1996 AMENDED AND RESTATED
COMMERCIAL REVOLVING LOAN AND SECURITY AGREEMENT
THIS 1996 AMENDED AND RESTATED COMMERCIAL REVOLVING LOAN AND SECURITY
AGREEMENT is entered into as of the 7th day of October, 1996 by and among BANK
OF BOSTON CONNECTICUT, a savings bank existing under the laws of the State of
Connecticut with a place of business at 000 Xxxxxx Xxxxxx, Xxx Xxxxx,
Xxxxxxxxxxx 00000, as agent for Fleet Bank, National Association, The Chase
Manhattan Bank, People's Bank, BHF-Bank Aktiengelleschaft, CoreStates Bank,
N.A., National Bank of Canada, The Sanwa Bank Limited, First Union Bank of
Connecticut and Bank of Boston Connecticut ("Agent") and FLEET BANK, NATIONAL
ASSOCIATION, a national banking association having its principal place of
business in Jersey City, New Jersey and having an office at 1133 Avenue of the
Americas, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000 ("Fleet/New Jersey"), THE
CHASE MANHATTAN BANK, a New York banking corporation with a place of business at
000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (successor by merger to The Chase
Manhattan Bank, N.A.) ("Chase"), PEOPLE'S BANK with a place of business at 0
Xxxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxxx 00000 ("People's"), BHF-BANK
AKTIENGELLESCHAFT with a place of business at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000- 2540 ("BHF"), CORESTATES BANK, N.A., with a place of business at
0000 Xxxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000 ("CoreStates"),
NATIONAL BANK OF CANADA, having a place of business at 000 Xxxx 00xx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000-0000 ("National Bank of Canada"), THE SANWA BANK LIMITED,
having a place of business at 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
("Sanwa"), FIRST UNION BANK OF CONNECTICUT, having a place of business at 000
Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 ("First Union") and BANK OF BOSTON
CONNECTICUT, a savings bank existing under the laws of the State of Connecticut
with a place of business at 000 Xxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxxx 00000,
("Bank of Boston") (each of Fleet/New Jersey, Chase, People's, BHF, CoreStates,
National Bank of Canada, Sanwa, First Union and Bank of Boston, together with
any other financial institution that becomes a party hereto, is sometimes
hereafter individually referred to as a "Bank" and collectively as the "Banks"),
STARTER CORPORATION, a Delaware corporation having a place of business at 000
Xxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxxx 00000, ("Starter") and STARTER GALT, INC.,
a Delaware corporation having a place of business at 000 Xxxxx Xxxxxx, Xxx
Xxxxx, Xxxxxxxxxxx 00000 ("Starter Galt"; Starter and Starter Galt are sometimes
hereinafter referred to collectively as the "Borrowers" and individually as a
"Borrower").
W I T N E S S E T H:
WHEREAS, Starter, the Agent, Bank of Boston, Fleet National Bank (then
known as "Fleet Bank, National Association") ("Fleet/Connecticut"), NatWest Bank
N.A., The Chase Manhattan Bank, N.A. and People's entered into a Commercial
Revolving Loan and Security Agreement dated March 30, 1995 (the "Original
Agreement"); and
WHEREAS, by First Amendment to Commercial Revolving Loan and Security
Agreement dated as of June 14, 1995 (the "First Amendment"), BHF, CoreStates,
National Bank of Canada and Sanwa joined the lenders and certain changes were
made to the Original Agreement as set forth in said First Amendment; and
WHEREAS, by Second Amendment to Commercial Revolving Loan and Security
Agreement dated as of January 31, 1996 (the "Second Amendment") certain further
changes were made to the Original Agreement as amended by the First Amendment as
set forth in said Second Amendment; and
WHEREAS, Fleet/New Jersey has become the successor by merger to NatWest
Bank N.A.; and
WHEREAS, Fleet/Connecticut has withdrawn as a lender from the Loan
Agreement and has assigned its rights and liabilities in connection with the
Fleet Standby L/C (as hereinafter defined) to Fleet/New Jersey; and
WHEREAS, by Third Amendment to Commercial Revolving Loan and Security
Agreement dated as of May 17, 1996 (the "Third Amendment") certain further
changes were made to the Loan Agreement; (the Original Agreement as amended by
the First Amendment, the Second Amendment, and the Third Amendment is
hereinafter referred to as the "Loan Agreement"); and
WHEREAS, Chase has become the successor by merger to The Chase Manhattan
Bank, N.A.; and
WHEREAS, Starter has created Starter Galt as a Subsidiary and Starter Galt
has acquired certain assets of Galt Sand Company and Galt Shop Company; and
WHEREAS, Starter Galt is a wholly-owned subsidiary of Starter and will
derive economic benefit from its execution and delivery of this Agreement,
including, without limitation, the benefits to be derived from a letter
agreement between Starter and Starter Galt dated of even date herewith whereby
Starter has agreed to provide sufficient capital, from time to time to Starter
Galt, in such form, in such amount, and at such times as is necessary to enable
Starter Galt at all times to (i) maintain assets which, taken at a fair value,
exceed its liabilities, (ii) be able to pay its debts
2.
as they mature, and (iii) maintain adequate capitalization for the business in
which it is engaged.
WHEREAS, Starter, the Agent and the Banks wish to add Starter Galt as a
Borrower hereunder and to add First Union as a Bank hereunder; and
WHEREAS, the Borrowers, the Agent and the Banks wish to increase the total
amount of Revolving Credit Facility to be made available to Borrowers; and
WHEREAS, the Borrowers, the Agent and the Banks wish to amend and restate
the Loan Agreement;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, receipt of which is hereby acknowledged by the parties
hereto, the parties hereto do hereby agree as follows (reference being hereby
made to Section 9 hereof for the definition of certain capitalized terms used
herein):
Section 1. Revolving Credit Facility; Security Interests; Interest;
Telephone Instructions; Requests for Advances; Funding; Assignment of Life
Insurance; Assignments of Leases; L/C Agreement; Assignment of Trademark Rights;
Stock Pledge.
Section 1.1. General Provisions. Subject to all of the terms and
conditions of this Agreement:
(A) Revolving Credit Facility.
(i) Amount of Revolving Credit Facility. So long as there exists
no Event of Default nor any event which, with the passage of time or giving of
notice, or both, would become an Event of Default, but subject to the
limitations hereinafter set forth and until the Termination Date, the Banks will
provide to the Borrowers a Revolving Credit Facility in the aggregate amount of
up to $145,000,000 (the "Regular Commitment"), plus a $30,000,000 seasonal
increase to $175,000,000 from April 15 through October 15 of each year (the
"Seasonal Commitment"). Each Bank severally agrees that, subject to the terms
and limitations set forth in this Agreement, it will extend credit to the
Borrowers through the Agent under the Revolving Credit Facility from time to
time during the period from the date hereof up to but not including the
Termination Date in an aggregate principal amount not to exceed at any time
outstanding the lesser of (a) such Bank's Regular Commitment or Seasonal
Commitment, as applicable, as set forth below opposite
3.
such Bank's name, or (b) its Pro Rata Share as set forth below opposite such
Bank's name:
Regular Seasonal Pro Rata
Bank Commitment Commitment Share (%)
---- ---------- ---------- ---------
Bank of Boston $ 29,000,000 $ 35,000,000 20.000%
Chase 20,713,250 25,000,000 14.285
Fleet/New Jersey 20,713,250 25,000,000 14.285
People's 16,572,050 20,000,000 11.429
CoreStates 16,572,050 20,000,000 11.429
First Union 16,572,050 20,000,000 11.429
BHF 9,942,650 12,000,000 6.857
National Bank of Canada 9,942,650 12,000,000 6.857
Sanwa 4,972,050 6,000,000 3.429
------------ ------------ ------
$145,000,000 $175,000,000 100%
Subject to the limitations contained herein, extensions of credit under the
Revolving Credit Facility may, at the option of the Borrowers, take the form of
Advances, Acceptances, Commercial L/C's or, upon the approval of all of the
Banks, standby letters of credit.
The existing Fleet Standby L/C shall remain outstanding as part of the
Revolving Credit Facility in accordance with its terms until the earlier of (i)
its expiration date, or (ii) the Borrower's reimbursement of Fleet/New Jersey
(as assignee of Fleet/Connecticut) pursuant to the terms of any reimbursement
agreement pertaining to the Fleet Standby L/C upon a draw thereunder.
(ii) Use of Proceeds of Revolving Credit Facility. The Revolving
Credit Facility shall be used the Borrowers as follows: (a) the proceeds of
Advances and Acceptances shall be used for each Borrower's working capital
purposes in the operation of its business; (b) the issuance of Commercial L/Cs
which shall be used for the benefit of a Borrower's designated foreign suppliers
for a term not to exceed 120 days, in connection with such Borrower's importing
of materials and finished goods from such foreign suppliers for the account of
such Borrower; (c) the issuance of standby L/C's which may be issued only with
the consent of all of the Banks; (d) the Fleet Standby L/C which shall remain
outstanding in accordance with its terms; and (e) the proceeds of Advances may
be used to pay off indebtedness of Starter Galt to First Union in the principal
amount of up to $13,942,245.19, together with interest therein, which
indebtedness was incurred in connection with the acquisition of certain assets
of Galt Sand Company and Galt Shop Company and has been guaranteed by Starter.
4.
The maximum aggregate amount of outstanding Advances and Acceptances under the
Revolving Credit Facility shall at no time exceed the Direct Loan Sublimit as
hereinafter set forth in section 1.1(E).
(iii) Revolving Credit Note. To evidence the Borrowers'
obligations under the Revolving Credit Facility, Borrowers are contemporaneously
herewith executing and delivering to the Agent the Revolving Credit Note dated
of even date herewith in the face principal amount of $175,000,000 in the form
and substance set forth on Exhibit A attached hereto. The Revolving Credit Note
in the face amount of $175,000,000 is issued in replacement of and substitution
for the Revolving Credit Note in the face principal amount of $150,000,000 dated
May 17, 1996 executed by Starter in favor of the Agent, as agent for the Banks
(except First Union) (the "May 17, 1996 Note"). The May 17, 1996 Note is hereby
cancelled.
(iv) Termination Date. On the Termination Date, the entire unpaid
principal balance of the Revolving Note together with all accrued and unpaid
interest thereon and all other sums owing hereunder shall become due and payable
in full without notice or demand.
(B) Advances. All Advances under the Revolving Credit Facility shall
be made by the Banks simultaneously and in the amount of their respective
Pro-Rata Shares.
The obligations of the Banks for Advances are independent and no Bank shall
be responsible for any default by any other Bank with respect to such other
Bank's obligation to make Advances hereunder, nor shall the obligation of any
Bank be increased or decreased as a result of the default by any other Bank in
such other Bank's obligation to make Advances hereunder. All requests by a
Borrower for Advances shall be made in accordance with the provisions of Section
1.4 of this Agreement;
(C) L/C's and Acceptances. All Commercial L/C's and Acceptances which
are issued or created under the Revolving Credit Facility will be issued by the
Agent or by The First National Bank of Boston or any of its overseas or domestic
affiliates on behalf of the Banks, and shall be administered by Agent, as agent
for the Banks. Each letter of credit issued under the Revolving Credit Facility
by The First National Bank of Boston or its overseas or domestic affiliates
shall be subject to the terms of the L/C Agreement. The minimum face amount of
each Commercial L/C and each Acceptance shall be $50,000.00.
Standby letters of credit may be issued under the Revolving Credit Facility
only upon the consent of all of the Banks.
5.
Each Commercial L/C issued hereunder shall have an expiration date not
later than 120 days following its date of issuance, and no Commercial L/C shall
have an expiration date later than September 28, 1998.
Notwithstanding the Termination Date, each Bank shall remain obligated
through the expiration date of the Fleet Standby L/C and each Commercial L/C and
standby L/C issued or outstanding under the Revolving Credit Facility to
reimburse the Agent for such Bank's Pro-Rata Share of a drawing on any such
letters of credit which is not immediately reimbursed by the Borrowers.
In the event of a drawing upon a Commercial L/C, a standby L/C or the Fleet
Standby L/C following the Termination Date (but not later than the expiration
date of such letter of credit) which is not immediately reimbursed by the
Borrowers, the payment of such drawing by the issuer of such letter of credit
shall constitute a portion of the Liabilities under the Revolving Credit
Facility and shall be subject to this Agreement notwithstanding the occurrence
of the Termination Date.
Acceptances shall be issued only in connection with transactions which a
Borrower certifies, in writing, to the Agent to be a qualified transaction. An
Acceptance shall have a maturity date not in excess of 120 days following its
date of issuance and no Acceptance shall have a maturity date later than the
Termination Date.
(D) Borrowing Base. The aggregate amount of outstanding Liabilities
under the Revolving Credit Facility shall not at any time exceed the lesser of
(x) the amount of the Regular Commitment or the Seasonal Commitment, as
applicable, or (y) the sum of (i) Eighty (80%) percent of Eligible Accounts,
plus (ii) Fifty (50%) percent of Eligible Inventory with a maximum limit on
availability against Eligible Inventory of (a) $40,000,000 in effect from
September 1 in each year through May 31 of the following year (except for the
month of September 1996 (as set forth below)), (b) $60,000,000 in effect for the
months of June, July and August of 1996, and (c) $50,000,000 during the months
of September 1996 and June, July, August in each year other than 1996, plus
(iii) fifty (50%) percent of L/C Inventory, plus (iv) One Hundred (100%) percent
of cash deposits held in the name of the Borrower or Fair Stock Limited d/b/a
Starter Far East, Ltd. in an interest bearing savings account at the Hong Kong
Branch of The First National Bank of Boston (the formula contained in this
clause (y) is hereinafter referred to as the "Borrowing Base").
(E) Direct Loan Sublimit: The aggregate amount of Advances and
Acceptances to be outstanding at any time shall not exceed the following amounts
(the "Direct Loan Sublimit"): (i) $50,000,000 during the months of October of
each year through April of the following year and (ii) $90,000,000 during the
months
6.
of May through September in each year, except that the (a) Direct Loan Sublimit
shall be $110,000,000 during the months of July, August and September 1996 and
(b) the Direct Loan Sublimit shall be as follows for October, November and
December 1996:
October $ 90,000,000
November $ 70,000,000
December $ 50,000,000
Notwithstanding the above sentence, the Direct Loan Sublimit shall be
$110,000,000 during the months of July and August, 1996.
Notwithstanding the preceding sentence, for a period of thirty (30)
consecutive days occurring during the period between December 1 in each calendar
year and February 15 in the following year, the Borrowers shall, from cash flow
generated from their continuing operations (as opposed to cash flow resulting
from a non-recurring event), cause the aggregate amount of Advances and
Acceptances outstanding hereunder to be reduced to an amount not to exceed
$25,000,000; provided, however, that for the period between December 1, 1996 and
February 15, 1997, such reduction shall be to an amount not to exceed
$40,000,000.
(F) Seasonal Overadvance: Notwithstanding the Borrowing Base, the
Borrowers may have Liabilities outstanding under the Revolving Credit Facility
in excess of the amount which would otherwise be available under the Borrowing
Base in the following amounts at the following times (the "Seasonal
Overadvance"):
Month 1996 1997
----- ---- ----
April $ 15,000,000 $ 10,000,000
May, June, July 25,000,000 15,000,000
August 10,000,000 10,000,000
Provided, however, that in no event shall (i) the aggregate total amount
outstanding under the Revolving Credit Facility at any time exceed the amount of
the Regular Commitment or the Seasonal Commitment, as applicable, or (ii) the
aggregate amount of Advances and Acceptances outstanding at any time exceed the
applicable Direct Debt Sublimit.
1.2 Security Interests. (A) Collateral. As security for the payment of
the Liabilities, each Borrower hereby mortgages, pledges and assigns to Agent,
and gives and grants to Agent, as agent for all of the Banks and also hereby
gives, grants, mortgages, pledges and assigns to each of the Banks, a security
interest in all of its personal property and fixtures, including, without
limitation, all
7.
of its right, title and interest in and to the items and types of property more
particularly described or referred to in subsections (i) - (x) below, whether
now owned or hereafter acquired, and the proceeds and products thereof (the
"Collateral"), which security interest is and shall remain first and prior and
which Collateral shall remain free and clear of all mortgages, pledges, security
interests, liens and other encumbrances and restrictions on the transfer
thereof, except as permitted under Section 4.1 hereof.
(i) Accounts, Instruments and Chattel Paper. All presently
existing or hereafter acquired accounts, accounts receivable, chattel paper,
notes, leases, drafts, acceptances and writings evidencing a monetary obligation
and a security interest in or a lease of goods, all rights to receive the
payment of money or other considerations under present or future contracts or by
virtue of merchandise sold or leased, services rendered, advances made or other
considerations given, whether or not earned by performance and whether or not
evidenced by or set forth in or arising out of any present or future chattel
paper, instrument, document, note, draft, lease, acceptance, writing, bond,
insurance policy, instrument, document or general intangible and whether written
or oral in nature, and all extensions and renewals of any thereof, any reversion
of pension plan excess funding, all rights under or arising out of present or
future contracts, agreements or general intangibles (as defined in the Uniform
Commercial Code as in effect in Connecticut), including, without limiting the
foregoing, all payments under licensing agreements or arrangements, all right,
title and interest in merchandise which gave rise to any or all of the
foregoing, including, inter-alia, all goods in transit and all returned,
reclaimed or repossessed goods and all claims for insurance respecting the same,
all claims for tax refunds, all claims or causes of action which either Borrower
may now or hereafter have whether arising in connection with or under any
agreement, contract, document, instrument or chattel paper whether written or
oral, or by operation of law or otherwise, and all present and future
indebtedness and obligations of any affiliate or subsidiary to it, all whether
now owned or hereafter acquired by either Borrower or in which either Borrower
may now have or may hereafter acquire any interest and all of its right, title
and interest in and to all assets and properties in which it has been granted a
security interest or lien to secure the payment of such indebtedness and
obligations ("Accounts").
(ii) Inventory. All inventories of every nature, whether
presently existing or hereafter acquired or produced, wherever located,
including, without limiting the foregoing, all goods intended for sale or to be
furnished under contracts of service, all raw materials, work in process or
materials used or consumed in either Borrower's business and all finished goods,
any and all rejected or returned goods and all supplies, materials and products
of every nature and description used or usable in connection with
8.
the manufacture, packing, shipping, advertising, selling, leasing or furnishing
of such goods and documents representing any of the same, all whether now owned
or hereafter acquired or in which either Borrower may now have or may hereafter
acquire any interest, and all goods now or hereafter held on consignment
("Inventory"). The security interest described herein continues in all
collateral described in this Paragraph (except goods sold as provided in
9-307(1) of the Uniform Commercial Code as in effect in Connecticut)
notwithstanding sale, exchange, or other disposition thereof by either Borrower.
(iii) Equipment. All equipment, machinery, chattels, tools, dies,
jigs, molds, parts, machine tools, small tools, perishable tools, furniture and
fixtures, of every nature, whether presently owned and existing or hereafter
acquired, wherever located, and all additions and accessories thereto and
substitutions therefor and all parts and equipment which may be attached to or
which are necessary to the operation and use of any or all of the foregoing,
whether or not the same shall be deemed to be affixed to real property, and all
rights under or arising out of present or future contracts relating to the
foregoing; all whether now owned or hereafter acquired by either Borrower or in
which either Borrower may now have or may hereafter acquire any interest and all
whether now existing or hereafter arising ("Equipment"). The security interest
described herein continues in all collateral described in this Paragraph
notwithstanding sale, exchange or other disposition thereof by a Borrower.
(iv) General Intangibles. All general intangibles (as that term
is defined in the Uniform Commercial Code in effect in Connecticut) of every
nature, whether presently existing or hereafter acquired, created, arising, or
coming into existence, including, without limitation, tax refunds, any reversion
of pension plan excess funding, patents, licensing agreements (except those
licensing agreements under which either Borrower is the licensee that provide
that either Borrower may not encumber, assign or sublicense its interest
therein), royalty payments, deposits, copyrights, service names, service marks,
logos, trademarks and the goodwill of the business enterprise and undertakings
to which each of the service names, service marks, logos and trademarks relate.
(v) Documents, Instruments, Chattel Paper. All documents,
instruments and chattel paper (as those terms are defined in the Uniform
Commercial Code in effect in Connecticut as of the date hereof) of every nature,
all whether now owned or hereafter acquired by either Borrower or in which
either Borrower may now have or may hereafter acquire any interest all whether
now existing or hereafter arising.
