business as
or used any other name.
(b) The address of the Debtor set forth on the first page hereof is the
Debtor's chief executive office (the "CHIEF EXECUTIVE OFFICE") and the place
where its business records are kept. Except (i) as disclosed on the Officer's
Certificate, (ii) Collateral in transit between locations disclosed on the
Officers Certificate and the Chief Executive Office, (iii) Inventory in the
temporary possession of independent sewing, laundering and finishing contractors
(provided that the total amount due to such contractors for work on such
Inventory shall not exceed $8,000,000 in the aggregate outstanding at any one
time), and (iv) Collateral in transit between any foreign manufacturer and the
Debtor, all tangible Collateral is located at the Chief Executive Office.
(c) The Debtor will not change its name, identity or organizational
structure or the Chief Executive Office or place where its business records are
kept, or move any tangible Collateral to a location other than (i) those set
forth in the Officer's Certificate, (ii) Collateral in transit between locations
disclosed on the Officers Certificate and the Chief Executive Office, (iii)
Inventory in the temporary possession of independent sewing, laundering and
finishing contractors (provided that the total amount due to such contractors
for work on such Inventory shall not exceed $8,000,000 in the aggregate
outstanding at any one time) and (iv) Collateral in transit between any foreign
manufacturer and the Debtor, unless the Debtor shall have given the Secured
Party at least 30 days' prior written notice thereof and shall have delivered to
the Secured Party such new Uniform Commercial Code financing statements or other
documentation as may be necessary or required by the Secured Party to ensure the
continued perfection and priority of the security interests granted by this
Agreement.
.2. OWNERSHIP OF COLLATERAL; ABSENCE OF LIENS AND RESTRICTIONS. The
Debtor is, and in the case of property acquired after the date hereof, will be,
the sole legal and equitable owner of the Collateral, holding good and
marketable title to the same free and clear of all Encumbrances except Permitted
Encumbrances, and has good right and legal authority to assign, deliver, and
create a security interest in the Collateral in the manner herein contemplated.
The Collateral is not subject to any restriction that would prohibit or restrict
the assignment, delivery or creation of the security interests contemplated
hereunder.
.3. FIRST PRIORITY SECURITY INTEREST. This Agreement, together with the
filing of Uniform Commercial Code financing statements in the appropriate
offices for the locations of Collateral listed in the Officer's Certificate,
create a valid and continuing first lien on and perfected security interest in
the Collateral (except for property not located in the United States or property
in which a security interest may not be perfected by filing of a financing
statement under the Uniform Commercial Code), prior to all other Encumbrances
other than Permitted Encumbrances, and is enforceable as such against creditors
of the Debtor.
.4. SALES AND FURTHER ENCUMBRANCES. The Debtor shall defend its title
to, and the Secured Party's interest in, the Collateral against all claims and
take any action necessary to remove any Encumbrances other than Permitted
Encumbrances and defend the right, title and interest of the Secured Party in
and to any of the Secured Party's rights in the Collateral.
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.5. ACCOUNTS: COLLECTION AND DELIVERY OF PROCEEDS. The Debtor will
collect all of its Accounts constituting Collateral in the ordinary course of
its business consistent with past practices unless and until the Secured Party
exercises its rights to collect the Accounts pursuant to this Agreement. After
the occurrence and during the continuation of an Event of Default, the Debtor
shall, at the request of the Secured Party, notify account debtors of the
security interest of the Secured Party in any Account and that payment thereof
is to be made directly to the Secured Party. After the occurrence and during
the continuance of an Event of Default and upon request of the Secured Party,
any proceeds of Accounts or Inventory constituting Collateral received by the
Debtor, whether in the form of cash, checks, notes or other instruments, shall
be held in trust for the Secured Party and the Debtor shall deliver said
proceeds daily to the Secured Party, without commingling, in the identical form
received (properly endorsed or assigned where required to enable the Secured
Party to collect same).
.6. RECORDS OF ACCOUNTS. The Debtor will, at the request of the Secured
Party, retain off-site current copies of all materials created by or furnished
to the Debtor on which is recorded then-current information about any computer
programs or data bases that the Debtor has developed or otherwise has the right
to use from time to time as it relates to Accounts and Inventory only. The
Debtor will, after the occurrence and during the continuance of an Event of
Default, at the request of the Secured Party, deliver a set of such copies to
the Secured Party for safekeeping and retention or transfer in the event of
foreclosure.