(vi) Records. All books, correspondence, credit files, records
and other documents of every nature relating to any of the Collateral including,
without limitation, all tapes, cards, discs,
9.
cassettes, newspapers, documents and computer software in the possession or
control of either Borrower, or any other Person, all whether now owned or
hereafter acquired by either Borrower or in which either Borrower now has or may
hereafter acquire any interest, and whether now existing or hereafter arising,
and together with the irrevocable right to enforce in the name of either
Borrower or otherwise any and all rights and remedies which such Borrower may
now or hereafter have respecting service contracts or computer contracts with
service bureaus or otherwise.
(vii) Insurance Policies. All rights in, to and under policies of
insurance, including claims or rights to payment and proceeds heretofore or
hereafter becoming payable thereunder, with respect to the Collateral, all
whether now owned or hereafter acquired by either Borrower or in which either
Borrower may now have or may hereafter acquire any interest, all whether now
existing or hereafter arising.
(viii) Proceeds of Condemnation. All rights in, to and under, and
claims or rights to payment and proceeds arising out of any present or future
taking of any portion of the Collateral by any public or quasi-public
governmental authority by way of condemnation or any other form of the exercise
by such authority of its powers of eminent domain, or any conveyance in lieu
thereof, all whether now existing or hereafter arising.
(ix) Deposit Accounts, Etc. All presently existing or hereafter
created deposit accounts, certificates of deposit, securities, acceptances,
bonds and any evidence thereof and all instruments or documents relating
thereto.
(x) Proceeds and Products. All proceeds and all products of all
Collateral described above and any collateral described in any financing
statement filed in connection with the transaction contemplated hereby.
(B) Financing Statements. At the request of the Agent, each Borrower
shall execute and deliver to the Agent, at any time or times hereafter, all such
financing statements, notices of assignment of accounts, agreements,
instruments, documents, warehouse receipts, bills of lading, schedules of
accounts assigned, mortgages and other written matter necessary or requested by
the Agent to perfect or maintain perfected the security interest in the
Collateral in favor of the Agent and the Banks.
Each Borrower hereby irrevocably makes, constitutes and appoints the Agent
(and all Persons designated by the Agent for that purpose) as such Borrower's
true and lawful attorney and agent-in-fact to sign the name of such Borrower on
any financing statement or other such document required under this paragraph and
to deliver such financing statements or other documents to such Persons as the
Agent, in its sole discretion, may elect. Each
10.
Borrower agrees that a carbon, photographic, photostatic, or other reproduction
of this Agreement or of a financing statement is sufficient as a financing
statement.
(C) Perfection and Priority; Location of Collateral: Each Borrower
represents and warrants that:
(i) None of the Collateral is subject to any lien, security
interest or other encumbrance, except as disclosed on Schedule 2.6 hereof or
permitted by Section 4.1.
(ii) The offices or locations where each Borrower keeps its
Collateral and its books and records, including, without limitation, computer
programs, printouts and other computer materials and records concerning the
Collateral, are at the locations set forth on Schedule 1.2 attached hereto, and
neither Borrower shall remove such books and records or the Collateral
therefrom, except as permitted under Section 4.5 hereof, nor keep any of such
books and records or the Collateral at any other office or location unless such
Borrower gives written notice to the Agent of such removal and the new location
of such books and records or the Collateral at least thirty (30) days prior
thereto
(iii) The addresses as specified on Schedule 1.2 include and
designate each Borrower's chief executive office, principal place of business or
other offices or places of business and are all of such Borrower's offices and
places of business.
(iv) Each Borrower shall advise the Agent of the opening of any
new office or place of business or its closing of any existing office or place
of business by written notice delivered to the Agent at least thirty (30) days
prior thereto.
1.3 Interest; Payments of Principal and Interest.
(A) Advances. Advances from time to time outstanding under the
Revolving Credit Facility shall bear interest at one or more of the following
Interest Rate Options as selected by the Borrower requesting such Advance,
subject to the terms thereof:
(i) a variable rate per annum at all times equal to the
Comparative Prime Rate. The interest rate on Prime Rate Advances shall change
when and as the Comparative Prime Rate changes; or
(ii) a fixed rate equal to the LIBOR Rate for the particular
LIBOR Interest Period selected by the Borrower for such Advance or portion of
such Advance; or
11.
(iii) a fixed rate equal to the Acceptance Rate per annum for the
particular Acceptance Rate Interest Period selected by Borrower for such Advance
or portion of such Advance.
(B) Unreimbursed Cash Draws Under Commercial L/C's, Standby L/C's and
Unreimbursed Payment of Acceptances. Any payments made by the Agent or the
issuing Bank under any Commercial L/C, standby L/C (including, without
limitation, the Fleet Standby L/C) or Acceptance shall bear interest until
reimbursed by Borrowers in full, at a rate which is three (3) percentage points
per annum above the Comparative Prime Rate, said rate to change when and as said
Comparative Prime Rate changes.
(C) Notice of Interest Rate Option Election, Failure to Give Notice.
Whenever a Borrower desires to elect, change or continue the Interest Rate
Option on all or a portion of any Advance, such Borrower shall notify Agent
thereof, which shall be confirmed by delivery to Agent of a written notice of
interest rate option election with respect to: (i) LIBOR Advances no later than
11:00 A.M. at least three (3) London Business Days in advance of the proposed
funding, change or continuation; and (ii) Comparative Prime Rate Advances and
Acceptance Rate Advances no later than 10:00 A.M. on the same Business Day of
the proposed funding, change or continuation. The notice of interest rate option
election shall be irrevocable and shall specify: (a) the proposed date of change
or continuation (which shall be a Business Day or a London Business Day, as
applicable) and if such change or continuation relates to any amount bearing
interest at the LIBOR Rate, the proposed date of change or continuation must be
at least three (3) London Business Days following the date of such notice of
interest rate option election; (b) the type of Advance (whether a Prime Rate
Advance, LIBOR Advance, or Acceptance Rate Advance) and amount thereof affected;
(c) whether such interest rate change or continuation is to consist of LIBOR
Advances or Prime Rate Advances or a combination of any thereof; and (d) the
Interest Periods therefor, if applicable.
If an Advance shall be outstanding for which a Borrower has not elected an
Interest Rate Option, or if at the termination of any Interest Period, such
Borrower fails to submit a notice of interest rate option election to convert or
to continue any outstanding Advance, then such Advance, regardless of the dollar
amount, shall automatically be and become a Prime Rate Advance as of the
applicable date for determining an interest rate with respect thereto.
Upon the expiration of any Interest Period applicable to a LIBOR Advance or
any Acceptance Rate Advance, such Advance shall be deemed repaid and reborrowed
upon the submission to Agent of a properly completed and executed Notice of
Interest Rate Option Election pertaining thereto as provided in this Section and
the succeeding Interest Period of such continued Advance shall commence
12.
on the first (1st) day of the Interest Period of the Advance deemed to be
reborrowed and continued.
A LIBOR Advance or an Acceptance Rate Advance may be converted into a Prime
Rate Advance only on the expiration date of an Interest Period applicable
thereto, except that no outstanding Advance may be continued as, or converted
into, a LIBOR Advance or continued as an Acceptance Rate Advance, nor shall the
Borrowers have the right to elect an Interest Rate Option, when any Event of
Default, or any event which with the passage of time or giving of notice, or
both, would become an Event of Default, has occurred and is continuing.
(D) Availability of LIBOR Rate. Upon request, the Agent shall give the
Banks and the Borrowers prompt notice of its determination of the then current
LIBOR Rate and, absent manifest error, each such determination of such rates by
the Agent shall be conclusive and binding for all purposes hereof.
(i) If a Borrower requests that all or any portion of the
Advances bear interest at the LIBOR Rate and (a) the Agent or any of the Banks
determines that, by reason of circumstances affecting the interbank Eurodollar
market generally, deposits in U.S. Dollars (in the applicable amounts) are not
being offered to banks in the interbank Eurodollar market for the selected
Interest Period, or (b) Banks holding in the aggregate a majority of the Pro
Rata Shares shall certify that the LIBOR Rate does not accurately reflect the
cost to such Bank of making or maintaining LIBOR Advances for the Interest
Period, then Agent shall forthwith give notice thereof to the Borrowers,
whereupon, (1) the obligation of Agent to permit the Advances to bear interest
at the LIBOR Rate shall be suspended so long as such circumstances exist, and
(2) the Borrowers shall convert the interest rates on the applicable portions of
the outstanding Advances to the Comparative Prime Rate for the current Interest
Period. Such suspension shall continue until the Agent notifies the Borrowers
that the circumstances giving rise to such suspension no longer exist.
(ii) If, after the date of this Agreement, the adoption of or any
change in rules, or change in the interpretation or administration thereof, by a
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Banks with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall make it unlawful or
impossible for any Bank to make or maintain or fund Advances at the LIBOR Rate
or at the Acceptance Rate, the interest rates on the applicable portions of the
outstanding LIBOR Advances and Acceptance Rate Advances shall be deemed to have
been converted to the Comparative Prime Rate, on either (a) the last day of the
then current Interest Period if all Banks may lawfully continue to maintain
loans at the LIBOR Rate or the Acceptance Rate to such
13.
day, or (b) immediately if any Bank may not lawfully continue to maintain
advances at the LIBOR Rate or the Acceptance Rate and the Borrowers shall have
no further right to obtain LIBOR Advances or Acceptance Rate Advances hereunder,
as the case may be.
(iii) Promptly upon notice from the Agent to Borrowers, Borrowers
will pay, prior to the date on which penalties attach thereto, the Eurodollar
Rate Tax. Promptly after the date on which payment of any such Eurodollar Rate
Tax is due pursuant to applicable law, Borrowers will, at the request of Agent,
furnish to the Banks evidence, in form and substance satisfactory to Agent, that
Borrowers have met their obligation under this subsection. Borrowers will,
jointly and severally, indemnify each Bank against, and reimburse each Bank on
demand for, any Eurodollar Rate Tax, as determined by such Bank in its good
faith discretion. Such Bank shall provide Borrower with appropriate receipts for
any payments or reimbursements made by Borrower pursuant to this subsection. A
certificate of the Agent (or a Bank) as to any amount payable pursuant to this
Section shall, absent manifest error, be final, conclusive and binding on all
parties hereto.
(iv) Upon notice to Borrowers from a Bank, the Borrowers shall
pay to the Agent for the account of such Bank, such amount or amounts as shall
be sufficient (in the reasonable opinion of such Bank) to compensate it for any
loss, cost, liability or expense incurred as a result of (a) any repayment of a
LIBOR Advance or Acceptance Rate Advance on a date other than the last day of
the Interest Period for such LIBOR Advance or such Acceptance Rate Advance,
including, but not limited to that resulting from acceleration of all amounts
outstanding under the Revolving Credit Facility following the occurrence of any
Event of Default or (b) any failure by the Borrowers to borrow or convert or
prepay, as the case may be, a LIBOR Advance or Acceptance Rate Advance on the
date for borrowing or conversion or prepayment, as the case may be, which is
specified in the notice of interest rate option election.
(E) Repayment of Prime Rate Advances; Prepayment Premium For LIBOR
Advances and Acceptance Rate Advances. Prime Rate Advances may be repaid at any
time without premium.
LIBOR Advances and Acceptance Rate Advances may be prepaid prior to the
expiration date of an Interest Period applicable thereto only upon payment by
the Borrowers to Agent on behalf of the Banks of the Prepayment Premium.
Notwithstanding the foregoing, no amount so prepaid may be reborrowed at
the LIBOR Rate or Acceptance Rate accruing on such Advance prior to the last day
of the Interest Period pertaining to the Advance prepaid. Said prepayment shall
be irrevocable once either Borrower has notified Agent of such prepayment and
Borrower will reimburse the Agent and each Bank for any and all loss, cost,
14.
liability and expense incurred by Agent or such Bank in the event that Borrowers
for any reason do not make such prepayment.
A determination by Agent as to the amounts payable pursuant to this
Subsection shall be conclusive absent arithmetical error.
(F) Payment. Subject to the provisions of Section 1.3(H) with respect
to mandatory prepayments, payments of principal shall be in the minimum amount
of $500,000 with respect to each such principal payment.
Interest on all outstanding Prime Rate Advances shall be payable by
Borrowers monthly on the first (1st) day of each calendar month for interest
accrued during the preceding month on the Advances at the rate or rates of
interest applicable during said preceding month. Interest on LIBOR Advances
shall be payable by the Borrowers on the last day of the applicable Interest
Period with respect to each such Advance. Interest on Acceptance Rate Advances
shall be prepaid by deduction from the proceeds of such Acceptance Rate Advance
at the time such Acceptance Rate Advance is made. In the event that a Bank
receives a payment after 11:00 A.M. on any Business Day, such payment shall not
be credited until the following Business Day. Interest shall be computed using a
per diem rate which shall be a fraction, the numerator of which shall be the
rate of interest calculated in accordance with Section 1.3(A) or (B) above and
the denominator of which shall be three hundred sixty (360), multiplied by the
actual number of days elapsed. Interest payments shall be withdrawn directly
from a Borrower's accounts maintained with the Agent and in the event funds are
not available in such accounts such payments, will be paid, subject to
availability hereunder, by an Advance under the Revolving Credit Facility. Each
Borrower hereby consents to any and all such withdrawals, Advances and payments
by any other means availed of by Agent and the Banks and further consents to
payments of interest on any of the outstanding Advances by such withdrawals or
Advances. In the event any payment of principal or interest shall be returned
unpaid for any reason, any credit given on account of such payment shall be
deleted, interest shall accrue retroactively to the date such credit was given
and such payment shall be deemed, for all purposes under this Agreement, never
to have been made. Any interest not paid as aforesaid may, in the Bank's sole
discretion, accrue and be added to the principal and continue to bear interest
at the highest rate being borne by such principal.
(G) Receipt of Payments; Lock Box. Immediately upon the execution of
this Agreement, each Borrower shall establish a post office box for the deposit
of all monies, checks, notes, drafts, and other payments relating to, or as
proceeds of, the Collateral, and, to the extent it has not yet done so, each
Borrower shall advise all of its account debtors and all other persons making
payment to it to forward all payments directly to
15.
such post office box. Each Borrower shall enter into a lock box agreement with
the Agent which shall provide that all payments which are received in the post
office box shall be immediately deposited to an account with the Agent and such
payments shall be applied by the Agent on account of sums outstanding under the
Revolving Credit Facility when such funds become available to the Agent through
the Federal Reserve System, provided that application of said amount against
such sums shall be subject to reversal until all checks, drafts or other
instruments comprising said sum have actually been collected by the Agent.
Notwithstanding anything herein to the contrary, all such items or payments
shall, solely for purposes of determining the occurrence of an Event of Default,
be deemed received upon the actual receipt by the Agent, unless the same is
subsequently dishonored for any reason whatsoever.
Each Borrower hereby irrevocably authorizes the Agent, now and at any time
or times hereafter, to (i) open such Borrower's mail and collect any and all
amounts due to such Borrower from account debtors, and (ii) direct such account
debtors to make all payments due from them to the Borrower directly to the lock
box account.
(H) Mandatory Prepayments of Sums Outstanding Under the Revolving
Credit Facility. Sums outstanding under the Revolving Credit Facility shall be
subject to mandatory prepayment to the extent, at the time, and under the
circumstances hereinafter set forth:
(i) When, and to the extent that, there exists an Overadvance (other
than a Seasonal Overadvance);
(ii) When, and to the extent that, the aggregate outstanding balance
of Advances and Acceptances exceeds the applicable Direct Loan
Sublimit;
(iii) When, and to the extent that, the Seasonal Overadvance
outstanding on any date exceeds the amount of the Seasonal
Overadvance permitted on such date;
(iv) Upon demand, any of the sums coming due under Section 13 hereof;
(v) Upon receipt by the Agent of collections of any proceeds of (i)
the Collateral, or (ii) the Assignment, to the extent of such
collections; provided, however, that if a mandatory prepayment
under this clause (v) would result in the prepayment of a LIBOR
Loan or an Acceptance Rate Loan, the Agent shall not apply such
collections in prepayment of such LIBOR Loan or Acceptance Rate
Loan but instead shall hold such collections as additional
Collateral until the maturity of such LIBOR Loan or Acceptance
Rate Loan; and
16.
(vi) Acceptance Rate Advances shall be payable upon the maturity of
the Acceptance giving rise to such Acceptance Rate Advance.
(I) Default Rate. Upon the occurrence of an Event of Default, the
interest rate accruing and payable from and after such Event of Default shall be
a variable rate (the "Default Rate") equal to three hundred (300) Basis Points
per annum above the Comparative Prime Rate which rate shall change when and as
said Comparative Prime Rate changes.
(J) Late Payment Charge. If any payment required under the Loan
Agreement or the Revolving Credit Note shall remain in arrears and unpaid for a
period of ten (10) days after the same shall become payable, the Borrowers shall
pay to the Agent the additional sum of five (5%) percent of the amount of such
payment to cover the additional expense of handling such late payment (the "Late
Payment Charge"). The assessment and collection of a Late Payment Charge shall
not constitute a waiver of any Event of Default which results from such late
payment.
1.4 Telephone Instructions, Requests for Advances, Minimum Advances;
Drawing on L/C Deemed to be a Request for an Advance. Each Borrower may from
time to time request, instruct or authorize Agent, by a telephone transmission
from anyone purporting to be Xxxxx X. Xxxxxxxxx, Xxxx X. Xxxxxx, Xxxx X. Xxxxxx,
Xxxxxxxx X. Xxxxx, Xxxx Xxxxx or Xxxxxx Xxxxxxx (or such other person as the
Borrowers may hereafter designate, in writing), to take or refrain from taking
certain action hereunder, including, but not limited to, requesting Advances.
Each Borrower specifically agrees that Agent and the Banks shall not be required
to but shall be entitled to rely on such telephone instructions and that the
Borrowers shall be bound thereby. Promptly following such telephone
instructions, the Borrowers shall provide to Agent such documentation respecting
each request for an Advance, as the Agent shall require.
With respect to LIBOR Advances, the Borrower requesting such Advance shall
notify Agent no later than 11:00 A.M. at least three (3) London Business Days in
advance of the proposed funding date set forth in the Request for Advance, which
funding date must be a Business Day and a London Business Day. Each request for
a LIBOR Advance must be for an amount not less than $3,000,000 and in increments
of $500,000 in excess of said amount. With respect to Prime Rate Advances and
Acceptance Rate Advances, the Borrower requesting such Advance shall notify the
Agent no later than 10:00 A.M. on the same Business Day on the proposed Funding
Date.
With respect to the issuance of any Commercial L/C, the Borrower requesting
the issuance of such Commercial L/C shall notify the Agent on or before the
Business Day on which such Commercial L/C is to be issued.
17.
In the event of a drawing upon a Commercial L/C, a standby L/C or the Fleet
Standby L/C which is not immediately reimbursed by the Borrowers, such event
shall be deemed to be a request by the Borrowers for a Prime Rate Advance under
the Revolving Credit Facility.
1.5 Funding. The obligation of the Agent to make any Advances or issue
any Commercial L/C or Acceptance is subject to the conditions precedent that:
(a) no event has occurred which would constitute an Event of Default; (b) no
event has occurred which but for the passage of time or giving of notice would
constitute an Event of Default; (c) all representations and warranties contained
in this Agreement are correct as though made on and as of the date of such
Request for Advance, except that the representations and warranties contained in
Section 2.4 shall be deemed to apply to the most recent financial statements
theretofore furnished by the Starter to the Agent and the Banks. Upon receipt of
the telephone instructions and Request For Advance pursuant to Section 1.4, the
Agent shall promptly notify each Bank by telephone (confirmed in writing by mail
or by facsimile) of the proposed Advance. Except as otherwise provided in the
Intercreditor Agreement with respect to Prime Rate Advances, not later than the
close of business on the Funding Date specified in the Request For Advance, each
Bank shall wire transfer, to the account designated by the Agent, an amount in
immediately available funds equal to the amount of each Bank's Pro Rata Share of
the Advances to be made to Borrower on such Funding Date.
Each Bank absolutely, unconditionally and irrevocably agrees that it shall
make the amount of its Pro Rata Share of the Advance available to the Agent in
immediately available funds at the office of the Agent located at 000 Xxxxxx
Xxxxxx, Xxx Xxxxx, Xxxxxxxxxxx 00000 at the time set forth above on the Funding
Date except as otherwise provided in the Intercreditor Agreement with respect to
Prime Rate Advances. Unless the Agent shall have been notified by any Bank prior
to any Funding Date in respect of any Advances that such Bank does not intend to
make available to the Agent such Bank's Pro Rata Share of the Advance on such
Funding Date, except as otherwise provided in the Intercreditor Agreement with
respect to Prime Rate Advances, the Agent may assume that such Bank has made or,
in the case of a Prime Rate Advance, will make, such amount available to the
Borrower requesting such Advance on such Funding Date, except as otherwise
provided in the Intercreditor Agreement with respect to Prime Rate Advances, and
the Agent in its sole discretion may, but shall not be obligated to, make
available to such Borrower a corresponding amount on such Funding Date by
depositing the proceeds thereof in the designated account which the Borrower
requesting such Advance maintains with the Bank of Boston. If, following
notification by the Agent of a request for Advance under the Revolving Credit
Facility, any Bank's Pro Rata Share is not in fact made available (either by a
wire transfer to the Agent or otherwise) to the Agent by such Bank, the Agent
shall not be
18.
required to advance to the Borrower requesting such Advance on the Funding Date
any amount not made available to the Agent by a Bank; provided, that if the
Agent (or any other Bank) advances to a Borrower on the Funding Date any amount
not made available by a Bank, such amount shall be deemed to be an Advance
hereunder which the Borrowers are obligated to repay as set forth under this
Agreement, and Agent shall be entitled to recover such corresponding amount on
demand from such Bank, together with interest thereon, for each day from such
Funding Date until the date such amount is paid to Agent at the daily average
Federal Funds Effective Rate for such period plus one (1%) percent. If such Bank
does not pay such corresponding amount forthwith upon the Agent's demand
therefor, the Agent shall promptly notify the Borrowers and the Borrowers shall
immediately pay such corresponding amount to the Agent, together with interest
at the interest rate option chosen by Borrower for such Advance. If such Advance
was in the form of a LIBOR Advance, any Prepayment Premium payable under Section
1.3(E) with respect to such Advance shall be paid by the Bank which failed to
fund its Pro Rata Share of such Advance.
1.6 Insurance on the Life of Beckerman. Starter has previously
delivered to Agent, as agent for the Banks, a collateral assignment to the Banks
of a life insurance policy on Beckerman's life, which policy is in the amount of
$5,000,000, (the "Assignment") to secure Borrowers' obligations hereunder. The
Assignment has been executed by the owners of the insurance policy referred to
therein, names Agent, as agent for the Banks, as Beneficiary and bears evidence
on its face that the assignment has been recorded in the home office of the
issuer of such policy. In addition, the Borrowers shall cause Beckerman to
deliver to Agent the actual policy so assigned.
1.7 Assignments of Leases of Premises. Each Borrower has delivered or
is simultaneously herewith delivering to Agent certified copies of its leases of
its various business premises and an assignment of such Borrower's interest as
tenant respecting each such lease consented to by the landlord thereunder. In
addition, if either Borrower leases any additional premises, as tenant, such
Borrower shall promptly execute and deliver to the Agent an assignment of such
lease as further security for the Liabilities.
1.8 L/C Agreement. In addition to all of the terms hereof, the
Borrowers have entered into the L/C Agreement with The First National Bank of
Boston pertaining to the issuance of Commercial L/C's, a copy of which is
attached hereto as Schedule 1.8. Any and all Commercial L/C's and Acceptances
issued by The First National Bank of Boston or any of its overseas or domestic
affiliates for the account of either Borrower shall be issued upon and shall be
subject to the terms of the L/C Agreement as well as the terms hereof and the
terms of such other instruments and documents as may be required by The First
National Bank of Boston
19.
or the Agent in connection with the issuance of any Commercial L/C and/or
Acceptance. All of the terms and conditions of the L/C Agreement are hereby
incorporated herein by reference as though fully set forth herein.
1.9 Assignment of Trademark Rights. (i) As further security for the
payment of the Liabilities, Starter has executed and delivered to the Agent a
Collateral Assignment of Trademarks dated March 30, 1995, which has been
recorded with the Patent and Trademark Office. Starter hereby confirms that the
Collateral Assignment of Trademarks shall be and remain in full force and effect
in favor the Agent and the Banks, and all references therein to the Loan
Agreement, the Revolving Note or the Liabilities shall be deemed to apply and
refer to this Agreement and the Revolving Note and the liabilities as defined
herein. In addition, Starter Galt shall execute and deliver to the Agent a
Collateral Assignment of Trademarks to be recorded with the Patent and Trademark
Office.
(ii) In connection with the foregoing Collateral Assignment of Trademarks,
each Borrower hereby warrants that: the Trademarks set forth in Schedule 1.9)
are a true and complete list of all trademark applications for registrations of
trademarks and trademark registrations now owned by either Borrower (the
"Trademarks"); the Trademarks are subsisting and have not been ruled or declared
invalid or unenforceable; to the best of each Borrower's knowledge, each of the
Trademarks are valid and enforceable and there is no litigation or proceeding
pending or threatened concerning the validity or enforceability of the
Trademarks; to the best of each Borrower's knowledge, no claim has been made
that the use of any of the Trademarks violates or may violate the rights of any
third person; each Borrower is the sole and exclusive owner of the entire and
unencumbered right, title and interest in and to each of the Trademarks
identified as being owned by such Borrower with the exception of nonexclusive
license in certain of the Trademarks in favor of those entities set forth in
Schedule 1.9; neither Borrower has any trademarks registered with any foreign or
state office, official or authority of any sort except as set forth in Schedule
1.9; each Borrower has used or will continue to use the proper statutory notice
in connection with its use of the Trademarks; each Borrower will use consistent
standards of quality and manufacturing of products sold under the Trademarks;
each Borrower has the unqualified right to enter into the Collateral Assignment
of Trademarks to which it is a party and perform its terms and has entered or
will enter into written agreements with each of its present and future
employees, agents, consultants, licensors and licensees which will enable it to
comply with the covenants provided therein; the Collateral Assignment of
Trademarks, together with the Agreement, will create in favor of Agent and the
Banks a valid and perfected first priority security interest in the Trademarks
upon the filing of the financing statements with the Connecticut Secretary of
State under the Uniform Commercial Code contemplated by this Agreement and the
20.
filing of the Collateral Assignment of Trademarks with the Patent and Trademark
Office; and except for the filing of financing statements with the Connecticut
Secretary of State under the Uniform Commercial Code and the recording of the
Collateral Assignment of Trademarks with the Patent and Trademark Office, no
authorization, approval or other action by, and no notice to or filing with, any
governmental or regulatory authority, agency or office is required either (1)
for the grant by each Borrower or the effectiveness of the security interest and
assignment granted hereby or for the execution, delivery and performance of the
Collateral Assignment of Trademarks by such Borrower, or (2) for the perfection
of or the exercise by Agent of any of its rights and remedies hereunder or under
the Collateral Assignment of Trademarks which are registered with the Patent and
Trademark Office or any foreign or state governmental or regulatory authority,
agency or office.
1.10 Stock Pledge. As further security for the Liabilities, Starter
has executed a pledge agreement in favor of the Agent and the Banks pledging to
the Agent and the Banks 51% of the voting stock of Starter Europe, B.V., and
Starter has also executed and delivered a pledge agreement pledging to the Agent
and the Banks 25.5% of the voting stock of Fair Stock Limited d/b/a Starter Far
East, Ltd, and Starter caused Starter Europe B.V. to execute and deliver a
pledge agreement pledging to the Agent and the Banks 25.5% of the voting stock
of Fair Stock Limited d/b/a Starter Far East, Ltd.; provided, however, that it
is the intention hereof that the ownership interest of the Agent and the Banks
in Fair Stock Limited d/b/a Starter Far East, Ltd shall not exceed 51%.
Section 2. Representations and Warranties.
The Borrowers hereby represent and warrant to the Agent and each of the
Banks that:
2.1 Incorporation and Qualification. Each Borrower is a corporation
duly organized and validly existing and in good standing under the laws of the
State of Delaware, has the corporate power to own its properties and conduct its
business, as presently conducted, and is duly qualified, or shall qualify as and
when necessary, to do business in each jurisdiction wherein the nature of the
business conducted by it or the property owned or held under lease by it makes
such qualification necessary including without limitation the States listed on
Schedule 2.1 attached.
2.2 Capitalization, Business and Subsidiaries. Except as set forth on
Schedule 2.2, and except that all of the issued and outstanding stock of Starter
Galt is owned by Starter, neither Borrower owns stock of any other corporation,
active or inactive. The information set forth on Schedule 2.2 attached with
respect to (i) each Borrower's authorized, issued and outstanding capital
21.
stock, all of which stock has been duly authorized and validly issued and is
fully paid and non-assessable, (ii) the beneficial and legal holdings of Xxxxx
X. Xxxxxxxxx of the stock of Starter, (iii) each Borrower's principal and other
places of business, (iv) the place where the inventories, equipment and records
of accounts of each Borrower are kept, and (v) the present business activities
and status of each Borrower, is complete and accurate. Except as set forth on
Schedule 2.2, Borrower has any place of business nor maintains or stores any
Material Assets at any location, including without limitation, inventory at a
vendor or subcontractor, other than (i) inventory which is located at the
vendors or subcontractors set forth on Schedule 2.2 attached; (ii) inventory
which is temporarily warehoused upon its importation; and (iii) inventory having
a value not to exceed $10,000,000 which is located with a vendor or
subcontractor for up to forty-five (45) days in connection with a special event.
2.3 Corporate Authorization. Each Borrower has the corporate power to
execute, deliver and carry out the terms and provisions of this Agreement and
the other Documents to which it is a party and has taken all necessary corporate
and legal action with respect thereto and this Agreement and such other
Documents to which it is a party have been duly authorized, executed and
delivered by such Borrower and each constitutes its valid, legal and binding
agreement and obligation enforceable in accordance with the terms thereof and
the Agent is entitled to the benefits thereof in accordance with such terms.
2.4 Financial Statements. There have been furnished to the Agent and
each of the Banks the consolidated financial statements of Starter and its
consolidated subsidiaries described or referred to in Schedule 2.4 attached. The
consolidated financial statements, including the comments and notes contained
therein, fairly present the financial position of Starter and its consolidated
subsidiaries as of the date thereof and the results of its operations for the
period purported to be covered thereby. The consolidated financial statements
have been prepared in conformity with GAAP applied on a consistent basis
throughout all periods involved, subject, in the case of unaudited statements,
to normal year-end audit adjustments. The projections set forth in Schedule 2.4
represent management's best estimate of the anticipated financial condition of
the Borrowers as set forth therein based on the assumptions set forth therein.
2.5 Indebtedness. Neither Borrower has any outstanding Indebtedness,
except for liabilities to trade creditors incurred in the ordinary course of
business and except as described or set forth in Schedule 2.5 attached, and has
materially performed and complied with all of the terms of such Indebtedness and
all instruments and agreements relating thereto and no default exists as of the
date hereof or would after notice or lapse of time, or
22.
both, exist with respect to any such Indebtedness, instruments or agreements.
2.6 Title to Properties and Assets; Liens, Etc. Each Borrower has good
and marketable title to its properties and assets, free and clear of any
mortgage, pledge, lien, lease, encumbrance or charge, other than those existing
in favor of the Agent on behalf of the Banks, those set forth on Schedule 2.6
attached and other than those permitted under Section 4.1. No financing
statement under the Uniform Commercial Code which names either Borrower as a
debtor has been filed in any state or other jurisdiction which has not been
terminated and neither Borrower has signed any such financing statement or any
security agreement authorizing any secured party thereunder to file any such
financing statement, other than (i) in favor of Agent or the Banks in connection
with this Agreement, (ii) the L/C Agreement, (iii) as set forth on Schedule 2.6
attached, and (iv) financing statements executed by Starter Galt in favor of
First Union which will be assigned by First Union to the Agent. No material
portion of the equipment of either Borrower was purchased as used equipment and
none of the equipment of either Borrower has been relocated within the past four
(4) months, except as disclosed on Schedule 2.6. Neither Borrower is a party to
any consignment agreement, except as described in Schedule 2.6 attached.
2.7 Patents, Trademarks, Etc. Each Borrower owns or holds licenses for
the use of or has the right to use all patents, trademarks, service marks, trade
names, copyrights and rights necessary for the conduct of its business as now
conducted and as contemplated, including those Material License Agreements
identified in Schedule 2.7 attached (the "Intellectual Property").
2.8 Litigation, Etc. Except as set forth in Schedule 2.8 attached,
there are no actions, proceedings or investigations pending against either
Borrower or to the knowledge of the Borrowers threatened (or any basis therefor
known to it) which, either in any case or in the aggregate, might result in any
material adverse change in its business, prospects, profits, properties,
liabilities, operations or conditions (financial or otherwise), of either
Borrower, or which might materially adversely affect a Borrower's ability to
perform this Agreement or any other Documents executed by it.
2.9 Changes in Condition. Since the date of the financial statements
referred to in Schedule 2.4, there has been no material adverse change, by
reason of any matter or cause whatsoever, in the business, prospects, profits,
properties, liabilities, operations or condition (financial or otherwise) of
either Borrower.
2.10 Tax Returns and Payments. All tax returns and reports required by
law to be filed by either Borrower have been
23.
duly filed and all taxes, assessments, fees and other governmental charges
(U.S., foreign, state or local or other) upon it or upon any of its properties,
assets, income or franchises, which are due and payable, have been paid. The
reserves on the books of each Borrower, in respect of taxes for all fiscal
periods to date, are adequate. The Federal and State income and payroll tax
returns of each Borrower have been examined and reported on by the taxing
authorities or closed by applicable statutes and satisfied for all fiscal years
prior to and including the fiscal years set forth in Schedule 2.10 attached.
2.11 Governmental Consents, Etc. No consent, approval or authorization
of or designation, declaration or filing with any governmental authority,
federal, foreign or other, is required in connection with the execution and
delivery of this Agreement or the Documents by either Borrower or the
consummation by either Borrower of any transaction contemplated hereby or
thereby. All contracts between either Borrower and the United States Government
(including, without limitation, the Department of Defense) are listed on
Schedule 2.11.
2.12 Compliance with Instruments, Charter and Law. Each Borrower is in
compliance with, and neither Borrower is in violation or default of, any
material term or provision of (i) its Certificate of Incorporation or by-laws,
(ii) any loan agreement, debt instrument, mortgage or indenture, (iii) any other
material contract, agreement or instrument, including, without limitation, any
Material Licensing Agreement, (iv) any judgment, decree or order or statute,
rule or regulation, (v) any licensing or governmental requirement, (vi) any
state or federal environmental act, or (vii) ERISA. The execution and delivery
and performance and compliance with this Agreement and any of the other
Documents will not result in any such violation or default by either Borrower or
be in conflict with any such term or provision or result in the creation of any
mortgage, lien, encumbrance or charge upon any of its properties or assets
except as provided in this Agreement and there is no such term or provision
which materially adversely affects or in the future may (so far as it can now
foresee) materially adversely affect the business, prospects, profits,
properties, liabilities, operations or condition (financial or otherwise) of
either Borrower or the ability of either Borrower to perform this Agreement or
any of the other Documents executed by it.
2.13 Solvency. Each Borrower is solvent, having assets of a fair
market, going concern value (taken as a whole) which exceeds the amount of its
liabilities, and is able to and anticipates that it will be able to meet its
debts as they mature and has adequate capital to conduct the business in which
it is engaged and is about to engage.
24.
2.14 Change of Name, Etc. Except as set forth on Schedule 2.14
attached, Borrower has not, within five (5) years, changed its name or been a
party to any consolidation or merger.
2.15 No Event of Default. No Event of Default, or event or condition
which, with the passage of time or giving of notice, or both, might become an
Event of Default, hereunder, has occurred or exists.
2.16 Management Agreements. Neither Borrower is a party to any written
executive employment, management or consulting agreement, except as described in
Schedule 2.16 attached.
2.17 Securities Law Compliance. Each Borrower is and will remain in
full compliance with all federal, state and local securities laws, rules,
regulations, and orders including, but not limited to the Securities Exchange
Act of 1934, the Securities Act of 1933, securities exchange rules and
regulations and all state "blue-sky" laws, so called. Each Borrower has timely
complied with all applicable requirements of the Securities and Exchange
Commission, state securities administrators, securities exchange authorities,
and all other necessary and appropriate authorities.
2.18 Full Disclosure. The financial statements, referred to in Section
2.4 hereof do not, nor does this Agreement or any Schedule hereto or any other
Document, certificate or statement furnished to Agent or any Bank by either
Borrower (or on its behalf) in connection with this Agreement, contain any
untrue statement of a material fact or omit to state a fact necessary in order
to make the statements contained therein and herein not misleading. There is no
fact which materially adversely affects or in the future may (so far as it can
now foresee) materially and adversely affect the business, prospects, profits,
properties, liabilities, operations or condition (financial or otherwise) of
either Borrower or the ability of either Borrower to perform this Agreement or
any other Document executed by it, which has not been set forth or referred to
herein or in a certificate or statement furnished to the Agent or any Bank by
it.
2.19. ERISA. Neither Borrower maintains any Pension Benefit Plan or
Welfare Benefit Plan, as defined in ERISA, which is subject to the minimum
funding requirements of ERISA.
Section 3. Affirmative Covenants.
The Borrowers jointly and severally, covenant and agree that, so long as
there is outstanding any amount under the Revolving Credit Facility or any
availability under the Revolving Credit Facility if no such outstanding balance
exists, and so long as any Commercial L/C's, standby L/C's or Acceptances remain
outstanding, the Borrowers will comply or cause compliance with the following
provisions:
25.
3.1 Punctual Payment. The Borrowers will duly and punctually pay all
payments of principal, interest and all charges which are owing by it in
accordance with the provisions hereof and of the other Documents.
3.2 Prompt Payment of Taxes, Mortgages, Leases and Indebtedness. The
Borrowers will promptly pay and discharge, or cause to be paid and discharged,
on or prior to the date when due (unless contested in good faith and unless
reserves against the payment of which, satisfactory to Agent and the Banks, are
deposited with Agent), all lawful taxes, assessments and governmental charges or
levies imposed upon its assets owned by it or in which it has an interest or
upon the business premises or the income, profits, property or business of
either Borrower or any of its Subsidiaries or upon any of its other assets. The
Borrowers will promptly pay or cause to be paid when due (or in conformity with
customary trade terms) all other Indebtedness of itself incident to the
operations of either Borrower and the Borrowers will promptly pay and perform
all obligations under leases of real and personal property and under material
contracts and will promptly notify Agent and the Banks of any default or notice
of alleged default received with respect to any such Indebtedness, lease or
contract.
3.3 Compliance with Law, Conduct of Business. Each Borrower will
conduct its business and maintain and operate its properties and assets all in
material compliance with applicable federal, state, and local laws, judgments,
decrees, orders, statutes, rules and regulations, including, but not limited to,
the Federal Fair Labor Standards Act, state and federal environmental
regulations, regulations of the Occupational Safety and Health Administration.
Each Borrower will do all things necessary to preserve, renew and keep in full
force and effect in good standing its corporate existence, qualification and any
franchises, licenses, patents, trademarks and items necessary to continue its
business, including without limitation the Intellectual Property. Each Borrower
shall qualify to do business in each jurisdiction in which such qualification is
required. Each Borrower will maintain its properties and assets in good order
and repair.