.7. FURTHER ASSURANCES. Upon the written request of the Secured Party,
and at the sole expense of the Debtor, the Debtor will promptly execute and
deliver such further instruments and documents and take such further actions as
the Secured Party may reasonably deem desirable to obtain the full benefits of
this Agreement and of the rights and powers herein granted, including, without
limitation, filing of any financing statement under the Uniform Commercial Code.
The Debtor authorizes the Secured Party to file any such financing statement
without the signature of the Debtor to the extent permitted by applicable law,
and to file a copy of this Agreement in lieu of a financing statement. If any
amount payable under or in connection with any of the Collateral shall be or
become evidenced by any promissory note or other instrument, such note or
instrument shall be immediately delivered to the Secured Party, duly endorsed in
a manner satisfactory to it.
.8. INSURANCE PROCEEDS. Other than after the occurrence and during the
continuance of an Event of Default, the Debtor shall retain all proceeds of any
insurance on the Collateral.
13 NOTICES AND REPORTS PERTAINING TO COLLATERAL. The Debtor will, with
respect to the Collateral:
(a) promptly furnish to the Secured Party, from time to time upon
written request, reports in form and detail reasonably satisfactory to the
Secured Party setting forth an aging of Accounts and location of all
Inventory and after an Default a copy of the names and addresses of all
account debtors of the Company with information as to the outstanding
balance due from each such account debtor; and
4
(b) promptly notify the Secured Party of any Encumbrance asserted
against the Collateral other than a Permitted Encumbrance, including any
attachment, levy, execution or other legal process levied against any of
the Collateral;
The Debtor authorizes the Secured Party to, and the Secured Party agrees to,
destroy all invoices, delivery receipts, reports and other types of documents
and records submitted to the Secured Party in connection with the transactions
contemplated herein at any time subsequent to 12 months from the time such items
are delivered to the Secured Party.
14 SECURED PARTY'S RIGHTS WITH RESPECT TO COLLATERAL. The Secured Party
may, at its option and at any time, after the occurrence and during the
continuance of an Event of Default and after the Obligations have been
accelerated in accordance with the terms of the Loan Agreement, without notice
or demand on the Debtor, take the following actions with respect to the
Collateral:
(a) with respect to any Accounts (i) notify account debtors of the
security interest of the Secured Party in such Accounts and that payment
thereof is to be made directly to the Secured Party; (ii) demand, collect,
and receipt for any amounts relating thereto, as the Secured Party may
determine; (iii) commence and prosecute any actions in any court for the
purposes of collecting any such Accounts and enforcing any other rights in
respect thereof; (iv) defend, settle or compromise any action brought and,
in connection therewith, give such discharges or releases as the Secured
Party may deem appropriate; (v) endorse checks, notes, drafts, acceptances,
money orders, bills of lading, warehouse receipts or other instruments or
documents evidencing payment, shipment or storage of the goods giving rise
to such Accounts or securing or relating to such Accounts, on behalf of and
in the name of the Debtor; and (vi) sell, assign, transfer, make any
agreement in respect of, or otherwise deal with or exercise rights in
respect of, any such Accounts or the goods or services which have given
rise thereto, as fully and completely as though the Secured Party were the
absolute owner thereof for all purposes; and
(b) with respect to any Inventory make, adjust and settle claims
under any insurance policy related thereto.
Except as otherwise provided herein or by law and except for accounting for
moneys actually received by it in good funds hereunder, the Secured Party shall
have no duty as to the collection or protection of the Collateral nor as to the
preservation of any rights pertaining thereto, beyond the safe custody and
reasonable care of any Collateral in its possession.
15 SET-OFF RIGHTS. Regardless of the adequacy of any Collateral or any
other means of obtaining repayment for any Obligations, the Lenders shall have
the right to set off under Section 9.3 of the Loan Agreement.
16 DEFAULTS. An event of default ("Event of Default") shall exist as
provided in Section 7.1 of the Loan Agreement.