3.4 Insurance. Each Borrower will maintain, with insurers satisfactory
to Agent and the Banks, insurance with respect to the Collateral which is owned
by it or in which it has an interest or which is in transit to it or its
customers and its other properties and business against loss or damage to the
extent that property of similar character is usually so insured by other
companies engaged in a similar business. Without limiting the foregoing, such
insurance shall include (A) public and product liability insurance in such
amounts and covering such risks, as the Banks may reasonably require, (B) all
worker's compensation and other employees' liability insurance as may be
required by law, (C) insurance with respect to items of the Collateral
constituting
26.
tangible personal property and fixtures, and with respect to its other
properties both real and personal, to the full extent of the insurable value
thereof, and covering such risks, as Agent may reasonably require, and (D)
business interruption insurance in amounts sufficient to cover the reasonable
needs of each Borrower's business during periods of partial or complete
interruption of such Borrower's business. All of each Borrower's property
insurance policies with respect to items of the Collateral shall contain loss
payable and/or mortgagee clauses in form and substance satisfactory to Agent,
naming Agent as agent for the Banks as loss payee and/or mortgagee, and
providing (i) that all proceeds thereunder respecting claims in excess of
$500,000.00 shall be payable directly to Agent, (ii) that such insurance shall
not be affected by any act or neglect of the insured or owner of the property
described in said policy, or by a change in title or ownership in the property
described in said policy, and (iii) that such policy and loss payable clause may
not be cancelled, amended or terminated (including, without limitation, for
non-payment of premium) unless at least thirty (30) days' prior written notice
thereof has been given to Agent. Upon request of Agent or any Bank, each
Borrower will furnish to Agent and the Banks evidence of the insurance at the
time in force pursuant to this Section 3.4, specifying the amount and character
of coverage, identifying the insurers and certifying as to no default in the
payment of current premiums thereon and will furnish Agent with original or
duplicate original copies of all policies. With respect to claims under any such
policies of $500,000.00 or more (a "Substantial Claim"), no settlement shall be
entered into by either Borrower without the consent of Agent, which shall not be
unreasonably withheld. With respect to the proceeds of any Substantial Claim,
all insurance proceeds received by Agent may, in Agent's sole discretion, be
retained by Agent for application to the payment of any of the principal,
whether or not due, or interest or such other obligation or Indebtedness which
constitutes all or any part of the Borrowers' obligations under the Revolving
Credit as well as any expenses relating thereto as Agent may determine, in its
sole discretion.
3.5 Financial Statements and Other Information. The Borrowers will
deliver or cause to be delivered to Agent and each Bank:
(i) As soon as available, and in any event within forty-five (45)
days after the end of each of the first three calendar quarters in each year,
Starter shall submit financial reports for such quarter on a consolidated basis,
which reports may be internally prepared by management but shall be prepared in
accordance with GAAP, containing a balance sheet as of the last day of such
quarter and an income statement for such quarter and statement of cash flow for
such quarter and for the portion of Starter's fiscal year then elapsed, together
with the corresponding information for the same period of the prior fiscal year
in a comparative format. Such quarterly financial statements
27.
shall be a accompanied by a certificate signed by the Chief Financial Officer of
Starter stating that Starter is in compliance with all covenants and agreements
under this Agreement or otherwise related to the Revolving Credit Facility. If
Starter is not in compliance with all such covenants or agreements, the
violations of such covenants and agreements shall be set forth in detail and the
action Starter intends to take with respect thereto, shall be set forth in
reasonable detail. Such quarterly financial statements shall be accompanied by
management prepared consolidating financial statements for the same period.
(ii) As soon as available, and in any event, not later than
twenty (20) days after the end of each calendar month other than March, June,
September and December, Starter will provide to the Agent and the Banks
financial statements on a consolidated basis, which financial statements may be
internally prepared, but shall be prepared in accordance with GAAP, and which
shall include, in such form as the Agent shall reasonably require, income
statement, balance sheet and cash flow statement.
(iii) As soon as available, and in any event within twenty (20)
days after the end of each calendar month the Borrowers shall provide to the
Agent and the Banks a report, in such form as the Agent may require, showing the
backlog of orders and inventory on hand for each Borrower as of the last day of
the month for which the report is prepared.
(iv) As soon as available, and in any event not later than the
third (3rd) Business Day of each week, the Borrowers shall submit to the Agent
and each of the Banks, a Borrowing Base Certificate dated as of the last
Business Day of the preceding week, in form satisfactory to the Agent, detailing
Eligible Accounts and Eligible Inventory.
(v) As soon as available, but in any event not later than twenty
(20) days following the end of each calendar month, the Borrowers shall submit
to the Agent and each of the Banks a Borrowing Base Certificate, in such form as
the Agent shall require detailing Eligible Accounts and Eligible Inventory as of
the end of such month, a detailed aging and reconciliation of accounts, and a
listing of type, cost and quantity of raw materials, work-in-progress and
finished goods.
(vi) On the first Business Day of each month, the Borrowers shall
provide to the Agent and the Banks a projected cash flow forecast and projected
borrowing base for the current month and the following month, in such form as
the Agent shall require.
(vii) As soon as available and in any event not later than
forty-five (45) days after the end of each of the first three calendar quarters
of each fiscal year, Starter shall
28.
provide to the Agent and Banks a copy of the Form 10Q submitted by Starter, as
of the end of each such period, to the United States Securities and Exchange
Commission, which copy shall be duly certified by the Chief Financial Officer of
Starter as having been prepared in accordance with the requirements of the
United States Securities and Exchange Commission and in accordance with GAAP
consistent with those applied in the preparation of the financial statements
referred to in Section 2.4 hereof and fairly presenting the financial position
and results of operations of Starter and its consolidated subsidiaries, on a
consolidated basis, for such period, together with a statement of such effect
that in the course of the preparation of such reports said Chief Financial
Officer has gained no knowledge that an Event of Default, or an event which,
with notice or lapse of time, or both, would constitute an Event of Default, has
occurred and is continuing or, if, in the opinion of said Chief Financial
Officer, an Event of Default or such an event has occurred and is continuing, a
statement as to the nature thereof and the action which Starter proposes to take
with respect thereto (the provision for such a statement herein shall in no way
be construed as a consent to the existence of such an Event of Default nor the
granting of time to cure). Such certification of the Chief Financial Officer of
Starter shall also set forth computations in reasonable detail, as of the end of
such period, demonstrating Starter's compliance with all of the financial
performance criteria set forth in Section 3.7 hereof.
(viii) As soon as available and in any event within ninety (90)
days after the end of each fiscal year of Starter, a copy of the annual audited
financial report for such year for Starter and its consolidated subsidiaries, on
a consolidated basis, including therein a balance sheet of Starter as of the end
of such fiscal year and a statement of income, a statement of changes in
stockholders' equity and a statement of cash flow of Starter and its
consolidated subsidiaries for such fiscal year, on a consolidated basis, and in
each case certified by a firm of independent certified public accountants
selected by Starter but acceptable to Agent and the Banks, together with the
Unqualified Opinion of such accounting firm to Agent and the Banks stating that
the financial statements audited by it present fairly, in all material respects,
the financial position of Starter as of the date of such financial statements
and the results of its operations and its cash flow for the fiscal year then
ended, all in conformity with GAAP, together with the certificate of such
accounting firm that, in the course of its audit of the Borrowers, it has
obtained no knowledge that an Event of Default or an event which, with notice or
lapse of time, or both, would constitute an Event of Default, has occurred and
is continuing or if, in the opinion of such accounting firm, an Event of Default
or such an event has occurred and is continuing, a statement as to the nature
thereof (the provision for such a statement herein shall in no way be construed
as a consent to the existence of such an Event nor the
29.
granting of time to cure), together with any and all management letters from
Starter's independent certified public accountant to Starter during such fiscal
year. The foregoing financial statements shall be accompanied by a certification
by the Chief Financial Officer of Starter which shall set forth computations, in
reasonable detail, as of the end of such fiscal year, demonstrating Starter's
compliance with all of the financial performance criteria set forth in Section
3.7 hereof. The annual consolidated financial statements shall be accompanied by
management prepared consolidating financial statements for the same period.
(ix) As soon as it is filed with the Securities and Exchange
Commission, Starter shall submit a copy of its Form 10K to the Agent and the
Banks.
(x) As soon as available, and in any event, within forty-five
(45) days after the end of each fiscal year of Starter, projections for the
coming fiscal year on a month-by-month basis in such form as Starter has
customarily submitted to its bank lenders, detailing each item of income and
expenditure for such month, and on a cumulative year-to-date basis from the
commencement of such fiscal year, which projections shall include, without
limitation, balance sheets, projected Commercial L/C and Acceptance usage and
any and all anticipated Capital Expenditures.
(xi) Such other data and information (financial and otherwise)
bearing upon or related to the financial condition, results of operations or
assets or Starter, as the Agent or any Bank from time to time may reasonably
request.
3.6 Set-Off. In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, the Agent, and
The First National Bank of Boston and each of its domestic and overseas
affiliates, and each Bank, is hereby authorized by the Borrowers upon the
occurrence of an Event of Default, and at any time thereafter while it
continues, without notice to either Borrower or to any other Person (any such
notice being hereby expressly waived by each Borrower), to set off and to
appropriate and to apply any and all balances held by such Bank or institution
at any of its offices for the account of either Borrower or any of its
Subsidiaries (regardless of whether such balances are then due to such Borrower
or its Subsidiaries) and any other property at any time held or owing by that
Bank or that holder to or for the credit or for the account of such Borrower,
against and on account of any of the obligations of the Borrowers under the
Revolving Credit Facility which remain unpaid. Each Borrower agrees, to the
fullest extent permitted by law, that (a) any Bank or holder may exercise its
right to set off with respect to the said obligations of either Borrower and may
sell participations in such set off to other Banks and holders and (b) any Bank
or holder so purchasing a participation in the obligations of either Borrower
under the Revolving Credit Facility
30.
made or held by other Banks or holders may exercise all rights of set-off,
bankers' lien, counterclaim or similar rights with respect to such participation
as fully as if such Bank or holder were a direct holder of such obligations in
the amount of such participation.
3.7 Financial Covenants. Starter shall maintain the following
financial performance criteria as shown on the consolidated financial statements
required to be provided pursuant to Section 3.5:
(A) Tangible Net Worth, as of the calendar quarter ending on the
specified date, of at least:
(i) March 31, 1996 $ 87,500,000
(ii) June 30, 1996 85,000,000
(iii) September 30, 1996 95,000,000
(iv) December 31, 1996 95,000,000
(v) March 31, 1997 95,000,000
(vi) June 30, 1997 95,000,000
(vii) September 30, 1997 110,000,000
(viii) December 31, 1997 110,000,000
(ix) March 31, 1998 110,000,000
(B) A ratio of total Indebtedness to Tangible Net Worth, as of the
calendar quarter ending on the specified date, of not greater than:
(i) March 31, 1996 0.9 to 1.0
(ii) June 30, 1996 1.5 to 1.0
(iii) September 30, 1996 1.60 to 1.0X
(iv) December 31, 1996 0.95 to 1.0
(v) March 31, 1997 0.9 to 1.0
(vi) June 30, 1997 1.1 to 1.0
(vii) September 30, 1997 1.1 to 1.0
(viii) December 31, 1997 0.6 to 1.0
(ix) March 31, 1998 0.9 to 1.0
(C) A ratio of (i) EBIT to (ii) Interest Expense (including without
limitation the commissions paid pursuant to paragraph 3.15(C) of this Agreement)
accrued during the twelve months ending on the specified date, of not less than:
(i) March 31, 1996 1.10 to 1.0
(ii) June 30, 1996 1.50 to 1.0
(iii) September 30, 1996 1.65 to 1.0
(iv) December 31, 1996 1.85 to 1.0
(v) March 31, 1997 3.75 to 1.0
(vi) June 30, 1997 3.75 to 1.0
(vii) September 30, 1997 3.75 to 1.0
(viii) December 31, 1997 3.75 to 1.0
(ix) March 31, 1998 3.75 to 1.0
31.
(D) Working Capital, as of the end of the calendar quarter ending on
the specified date, in an amount not less than:
(i) March 31, 1996 $ 57,000,000
(ii) June 30, 1996 55,000,000
(iii) September 30, 1996 67,500,000
(iv) December 31, 1996 70,000,000
(v) March 31, 1997 65,000,000
(vi) June 30, 1997 65,000,000
(vii) September 30, 1997 75,000,000
(viii) December 31, 1997 75,000,000
(ix) March 31, 1998 70,000,000
(E) A Quick Ratio, as of the end of the calendar quarter ending on the
specified date, of not less than:
(i) March 31, 1996 0.80 to 1.0
(ii) June 30, 1996 0.35 to 1.0
(iii) September 30, 1996 .60 to 1.0
(iv) December 31, 1996 .55 to 1.0
(v) March 31, 1997 0.80 to 1.0
(vi) June 30, 1997 0.55 to 1.0
(vii) September 30, 1997 0.90 to 1.0
(viii) December 31, 1997 1.00 to 1.0
(ix) March 31, 1998 0.90 to 1.0
(F) Net income, determined in accordance with GAAP, in any fiscal year
shall not be less than One Dollar ($1.00).
(G) The Amount of Available Accounts less the Amount of Direct Loans
as of the last day of each of the following months shall be not less than the
amount set forth for such month:
October 1996 $ 5,500,000
November 1996 $ 9,000,000
December 1996 $(6,000,000)
January 1997 $(2,000,000)
February 1997 $ 3,000,000
March 1997 $ 6,000,000;
provided, however, that an Event of Default shall not be deemed to have occurred
unless (i) Starter does not comply with this covenant for two consecutive
months, or (ii) the Amount of Available Accounts less the Amount of Direct Debt
is less than zero as of the last day of any of the months of October, November,
February or March.
Starter acknowledges that it has assisted Agent and the Banks in the
formulation of each of the foregoing financial performance criteria and fully
understands each of said criteria.
32.
3.8 Inspection; Field Exam. Each Borrower, after reasonable notice,
will permit Agent and each of the Banks and any of their authorized
representatives to visit and inspect any of its properties or offices or the
properties or offices of any of its Subsidiaries, including, without limitation,
its various business premises and its and their books and records, including
books and records relating to its accounts receivable, equipment and inventories
(and to make extracts therefrom), and to discuss its and their affairs, finances
and accounts with its Chief Executive Officer, Chief Financial Officer, Senior
Vice President, Administration and Finance, and President, all at such times
during normal business hours and as often and continuously as may be requested
by Agent and the Banks.
In extension of the foregoing, each Borrower shall permit Agent to conduct
quarterly (or more frequently if Agent so requests) field exams and audits of
all of the foregoing books and records, which field exams and audits shall be at
the sole cost and expense of the Borrowers.
3.9 Notice of Certain Events and Changes. Promptly after becoming
aware of any condition, event or state of facts which constitutes an Event of
Default or which, after notice or lapse of time, or both, would constitute an
Event of Default, the Borrowers will give written notice to Agent and each of
the Banks specifying the nature and period of existence thereof and the action
which the Borrowers propose to take with respect thereto, in reasonable detail.
The Borrowers will promptly give Agent and each of the Banks written notice of
any condition, event or state of facts which causes or may cause material loss
or depreciation in the value of its Material Assets and of the commencement or
threat of any action, proceeding or investigation or the occurrence or existence
of any other event, matter or cause whatsoever, which, either in any case or in
the aggregate results or might result in any material adverse change in its
business, prospects, profits, properties, operations or condition (financial or
otherwise). The Borrowers will give Agent and each of the Banks at least thirty
(30) days' prior written notice of any proposed change in the place or places of
business, and any proposed changes in the name of either Borrower.
3.10 Application of Proceeds; No Margin Stock. Each Borrower agrees to
apply the proceeds of the Revolving Credit Facility for the purposes set forth
in Section 1.1(A) above. Each Borrower agrees that it will not, directly or
indirectly, apply any part of such proceeds to the purchasing or carrying of any
"margin stock" within the meaning of Regulation G or Regulation U of the Board
of Governors of the Federal Reserve System, or for any use which will cause a
violation of any other regulation of the Board of Governors of the Federal
Reserve System or of any regulations, interpretations or rulings thereunder.
33.
3.11 Governmental Notices. As soon as reasonably practicable, after
the issuance thereof, the Borrowers will send to Agent and each Bank a copy of
all notices of investigation, claims of violation, or orders, issued by any
federal, state or municipal regulatory authority under any laws or regulations
adopted thereby which are directed to and received by either Borrower. Further,
the Borrowers will, as soon as reasonably practicable, send to Agent and each
Bank copies of all reports or other materials filed by either Borrower with, or
issued or sent to either Borrower by, the Securities and Exchange Commission.
3.12 Compliance With Material Licensing Agreements. Each Borrower
shall comply with each and every material term of each Material Licensing
Agreement now existing or hereafter entered into by such Borrower, including
without limitation, each agreement executed in connection with each Material
Licensing Agreement disclosed on Schedule 3.12. The Borrowers shall maintain
each such Material Licensing Agreement, in full force and effect. The Borrowers
shall promptly notify Agent and each of the Banks of any event which may
constitute a default by either party to any such Material Licensing Agreement
and shall promptly forward to Agent and each of the Banks any communication
received by either Borrower from any licensor claiming any irregularity with
respect to any such Material Licensing Agreement. In the event that either
Borrower enters into any agreement or undertaking that creates, extends or
renews any of the Material Licensing Agreement or amends any Material Licensing
Agreement in any material respect, the Borrowers shall immediately provide to
the Agent and the Banks a copy of the documents creating, amending, extending,
or renewing such Material Licensing Agreement. Each Borrower has obtained the
consent of each licensor under a Material Licensing Agreement to the grant of a
security interest in the inventory manufactured thereunder to the Agent and the
Banks.
3.13 Deposit Accounts. Each Borrower shall maintain its primary
deposit and checking accounts with Bank of Boston, including, without
limitation, its payroll accounts, operating accounts, tax escrow and investment
accounts and shall not maintain deposit or checking accounts of any nature with
any other institution, except for operating accounts maintained for local
operating purposes with a bank or banks in locations in which the Borrowers
conduct their operations. In extension of the foregoing, all required employee
withholding taxes and social security payments shall promptly and timely be
deposited with Bank of Boston. Additionally, all cash management services
utilized by a Borrower shall be provided by Bank of Boston or any other Bank as
the Agent and Starter may direct from time to time.
3.14 Intentionally Omitted.
3.15 Fees.
34.
(A) Commercial L/C's. The fees to be payable by the Borrowers in
connection with Commercial L/C's shall be as set forth on Schedule 3.15 attached
hereto.
(B) Standby L/C's. During the term of each standby L/C, the Borrowers
shall pay to Agent, in current funds, quarterly, in advance, commencing with the
execution of this Agreement, a fee equal to two (2.0%) percent per annum of the
face amount of each standby L/C, including, without limitation, the Fleet
Standby L/C, outstanding during any portion of such quarter, which fee shall be
calculated based on a 360-day year but shall be payable for the actual number of
days on which such standby L/C was outstanding; and
(C) Acceptances. Upon the issuance of each Acceptance, the Borrowers
shall pay to Agent such fees as are customarily charged by Agent for similar
transactions. In addition to such fees, the Borrowers shall pay to Agent
contemporaneously with the issuance of each such Acceptance an Acceptance
commission of 162.5 Basis Points per annum above the Agent's Acceptance Rate
(but in no case less than a minimum commission of $150.00 for each Acceptance)
but no Acceptance will be issued for a term in excess of 120 days. In addition
the Borrowers shall pay any discount charges pursuant to the terms of the L/C
Agreements, which discount charges will be at Agent's discount rate for banker's
acceptances from time to time.
(D) Facility Fee.
(i) Calendar Quarters ending Prior to October 1, 1996: For
calendar quarters ending prior to October 1, 1996, the Borrowers shall pay to
the Agent quarterly in arrears, for the account of the Banks, a Facility Fee at
the annual rate of thirty-seven and one-half (37.5) Basis Points of the
Commitment for the calendar quarter for which the Facility Fee is being paid.
(ii) Calendar Quarters Ending Subsequent to September 30, 1996:
For calendar quarters ending subsequent to September 30, 1996, the Borrowers
shall pay to the Agent, quarterly in arrears, for the account of the Banks, a
Facility Fee calculated at an annual rate equal to the Commitment for the
calendar quarter for which the Facility Fee is being paid, multiplied by the
applicable number of Basis Points based upon Starter's Indebtedness/EBITDA Ratio
as of the last day of the preceding calendar quarter, as determined from
Starter's Form 10Q as filed with the United States Securities and Exchange
Commission for each of the first three quarters of Starter's Fiscal Year or from
Starter's audited consolidated financial statements with respect to the four
quarters ended December 31, as set forth below:
35.
Indebtedness/EBITDA Ratio Annualized Facility Fee
(as hereinafter defined) in Basis Points
------------------------- -----------------------
Equal to or more than 6.5 to 1.0 50 Basis Points
Equal to or more than 5.0 to 1.0
but not more than 6.4 to 1.0 37.5 Basis Points
Less than 5.0 to 1.0 25 Basis Points
The amount of the Facility Fee payable with respect to a particular
calendar quarter shall be determined by the Agent based upon the figures
contained in Starter's Form 10Q as filed with the United States Securities and
Exchange Commission with respect to each of the first three quarters of
Starter's Fiscal Year or Starter's audited consolidated financial statements for
the four quarters ended December 31. Such Facility Fee shall be payable on
demand.
(iii) Proration of Facility Fee: In each case, the Facility Fee
shall be pro-rated to reflect the actual number of days that the Regular
Commitment and the Seasonal Commitment are in effect during such calendar
quarter.
(E) Intentionally Omitted.
(F) Annual Agent Fee. On March 31 of each year, the Borrowers shall
pay to Agent an agent fee in the amount of $50,000. The agent fee may be
increased by Agent upon the occurrence of any one or more of the following
events:
(i) the occurrence of an Event of Default hereunder; or
(ii) if at any time the cost to Agent of administering the
Revolving Credit Facility shall increase such that the existing Agent Fee is not
sufficient to cover Agent's reasonable costs.
(G) Intentionally omitted.
(H) Payment. All of the above fees shall be payable promptly in
immediately available funds by the Borrowers to the Agent. The Agent may, but
shall not be obligated to, pay any of such fees by a withdrawal from any account
maintained by either Borrower with Agent.
3.16 Management. It is specifically acknowledged by the Borrowers that
Agent and the Banks would not have entered into this Agreement unless Beckerman
(legally and beneficially) retained voting rights of not less than a majority of
the stock of Starter
36.
having ordinary voting power, and remained as either the Chief Executive
Officer, Chairman of the Board or other senior level corporate officer of
Starter and a Director of the Borrowers. The Borrowers agree that Beckerman
shall remain in each such capacity and remain actively involved in the
day-to-day operations of the Borrowers, provided, however, that Beckerman's
death shall not result in a violation of this covenant if, within 6 months
thereafter, the Borrowers shall submit to the Agent and the Banks, in writing, a
plan for management succession of the Borrowers, which plan shall be acceptable
to the Agent and the Banks.
3.17 Environmental Compliance.
(A) Each Borrower will comply with all applicable Federal, state and
local environmental laws, regulations, rules, standards, orders and agreements.
Whenever, pursuant to any such legal requirement, either Borrower is obligated
to report to any party the existence of a Spill (as such term is defined in
Section 22a-452c of the Connecticut General Statutes), or a similar
environmental condition under the laws of any other jurisdiction, a "Release"
(as defined in 42 U.S. Code 9601 et seq.), "Hazardous Waste" (as defined in
Section 22a-115 of the Connecticut General Statutes), "Hazardous Substance" (as
defined in 42 U.S. Code 9601 et. seq.) or other environmental contamination on
or emanating from any of business premises of either Borrower, the Borrowers
will, simultaneously and in writing, report the existence of such conditions to
Agent and each Bank.
(B) In addition to any and all other liability of the Borrowers to
Agent and the Banks hereunder, the Borrowers shall, jointly and severally,
indemnify the Agent and each Bank against any loss or damage that shall occur to
Agent or any Bank as a result of the application of any federal, state, local or
quasi-governmental law, rule, regulation, ordinance or the like, including,
without limitation the Connecticut Super Lien Act (ss. 22a-452a of the
Connecticut General Statutes) or a similar law or regulation of any other state
or local governmental agency.
(C) The Agent and each Bank or its authorized representatives shall
have the right, at reasonable times and upon reasonable notice to the Borrowers,
to enter upon either Borrower's business premises for the purpose of conducting
inspections or audits of environmental compliance of either Borrower or the
methods or procedures used by either Borrower for disposal of waste products
used in the course of such Borrower's business, all at the sole cost and expense
of the Borrowers.
37.
(D) Starter hereby confirms that the Environmental Indemnification
Agreement dated as of March 30, 1995 and executed by it in favor of the Agent
and the Banks shall be and remain in full force and effect in favor of the Agent
and the Banks and all references therein to the Loan Agreement or the Revolving
Note shall be deemed to apply to this Agreement and the Revolving Note as
defined herein. In addition, the Borrowers are contemporaneously herewith
executing and delivering to Agent and the Banks an Environmental Indemnification
Agreement with respect to the foregoing matters as they pertain to certain
premises occupied by Starter Galt.
3.18 Guaranty by Material Domestic Subsidiaries.
Each Borrower shall cause each of its Material Domestic Subsidiaries,
whether presently existing or hereafter created or acquired, to execute and
deliver to the Agent and the Banks, and to maintain in effect, a guaranty
agreement by which each such Material Domestic Subsidiary unconditionally
guarantees the full and prompt payment of the Liabilities, which guaranty
agreement shall be acceptable to the Agent in form and substance, except that
Starter Galt, as a Borrower hereunder, shall not execute such a guaranty
agreement.
3.19 ERISA
The Borrowers shall cause any Pension Benefit Plans or Welfare Benefit
Plans, as defined in ERISA, which are subject to the minimum funding
requirements of ERISA, and which are created or maintained at any time by either
Borrower, to be created and maintained in compliance with ERISA at all times.
3.20 Additional Consents from Material Licensors.
In the event that either Borrower shall become the licensee under any
Material License Agreement with respect to which the licensor thereunder has not
entered into an agreement with the Agent and the Banks consenting to the grant
of a security interest in favor of the Agent and the Banks in the Inventory to
be produced or sold pursuant to such Material License Agreement, the Borrowers
shall use their best efforts to cause such licensor to execute such an agreement
in form and substance satisfactory to the Agent and the Banks. In the event that
such licensor refuses to enter into such an agreement, the Agent may, in its
discretion, exclude from the Eligible Inventory the Inventory to be produced or
sold under such Material License Agreement.
38.
3.21 Additional or Renegotiated Contracts with the United States of
America.
In the event that from and after the date hereof either Borrower
enters into any contract with any agency of the United States of America or
renegotiates any existing contract with any agency of the United States of
America in such a way that the renegotiated contract is assigned a new contract
number, the Borrowers shall promptly notify the Agent thereof and shall, at the
request of the Agent, execute an assignment of monies to become due under such
contracts and notices of such assignment in such form and substance as the Agent
shall request in conformity with the Federal Assignment of Claims Act.
Section 4. Negative Covenants.
The Borrowers, jointly and severally, covenant and agree that, so long as
there is outstanding any amount under the Revolving Credit Facility or any
availability under the Revolving Credit Facility if no such outstanding balance
exists, and so long as any Commercial L/C or standby L/C or Acceptance remains
outstanding, the Borrowers shall not, and shall not permit any of their
respective Subsidiaries to:
4.1 Liens. Directly or indirectly, create, incur, assume or permit to
exist any mortgage, lien, charge or encumbrance on or pledge or deposit of or
conditional sale, lease or other title retention agreement with respect to any
property or asset of either Borrower, whether now owned or hereafter acquired,
or be bound by or subject to any agreement or option to do so, provided that the
foregoing restrictions shall not apply to:
(A) liens for taxes, assessments or governmental charges or levies the
payment of which is not at the time required by Section 3.2;
(B) liens incurred or deposits made in the ordinary course of business
in connection with operating leases, worker's compensation or unemployment
insurance or to secure the performance of tenders, statutory obligations, surety
and appeal bonds, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);
(C) zoning restrictions, easements, rights-of-way, restrictions or
minor irregularities in title and other liens, charges and encumbrances
incidental to the conduct of its business or the ownership of its properties or
assets which are not incurred in connection with the borrowing of money and
which in the aggregate are not material;
39.
(D) statutory or common law possessory liens for charges incurred in
the ordinary course of business the payment of which is not yet due;
(E) the mortgages, liens and encumbrances referred to or described in
Schedule 2.6 attached;
(F) liens in favor of the Agent or the Banks pursuant to this
Agreement;
(G) liens or security interests in favor of The First National Bank of
Boston or any of its overseas or domestic affiliates as agent for the Agent and
the Banks in connection with the issuance of Commercial L/C's; and
(H) the security interest in favor of First Union Bank of Connecticut
(f/k/a First Fidelity Bank and f/k/a Union Trust Company), as evidenced by a
Term Loan Agreement between Starter and Union Trust Company dated December 30,
1993, as heretofore amended (including without limitation, the ISDA Master
Agreement dated as of April 26, 1996), provided that such security interest is
subject to an Intercreditor Agreement between First Union Bank of Connecticut,
the Agent and the Banks which is satisfactory to the Agent and the Banks in form
and substance;
(I) purchase money security interests in equipment provided that such
security interests do not extend to any assets other than the assets being
acquired with the proceeds of the indebtedness secured thereby, and
(J) involuntarily liens in an amount not to exceed $250,000 in the
aggregate outstanding at any time, provided that each such lien is released or
discharged, by bonding or otherwise, within sixty (60) days.
4.2 Restrictions on Indebtedness. Directly or indirectly, create,
incur, assume, guarantee, agree to purchase or repurchase, pay or provide funds
in respect of, suffer to exist, or otherwise be or become or remain liable,
contingently, directly or indirectly, with respect to, any Indebtedness: (A)
which is for borrowed money; or (B) the incurring of which would, at the time of
incurrence or thereafter, given the reasonable business needs of the Borrowers,
cause a default under any of the performance criteria set forth in Section 3.7
hereof or would otherwise violate any other term or provision of this Agreement;
or (C) which is represented by the issuance of any letter of credit for the
account of either Borrower or any Affiliate, excepting only (i) a letter of
credit issued by Fleet/New Jersey (f/k/a NatWest Bank N.A. and f/k/a National
Westminster Bank U.S.A.) in the face amount of $250,000.00 for the account of
Starter and for the benefit of Cedrico, S.A.; (ii) a letter of credit issued by
Fleet/New Jersey (f/k/a NatWest Bank N.A.) the present amount of which is
$4,275,945
40.
for the account of Starter in favor of State Street Bank and Trust Company, as
Trustee; (iii) Liabilities under the Revolving Credit Facility; (iv)
Indebtedness in favor of First Union Bank of Connecticut (f/k/a First Fidelity
Bank and f/k/a/ Union Trust Company) pursuant to a Promissory Note and a Term
Loan Agreement each dated as of December 30, 1993, between Starter and Union
Trust Company, as heretofore amended (including, without limitation, the ISDA
Master Agreement dated April 26, 1996); (v) the Indebtedness described on
Schedule 2.5; (vi) the guarantee by Starter of certain obligations of Galt Sand
Company and Galt Shop Company in favor of SunTrust Bank, Atlanta under certain
Factoring Agreements dated June 26, 1987 in the principal amount of up to
$3,800,000 which amount shall decline as the accounts factored by Galt Sand
Company and Galt Shop Company are collected by SunTrust Bank; and (vii) the
guarantee by Starter Galt in favor of Mercantile Bank of a loan by Mercantile
Bank to G. Xxxxxxx Xxxxxxxx in the original principal amount of $60,162.52;
which loan is to be repaid when Xx. Xxxxxxxx sells his residence in Minnesota;
and (viii) guarantees by Starter of lease obligations of Starter Outlet Stores,
Inc. in connection with retail stores operated by it, provided (1) that Starter
gives prior written notice of such guaranty to the Agent and the Banks; and (2)
Starter causes Starter Outlet Stores, Inc. to assign its interest in such lease
to the Agent and the Banks, in form and substance satisfactory to the Agent, as
further security for the Liabilities.
4.3 Restrictions on Investments, Loans, Etc. Purchase or otherwise
acquire or own any stock or other securities or Indebtedness of any other Person
except as set forth on Schedule 2.2, or make or permit to be outstanding any
loan or advance or capital contribution to any other Person, other than:
(A) presently outstanding loans, advances and investments described in
Schedule 4.3 attached;
(B) Indebtedness of customers for merchandise sold or services
rendered in the ordinary course of business;
(C) investments in bills or bonds issued or guaranteed by the
government of the United States of America;
(D) certificates of deposit issued by Agent or any of the Banks;
(E) investments in any U.S. commercial bank provided such bank(i)
maintains a ratio of equity to assets of at least 5.5%, and (ii) has assets of
not less than Two Billion Dollars.
(F) loans to employees of either Borrower, other than Beckerman, for
travel and entertainment advances not to exceed $50,000 in the aggregate
outstanding at any one time, and with
41.
respect to employees of either Borrower, including Beckerman, not to exceed
$150,000 in the aggregate outstanding at any one time (exclusive of the
guarantee of the loan to G. Xxxxxxx Xxxxxxxx referred to in Section 4.2(c)(vii).
4.4 Dividends, Distributions and Redemptions. Directly or indirectly,
declare, order, pay, make or set apart any sum or property for the redemption,
retirement, purchase or other acquisition, direct or indirect, of any shares of
its stock of any class now or hereafter outstanding or for the payment of any
dividends on any of such stock other than dividends payable solely by the
issuance of additional stock and, provided no Event of Default, nor any event
which, with the passage of time or giving of notice, or both, would become an
Event of Default has occurred and is continuing, excepting only permitted
distributions under (i) the Starter Corporation Stock Option Plan dated as of
January 27, 1993, (ii) the Starter Employee Stock Purchase Plan, and (iii) the
Starter Non-Employee Director Stock Option Plan, a copy of each of which has
previously been delivered to the Agent.
4.5 Sale of Assets, Consolidation, Merger, Acquisition of Assets.
Directly or indirectly, sell, abandon or otherwise dispose of any material
portion of its properties or assets having a value or a sale price in excess of
$100,000 (except for the sale of inventory in the ordinary course of each
Borrower's business and except for the sale or disposition of machinery or
equipment that has become obsolete or has been replaced with machinery or
equipment of equivalent value and function), or consolidate with or merge into
any other corporation, or permit any other corporation to consolidate with or
merge into it, or acquire all or a substantial portion of the assets of another
Person, or form any Subsidiary.
4.6 Transactions with Affiliates. Enter into any transaction with any
Affiliate except (A) transactions with Starter Outlet Stores, Inc. and (B)
arms-length transactions with (i) Starter Europe, B.V., (ii) Fair Stock Limited
d/b/a Starter Far East, Ltd., (iii) Beckerman d/b/a Acorn Realty Company, (iv)
legal counsel to Borrower who may also be an officer and/or director, and (v)
the accounting firm of Xxxx Xxxxxxx.
4.7 [Intentionally omitted]
4.8 Capital Expenditures. Make any Capital Expenditures in any Fiscal
Year for Capital Assets (other than for repairs and maintenance which are not
required to be capitalized in accordance with GAAP, as hereinafter set forth)
unless, immediately after giving effect thereto, the aggregate amount expended
or to be expended on account of all such expenditures by the Borrowers in such
Fiscal Year would not exceed $3,000,000 which sum shall not be cumulative from
year to year. No Capital Expenditures shall be permitted (i) in the event that
following any Event of Default the
42.
Agent either accelerates the Liabilities or ceases to fund under the Revolving
Credit Facility, or (ii) if the Capital Expenditures would result in a violation
of any of the financial performance criteria set forth in Section 3.7.
4.9 Partnerships, Joint Ventures, Other Businesses; Grant of Licenses
to Others. Enter into, join, create or participate in the creation of any
partnership, joint venture, corporation or other entity (including, but not
limited to, any Subsidiaries) or engage in any business other than the business
presently conducted by it; provided, however, that either Borrower may enter
into licensing agreements with respect to such Borrower's name, logos,
trademarks, copyrights and patents owned by such Borrower, provided that the
Borrowers shall at all times retain ownership of such name, logo and trademarks
and maintain control of all use of such name, logo and trademarks.
4.10 Beckerman Compensation. Provide a total cash compensation package
to Beckerman including any member of his family (unless such other family member
shall be employed on a full time basis by the Borrowers and shall not be
otherwise employed) having an annualized cost to the Borrowers in excess of
$750,000.00 per annum in the aggregate, plus, provided no Event of Default
hereunder, nor any event which with the giving of notice or passage of time
would become an Event of Default, shall have occurred and be continuing, and
provided further that the payment hereinafter described does not result in an
Event of Default, the Borrowers may pay to Beckerman up to two annual cash
bonuses, each in an amount not to exceed $1,125,000.
Provided no Event of Default shall have occurred hereunder, nor any event
which with the passage of time or giving of notice, or both, would become an
Event of Default and provided the payment or provision of the following items
does not result in an Event of Default, such items as company car, pension plan
contributions, stock purchase plans, stock options, profit sharing plans, 401(K)
and similar plans, deferred compensation plans, club memberships and the like
may also be provided to Beckerman provided the same are reasonable and do not
materially adversely affect the Borrowers' working capital.
Notwithstanding anything to the contrary contained in this Section 4.10,
the Borrowers shall not pay to Beckerman any form of compensation (whether
salary, bonus or fringe benefits whether in cash, stock or otherwise) in excess
of $3,500,000.00 in the aggregate during any Fiscal Year of the Borrowers.
4.11 Ownership. Suffer a change in ownership of capital stock of
either Borrower nor issue additional shares thereof unless, after giving full
effect thereto (including without limitation the effect of warrants or options
and the like which are convertible into shares of Borrower's capital stock),
Beckerman
43.
shall own directly or beneficially at least a majority of all issued and
outstanding capital stock of Starter having ordinary voting power and shall
directly have at least a majority of all voting rights represented by such stock
and Starter shall own all of the issued and outstanding capital stock of Starter
Galt.
4.12 [Intentionally omitted.]
4.13 Judgments. Suffer any final judgment (exclusive of judgments
insured against by adequate liability insurance policies) in excess of $500,000
which is not discharged or execution thereof stayed pending appeal within the
applicable period for initiating an appeal therefrom, or fail to discharge such
judgment within thirty (30) days after the expiration of any such stay.
4.14 Uninsured Losses, Etc. Suffer, during any consecutive twelve (12)
month period, one or more uninsured losses, thefts, damage or destruction which
uninsured losses, thefts, damage or destruction results in a loss in excess of
$500,000.
4.15 Termination of Licensing Agreements. Terminate or fail to renew
or suffer the termination or non-renewal of (i) any Material Licensing
Agreement, or (ii) any licensing agreement or agreements under which either
Borrower is a licensee and which individually meets the profitability standards
established by such Borrower and in the aggregate account for $7,500,000 or more
of the Borrower's revenues in any Fiscal Year. Notwithstanding the foregoing,
Starter shall not be obligated to renew its Licensing Agreements with the United
States Olympic Committee and the Atlanta Centennial Olympic Committee upon the
expiry of such licenses, which the Borrowers represent to be December 31, 1996.
Section 5. Events of Default.
Each of the following events shall constitute an "Event of Default":
(A) If the Borrowers shall default in the payment of any Liabilities
under the Revolving Credit Facility, when the same shall become due and payable
(following any applicable grace periods), whether at any stated maturity, or as
a mandatory prepayment, or by declaration, acceleration or otherwise;
(B) If either Borrower shall be in material default of any provision
of any of (a) a Material Licensing Agreement, or (b) any other licensing
agreement or agreements which individually meets the profitability standards
established by the Borrower and in the aggregate account for $7,500,000 or more
of the Borrower's revenues in any Fiscal Year, and such default shall not have
been satisfactorily cured by Borrower within any applicable cure period provided
in such Material Licensing Agreement or other licensing agreement, respectively;
44.
(C) If either Borrower or a Guarantor, respectively, shall default in
the performance of or compliance with any term applicable to it contained in
this Agreement or contained in any other Documents, or contained in any
Guarantor Document;
(D) If any representation or warranty made by or on behalf of either
Borrower or any Guarantor in this Agreement or in the Schedules hereto, or in
any of the other Documents, or in any Guarantor Document or in connection with
the transactions contemplated hereby and thereby shall prove to be false or
incorrect in any material respect;
(E) If either Borrower or any Guarantor shall default in the payment
of any Indebtedness (other than the Liabilities) in an amount of $500,000.00 or
more, either individually or in the aggregate or shall default with respect to
any of the material terms of any evidence of such Indebtedness or of any
indenture or other agreement relating thereto, or if either Borrower or any
Guarantor shall commit any material breach or be in material default under any
material contract to which it is a party or by which it is bound;
(F) If either Borrower or any Guarantor shall make an assignment for
the benefit of creditors, or shall admit in writing an inability to pay debts as
they become due, or shall file a voluntary petition in bankruptcy, or if an
order for relief is entered against either Borrower or any Guarantor in an
involuntary bankruptcy petition, or if either Borrower or any Guarantor shall be
adjudicated insolvent, or shall file any petition or answer seeking for itself
any reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any present or future statute, law or
regulation, or shall file any answer admitting, or shall fail to deny, the
material allegations of a petition filed against it for any such relief, or
shall seek or consent to or acquiesce in the appointment of any trustee,
receiver or liquidator of itself or of all or any substantial part of its
properties, or its directors or majority stockholders shall take any action
looking to its dissolution or liquidation, or it shall cease doing business as a
going concern;
(G) If, within sixty (60) days after the commencement of any
proceeding against either Borrower or a Guarantor seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, such proceeding
shall not have been dismissed, or if, within thirty (30) days after the
appointment, without its consent or acquiescence of any trustee, receiver or
liquidator of itself or of all or any substantial part of its properties, such
appointment shall not have been vacated;
45.
(H) If any opinion of Starter's Certified Public Accountants required
to be submitted to Agent or the Banks pursuant to Section 3.5 hereof shall not
be an Unqualified Opinion;
(I) If there shall have occurred any spill, release, hazardous waste,
hazardous substance or other environmental contamination on or emanating from
any of the business premises of either Borrower or any Guarantor or if any
underground storage tank on any of the business premises of either Borrower or
any Guarantor leaks onto or into the soil, ground water or aquifer of, under or
adjacent to such business premises and the aggregate cost of the complete
remediation of such condition or contamination is estimated by an environmental
engineer selected by Agent to be in excess of $500,000.00.
Section 6. Remedies on Default; Etc.
(A) Except as hereinafter provided with respect to an Event of Default
involving a Guarantor, if an Event of Default shall have occurred, Agent may,
and shall at the request of Banks holding in the aggregate more than sixty-six
and two-thirds percent (66 2/3%) of the Pro Rata Shares, take any one or more of
the following actions at its option and without notice to, or demand upon, the
Borrowers:
(i) immediately cease making Advances under the Revolving Credit
Facility;
(ii) immediately cease issuing any Commercial L/C's and
immediately cease creating Acceptances with respect thereto;
(iii) declare all Liabilities outstanding under the Revolving
Credit Facility to be immediately due and payable, whereupon the same shall
forthwith mature and become due and payable, together with interest accrued
thereon, and obtain cash collateral for all amounts outstanding with respect to
any and all Commercial L/C's, standby L/C's, the Fleet Standby L/C and
Acceptances or any portion thereof;
(iv) demand immediate payment of all or any Liabilities
outstanding under the Revolving Credit Facility and demand cash collateral for
all issued and outstanding Commercial L/C's, standby L/C's, the Fleet Standby
L/C and Acceptances;
(v) proceed to protect and enforce its rights by suit in equity,
action at law or other appropriate proceedings, whether for the specific
performance of any agreement contained herein or in any other Document, or for
an injunction against a violation of any of the terms hereof or thereof, or in
aid of the exercise of any right, power or remedy granted thereby or by law,
equity or otherwise;
46.
(vi) the Agent or any Bank may appropriate, set-off and apply to
the payment of all or any part of the Revolving Credit Facility or either
Borrower's other obligations hereunder any and all balances, sums, property,
claims, credits, deposits, accounts, reserves, collections, drafts, notes or
other items, in or coming into the possession of Agent or any Bank or their
agents, or belonging to either Borrower and in such manner as Agent or any Bank
may, in its discretion determine; and
(vii) with the prior consent of the Banks, continue to make
Advances to the Borrowers or to issue additional Commercial L/C's, or standby
L/C's or create additional Acceptances, but Agent may modify the terms and
conditions upon which such Advances, Commercial L/C's, standby L/C's and/or
Acceptances are advanced, issued or created, which modification of terms and
conditions may include, without limitation, an increase in the interest rate,
fees and charges for the provision of such services by Agent or the Banks.
(B) Agent is hereby irrevocably appointed, but effective only upon the
occurrence of an Event of Default, as the attorney-in-fact for each Borrower
with power to endorse each Borrower's name on any checks, notes, acceptances,
money orders, drafts or other forms of payment or security; to sign each
Borrower's name on any invoice or xxxx of lading or other document of title on
notices of assignment, financing statements and other public records, to do any
act which either Borrower is obligated to do under the terms and conditions of
this Agreement, to exercise such rights as either Borrower might exercise, and
to do all other things necessary to enforce and carry out Agent's rights and
remedies under this Agreement.
(C) Without limitation of any rights and remedies of Agent as a
secured party under the Uniform Commercial Code and any rights or remedies set
forth in any of the Documents, if any Event of Default shall exist hereunder,
Agent shall have all of the following rights and remedies with respect to the
Collateral or any portion thereof, all as agent for the Banks:
(i) Agent may at any time and from time to time with or without
judicial process and the aid or assistance of others, enter upon any premises in
which any of the Collateral may be located and, without resistance or
interference by the Borrowers, take possession of the Collateral and dispose of
any part or all of the Collateral on any such premises; or require the Borrowers
to assemble and make available to Agent, at the expense of the Borrowers, any
part or all of the Collateral at any place or time designated by Agent which is
reasonably convenient to the Borrowers and Agent; and/or remove any part or all
of the Collateral from any premises on which any part may be located for the
purpose of effecting sale or other disposition thereof; and/or sell, resell,
lease, assign and deliver, grant options for or
47.
otherwise dispose of any or all of the Collateral in its then condition or
following any commercially reasonable preparation or processing, at public or
private sale or proceedings, by one or more contracts, in one or more parcels,
at the same or different times, with or without having the Collateral at the
place of sale or other disposition, for cash and/or credit, and upon any terms,
at such place(s) and time(s) and to such Persons as Agent shall deem best, all
without demand for performance or any advertisement whatsoever. The Borrowers
shall be given five (5) Business Days' notice of the place and time of any
public sale or of the time after which any private sale or other intended
disposition is to be made, which notice Borrowers hereby agree shall be deemed
reasonable notice thereof, provided that, if the Collateral is perishable or
threatens to decline in value speedily or is of a type customarily sold on a
recognized market, no notice shall be required. Agent shall otherwise act in a
commercially reasonable manner with respect to the disposition of such
Collateral. If any of the Collateral is sold by Agent on credit or for future
delivery, Agent shall not be liable for the failure of the purchaser to pay for
same and in such event Agent may resell such Collateral. Agent may buy any part
or all of the Collateral at any public sale and if any part or all of the
Collateral is of a type customarily sold in a recognized market or is of the
type which is the subject of widely distributed standard price quotations Agent
may buy at private sale and may make payment therefor by application of all or a
part of the Borrowers' obligations hereunder;
(ii) Agent may, in Agent's discretion, apply the cash proceeds
from any sale or other disposition of the Collateral, first, to be deposited in
a cash collateral account at Agent in order to assure payment in full of all
outstanding Commercial L/C's, standby L/C's, the Fleet Standby L/C and
Acceptances, second, to the reasonable expenses of retaking, holding, preparing
for sale, selling, leasing and otherwise disposing of such Collateral, to
reasonable appraisal, accounting and attorneys' fees and all legal expenses,
travel and other expenses which are to be paid or reimbursed to Agent, pursuant
hereto or pursuant to the other Documents, third, to all accrued interest, fees
and charges outstanding with respect to the Revolving Credit Facility,
Borrowers' other obligations hereunder, in such order as Agent shall determine,
fourth, to principal and all other outstanding portions of the Revolving Credit
Facility and Borrowers' other obligations hereunder in such order, as Agent
shall determine, fifth, any surplus to any other secured parties having an
interest in the Collateral known to Agent in accordance with their interest, and
sixth, any surplus to the Borrowers; provided, however, that Borrowers shall
remain liable with respect to unpaid portions of the Revolving Credit Facility
and Borrowers' other obligations hereunder and will pay Agent, for the account
of the Banks, on demand any deficiency remaining together with interest thereon.
48.
Notwithstanding any of the foregoing, each Borrower acknowledges that Agent
and the Banks are providing the Revolving Credit Facility in reliance on the
value of the Collateral and this Agreement specifically prohibits subordinate
liens thereon, except as specifically provided herein. Consequently, Agent shall
have no liability to marshal assets for the benefit of any other creditor, or be
subject to any restrictions with respect to the liquidation or other disposal of
the Collateral.
(iii) Agent may if appropriate, set-off and apply to the payment
of all or any part of the Revolving Credit Facility or Borrowers' other
obligations hereunder any and all balances, sums, property, claims, credits,
deposits, accounts, reserves, collections, drafts, notes or other items or
proceeds of the collateral, in or coming into the possession of Agent or its
agents, or belonging to either Borrower and in such manner as Agent may, in its
discretion determine, and the proceeds of any such set-off shall be applied in
accordance with the provisions of the preceding Subparagraph hereof;
(iv) Any of the proceeds of the Collateral received by either
Borrower after the occurrence of an Event of Default shall not be commingled
with any other of its property, but shall be segregated and held by it in trust
as the exclusive property of Agent, and the Borrowers will immediately deliver
to Agent the identical checks, monies, or other proceeds of Collateral received;
(v) Unless Borrowers' account debtors are already making payments
directly to Agent, upon the written request of Agent made to the Borrowers after
the occurrence of an Event of Default shall have occurred, the Borrowers shall:
(a) Notify all account debtors that the Accounts have been
assigned to Agent and that any payments on such Accounts should be made directly
to Agent; and/or
(b) Turn over to Agent any and all inventory returned in
connection with any of its Accounts; and/or
(c) Xxxx or stamp all invoices with a legend satisfactory to
Agent so as to require that the same should be paid directly to Agent.
Following an Event of Default, Agent shall have the right at any time upon
written notice to the Borrowers to notify account debtors to make such payments
of the Accounts directly to Agent.
Notwithstanding the foregoing, in the case of an Event of Default which is
caused by an act or omission of a Guarantor, the Agent shall exclude from the
Borrowing Base any assets of such
49.
Guarantor which would otherwise have been included therein and shall have the
right to exercise such remedies as are provided in the Guarantor Documents, but
unless such Event of Default has a material adverse effect on Starter on a
consolidated basis, neither the Agent nor the Banks shall be entitled to
exercise any of the rights and remedies provided herein with respect to the
Borrowers.
Section 7. Cumulative Remedies; No Waivers, Etc.
No right, power or remedy granted to Agent in this Agreement or in the
other Documents is intended to be exclusive, but each shall be cumulative and in
addition to any other rights, powers or remedies referred to in this Agreement,
in the other Documents or otherwise available to Agent at law or in equity. The
exercise by Agent of any one or more of such rights, powers or remedies, shall
not preclude the simultaneous or later exercise by Agent of any or all of such
other rights, powers or remedies. No waiver by, nor any failure or delay on the
part of Agent in any one or more instances to insist upon strict performance or
observance of one or more covenants or conditions hereof or of the other
Documents shall constitute, or be construed as, a waiver of such covenant in any
other instance or to prevent Agent's rights to later require the strict
performance or observance of such covenants or conditions, or otherwise
prejudice Agent's rights, powers or remedies.
Section 8. Partial Invalidity; Waivers.
(A) If any term or provision of this Agreement or any of the other
Documents or the application thereof to any Person or circumstance shall, to any
extent, be invalid or unenforceable by reason of any applicable law, the
remainder of this Agreement and the other Documents, or application of such term
or provision to Persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Agreement and the other Documents shall be valid and be
enforced to the fullest extent permitted by law. To the full extent, however,
that the provisions of any such applicable law may be waived, they are hereby
waived by each Borrower to the end that this Agreement and the other Documents
shall be deemed to be valid and binding obligations enforceable in accordance
with their terms.
(B) To the extent permitted by applicable law, each Borrower hereby
waives protest, notice of protest, notice of default or dishonor, notice of
payments and non-payments, or of any default.
(C) WITH RESPECT TO ANY CONTROVERSY, ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THE TRANSACTIONS DESCRIBED
HEREIN OR CONTEMPLATED HEREBY, INCLUDING, WITHOUT LIMITATION, IN CONNECTION WITH
THE REVOLVING CREDIT FACILITY OR ANY OF BORROWERS' OTHER OBLIGATIONS HEREUNDER
OR ANY OF
50.
THE OTHER DOCUMENTS EACH BORROWER, AGENT AND EACH BANK EACH VOLUNTARILY AND
KNOWINGLY WAIVES ANY RIGHT TO OR CLAIM FOR A TRIAL BY JURY.
(D) EACH BORROWER ACKNOWLEDGES THAT THE WITHIN AGREEMENT EVIDENCES A
COMMERCIAL TRANSACTION AND THAT, UNDER CHAPTER 903a OF THE CONNECTICUT GENERAL
STATUTES, AS FROM TIME TO TIME AMENDED, EACH BORROWER COULD HAVE THE RIGHT TO
NOTICE OF AND HEARING ON THE RIGHT OF AGENT OR ANY BANK TO OBTAIN A PREJUDGMENT
REMEDY, SUCH AS ATTACHMENT, GARNISHMENT OR REPLEVIN, AND COULD HAVE THE FURTHER
RIGHT TO HAVE A BOND POSTED IN CONNECTION THEREWITH. EACH BORROWER HEREBY WAIVES
ALL RIGHTS TO NOTICE, JUDICIAL HEARING OR PRIOR COURT ORDER AND THE POSTING OF A
BOND TO WHICH IT MIGHT OTHERWISE HAVE THE RIGHT UNDER CHAPTER 903a OF THE
CONNECTICUT GENERAL STATUTES, OR UNDER ANY OTHER STATE OR FEDERAL STATUTE OR
CONSTITUTION PROVISION IN CONNECTION WITH THE OBTAINING BY AGENT OR ANY BANK OF
ANY PREJUDGMENT REMEDY BY REASON OF THIS COMMERCIAL REVOLVING CREDIT AGREEMENT,
OR BY REASON OF ANY RENEWALS OR EXTENSIONS OF THE SAME. EACH BORROWER ALSO
WAIVES ANY AND ALL OBJECTION WHICH IT MIGHT OTHERWISE ASSERT, NOW OR IN THE
FUTURE, TO THE EXERCISE OR USE BY AGENT OR ANY BANK OF ANY RIGHT OF SETOFF,
REPOSSESSION OR SELF HELP AS MAY PRESENTLY EXIST OR WHICH MAY EXIST HEREAFTER
UNDER STATUTE OR COMMON LAW.
Section 9. Definitions.
As used herein, the following terms shall mean:
Acceptable Investment Grade: Investment quality rated by: (i) Xxxxx'x
Investment Services as long-term investment grade Baa or better; or (ii)
Standard and Poors as long-term investment grade BBB or better.
Acceptance: A banker's acceptance for a term not to exceed 120 days for the
account of either Borrower.
Acceptance Rate:
(1) Prior to October 1, 1996. For Acceptances prior to October 1, 1996, a
fixed rate equal to the Bank of Boston acceptance rate for the applicable
Acceptance Rate Interest Period plus 162.5 Basis Points per annum;
(2) Subsequent to September 30, 1996. For Acceptances issued subsequent to
September 30, 1996, a fixed rate equal to the Bank of Boston Acceptance Rate for
the applicable Acceptance Rate Interest Period plus the applicable number of
Basis Points set forth below based upon Starter's consolidated
Indebtedness/EBITDA Ratio as of the end of the preceding calendar quarter
commencing with the calendar quarter ending September 30, 1996 as determined
from Starter's Form 10Q as filed with the United States Securities and Exchange
Commission for each of the first three (3) quarters of
51.
Starter's Fiscal Year or Starter's audited consolidated financial statements for
the four (4) quarters ending December 31:
Indebtedness/EBITDA Ratio Spread
------------------------- ------
Equal to or more than 7.5 to 1.0 225 Basis Points
Equal to or more than 6.5 to 1.0
but not more than 7.4 to 1.0 200 Basis Points
Equal to or more than 5.0 to 1.0
but not more than 6.4 to 1.0 162.5 Basis Points
Less than 5.0 to 1.0 100 Basis Points
Provided, however, that the applicable spread hereunder shall be determined
based on the figures contained in Starter's Form 10Q as filed with the United
States Securities and Exchange Commission for the applicable quarter with
respect to each of the first three (3) quarters of Starter's Fiscal Year or
Starter's audited consolidated financial statements for the four (4) quarters
ending December 31. Any change in the applicable spread shall be effective only
with respect to Acceptances issued subsequent to the receipt of such Form 10Q or
such audited financial statements, by the Agent and the Banks.
Acceptance Rate Advances: An Advance which results from the issuance of an
Acceptance which bears interest at the Acceptance Rate.
Acceptance Rate Interest Period: The period commencing on the date the
Acceptance Rate Advance is made or continued and ending, at the option of
Borrower requesting such Acceptance Rate Advance on the numerically
corresponding day in the first, second, third or fourth calendar month
thereafter except that (a) each such Acceptance Rate Interest Period that
commences on the last Business Day of a calendar month (or on any day for which
there is no numerically corresponding day in the appropriate subsequent calendar
month) shall end on the last Business Day of the appropriate subsequent calendar
month; (b) if an Acceptance Rate Interest Period would end on a day that is not
a Business Day, such Acceptance Rate Interest Period shall be extended to the
next Business Day unless such Business Day would fall in the next calendar
month, in which event such Acceptance Rate Interest Period shall end on the
immediately preceding Business Day; and (c) no Acceptance Rate Interest Period
may extend beyond the Termination Date.
Accounts: As defined in Section 1.2(A) hereof.
52.
Advance or Advances: Cash advances to a Borrower under the Revolving Credit
Facility.
Affiliate: An affiliate of a Person is any director, officer, or employee
of such Person, or any other Person in which such Person has a direct or
indirect controlling interest or by which such Person is directly or indirectly
controlled or is direct or indirect common control with such Person.
Agent: Bank of Boston Connecticut.
Agreement: This Amended and Restated Commercial Revolving Loan and Security
Agreement, as it may be amended from time to time.
Amount of Available Accounts: An amount equal to eighty percent (80%) of
the amount of Eligible Accounts.
Amount of Direct Loans: The aggregate amount of outstanding Advances and
Acceptances.
Assignment: A collateral assignment to the Agent and the Banks of a life
insurance policy in the amount of $5,000,000 on the life of Beckerman to secure
Borrower's obligations hereunder.
Assignments of Leases: As set forth in Section 1.7 hereof.
Bank of Boston: Bank of Boston Connecticut.
Bank or Banks: Individually, collectively, or any number of Bank of Boston,
Fleet/New Jersey, Chase, People's, BNH, CoreStates, National Bank of Canada,
Sanwa, First Union, so long as such Bank remains a lender hereunder, and any
additional bank or institution which subsequently, from time to time, becomes a
lender hereunder for so long as such Bank or institution remains a lender
hereunder.
Basis Point: One one-hundredth (1/100) of one percent.
Beckerman: Xxxxx X. Xxxxxxxxx.
Borrowing Base: As set forth in Section 1.1(D) of the Agreement.
Borrowing Base Certificate: The Borrowing Base Certificate in the form of
Schedule 3.5 attached hereto.
Business Day: Any day other than Saturday, Sunday or any other day on which
any of the Banks is authorized or required by law to be closed.
53.
Capital Assets: Assets that, in accordance with GAAP, are required or
permitted to be depreciated on Starter's consolidated balance sheet.
Capital Expenditures: The aggregate amount of all expenditures for the
acquisition, construction, improvement, replacement or purchase of Capital
Assets, including, without limitation, expenditures under Capital Leases.
Capital Leases: Leases, conditional sales contracts and other title
retention agreements relating to the acquisition of Capital Assets.
Code: The Internal Revenue Code of 1986, as amended.
Collateral: As defined in Section 1.2 of the Agreement.
Commercial L/C: Commercial Letters of Credit issued by The First National
Bank of Boston or its domestic or overseas subsidiaries.
Commitment: The aggregate amount currently available to the Borrowers under
the Revolving Credit Facility.
Comparative Prime Rate: A variable rate at all times equal to the highest
Prime Rate in effect at any of the Banks.
Default Rate: Shall have the meaning accorded to it in Section 1.3(I)
hereof.
Direct Loan Sublimit: Shall have the meaning accorded to it in Section
1.1(E) of this Agreement.
Documents: This Agreement, the Revolving Note, the L/C Agreement, the
Environmental Indemnification Agreement, the Assignment, the Assignments of
Leases, the Assignment of Trademarks, the Assignment of Patents, stock pledge
agreements, the Intercreditor Agreement, and all other agreements or instruments
executed and delivered by either or both of the Borrowers or a Guarantor, prior
to the date hereof, contemporaneously herewith or hereafter, pursuant to this
Agreement or any of the other listed documents. The term Documents shall also
include, without limitation, reimbursement agreements or other agreements
between Starter and Fleet/New Jersey pertaining to the Fleet Standby L/C.
EBIT (Earnings Before Interest and Taxes): Income from continuing
operations before the payment of interest and taxes which are measured by or
based upon income, as derived from Starter's consolidated financial statements
determined in accordance with GAAP.
54.
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization):
Income from continuing operations before the payment of interest and taxes which
are based on or measured by income plus depreciation and amortization, as
derived from Starter's consolidated financial statements determined in
accordance with GAAP.
Eligible Account: An Account owned by either Borrower which meets each of
the following requirements:
(A) Such Account has not remained unpaid for more than the longer of (i)
sixty (60) days after the date on which it was due and payable as reflected in
the invoice from either Borrower to the account debtor thereon or (ii) 150 days
from the date of such invoice; provided, however, that up to $15,000,000 in the
aggregate of Accounts with respect to which either Borrower has allowed extended
payment terms of up to 270 days from date of invoice shall be deemed to be
Eligible Accounts;
(B) Except as otherwise provided in clause (A) above with respect to
Accounts with respect to which either Borrower has allowed extended payment
terms, such Account is not owing from an account debtor from whom thirty-five
(35%) percent or more (the "Cross Aging Percentage") of the balance owing to a
Borrower has remained unpaid for more than the longer of (i) sixty (60) days
after the due date as set forth on the invoice from the Borrower to such account
debtor or (ii) 150 days from the date of such invoice, except that, at the
request of the Borrower, the Agent may, at its discretion, increase the Cross
Aging Percentage to fifty (50%) percent with respect to certain specific account
debtors as shall be set forth on a schedule to be provided to the Agent;
(C) Such Account is payable in U.S. dollars;
(D) Such Account is not subject to any offsets, contraclaims,
counterclaims, deductions, disputes or discounts of any nature whatsoever
claimed or which, under the terms of any agreement or otherwise, may be claimed
by the account debtor with respect thereto, including, without limitation, an
account where the account debtor is also a creditor of or supplier to a
Borrower;
(E) Such Account is evidenced by an invoice, in form satisfactory to the
Agent, and it represents undisputed, bona fide indebtedness to either Borrower
of an account debtor, who is not an employee, officer, director, agent,
affiliate or subsidiary of a Borrower, for items of Inventory sold and actually
shipped and unconditionally accepted by the account debtor or for the rendition
of services in such Borrower's ordinary course of business (and as to which the
delivery of items of Inventory or the rendition of services has been completed)
in jurisdictions in which such Borrower is qualified to do business or, if it is
not qualified to do business in such a jurisdiction, such sale or lease,
rendering
55.
of services or other activities of such Borrower therein would not subject it to
qualify to do business or require it to take any other action therein;
(F) The assignment of such Account does not violate the purchase orders or
contracts which gave rise thereto, including, but not limited to, any Account
governed by the Federal Assignment of Claims Act;
(G) A Borrower is the lawful owner of and has a good right to pledge, sell,
assign, transfer and grant a security interest in such Account;
(H) Such Account is subject to a valid and perfected first priority
security interest in favor of the Agent and the Banks;
(I) Such Account has not been, pledged, sold, assigned, transferred or
encumbered to any Person other than Agent or the Banks in connection with this
Agreement;
(J) The Inventory sold to the account debtor or the service rendered to the
account debtor or debtors which gave rise to the such Account was not sold on a
xxxx-and-hold, guaranteed sale, sale-and-return, sale on approval, consignment
or other repurchase or return basis, and such Inventory has, or will have,
actually been shipped and conforms to the contracts for such goods and has not
been rejected;
(K) Such Account is owing by an account debtor who, since the date of
billing such account, has not died, terminated its existence, become insolvent
(which term shall include either a negative tangible net worth or an inability
to pay its debts as they mature), suffered a business failure, been subjected
either voluntarily or involuntarily to the appointment of a receiver of any part
of his or its creditors, requested creditors to stand by, or has filed or had
filed against him or it a petition in bankruptcy or any other proceeding under
any bankruptcy or insolvency laws;
(L) The Borrower to whom such Account is due has access to the courts or
other appropriate tribunal of the state or other jurisdiction which has or will
have in personam jurisdiction over the account debtor owing on such Account for
purposes of collecting and enforcing such Account;
(M) Such Account is not evidenced by a promissory note, chattel paper or
other instrument unless such Account is otherwise an Eligible Account and such
note, chattel paper or other instrument has been endorsed to and delivered to
Agent; and
(N) Such Account is not an account owing by any account debtor located
outside of the United States or Puerto Rico except
56.
(i) an Account with respect to which payment is assured pursuant to a letter of
credit issued by a financial institution which is in all respects acceptable to
Agent and which letter of credit has been assigned to and delivered to the
Agent; (ii) an Account arising out of a shipment pursuant to a documentary
collection payable at sight; or (iii) an Account owing from a foreign subsidiary
of a corporation having its headquarters in the United States which has provided
to the Agent and the Banks a comfort letter which is satisfactory to them in
form and substance.
Eligible Inventory: Inventory which is owned by either of the Borrowers or,
subject to the limitation contained herein, Starter Outlet Stores, Inc., and
which meets the following criteria:
Inventory (the value of which shall be calculated at the lower of cost or
market value on a first-in first-out basis and excluding the Borrower's reserves
for markdown and obsolete Inventory) (i) which is owned by either Borrower, or
which is owned by Starter Outlet Stores, Inc., provided that (a) inventory owned
by Starter Outlet Stores, Inc. and (b) inventory owned by Starter Galt which is
located at Starter Galt's retail store locations shall be included as Eligible
Inventory only up to an aggregate value of $4,000,000, (ii) which consists only
of good and usable current Inventory (iii) which is saleable by a Borrower or
Starter Outlet Stores, Inc. in the ordinary course of business, (iv) which is
(a) located on the premises of a Borrower, (b) located at one or more retail
stores owned and operated by Starter Outlet Stores, Inc., (c) in transit to a
Borrower or Starter Outlet Stores, Inc. and has been paid for by a Borrower or
Starter Outlet Stores, Inc. and which is covered by marine transport insurance
satisfactory to the Agent, or (d) in a public warehouse and the Borrowers have
delivered to Agent all original warehouse receipts covering such Inventory or
the Agent's security interest in such Inventory or in such warehouse receipts is
otherwise perfected, (v) which is located within the continental United States,
(vi) which has not been sold or otherwise designated for any customer of a
Borrower or Starter Outlet Stores, Inc., and (vii) which is subject to a valid
and perfected first priority security interest in favor of the Agent and the
Banks; but Eligible Inventory shall not include:
(A) any Inventory which has been produced in violation of the Fair Labor
Standards Act; or
(B) any Inventory located at any customer of Borrower or Starter Outlet
Stores, Inc.; or
(C) Inventory manufactured under any government contract unless the
Borrower's rights under such contract have been validly assigned to the Agent
and the Banks pursuant to the Federal Assignment of Claims Act; or
57.
(D) any Inventory which is not in good condition or which is defective or
obsolete or any Inventory which is not used by a Borrower in the regular course
of its business or any Inventory which is not usable or not saleable for any
reason by a Borrower in the ordinary course of business; or
(E) any work-in-process Inventory; or
(F) any raw-material Inventory, other than (i) roll goods not to exceed
$2,000,000 in the aggregate, or (ii) "printables" Inventory or "blank" T-shirts,
shorts, fleece pants and tops, which are complete except for the silk-screening
of logos and designs, not to exceed $8,000,000.00; or
(G) any Inventory subject to any lien in favor of any entity other than the
Agent or the Banks; or
(H) any Inventory on consignment; or
(I) any Inventory of any vendor or subcontractor of a Borrower; or
(J) L/C Inventory.
Environmental Indemnification Agreements: Individually and collectively (i)
A certain environmental indemnification agreement dated March 30, 1995 executed
by Starter in favor of the Agent and the Banks, indemnifying the Agent and the
Banks as to all matters set forth in ss.3.17 of the Agreement pertaining to
certain real estate occupied by Starter and (ii) a certain environmental
indemnification agreement dated of even date herewith, executed by the Borrower
in favor of the Agent indemnifying the Agent and the Banks as to all matters set
forth in ss.3.17 of this Agreement pertaining to certain real estate occupied by
Starter Galt.
Equipment: as set forth in Section 1.2(A)(iii) of the Agreement.
ERISA: Employee Retirement Income Security Act of 1974, as amended.
Eurocurrency Reserve Requirements: With respect to any LIBOR Advance for
any LIBOR Interest Period, the daily average of the stated maximum rate
(expressed as a decimal) at which reserves (including any marginal, supplemental
or emergency reserves) are required to be maintained in New York City under
Regulation D (as promulgated by the Board of Governors of the Federal Reserve
System) by member banks of the Federal Reserve System with deposits exceeding
one billion dollars, against "Eurocurrency Liabilities" (as such term is used in
Regulation D) but without benefit or credit of proration, exemptions, or offsets
that might otherwise be available under Regulation D. Without limiting the
effect of the
58.
foregoing, the Eurocurrency Reserve Requirements shall reflect any other reserve
required to be maintained against (1) any category of liabilities that includes
deposits by reference to which the LIBOR Rate for LIBOR Advances is to be
determined, or (2) any category of extension of credit or other assets that
include LIBOR Advances.
Eurodollar Rate Tax: All present and future stamp taxes, documentary taxes
and other similar taxes, levies or costs and charges that are imposed, assessed,
levied, or collected on or in respect of Advances solely as a result of (A) the
interest rate being determined by reference to the LIBOR Interest Rate; (B) the
provisions of this Agreement relating to the LIBOR Interest Rate or the LIBOR
Rate; (C) the recording, registration, notarization of the any of the foregoing;
or (D) payments of principal, interest or other amounts made on or in respect of
LIBOR Advances.
Event of Default: Event of Default as defined in Section 5 of the
Agreement.
Fiscal Year: A twelve (12) month period ending with December 31.
Fleet/Connecticut: Fleet National Bank (formerly known as Fleet National
Bank of Connecticut and successor by merger to Fleet Bank, National
Association), a national banking association having its principal place of
business in Springfield, Massachusetts.
Fleet/New Jersey: Fleet Bank, National Association, successor by merger to
NatWest Bank N.A. and having its principal place of business in Jersey City, New
Jersey and an office at 1133 Avenue of the Americas, 00xx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000-0000
Fleet Standby L/C: That certain standby letter of credit issued by
Fleet/Connecticut for the account of Starter designated Letter of Credit
#CS1024403 in the face amount of $500,000 for the benefit of the United States
Olympic Committee issued 11/18/93 and including renewals or replacements
thereof, and, with respect to which Fleet/Connecticut's rights and obligations
have been assigned to Fleet/New Jersey.
Funding Date: A proposed date set forth in a Request for Advance submitted
to Agent by a Borrower that must be a Business Day or, in the case of a LIBOR
Advance, a London Business Day.
GAAP: Generally accepted accounting principles in the United States of
America as from time to time in effect; provided, however, that, for any
particular financial statements, GAAP means such principles as in effect on the
date of the preparation and delivery of these financial statements with respect
to such financial statements.
59.
Guarantor: Any Material Domestic Subsidiary of either Borrower or any other
Person which has executed a guaranty agreement in favor of the Agent and the
Banks.
Guarantor Document: Any guaranty agreement, security agreement or any other
agreement heretofore, now or hereafter executed by a Guarantor in favor of the
Agent and the Banks in connection with or relating to the Revolving Credit
Facility.
Indebtedness: All obligations that, in accordance with GAAP, should be
classified as liabilities on a balance sheet.
Indebtedness/EBITDA Ratio: The ratio of (x) the sum of Indebtedness as of
the end of each of the immediately preceding four quarterly periods divided by
four (4) to (y) EBITDA for immediately preceding four quarterly periods.
Intangible Assets: Assets that, in accordance with GAAP, are properly
classifiable as intangible, on the Borrowers' consolidated financial statements,
including, but not limited to, goodwill, franchises, licenses, patents,
trademarks, tradenames, and copyrights.
Intellectual Property: A license for the use of or the right to use a
patent, trademark, service xxxx, trade name, copyright or any other rights
necessary for either Borrower to conduct its business, including the Material
License Agreements identified in Schedule 2.7.
Intercreditor Agreement: The 1996 Amended and Restated Intercreditor and
Agency Agreement among the Agent and the Banks dated of even date herewith, as
it may be amended from time to time.
Interest Expense: All interest paid or payable, including, but not limited
to, interest payable on indebtedness and on Capital Leases, determined in
accordance with GAAP.
Interest Period: A LIBOR Interest Period or an Acceptance Rate Interest
period, as appropriate.
Interest Rate Option: Interest rate selected by a Borrower, in accordance
with the terms of this Agreement, being either the Comparative Prime Rate, the
LIBOR Rate, or the Acceptance Rate.
Inventory: as set forth in Section 1.2(A)(ii) of the Agreement.
Late Payment Charge: as set forth in Section 13(J) of this Agreement.
60.
L/C Agreement: A certain Master Commercial Letter of Credit Reimbursement
and Security Agreement dated as of March 30, 1995 between Starter and The First
National Bank of Boston, as supplemented by a letter agreement of even date
herewith executed by Starter Galt and The First National Bank of Boston a copy
of which is attached hereto as Schedule 1.8.
L/C Inventory: Inventory which is work in process or which is in transit to
a Borrower and with respect to which, in either case, payment is assured by an
issued but undrawn Commercial Letter of Credit.
Liabilities: All amounts now or hereafter outstanding under the Revolving
Credit Facility including, without limitation, all Advances, Acceptances and the
issued but undrawn amount and the drawn but unreimbursed amount of all
Commercial L/C's whether issued by the Agent or The First National Bank of
Boston or any of its Affiliates on behalf of the Agent and the Banks, the
standby L/C's, and the Fleet Standby L/C, together with interest thereon, and
all costs, fees and expenses payable in connection therewith and the performance
by the Borrowers of their obligations under this Agreement and the other
Documents, direct or indirect, absolute or contingent, as well as for any and
all financial accommodations now or hereafter extended by Agent or any one or
all of the Banks to either Borrower pursuant to this Agreement, and any renewals
and extensions thereof. The term Liabilities shall also include the obligation
of the Borrowers to reimburse Fleet/New Jersey pursuant to the applicable
reimbursement agreements between the Borrower and Fleet/New Jersey pertaining to
the Fleet Standby L/C.
LIBOR Advance: An Advance which bears interest at the LIBOR Interest Rate.
LIBOR Interest Period: The period commencing on the date the LIBOR Advance
is made or continued and ending, at the option of a Borrower, subject to the
terms of this Agreement, on the numerically corresponding day in the first,
second or third calendar month thereafter except that (a) each such LIBOR
Interest Period that commences on the last London Business Day of a calendar
month (or on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last London Business Day
of the appropriate subsequent calendar month; and (b) if a LIBOR Interest Period
would end on a day that is not a London Business Day, such LIBOR Interest Period
shall be extended to the next London Business Day unless such London Business
Day would fall in the next calendar month, in which event such LIBOR Interest
Period shall end on the immediately preceding London Business Day and (c) no
LIBOR Interest Period may extend beyond the Termination Date.
61.
LIBOR Interest Rate: The rate per annum determined by Agent to be equal to
the quotient of the London Interbank Offered Rate for an Advance or portion of
an Advance for the Interest Period selected by a Borrower, divided by 1 minus
the Eurocurrency Reserve Requirements for such Interest Period rounded upward to
the next 1/16th of 1% if the rate is not itself an integral multiple of 1/16th
of 1%.
LIBOR Rate:
(1) Prior to October 1, 1996: For LIBOR Advances made prior to October 1,
1996, a fixed rate equal to the LIBOR Interest Rate for the applicable LIBOR
Interest Period plus 162.5 Basis Points per annum;
(2) On or after October 1, 1996: For LIBOR Advances made on or after
October 1, 1996, the fixed rate equal to the LIBOR Interest Rate for the
applicable LIBOR Interest Period plus the applicable number of Basis Points set
forth below based upon Starter's consolidated Indebtedness/EBIT Ratio as of the
end of the preceding calendar quarter commencing with the calendar quarter
ending September 30, 1996 as determined from Starter's Form 10Q as filed with
the United States Securities and Exchange Commission for each of the first three
(3) quarters of Starter's Fiscal Year or Starter's audited consolidated
financial statements for the four (4) quarters ending December 31.
Indebtedness/EBITDA Ratio Spread
------------------------- ------
Equal to or more than 7.5 to 1.0 225 Basis Points
Equal to or more than 6.5 to 1.0
but not more than 7.4 to 1.0 200 Basis Points
Equal to or more than 5.0 to 1.0
but not more than 6.4 to 1.0 162.5 Basis Points
Less than 5.0 to 1.0 100 Basis Points
Provided, however, that the applicable spread hereunder shall be determined
based on the figures contained in Starter's Form 10Q as filed with the United
States Securities and Exchange Commission for the applicable quarter with
respect to the first three (3) quarters of Starter's Fiscal Year or Starter's
audited consolidated financial statements for the four (4) quarters ending
December 31. Any change in the applicable spread shall be effective only with
respect to LIBOR Advances made subsequent to the receipt of such Form 10Q, or
such audited financial statements by the Agent and the Banks.
62.
London Business Day: Any day other than a Saturday or Sunday on which
dealings in dollar deposits are carried on in the London interbank market and on
which day banks are open for business in London and which is also a Business
Day.
London Interbank Offered Rate: The arithmetic average of the rates per
annum (rounded upward, if necessary, to the nearest 1/16 of 1% if the rate
itself is not an integral multiple of 1/16 of 1%) quoted at approximately 11:00
A.M. London time by the principal London branch of each of the Reference Banks
two (2) London Business Days prior to the first day of such Interest Period for
the offering to leading banks in the London interbank market of U.S. dollar
deposits for a period and in an amount comparable to the Interest Period and
principal amount of the particular Advance or portion of Advance to which the
LIBOR Rate is to apply.
Material Asset: Any asset of either Borrower, or group of assets of either
Borrower, having a fair market value in an orderly liquidation of $500,000 or
more.
Material Domestic Subsidiary: A Subsidiary of either Borrower which owns
assets having a value of $250,000 or more, which is organized under the laws of,
or has its principal place of business in, any state of the United States or the
District of Columbia.
Material Licensing Agreement: Any licensing agreement in which either
Borrower is the licensee and which accounts for $7,500,000 or more of Starter's
consolidated revenues in any Fiscal Year.
Overadvance: The condition which exists when the total Liabilities
outstanding under the Revolving Credit Facility exceeds the lesser of (i) the
Borrowing Base; or (ii) the Regular Commitment or the Seasonal Commitment, as
appropriate; provided, however, that the term "Overadvance" does not include a
Seasonal Overadvance.
Participant: One to whom any of the Banks sell or syndicate participating
interest in one or more portions of such Bank's commitment.
Person: A corporation, association, partnership, organization, business,
individual, government, political subdivision, governmental agency, or any other
entity.
Prepayment Premium: A premium for the prepayment of LIBOR Advances or
Acceptance Rate Advances, calculated as follows: (i) on a prepayment date, the
remaining payments of principal and interest that would otherwise have become
payable through the expiration of that Interest Period for that LIBOR Advance or
Acceptance Rate Advance shall be discounted to a present value at a rate per
annum equal to the Prepayment Yield to Maturity; and
63.
added to any costs for reserves, assessments or reinvesting the amount being
prepaid; and (ii) if the sum of such discounted value plus such costs shall
exceed the unpaid principal amount being prepaid then the Prepayment Premium
shall be an amount equal to such excess, otherwise the Prepayment Premium shall
be zero (0).
Prepayment Yield to Maturity: The yield to maturity of the debt obligation
of the United States Treasury (excluding those commonly known as "Flower Bonds")
having a term substantially equal to the term of the relevant Interest Period
maturity date nearest in expiration of the relevant Interest Period. The
maturity date and yield to maturity of such United States Treasury obligation
shall be determined by Agent on the basis of quotations appearing in the Xxxxxx
Monitor Money Rates Service on the prepayment date. If there shall be more than
one such debt obligation of the United States Treasury maturing nearest in time
to the expiration of the relevant LIBOR Interest Period or Acceptance Rate
Interest Period, the Prepayment Yield to Maturity shall be the arithmetic
average of the yields to maturity of all such obligations.
Prime Rate: The rate designated by a Bank from time to time as its prime
rate, base rate, or the equivalent thereof.
Prime Rate Advances: Those advances or portions of advances which bear
interest at the Comparative Prime Rate.
Pro Rata Share: With respect to each Bank, the amount represented by the
ratio of each Bank's Commitment to the total Regular Commitment or Seasonal
Commitment, as appropriate, available under the Revolving Credit Facility as set
forth in the Agreement.
Quick Ratio: A quotient equal to the aggregate of (A)(i) cash and currency
on hand and on deposit, demand deposits and checks held, (ii) short term, highly
liquid investments that are readily convertible to known amounts of cash, (iii)
marketable securities, (iv) accounts receivable less allowances for doubtful
accounts receivable, and (v) refunds shown to be due from a taxing authority
based on information contained in Starter's audited consolidated financial
statements, divided by (B) Total Current Liabilities.
Reference Banks: Two or more major banks in the London Interbank market as
selected by the Agent and the Banks.
Regular Commitment: Shall have the meaning accorded to it in Section 1.1.
Revolving Credit Facility: Shall have the meaning accorded to it in Section
1.1.
64.
Revolving Note: The Revolving Credit Note, in form and substance as set
forth in Exhibit A attached hereto, and any renewals thereof or replacements
therefor.
Seasonal Commitment: Shall have the meaning accorded to it in Section 1.1.
Seasonal Overadvance: As defined in Section 1.1(F) of this Agreement.
Subsidiary: A subsidiary of a Person, is a corporation or some other
association or entity of which the Person owns, directly or beneficially, not
less than a majority of the outstanding shares of the class or classes of stock,
having by the terms thereof ordinary voting power to elect a majority of the
directors, managers or trustees of such corporation or association or entity, of
which are at the time owned or controlled, directly or indirectly, by such
Person or by a Subsidiary of Person.
Tangible Net Worth: Total assets minus the sum of Intangible Assets and
Total Liabilities.
Termination Date: May 31, 1998.
Total Current Assets: Total current assets determined in accordance with
GAAP.
Total Current Liabilities: Total current liabilities determined in
accordance with GAAP, and including without limitation, outstanding Advances and
Acceptances.
Total Liabilities: Total liabilities determined in accordance with GAAP.
Unqualified Opinion: When used with reference to an opinion of an
independent certified public accountant, an opinion shall be deemed to be
unqualified if it is, in fact, unqualified or if it is qualified only (i) as a
result of a change by Starter in its accounting policies to conform with GAAP or
(ii) by reference to an Event of Default under this Agreement provided such
opinion acknowledges that such Event of Default has been cured or waived by the
Banks.
Working Capital: Total Current Assets less Total Current Liabilities.
Section 10. Expenses.
The Borrowers jointly and severally agree to:
10.1 Closing Costs. Pay or reimburse Agent and the Banks on demand for
any and all reasonable charges, costs and taxes
65.
incurred in the preparation, documentation and implementation of this Agreement,
and all Documents, and any amendment thereto, including, without limitation, all
recording and filing fees, appraisal fees and reasonable fees and disbursements
of Agent's and the Banks' special counsel retained in connection therewith,
including payment upon the Closing hereof of any portion of such charges, costs
and fees for which an invoice shall be rendered. The Borrowers will also pay or
reimburse Agent and the Banks on demand for any and all reasonable charges and
costs incurred as a result of the addition, withdrawal or substitution of Banks
in the syndication, for whatever reason.
10.2 Indemnification and Hold Harmless. Indemnify and hold the Agent
and each of the Banks harmless from, and pay or reimburse Agent and each of the
Banks for, all charges, costs, damages, liabilities and expenses, including
reasonable attorneys' fees, if any, incurred by Agent and each of the Banks,
including, without limitation, the payment of any sum assessed under any statute
relating to the environment or the priority of any liens or changes arising
thereunder, or in the attempted enforcement or enforcement of this Agreement or
the other Documents, or in the collection or attempted collection of any of the
obligations owing under any thereof, or in the prosecution or defense of any
action or proceeding concerning any matter growing out of or connected with this
Agreement or the other Documents; and
10.3 Advances Regarding Expenses. Allow Agent, in Agent's discretion,
to receive payment of any of items referred in Sections 10.1 and 10.2 above by a
charge to the Revolving Credit Facility (which charge shall thereupon become an
Advance, which Advance will bear interest in accordance with Section 1.3(A)(i)
hereof) or by deduction from any account maintained by either Borrower with
Agent or any Bank.
Section 11. Further Assurances.
The Borrowers will deliver to Agent and the Banks such other instruments or
documents as shall be reasonably required to implement and carry out the terms
of this Agreement.
Section 12. Survival of Agreements, Representations and Warranties, Etc.
All agreements, representations and warranties contained herein or made in
writing by or on behalf of either Borrower, in connection with the transactions
contemplated hereby, shall survive the execution and delivery of this Agreement
and the other Documents and, to the extent applicable, shall be deemed to be
made anew each time an Advance is made or a Commercial L/C or a standby L/C is
issued or an Acceptance is created pursuant hereto or pursuant to the other
Documents, except that the representations and warranties contained in Section
2.4 hereof shall be deemed to
66.
apply to the most recent Financial Statements theretofore delivered to the Agent
and the Banks. All statements contained in any certificate or other instrument
delivered by or on behalf of either or both of the Borrowers, pursuant hereto or
in connection with the transactions contemplated hereby, including, without
limitation, those contained in any Borrowing Base Certificate or Interest Rate
Option Election, shall be deemed representations and warranties made hereunder.
Section 13. Failure to Perform.
If the Borrowers shall fail to observe or perform any of the covenants
hereof, Agent or any of the Banks may pay amounts or incur liabilities to remedy
or attempt to remedy any such failure (including, without limitation, any sums
payable under any statute relating to the environment) and all such payments
made and liabilities incurred shall be for the account of the Borrowers, and may
be paid, at Agent's or any Bank's option, by the making of additional Advances
under the Revolving Credit Facility and, all such amounts shall be repaid by the
Borrowers on demand, together with interest thereon at the rate provided in
Section 1.3(A)(i) hereof, or may be repaid by a withdrawal from any of the
accounts maintained by either Borrower with Agent or such Bank. The provisions
of this Section and any such action by Agent or such Bank shall not prevent any
default in the observance or performance of any covenant hereof from
constituting an Event of Default hereunder.
Section 14. Notices, Etc.
All notices, requests, consents and other communications hereunder shall be
in writing and shall be deemed to be duly delivered if mailed, postage prepaid,
by first class registered mail, return receipt requested, or if delivered by any
receipted delivery or courier service:
67.
(A) if to Agent:
Bank of Boston Connecticut
000 Xxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxx
Vice President
with a copy to:
Xxxxx Xxxxxx & Xxxxxx
000 Xxxxxx Xxxxxx
X.X. Xxx 0000
Xxx Xxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxx, Esq.
(B) if to Fleet Bank, National Association
Fleet Bank, National Association
1133 Avenue of the Americas
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxxxx Xxxxxxxx
Vice President
(C) if to Chase:
The Chase Manhattan Bank
0000 Xxxxxxxx - 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx, Vice President
(D) if to People's:
People's Bank
Two Xxxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx
Vice President
(E) if to BHF:
BHF-Bank
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx Xxxx
Assistant Vice President
68.
(F) if to CoreStates:
CoreStates Bank, N.A.
0000 Xxxxxxxx Xxxxxx
P.O. Box 7618
Philadelphia, Pennsylvania 19101-7618
Attention: Xxxxx Xxxxx Marks
Vice President
(G) if to National Bank of Canada:
National Bank of Canada
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx
Vice President
(H) if to Sanwa:
The Sanwa Bank Limited
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx Xxxxxxx
Assistant Vice President
(I) if to First Union:
First Union Bank of Connecticut
000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx
Vice President
or at such other address as may have been furnished from time to time in writing
by Agent or any Bank to Borrower; or
if to either Borrower:
Starter Corporation
000 Xxxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx
Senior Vice President and
Xxxxxxxx Xxxx, Esquire
General Counsel
with a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxx, Xxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx, Esquire
or at such other address as may have been furnished from time to time in writing
by Borrower to Agent.
69.
Section 15. Amendments and Waivers.
Neither this Agreement nor any other Document nor any term hereof or
thereof may be changed, waived, discharged or terminated, except by a writing
signed by the party to be charged, except to the extent that certain changes may
be made binding upon all of the Banks with the consent of Banks holding
sixty-six and two-thirds percent (66 2/3%) of the Pro Rata Shares as set forth
in the Inter- Creditor Agreement.
Section 16. Miscellaneous.
(A) Direct or Indirect Action. Where any provision in this Agreement
refers to action to be taken by any person or entity, or which such person or
entity is prohibited from taking, such provision shall be applicable whether
such action is taken directly or indirectly by such person or entity.
(B) Connecticut Law; Jurisdiction of Connecticut Courts. This
Agreement and the Documents contemplated hereby shall be construed and enforced
in accordance with and governed by the laws of the State of Connecticut. Each
Borrower hereby specifically consents to the jurisdiction of the Courts of the
State of Connecticut and agrees to be bound by the decisions of the Court of the
State of Connecticut.
(C) Conflicts in Loan Documents. To the extent there is any
inconsistency between the terms of this Agreement and any of the Documents
hereby, this Agreement shall control.
(D) Binding on Successors and Assigns. All of the terms of this
Agreement and such other Documents shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of the
parties hereto, whether so expressed or not, and by any other holder or holders
at the time of any obligations of either or both of the Borrowers hereunder or
any part thereof.
(E) Headings. The headings in this Agreement are for the purposes of
reference only and shall not limit or otherwise affect any of the terms hereof.
(F) Agreement Executed in Multiple Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original,
and by the several parties hereto in separate counterparts, but all of which
together shall constitute one and the same instrument.
(G) No Third Party Reliance. This Agreement is between Agent, the
Banks and the Borrowers only and shall not be relied upon by any third party.
Without limiting the foregoing, Agent shall have no liability to any party
whatever, including, without
70.
limitation, either Borrower or anyone conducting business with either Borrower,
in the event Agent, for any reason and at any time exercises, or does not
exercise, its rights under this Agreement or the other Documents contemplated
hereby.
(H) Obligations of the Borrowers are Joint and Several. The
obligations of the Borrowers under this Agreement and the other Documents shall
be joint and several.
(I) Confirmation of Existing Documents. All of the Documents
heretofore executed by Starter shall be and remain in full force and effect,
except as any such Document has been previously modified or is expressly
modified herein, and except that any reference in any such Document to the Loan
Agreement, the Revolving Note, the Liabilities or the Banks shall be deemed to
refer to this Agreement, the Revolving Note, the Liabilities and the Banks as
these terms are respectively defined herein.
(J) Replacement for Original Agreement as Amended. This Agreement is
executed and delivered in substitution and replacement for and shall supersede,
the Original Agreement, as amended by the First Amendment, the Second Amendment
and the Third Amendment as each of those terms is defined in the recitals to
this Agreement.
Section 17. Sale of Obligations/Syndications/Participations.
Each Borrower agrees that each of the Banks may sell participating
interests in portions of such Bank's Commitment to other parties (each, a
"Participant") provided that (i) such Bank shall obtain the prior consent of the
Borrowers to such sale, which consent will not be unreasonably withheld, and
(ii) such Participant shall have an investment quality rating of an Acceptable
Investment Grade, or, if such Participant is not rated, its corporate parent
shall have an investment quality rating of an Acceptable Investment Grade.
Section 18. Reduction of Availability Under Revolving Credit Facility.
In the event that the long term investment grade of any of the Banks (or
any successors or assigns of any of the Banks), other than People's, shall be
reduced below the Acceptable Investment Grade(or, if such Bank is not rated, if
the long term investment grade of its corporate parent shall be reduced below
the Acceptable Investment Grade), or in the event that the long term investment
grade of People's is reduced from its present grade, then Agent shall endeavor
to notify the Borrowers thereof (but the failure by Agent to provide such
notification shall not affect any of Agent's or any Bank's rights hereunder) and
the availability under the Revolving Credit Facility shall immediately be
reduced by the amount of such Bank's Commitment, and Borrowers, Agent and the
71.
Banks shall, for a period of ninety (90) days following the date of such
reduction, attempt to secure a substitute for such Bank having an Acceptable
Investment Grade and otherwise reasonably satisfactory to the Agent, the Banks,
and the Borrowers. At the end of such ninety (90) day period, Borrowers shall,
upon demand by Agent or the Banks, immediately pay to Agent the amount by which
the aggregate amount then outstanding under the Revolving Credit Facility
exceeds the reduced availability under the Revolving Credit Facility.
Section 19. Release.
Upon full payment and satisfaction of all amounts outstanding under the
Revolving Credit Facility, all Commercial L/C's, standby L/C's, the Fleet
Standby L/C and Acceptances, as well as all of Borrowers' other obligations
hereunder and the interest thereon and expenses incurred by Agent and each of
the Banks in connection therewith and upon termination of this Agreement by
Agent and the Banks, the parties shall thereupon automatically each be fully,
finally, and forever released and discharged from any further claim, liability
or obligation in connection with the foregoing obligations of the Borrowers or
any of them.
Section 20. Rate Protection.
In the event that any law, regulation, treaty or official directive or the
interpretation or application thereof, by any court of governmental authority,
or the compliance with any guideline or request of any central bank or other
governmental authority (whether or not having the force of law):
(A) subjects Agent or any Bank to any tax with respect to any amounts
payable hereunder by the Borrowers or otherwise with respect to the transaction
contemplated hereunder (except for taxes on the overall net income of Agent or
any Bank imposed by the United States of America or any political subdivision
thereof); or
(B) imposes, modifies or deems applicable any deposit insurance,
reserve, special deposit, capital maintenance or similar requirement against
assets held by, or deposit in or for the account of, any obligations of
Borrowers hereunder or Advances (whether Prime Rate Advances or LIBOR Advances
or Acceptance Rate Advances), Commercial L/C's, standby L/C's, the Fleet Standby
L/C, Acceptances or commitments to make or provide any of the foregoing by,
Agent or any Bank (other than such requirements, the effect of which is included
in the determination of the interest rates for loans or Advances made
hereunder); or
(C) imposes upon Agent or any Bank any other condition with respect to
such Advances or obligations or commitments to make such Advances or obligations
made hereunder; and the result of any of the foregoing is to increase the cost
to Agent or any Bank or
72.
reduce the income receivable by Agent or any Bank or return on equity of Agent
or any Bank or impose any expense upon Agent or any Bank with respect to any
such Advances whether Prime Rate Advances, LIBOR Advances, Acceptance Rate
Advances, or obligations or commitments to make such Advances or obligations
hereunder, Agent or such Bank shall so notify the Borrowers. The Borrowers agree
to pay Agent or such Bank the amount of such increase in cost, reduction in
income, reduced return on equity or additional expense as and when such cost,
reduction in income, reduced return on equity or additional expense is incurred
or determined plus interest, upon presentation by Agent or such Bank of a
statement in the amount and setting forth Agent's or such Bank's calculation
thereof (in determining such amount, Agent or such Bank may use any reasonable
averaging and attribution methods), which statement shall be deemed true and
correct, absent manifest error.
73.
IN WITNESS WHEREOF, each of the parties hereto has executed this 1996
Amended and Restated Commercial Revolving Loan and Security Agreement on the day
first above mentioned.
BANK OF BOSTON CONNECTICUT, as Agent
By /s/ [ILLEGIBLE]
---------------------------------
Its Vice President
FLEET BANK, NATIONAL ASSOCIATION
By /s/ [ILLEGIBLE]
---------------------------------
Its VP
THE CHASE MANHATTAN BANK
By
---------------------------------
Its
PEOPLE'S BANK
By
---------------------------------
Its
BHF-BANK AKTIENGELLESCHAFT
By
---------------------------------
Its
and
By
---------------------------------
Its
CORESTATES BANK, N.A.
By
---------------------------------
Its
74.
IN WITNESS WHEREOF, each of the parties hereto has executed this 1996
Amended and Restated Commercial Revolving Loan and Security Agreement on the day
first above mentioned.
BANK OF BOSTON CONNECTICUT, as Agent
By
---------------------------------
Its
FLEET BANK, NATIONAL ASSOCIATION
By
---------------------------------
Its
THE CHASE MANHATTAN BANK
By /s/ [ILLEGIBLE]
---------------------------------
Its Vice President
PEOPLE'S BANK
By
---------------------------------
Its
BHF-BANK AKTIENGELLESCHAFT
By
---------------------------------
Its
and
By
---------------------------------
Its
CORESTATES BANK, N.A.
By
---------------------------------
Its
74.
IN WITNESS WHEREOF, each of the parties hereto has executed this 1996
Amended and Restated Commercial Revolving Loan and Security Agreement on the day
first above mentioned.
BANK OF BOSTON CONNECTICUT, as Agent
By
---------------------------------
Its
FLEET BANK, NATIONAL ASSOCIATION
By
---------------------------------
Its
THE CHASE MANHATTAN BANK
By
---------------------------------
Its
PEOPLE'S BANK
By /s/ [ILLEGIBLE]
---------------------------------
Its Vice President
BHF-BANK AKTIENGELLESCHAFT
By
---------------------------------
Its
and
By
---------------------------------
Its
CORESTATES BANK, N.A.
By
---------------------------------
Its
74.
IN WITNESS WHEREOF, each of the parties hereto has executed this 1996
Amended and Restated Commercial Revolving Loan and Security Agreement on the day
first above mentioned.
BANK OF BOSTON CONNECTICUT, as Agent
By
---------------------------------
Its
FLEET BANK, NATIONAL ASSOCIATION
By
---------------------------------
Its
THE CHASE MANHATTAN BANK
By
---------------------------------
Its
PEOPLE'S BANK
By
---------------------------------
Its
BHF-BANK AKTIENGELLESCHAFT
By /s/ [ILLEGIBLE]
---------------------------------
Its VP
and
By /s/ [ILLEGIBLE]
---------------------------------
Its AVP
CORESTATES BANK, N.A.
By
---------------------------------
Its
74.
IN WITNESS WHEREOF, each of the parties hereto has executed this 1996
Amended and Restated Commercial Revolving Loan and Security Agreement on the day
first above mentioned.
BANK OF BOSTON CONNECTICUT, as Agent
By
---------------------------------
Its
FLEET BANK, NATIONAL ASSOCIATION
By
---------------------------------
Its
THE CHASE MANHATTAN BANK
By
---------------------------------
Its
PEOPLE'S BANK
By
---------------------------------
Its
BHF-BANK AKTIENGELLESCHAFT
By
---------------------------------
Its
and
By
---------------------------------
Its
CORESTATES BANK, N.A.
By /s/ Xxxxx Xxxxx Marks
---------------------------------
Its VP
74.
NATIONAL BANK OF CANADA
By /s/ [ILLEGIBLE]
---------------------------------
Its Vice President
and
By /s/ [ILLEGIBLE]
---------------------------------
Its Asst. Vice President
THE SANWA BANK LIMITED
By
---------------------------------
Its
BANK OF BOSTON CONNECTICUT
By
---------------------------------
Its
FIRST UNION BANK OF CONNECTICUT
By
---------------------------------
Its
STARTER CORPORATION
By
---------------------------------
Its
STARTER GALT, INC.
By
---------------------------------
Its
75.
NATIONAL BANK OF CANADA
By
---------------------------------
Its
and
By
---------------------------------
Its
THE SANWA BANK LIMITED
By /s/ [ILLEGIBLE]
---------------------------------
Its AVP
BANK OF BOSTON CONNECTICUT
By
---------------------------------
Its
FIRST UNION BANK OF CONNECTICUT
By
---------------------------------
Its
STARTER CORPORATION
By
---------------------------------
Its
STARTER GALT, INC.
By
---------------------------------
Its
75.
NATIONAL BANK OF CANADA
By
---------------------------------
Its
and
By
---------------------------------
Its
THE SANWA BANK LIMITED
By
---------------------------------
Its
BANK OF BOSTON CONNECTICUT
By
---------------------------------
Its
FIRST UNION BANK OF CONNECTICUT
By /s/ [ILLEGIBLE]
---------------------------------
Its
STARTER CORPORATION
By
---------------------------------
Its
STARTER GALT, INC.
By
---------------------------------
Its
75.
NATIONAL BANK OF CANADA
By
---------------------------------
Its
and
By
---------------------------------
Its
THE SANWA BANK LIMITED
By
---------------------------------
Its
BANK OF BOSTON CONNECTICUT
By /s/ [ILLEGIBLE]
---------------------------------
Its Vice President
FIRST UNION BANK OF CONNECTICUT
By
---------------------------------
Its
By /s/ [ILLEGIBLE]
---------------------------------
Its SVP
STARTER GALT, INC.
By /s/ [ILLEGIBLE]
---------------------------------
Its SVP
75.