17 SECURED PARTY'S RIGHTS AND REMEDIES.
(a) So long as any Event of Default shall have occurred and is continuing:
5
(i) the Secured Party may take immediate possession of the
Collateral, and for that purpose the Secured Party may, so far as the
Debtor can give authority therefor, enter upon any premises on which
any of the Collateral is situated and remove the same therefrom or
remain on such premises and in possession of such Collateral for a
reasonable period for purposes of conducting a sale or enforcing the
rights of the Secured Party;
(ii) the Debtor will, upon demand, assemble the Collateral and
make it available to the Secured Party at a place and time designated
by the Secured Party that is reasonably convenient to both parties;
(iii) the Secured Party may sell or otherwise dispose of the
Collateral at a public or private sale, with or without having the
Collateral at the place of sale, and upon such terms and in such
manner as the Secured Party may reasonably determine, and the Secured
Party may purchase any Collateral at any such sale. Unless the
Collateral threatens to decline rapidly in value or is of the type
customarily sold on a recognized market, the Secured Party shall send
to the Debtor prior written notice (which, if given within ten days of
any sale, shall be deemed to be reasonable) of the time and place of
any public sale of the Collateral or of the time after which any
private sale or other disposition thereof is to be made. The Debtor
agrees that upon any such sale the Collateral shall be held by the
purchaser free from all claims or rights of every kind and nature,
including any equity of redemption or similar rights, and all such
equity of redemption and similar rights are hereby expressly waived
and released by the Debtor. In the event any consent, approval or
authorization of any governmental agency is necessary to effectuate
any such sale, the Debtor shall execute all applications or other
instruments as may be reasonably required; and
(iv) in any jurisdiction where the enforcement of its rights
hereunder is sought, the Secured Party shall have, in addition to all
other rights and remedies, the rights and remedies of a secured party
under the Uniform Commercial Code.
(b) Prior to any disposition of Collateral pursuant to this Agreement the
Secured Party may, at its option, cause any of the Collateral to be repaired or
reconditioned (but not upgraded unless mutually agreed) in such manner and to
such extent as to make it saleable.
(c) To the extent necessary in connection with the exercise of remedies
hereunder, the Secured Party is hereby granted a license or other right to use,
upon the occurrence and during the continuance of an Event of Default, without
charge, the Debtor's labels, patents, copyrights, rights of use of any name,
trade secrets, trade names, trademarks and advertising matter, or any property
of a similar nature, relating to the Collateral, in completing production of,
advertising for sale and selling any Collateral.
(d) The Secured Party shall be entitled to apply the proceeds of any
disposition of the Collateral, first, to its reasonable expenses of retaking,
6
holding, protecting and maintaining, and preparing for disposition and disposing
of, the Collateral, including reasonably attorneys' fees and other reasonable
legal expenses incurred by it in connection therewith; and second, to the
payment of the Obligations in accordance with the Loan Agreement. Any surplus
remaining after such application shall be paid to the Debtor or to whomever may
be legally entitled thereto, provided that in no event shall the Debtor be
credited with any part of the proceeds of the disposition of the Collateral
until such proceeds shall have been received in good funds (or the equivalent
value if any Collateral is retained) by the Secured Party. The Debtor shall
remain liable for any deficiency.
18 WAIVERS. The Debtor waives presentment, demand, notice, protest,
notice of acceptance of this Agreement, notice of any loans made, credit or
other extensions granted, Collateral received or delivered or any other action
taken in reliance hereon and all other demands and notices of any description,
except for such demands and notices as are expressly required to be provided to
the Debtor under this Agreement, any other Loan Document or any other document
evidencing the Obligations. With respect to both the Obligations and the
Collateral, the Debtor assents to any extension or postponement of the time of
payment or any other forgiveness or indulgence, to any substitution, exchange or
release of Collateral, to the addition or release of any party or person
primarily or secondarily liable, to the acceptance of partial payment thereon
and the settlement, compromise or adjustment of any thereof, all in such manner
and at such time or times as the Secured Party may deem advisable. The Secured
Party may exercise its rights with respect to the Collateral without resorting,
or regard, to other collateral or sources of reimbursement for Obligations. The
Secured Party shall not be deemed to have waived any of its rights with respect
to the Obligations or the Collateral unless such waiver is in writing and signed
by the Secured Party. No delay or omission on the part of the Secured Party in
exercising any right shall operate as a waiver of such right or any other right.
A waiver on any one occasion shall not bar or waive the exercise of any right on
any future occasion. All rights and remedies of the Secured Party in the
Obligations or the Collateral, whether evidenced hereby or by any other
instrument or papers, are cumulative and not exclusive of any remedies provided
by law or any other agreement, and may be exercised separately or concurrently.
19 EXPENSES. The Debtor shall pay all expenses as provided in Section
9.2 of the Loan Agreement.
20 NOTICES. Any demand upon or notice to the Debtor or the Secured
Party shall be effective when delivered as provided in Section 9.1 of the Loan
Agreement.
21 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Debtor, the Secured Party, the Lenders, their respective successors and assigns,
and shall inure to the benefit of and be enforceable by the Debtor, the Secured
Party or any of the Lenders and their respective successors and assigns.
Without limiting the generality of the foregoing sentence, the Secured Party and
the Lenders may assign or otherwise transfer any agreement or any note held by
it evidencing, securing or otherwise executed in connection with the Obligations
as provided in the Loan Agreement, or sell participation in any interest therein
as provided in the Loan Agreement, to any other person or entity, and such other
person or entity shall thereupon become vested, to the extent set forth in the
7
agreement evidencing such assignment, transfer or participation, with all the
rights in respect thereof granted to the Secured Party and the Lenders herein.
22 GENERAL. This Agreement may not be amended or modified except by a
writing signed by the Debtor and the Secured Party (subject to the provisions of
Section 9.7 of the Loan Agreement), nor may the Debtor assign any of its rights
hereunder. This Agreement and the terms, covenants and conditions hereof shall
be construed in accordance with, and governed by, the laws of The Commonwealth
of Massachusetts (without giving effect to any conflicts of law provisions
contained therein).
23 SECTION HEADINGS. Section headings are for convenience of reference
only and are not a part of this Agreement.
24 JURY WAIVER. THE SECURED PARTY (BY ITS ACCEPTANCE HEREOF) AND THE
DEBTOR AGREE THAT NEITHER OF THEM, NOR ANY ASSIGNEE OR SUCCESSOR SHALL (A) SEEK
A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM, OR ANY OTHER ACTION BASED
UPON, OR ARISING OUT OF, THIS AGREEMENT, ANY RELATED INSTRUMENTS, ANY COLLATERAL
OR THE DEALINGS OR THE RELATIONSHIP BETWEEN OR AMONG ANY OF THEM, OR (B) SEEK TO
CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT
BE OR HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY
DISCUSSED BY THE SECURED PARTY AND THE DEBTOR, AND THESE PROVISIONS SHALL BE
SUBJECT TO NO EXCEPTIONS. NEITHER THE SECURED PARTY NOR THE DEBTOR HAS AGREED
WITH OR REPRESENTED TO THE OTHER THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT
BE FULLY ENFORCED IN ALL INSTANCES.
IN WITNESS WHEREOF, the Debtor has caused this Agreement to be duly
executed as an instrument under seal as of the date first written above.
WITNESS: DEBTOR: GUESS?, INC.
By:
Title:
Accepted and Agreed to:
The First National Bank of Boston, as Agent for the Lenders
By:_______________________________________________
Title:
OFFICER'S CERTIFICATE
to
AMENDED AND RESTATED SECURITY AGREEMENT
Dated March 28, 1997
GUESS ?, Inc. (the "DEBTOR"), hereby certifies, with reference to a certain
Amended and Restated Security Agreement dated March __, 1997 (terms defined in
such Security Agreement having the same meanings herein as specified therein),
between the Debtor and The First National Bank of Boston (the "Agent"), to the
Agent and the Lenders as follows:
1. Names.
(a) The exact corporate name of the Debtor and its taxpayer identification
number is as follows:
Guess ?, Inc.; 00-0000000
(b) The following is a list of all other names (including trade names or
similar appellations) used by the Debtor, or any other business or organization
to which the Debtor became the successor by merger, consolidation, acquisition,
change in form, nature or jurisdiction of organization or otherwise, now or at
any previous time:
None.
2. Locations.
(a) The chief executive office of the Debtor is located at the following
address:
0000 Xxxxx Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
(b) The following are is a list of all other locations in the United
States of America in which the Debtor maintains any books or records relating to
any of the Collateral:
Same as 2(b)
Within the last four months, if different:
(c) Set forth on Schedule 2 (c) hereto are all the other places of
business of the Debtor in the United States of America where Collateral is
located.
9
(d) The following are the names and addresses of all persons or entities
other than the Debtor (and other than independent sewing, laundering and
finishing contractors), such as lessees, consignees or warehousemen that have
possession or are intended to have possession of any of the Collateral
consisting of Inventory:
Currently:
Street and Number County State Zip Code
None.
Within the last four months, if different:
Street and Number County State Zip Code
None.
IN WITNESS WHEREOF, this Certificate has been executed on behalf of the
Debtor by its duly authorized officer on this __th day March, 1997.
GUESS ?, Inc.
By:
Title:
