EIGHTH AMENDMENT AGREEMENT
EIGHTH AMENDMENT AGREEMENT, dated as of April 28, 1997, to the Credit
Agreement, dated as of June 5, 1995 (as the same has heretofore or may be
hereafter amended, supplemented or modified from time to time in accordance
with its terms, the "Credit Agreement"), among Donnkenny Apparel, Inc., a
Delaware corporation ("DKA"), and ▇▇▇▇▇▇▇ Industries Corporation, a Delaware
corporation ("BIC" and collectively with DKA, the "Borrowers"), the Guarantors
named therein and signatories thereto, the lenders named in Schedules 2.01(a)
and (b) of the Credit Agreement (collectively, the "Lenders"), and The Chase
Manhattan Bank (formerly known as Chemical Bank) as agent for the Lenders (in
such capacity, the "Agent"). Capitalized terms used herein but not otherwise
defined herein shall have the meanings attributed thereto in the Credit
Agreement.
WHEREAS, the parties to the Credit Agreement have agreed to amend the
Credit Agreement to reflect a partial assignment of Notes by one or more of the
Lenders and to make certain other amendments to the Credit Agreement.
NOW THEREFORE, for valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, and subject to the fulfillment of the
conditions set forth below, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT
1.1 MegaKnits, Inc., a New York corporation ("MegaKnits"), shall be added
as an additional "Borrower" under the Credit Agreement. By its execution and
delivery of this Agreement, MegaKnits agrees to be bound by all of the terms
and provisions of the Credit Agreement relating to the Borrowers. All
references to the "Borrowers" or a "Borrower" in any of the Loan Documents
shall include MegaKnits.
1.2 The first sentence of the Preamble to the Credit Agreement is hereby
amended by (a) deleting the amount "$100,000,000" appearing therein and
substituting the amount "$110,000,000" therefor and (b) deleting the amount
"$70,000,000" appearing therein and substituting the amount "$85,000,000"
therefor.
1.3 The definition of "Availability" contained in Section 1.01 of the
Credit Agreement is hereby amended in its entirety to read as follows:
"Availability" shall mean at any time (i) the lesser at such time
of (x) the Total Revolving Credit Commitment and (y) the Borrowing
Base minus (ii) the sum at such time of (x) the unpaid principal
balance of, and accrued interest and fees on, the Revolving Credit
Loans, together with all reserves established
pursuant to the Loan Documents and (y) the Letter of Credit Usage.
1.4 The definition of "Letter of Credit Usage" contained in Section 1.01
of the Credit Agreement is hereby amended in its entirety to read as follows:
"Letter of Credit Usage" shall mean at any time, (i) the
aggregate undrawn amount of all outstanding Letters of Credit at such
time plus (ii) the unreimbursed amount of all payments made by the
Administrative Agent under all related Letter of Credit Guaranties.
1.5 The definition of "Final Maturity Date" contained in Section 1.01 of
the Credit Agreement is hereby amended by deleting the date "February 2, 1999"
and substituting the date "March 31, 1999" therefor.
1.6 The definition of "Obligations" contained in Section 1.01 of the
Credit Agreement is hereby amended by adding (i) a comma followed by the term
"the Administrative Agent" after the term "Lenders" in each of the second line
and tenth line thereof and (ii) a comma followed by the term "the Letter of
Credit Guaranty" after the term "Letters of Credit" in the eleventh line
thereof.
1.7 The definition of "Prime Rate" contained in Section 1.01 of the Credit
Agreement is hereby amended in its entirety to read as follows:
"Prime Rate" shall mean, for any day, the rate of interest per
annum publicly announced from time to time by the Agent at its
principal office in New York City as its prime rate in effect at such
time. The Prime Rate is not intended to be the lowest rate of interest
charged by the Agent to its borrowers.
1.8 Section 1.01 of the Credit Agreement is hereby amended to add the
following definitions in the appropriate alphabetical order:
"Administrative Agent" shall mean The CIT Group/Commercial
Services, Inc.
"Amendment Date" shall mean April 28, 1997.
"CIT" shall mean The CIT Group/Commercial Services, Inc.
"Eligible Inventory" shall mean inventory of the Borrowers
comprised solely of raw materials and finished goods which is lawfully
owned by any of the Borrowers and which is, in the opinion of the
Administrative Agent, not obsolete, slow-moving or unmerchantable and
is and at all times shall continue to be acceptable to the
Administrative
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Agent in all respects (it being understood and agreed that, for the
purposes hereof, any Excess Inventory that is slow-moving or
unmerchantable and would thereby be excluded from Eligible Inventory
shall not be excluded from Eligible Inventory solely for such
reasons); provided, however, that Eligible Inventory shall in no event
include inventory which (i) is not located at one of the addresses for
locations of Collateral set forth on Schedule I to the Security
Agreement and with respect to which the Agent has not been granted a
valid, first priority, fully perfected security interest, (ii) has
been returned or rejected by a Customer, or (iii) does not conform to
the representations and warranties contained herein and in the other
Loan Documents. Standards of eligibility may be fixed and revised from
time to time solely by the Administrative Agent in the Administrative
Agent's exclusive judgment. In determining eligibility, the
Administrative Agent may, but need not, rely on reports and schedules
furnished by the Borrowers, but reliance by the Administrative Agent
thereon from time to time shall not be deemed to limit the right of
the Administrative Agent to revise standards of eligibility at any
time as to both present and future inventory of the Borrowers.
"Eligible Receivables" shall mean (i) Receivables created by the
Borrowers (other than MegaKnits) in the ordinary course of business
arising out of the sale or lease of goods or rendition of services by
the Borrowers (other than MegaKnits), which (A) are subject to a
valid, first priority, fully perfected security interest in favor of
the Agent and which conform to the representations and warranties
contained herein and in the other Loan Documents, and (B) at all times
shall continue to be acceptable to the Administrative Agent in all
respects and (ii) any and all sums which CIT is obligated to or may
pay from time to time to the Borrowers (other than MegaKnits) pursuant
to Notification Factoring Agreements, each dated April 28, 1997.
Standards of eligibility may be fixed and revised from time to time
solely by the Administrative Agent in the Administrative Agent's
exclusive judgment.
"Excess Collateral Requirement" shall mean, during any Excess
Collateral Period, the amounts set forth below as correspond to the
Excess Collateral Period commencing in the months set forth below, and
zero as to any other date:
Month Excess Collateral Requirement
----- -----------------------------
October 1997 $ 800,000
November 1997 2,800,000
December 1997 1,800,000
January 1998 2,600,000
February 1998 2,200,000
March 1998 700,000
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For purposes of this paragraph, the term "Excess Collateral Period"
shall mean the period commencing on the last Business Day of a month
and ending on the fifth day of the immediately following month.
"Excess Inventory" shall mean inventory of the Borrowers
designated by the Borrowers as "excess inventory" in the inventory
certificates which will be delivered by the Borrowers to the
Administrative Agent in accordance with Section 6.05 hereof.
"Inventory Amount" shall mean, during any month, the amount set
forth below as corresponds to such month:
Month Inventory Amount
----- ----------------
April 1997 $21,900,000
May 1997 24,000,000
June 1997 27,000,000
July 1997 29,800,000
August 1997 28,100,000
September 1997 23,400,000
October 1997 19,200,000
November 1997 15,600,000
December 1997 16,600,000
January 1998 17,000,000
February 1998 16,400,000
March 1998 15,800,000
Thereafter -0-
"Letter of Credit Application" shall have the meaning assigned to
such term in Section 2.17 hereof.
"Letter of Credit Guaranty" shall mean the guaranty delivered by
the Administrative Agent on behalf of the Lenders to the Letter of
Credit Issuer of the Borrowers' reimbursement obligation under the
Letter of Credit Issuer's reimbursement agreement, the Letter of
Credit Application with respect thereto or any other like document.
"Letter of Credit Issuer" shall mean the issuer of a Letter of
Credit, which, if not The Chase Manhattan Bank, shall be a commercial
bank satisfactory to the Administrative Agent. The Administrative
Agent hereby agrees to notify the Borrowers of the identity of any
Letter of Credit Issuer if other than The Chase Manhattan Bank.
"MegaKnits" shall mean MegaKnits, Inc., a New York corporation.
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"Net Amount of Eligible Inventory" shall mean, at any time, the
aggregate value, computed at the lower of cost (on a FIFO basis) and
current market value, of Eligible Inventory of the Borrowers less
reserves for (i) special order goods; (ii) market value declines;
(iii) ▇▇▇▇ and hold (deferred shipment) or consignment sales; and (iv)
other reserves required by the Administrative Agent in the exercise of
its reasonable business judgment.
"Net Amount of Eligible Receivables" shall mean and include at
any time, without duplication, the gross amount of Eligible
Receivables at such time less the sum of (i) sales, excise or similar
taxes, (ii) returns, discounts, claims, credits and allowances of any
nature at any time issued, owing, granted, outstanding, available or
claimed, and (iii) such reserves as determined by the Administrative
Agent in its sole judgment for (A) sales to the United States of
America or to any agency, department or division thereof; (B) foreign
sales other than sales secured by stand-by letters of credit (in form
and substance satisfactory to the Administrative Agent) issued or
confirmed by, and payable at, banks having a place of business in the
United States of America and payable in United States currency; (C)
Receivables that remain unpaid more than ninety (90) days from the
invoice date; (D) contras; (E) sales to the Borrowers' Affiliates; (F)
▇▇▇▇ and hold (deferred shipment) or consignment sales; (G) sales to
any Customer which is (w) insolvent, (x) the debtor in any bankruptcy,
insolvency, arrangement, reorganization, receivership or similar
proceedings under any federal or state law, (y) negotiating or has
called a meeting of its creditors for purposes of negotiating, a
compromise of its debts, or (z) financially unacceptable to the
Administrative Agent or has a credit rating unacceptable to the
Administrative Agent; (H) all sales to any Customer if fifty percent
(50%) or more of either (x) all outstanding invoices of such Customer,
or (y) the aggregate dollar amount of all outstanding invoices of such
Customer, are unpaid more than ninety (90) days from the invoice date;
(I) any other reasons deemed necessary by the Administrative Agent in
its sole judgment; and (J) an amount representing, historically,
returns, discounts, claims, credits and allowances.
"Overadvance Amount" shall mean, during any End of Month Period
and Intramonth Period, the amounts set forth below as correspond to
the End of Month Period and the Intramonth Period during the months
set forth below:
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Overadvance
Overadvance Amount
Amount during the during the
Month End of Month Period Intramonth Period
----- ------------------- -----------------
April 1997 $ 5,500,000 $ 6,500,000
May 1997 8,500,000 11,500,000
June 1997 13,000,000 14,500,000
July 1997 12,000,000 19,000,000
August 1997 8,800,000 18,000,000
September 1997 3,600,000 14,800,000
October 1997 -0- 9,600,000
November 1997 -0- 5,200,000
December 1997 -0- 3,200,000
January 1998 -0- 4,200,000
February 1998 -0- 3,400,000
March 1998 -0- 3,800,000
Thereafter -0- -0-
For purposes of this paragraph, (i) the term "End of Month Period"
shall mean the period commencing on the last Business Day of a month
and ending on the fifth day of the immediately following month and
(ii) the term "Intramonth Period" shall mean the period commencing on
the sixth day of a month and ending on the day immediately preceding
the last Business Day of the same month.
"Settlement Period" shall have the meaning assigned to such term
in Section 2.13(c)(i) hereof.
1.9 Section 1.01 of the Credit Agreement is hereby amended to delete the
definitions of "Debt Sublimit", "Net Amount of Receivables" and "Waiver Period"
in their entirety.
1.10 Article II (excluding Sections 2.01(b), 2.06 (c), 2.13, 2.16, 2.17,
2.18, 2.19 and 2.20 which are amended as set forth below) of the Credit
Agreement is hereby amended by deleting all references to "Agent" appearing
therein and substituting the words "Administrative Agent" therefor.
1.11 Section 2.01(b) of the Credit Agreement is hereby amended in its
entirety to read as follows:
"(b) Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, each Lender,
severally and not jointly, agrees to make Revolving Credit Loans to,
and through the Administrative Agent open Letters of Credit for
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the benefit of, the Borrowers, at any time and from time to time from
the date hereof to the Revolving Credit Termination Date, in an
aggregate principal amount at any time outstanding not to exceed the
amount of such Lender's Revolving Credit Commitment set forth opposite
its name in Schedule 2.01(b) annexed hereto, as such Revolving Credit
Commitment may be reduced from time to time in accordance with the
provisions of this Agreement. Notwith standing the foregoing, the
aggregate principal amount of Revolving Credit Loans outstanding at
any time to the Borrowers shall not exceed (1) the lesser of (A) the
Total Revolving Credit Commitment (as such amount may be reduced
pursuant to Section 2.07 hereof) and (B) an amount equal to the total
of (i) up to eighty-five percent (85)% of the Net Amount of Eligible
Receivables plus (ii) the lesser of (a) the Inventory Amount as of the
date of determination and (b) up to sixty percent (60%) of the sum of
the Net Amount of Eligible Inventory plus (iii) up to sixty percent
(60%) of the undrawn amount of all outstanding Letters of Credit for
the importation of finished goods inventory consigned to the Agent as
of the date of determination plus (iv) the Overadvance Amount as of
the date of determination minus (v) the Excess Collateral Requirement
as of the date of determination (this clause (B) referred to herein as
the "Borrowing Base"), minus (2) the Letter of Credit Usage at such
time (not to exceed $35,000,000 at any time); provided, however, that
in no event shall the aggregate principal amount of Revolving Credit
Loans outstanding at any time to the Borrowers exceed $70,000,000. The
Borrowing Base will be computed daily and a compliance certificate
from a Responsible Officer of the Borrowers presenting its computation
will be delivered to the Administrative Agent in accordance with
Section 6.05 hereof.
Subject to the foregoing and within the foregoing limits, the
Borrowers may borrow, repay (or, subject to the provisions of Section
2.09 hereof, prepay) and reborrow Revolving Credit Loans, on and after
the date hereof and prior to the Revolving Credit Termination Date,
subject to the terms, provisions and limitations set forth herein,
including, without limitation, the requirement that no Revolving
Credit Loan shall be made hereunder if the amount thereof exceeds the
Availability outstanding at such time."
1.12 Schedules 2.01(a) and 2.01(b) to the Credit Agreement are hereby
amended in their entirety to read as Schedules 2.01(a) and 2.01(b) annexed
hereto.
1.13 Schedule 2.02 to the Credit Agreement is hereby amended in its
entirety to read as Schedule 2.02 annexed hereto.
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1.14 Section 2.04(a) of the Credit Agreement is hereby amended by deleting
the phrase "such Lender's sublimit for Revolving Credit Loans as set forth on
Schedule 2.01(b) annexed hereto" and substituting the phrase "its Revolving
Credit Commitment in respect of the Borrowers on the Amendment Date".
1.15 Section 2.04 of the Credit Agreement is hereby amended by adding a new
clause (e) as follows:
"(e) Each of the Borrowers shall be jointly and severally liable
with the other Borrower(s) for the Obligations, and each of the
Obligations shall be secured by all of the Collateral. Each of the
Borrowers acknowledges that it is a co-borrower hereunder and is
jointly and severally liable under this Agreement and the other Loan
Documents. All financial accommodations extended to any of the
Borrowers or requested by any of the Borrowers shall be deemed to be
financial accommodations extended for each of the Borrowers, and each
of the Borrowers hereby authorizes each other of the Borrowers to
effectuate borrowings and issuances of Letters of Credit on its
behalf. Notwithstanding anything to the contrary contained in this
Agreement or any of the other Loan Documents, the Agent, the
Administrative Agent and the Lenders shall be entitled to rely upon
any request, notice or other communication received by them from any
of the Borrowers on behalf of all Borrowers, and shall be entitled to
treat their giving of any notice hereunder to any of the Borrowers as
notice to each and all Borrowers.
Each of the Borrowers agrees that the joint and several liability
of the Borrowers provided for in this subsection (e) shall not be
impaired or affected by any modification, supplement, extension or
amendment or any contract or agreement to which the other Borrower(s)
may hereafter agree (other than an agreement signed by the Agent, the
Administrative Agent and the Lenders specifically releasing such
liability), nor by any delay, extension of time, renewal, compromise
or other indulgence granted by the Agent, the Administrative Agent or
any Lender with respect to any of the Obligations, nor by any other
agreements or arrangements whatsoever with the other Borrower(s) or
with any other person, each of the Borrowers hereby waiving all notice
of such delay, extension, release, substitution, renewal, compromise
or other indulgence, and hereby consenting to be bound thereby as
fully and effectually as if it had expressly agreed thereto in
advance. The liability of each of the Borrowers is direct and
unconditional as to all of the Obligations, and may be enforced
without requiring the Agent, the Administrative Agent or any Lender
first to resort to any other right, remedy or security. Each of the
Borrowers hereby
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expressly waives promptness, diligence, notice of acceptance and any
other notice with respect to any of the Obligations, the Notes, this
Agreement or any other Loan Document and any requirement that the
Agent, the Administrative Agent or any Lender protect, secure, perfect
or insure any Lien or any property subject thereto or exhaust any
right or take any action against any of the Borrowers or any other
person or any Collateral.
Each of the Borrowers hereby irrevocably waives and releases each
other of the Borrowers from all "claims" (as defined in Section 101(5)
of the Bankruptcy Code) to which such Borrowers are or would be
entitled by virtue of the provisions of the first paragraph of this
subsection (e) or the performance of such Borrower's obligations
thereunder including, without limitation, any right of subrogation
(whether contractual, under Section 509 of the Bankruptcy Code or
otherwise), reimbursement, contribution, exoneration or similar right,
or indemnity, or any right of recourse to security for any of the
Obligations."
1.16 Section 2.05(d) of the Credit Agreement is hereby amended in its
entirety to read as follows:
"(d) Notwithstanding subsections (a) and (b) hereof, from and
after the Amendment Date, the Borrowers shall not request Eurodollar
Loans and each Prime Rate Loan which is a Term Loan or a Revolving
Credit Loan shall bear interest at a rate per annum equal to the Prime
Rate plus 1-1/2%. In the event of any change in the Prime Rate, the
rate of interest hereunder shall change, as of the first day of the
month following any change, so as to remain one and one-half percent
(1-1/2%) above the Prime Rate."
1.17 Section 2.06(a) of the Credit Agreement is hereby amended by deleting
the percentage "one-quarter of one percent (1/4 of 1%)" appearing therein and
substituting the percentage "two-fifths of one percent (2/5 of 1%)" therefor.
1.18 Section 2.06(c) of the Credit Agreement is hereby amended in its
entirety to read as follows:
"Until such time as all Obligations (excluding indemnity
obligations surviving the payment in full of the Notes and the
termination of the Total Commitment) shall have been paid in full and
all Commitments to lend hereunder shall have terminated, the Borrowers
shall pay to the Administrative Agent, for the Administrative Agent's
own account, a fee of $6,000 per month payable on the first day of
each calendar month commencing May 1, 1997."
9
1.19 Section 2.07(a) of the Credit Agreement is hereby amended by deleting
the amount "$60,000,000" appearing in the last sentence thereof and
substituting the amount "$70,000,000" therefor.
1.20 Section 2.09(c) of the Credit Agreement is hereby amended in its
entirety to read as follows:
"(c) The Borrowers shall make prepayments of the Revolving Credit
Loans from time to time such that the Availability equals or exceeds
zero at all times. Notwithstanding the provisions of Section 2.08(a)
hereof and without waiving any Event of Default which has occurred
thereby, if at any time Availability is less than zero and the
Borrowers do not make a prepayment of the Revolving Credit Loans as
required by this Section 2.09(c), all Revolving Credit Loans shall
bear interest at a rate per annum equal to the Prime Rate plus three
and one-half percent (3-1/2%)."
1.21 Section 2.09(d) of the Credit Agreement is hereby amended to add the
following sentence at the end thereof:
"Within one (1) Business Day following the receipt by the Parent
and/or any of its Subsidiaries of any tax refunds in excess of
$2,000,000 in the aggregate applicable to the 1996 Fiscal Year and
prior Fiscal Years, the Borrowers shall make a mandatory prepayment of
the Term Loans in an amount equal to such excess, such prepayment to
be applied as set forth in paragraph (f) below."
1.22 Section 2.13 of the Credit Agreement is hereby amended in its entirety
to read as follows:
"SECTION 2.13. Pro Rata Treatment; Funding and Settlement
Procedures. (a) Except as permitted under Sections 2.10 and 2.11
hereof, each payment or prepayment of principal of the Notes, each
payment of interest on the Notes, each payment of any fee or other
amount payable hereunder and each reduction of the Total Revolving
Credit Commitment and Total Term Loan Commitment shall be made pro
rata among the Lenders in the proportions that their Revolving Credit
Commitments bear to the Total Revolving Credit Commitment or that
their Term Loan Commitments bear to the Total Term Loan Commitment, as
the case may be.
(b) (i) Except as otherwise provided in subsection (b) of this
Section 2.13, all Loans under this Agreement shall be made by the
Lenders simultaneously and shall be made pro rata among the Lenders in
the proportions that their Revolving Credit Commitment bear to the
Total Revolving Credit Commitment or that their Term Loan Commitments
10
bear to the Total Term Loan Commitment, as the case may be.
(ii) Notwithstanding any other provision of this Agreement,
in order to reduce the number of fund transfers among the Borrowers,
the Lenders and the Administrative Agent, the Borrowers, the Lenders
and the Administrative Agent agree that the Administrative Agent may,
but shall not be obligated to, and the Borrowers and the Lenders
hereby irrevocably authorize the Administrative Agent to, fund, on
behalf of the Lenders, Revolving Credit Loans pursuant to Sections
2.02 and 2.03, subject to the procedures for settlement set forth in
subsection (c) of this Sec tion 2.13; provided, however, that (A) the
Administrative Agent shall in no event fund such Revolving Credit Loan
or request that any Lender so fund if the Administrative Agent shall
have received written notice from the Required Lenders on the Business
Day prior to the date of the proposed Revolving Credit Loan that one
or more of the conditions precedent contained in Section 5.01 hereof
will not be satisfied on the date of the proposed Revolving Credit
Loan and (B) the Administrative Agent shall not otherwise be required
to determine that, or take notice whether, the conditions precedent in
Section 5.01 have been satisfied. If the Administrative Agent elects
not to fund a requested Revolving Credit Loan on behalf of the
Lenders, promptly after receipt of a notice of a Loan pursuant to
Section 2.03 hereof, the Administrative Agent shall so notify each
Lender. If the Administrative Agent notifies the Lenders that it will
not fund a requested Revolving Credit Loan on behalf of the Lenders,
each Lender shall make its pro rata share of the Loan available to the
Administrative Agent, in immediately available funds, at the
Administrative Agent's payment office (as described in Section 2.16
hereof) no later than 2:00 p.m. (New York City time) on the date of
the proposed Loan. The Administrative Agent will make the proceeds of
such Loans available to the Borrowers on the day of the proposed Loan
by causing an amount, in immediately available funds, equal to the
proceeds of all such Loans received by the Administrative Agent at the
Administrative Agent's payment office or the amount funded by the
Administrative Agent on behalf of the Lenders to be deposited in an
account designated by the Borrowers.
(iii) If the Administrative Agent has notified the Lenders
that the Administrative Agent will not fund a particular Loan pursuant
to subsection (b)(ii) of this Section 2.13 on behalf of the Lenders,
the Administrative Agent may assume that such Lender has made such
amount available to the Administrative
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Agent on such day and the Administrative Agent, in its sole and
absolute discretion, may, but shall not be obligated to, cause a
corresponding amount to be made available to the Borrowers on such
day. If, in such case, the Administrative Agent makes such
corresponding amount available to the Borrowers and such corresponding
amount is not in fact made available to the Administrative Agent by
such Lender, such Lender and each of the Borrowers agrees to repay to
the Administrative Agent forthwith on demand such corresponding amount
together with interest thereon for each day from the date such amount
is made available to the Borrowers to and including the date such
amount is repaid to the Administrative Agent, at (x) in the case of
the Borrowers, a rate per annum equal to the higher of the Federal
funds rate during such period as quoted by the Administrative Agent
and the interest rate applicable thereto pursuant to Section 2.05 and
(ii) in the case of such Lender, at the Federal funds rate during such
period as quoted by the Administrative Agent for three Business Days
and thereafter at the Prime Rate. If such Lender shall repay to the
Administrative Agent such corresponding amount, such amount so repaid
shall constitute such Lender's pro rata share of such Revolving Credit
Loan.
(iv) Nothing in this Section 2.13(b) shall be deemed to
relieve any Lender from its obligation to fulfill its Revolving Credit
Commitment hereunder or to prejudice any rights that the
Administrative Agent or a Borrower may have against any Lender as a
result of any default by such Lender hereunder.
(c) (i) With respect to all periods for which the Administrative
Agent, on behalf of the Lenders, has funded Revolving Credit Loans
pursuant to subsection (b) of this Section 2.13, on the first
Business Day after the last day of each week, or such shorter period
as the Administrative Agent may from time to time select (any such
week or shorter period being herein called a "Settlement Period"), the
Administrative Agent shall notify each Lender of the unpaid principal
amount of the Revolving Credit Loans outstanding at the close of
business on the last Business Day of such Settlement Period. In the
event that such amount is greater than the unpaid principal amount of
the Revolving Credit Loans outstanding at the close of business on the
last Business Day of the Settlement Period immediately preceding such
Settlement Period (or, if there has been no preceding Settlement
Period, the amount of the Revolving Credit Loans made on the date of
such Lender's initial funding), each Lender shall promptly make
available to the Administrative Agent such Lender's pro rata share of
the difference in immediately available funds. In the event
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that such amount is less than such unpaid principal amount, the
Administrative Agent shall promptly pay over to each other Lender such
Lender's pro rata share of the difference in immediately available
funds. In addition, if the Administrative Agent shall so request at
any time when a Default or an Event of Default shall have occurred and
be continuing, or any other event shall have occurred as a result of
which the Administrative Agent shall determine that it is desirable to
present claims against the Borrowers for repayment, each Lender shall
promptly remit to the Administrative Agent or, as the case may be, the
Administrative Agent shall promptly remit to each Lender, sufficient
funds to adjust the interests of the Lenders in the then outstanding
Revolving Credit Loans to such an extent that, after giving effect to
such adjustment, each Lender's interest in the then outstanding
Revolving Credit Loans will be equal to its pro rata share thereof.
The obligations of the Administrative Agent and each Lender under this
subsection 2.13(c) shall be absolute and unconditional. Each Lender
shall only be entitled to receive interest on its pro rata share of
the Revolving Credit Loans which have been funded by such Lender.
(ii) In the event that any Lender fails to make any payment
required to be made by it pursuant to subsection 2.13(c)(i), the
Administrative Agent shall be entitled to recover such corresponding
amount on demand from such Lender together with interest thereon, for
each day from the date such payment was due to and including the date
such amount is paid to the Administrative Agent, at the Federal funds
rate during each period as quoted by the Administrative Agent for
three Business Days and thereafter at the Prime Rate. During the
period in which such Lender has not paid such corresponding amount to
the Administrative Agent, notwithstanding anything to the contrary
contained in this Agreement or any other Loan Document, the amount so
advanced by the Administrative Agent to the Borrowers shall, for all
purposes hereof, be a Loan made by the Administrative Agent for its
own account. Upon any such failure by a Lender to pay the
Administrative Agent, the Administrative Agent shall promptly
thereafter notify the Borrowers of such failure and the Borrowers
shall immediately pay such corresponding amount to the Administrative
Agent for its own account."
1.23 Sections 2.16, 2.17, 2.18, 2.19 and 2.20 of the Credit Agreement are
hereby amended in their entirety to read as follows:
"SECTION 2.16. Payments and Computations. The Borrowers shall
make each payment hereunder and under any
13
instrument delivered hereunder no later than 1:00 p.m. (New York City
time) on the day when due in lawful money of the United States to the
Administrative Agent at the Administrative Agent's account maintained
at The Chase Manhattan Bank, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
(account no. 144-0-75212) for the account of the Lenders, in
immediately available funds without setoff, counterclaim or other
deduction of any nature. The Administrative Agent may charge, when due
and payable, the Borrowers' account with the Administrative Agent for
all interest, principal and fees owing to the Administrative Agent or
the Lenders on or with respect to this Agreement and/or the Loans and
other Loan Documents. If at any time there is not sufficient
availability to cover any of the payments referred to in the prior
sentence, and in any event upon the occurrence of any Default, the
Borrowers shall make any such payments upon demand.
SECTION 2.17. Letter of Credit Guaranty.
(a) In order to assist the Borrowers in establishing or opening
documentary letters of credit with the Letter of Credit Issuer, which
shall not have expiration dates that exceed 180 days from the date of
issuance thereof or that exceed 30 days prior to the Revolving Credit
Termination Date (the "Letters of Credit"), and with respect to the
Letters of Credit described in Section 2.17(j) hereof, the Borrowers
have requested that the Administrative Agent join in the applications
for such Letters of Credit, and/or guarantee payment or performance of
such Letters of Credit and any drafts thereunder through the issuance
of a Letter of Credit Guaranty, thereby lending the Administrative
Agent's credit to that of the Borrowers, and the Administrative Agent
has agreed to do so. These arrangements shall be handled by the
Administrative Agent subject to the terms and conditions set forth
below. The Administrative Agent shall not be required to be the issuer
of any Letter of Credit. The Borrowers will be, jointly and severally,
the account party for any application for a Letter of Credit, which
application shall be substantially in the form of Exhibit G hereto or
such other form as may from time to time be approved by the Letter of
Credit Issuer and the Administrative Agent and which shall be duly
completed in a manner reasonably acceptable to the Administrative
Agent (such application, together with such other certificates,
documents and other papers and information as the Letter of Credit
Issuer or the Administrative Agent may reasonably request,
collectively the "Letter of Credit Application"). The Letters of
Credit shall be issued with respect to transactions occurring in the
ordinary course of the business of the Borrowers.
14
(b) Notwithstanding anything to the contrary contained herein,
the Letter of Credit Usage shall not exceed $35,000,000 at any time,
and no Letter of Credit Guaranty shall be issued hereunder if, after
giving effect thereto, Availability would be less than zero.
(c) The Administrative Agent shall have the right, without notice
to the Borrowers, to charge the Borrowers' account with the
Administrative Agent with the amount of any and all indebtedness,
liabilities and obligations of any kind (including indemnification for
breakage costs, capital adequacy and reserve requirement charges)
incurred by the Administrative Agent or the Lenders under the Letter
of Credit Guaranty or incurred by a Letter of Credit Issuer with
respect to a Letter of Credit at the earlier of (A) payment by the
Administrative Agent or the Lenders under the Letter of Credit
Guaranty or (B) the occurrence of an Event of Default. Any amount so
charged to the Borrowers' account with the Administrative Agent shall
be deemed a Revolving Credit Loan hereunder made by the Lenders to the
Borrowers, funded by the Administrative Agent on behalf of the Lenders
and subject to Section 2.05 and Section 2.09(c) of this Agreement and
subject further to the requirement that the Borrowers immediately
prepay outstanding Revolving Credit Loans so that the outstanding
principal balance of all Revolving Credit Loans will not exceed
$70,000,000. Any charges, fees, commissions, costs and expenses
charged to the Administrative Agent for the Borrowers' account by the
Letter of Credit Issuer in connection with or arising out of Letters
of Credit or transactions relating thereto will be charged to the
Borrowers' account with the Administrative Agent in full when charged
to or paid by the Administrative Agent and, when charged, shall be
conclusive on the Borrowers absent manifest error. Each of the Lenders
and the Borrowers agrees that the Administrative Agent shall have the
right to make such charges regardless of whether any Event of Default
or Default shall have occurred and be continuing or whether any of the
conditions precedent in Section 5.01 have been satisfied.
(d) The Borrowers unconditionally indemnify the Administrative
Agent and each Lender and hold the Administrative Agent and each
Lender harmless from any and all loss, claim or liability (including,
without limitation, reasonable attorneys' fees and disbursements)
incurred by the Administrative Agent or any Lender arising from any
transactions or occurrences relating to Letters of Credit, any drafts
or acceptances thereunder, the collateral relating thereto, and all
Obligations in respect thereof, including any such loss or claim due
to any action taken by the
15
Letter of Credit Issuer, other than to the extent that any such loss,
claim or liability directly results from the gross negligence or
willful misconduct of the Administrative Agent or any Lender,
respectively, as determined by a final judgment of a court of
competent jurisdiction. The Borrowers further agree to jointly and
severally hold the Administrative Agent and each Lender harmless from
any errors or omission, negligence, unlawful conduct or misconduct by
the Letter of Credit Issuer. The Borrowers' unconditional, joint and
several obligations to the Administrative Agent and each Lender with
respect to the Letters of Credit hereunder shall not be modified or
diminished for any reason or in any manner whatsoever. Each Borrower
and each Guarantor agrees that any charges incurred by the
Administrative Agent or the Letter of Credit Issuer for the Borrowers'
account hereunder may be charged to the Borrowers' account with the
Administrative Agent.
(e) None of the Administrative Agent, the Lenders and the Letter
of Credit Issuer shall be responsible for the existence, character,
quality, quantity, condition, packing, value or delivery of the goods
purporting to be represented by any documents; any difference or
variation in the character, quality, condition, packing, value or
delivery of the goods from that expressed in the documents; the
validity, sufficiency or genuineness of any documents or of any
endorsements thereof even if such documents should in fact prove to be
in any or all respects invalid, insufficient, fraudulent or forged;
the time, place, manner or order in which shipment is made; partial or
incomplete shipments, or failure or omission to ship any or all of the
goods referred to in the Letters of Credit or documents; any deviation
from instructions, delay, default, or fraud by the shipper and/or
anyone else in connection with the collateral or the shipping thereof;
or any breach of contract between the shipper or vendors and the
Borrowers. Furthermore, without limiting any of the foregoing, neither
the Administrative Agent nor the Lenders shall be responsible for any
act or omission with respect to or in connection with any goods
covered by any Letter of Credit.
(f) The Borrowers jointly and severally agree that any action
taken by the Administrative Agent or any Lender, or any action taken
by the Letter of Credit Issuer, under or in connection with the
Letters of Credit, the drafts or acceptances, the guarantees or the
collateral, shall be binding on the Borrowers and shall not put the
Administrative Agent, or the Lenders in any resulting liability to the
Borrowers. In furtherance of the foregoing, the Administrative Agent
shall have the full right and authority to
16
clear and resolve any questions of non-compliance of documents; to
give any instructions as to acceptance or rejection of any documents
or goods; to execute any and all steamship or airways guaranties (and
applications therefor), indemnities or delivery orders; to grant any
extensions of the maturity of, time of payment for, or time of
presentation of, any drafts, acceptances or documents; and to agree to
any amendments, renewals, extensions, modifications, changes or
cancellations of any of the terms or conditions of any of the
applications, Letters of Credit, drafts or acceptances, all in the
Administrative Agent's sole name, and the Letter of Credit Issuer
shall be entitled to comply with and honor any and all such documents
or instruments executed by or received solely from the Administrative
Agent, all without any notice to or any consent from the Borrowers.
The Administrative Agent shall use reasonable efforts to consult with
the Borrowers before taking any action pursuant to this Section
2.17(f).
(g) Without the Administrative Agent's express consent, the
Borrowers jointly and severally agree: (x) not to execute any and all
applications for steamship or airway guaranties, indemnities or
delivery orders; to grant any extensions of the maturity of, time of
payment for, or time of presentation of, any drafts, acceptances or
documents; or to agree to any amendments, renewals, extensions,
modification, changes or cancellations of any of the terms or
conditions of any of the applications, Letters of Credit, drafts or
acceptances; and (y) after the occurrence of any Event of Default
which is not cured within any applicable grace period, if any, or
waived as provided under Section 11.08 hereof, not to (A) clear and
resolve any questions of non-compliance of documents, or (B) give any
instructions as to acceptances or rejection of any documents or goods.
(h) The Borrowers jointly and severally agree that any necessary
and material import, export or other license or certificate for the
import or handling of inventory will have been promptly procured; all
foreign and domestic governmental laws and regulations in regard to
the shipment and importation of inventory or the financing thereof
will have been promptly and fully complied with and any certificates
in that regard that the Administrative Agent may at any time
reasonably request will be promptly furnished. In this connection, the
Borrowers warrant and represent that all shipments made under any
Letters of Credit are in accordance with the laws and regulations of
the countries in which the shipments originate and terminate, and are
not prohibited by any such laws and regulations. As between the
Borrowers, on the one hand, and the Administrative Agent, the Lenders
and the Letter
17
of Credit Issuer, on the other hand, the Borrowers jointly and
severally assume all risk, liability and responsibility for, and agree
to pay and discharge, all present and future local, state, federal or
foreign taxes, duties or levies. As between the Borrowers, on the one
hand, and the Administrative Agent, the Lenders and the Letter of
Credit Issuer, on the other hand, any embargo, restriction, laws,
customs or regulations of any country, state, city or other political
subdivision, where such inventory is or may be located, or wherein
payments are to be made, or wherein drafts may be drawn, negotiated,
accepted or paid, shall be solely the Borrowers' joint and several
risk, liability and responsibility.
(i) Upon any payments to the Letter of Credit Issuer under a
Letter of Credit Guaranty, the Administrative Agent or the Lenders, as
the case may be, shall, without prejudice to its or their respective
rights under this Agreement (including that such unreimbursed amounts
shall constitute Revolving Credit Loans hereunder in accordance with
subsection (c) of this Section 2.17), acquire by subrogation, any
rights, remedies, duties or obligations granted or undertaken by the
Borrowers in favor of the Letter of Credit Issuer in any application
for Letters of Credit, any standing agreement relating to Letters of
Credit or otherwise, all of which shall be deemed to have been granted
to the Administrative Agent and the Lenders and apply in all respects
to the Administrative Agent and the Lenders and shall be in addition
to any rights, remedies, duties or obligations contained herein.
(j) Schedule 2.17(j) annexed hereto contains a description of all
letters of credit issued for the benefit of the Borrowers with respect
to which The Chase Manhattan Bank is the Letter of Credit Issuer
outstanding on the Amendment Date. Each such letter of credit,
including any extension or renewal thereof, shall constitute a "Letter
of Credit" for all purposes of this Agreement, issued on the Amendment
Date.
SECTION 2.18. Participations.
(a) Purchase of Participations. Immediately upon issuance by the
Letter of Credit Issuer of any Letter of Credit pursuant to this
Agreement, each Lender (other than the Administrative Agent) shall be
deemed to have irrevocably and unconditionally purchased and received
from the Administrative Agent, without recourse or warranty, an
undivided interest and participation (which participation shall be
without recourse to the Administrative Agent), equal to such Lender's
pro rata (based upon its Revolving Credit Commitment) share of each
such Letter of Credit, in all obligations and rights of the
Administrative Agent in
18
such Letter of Credit (including, without limitation, all
reimbursement obligations of the Borrowers with respect thereto
pursuant to the Letter of Credit Guaranty or otherwise).
(b) Sharing of Payments. In the event that the Administrative
Agent makes any payment in respect of the Letter of Credit Guaranty
and the Borrowers shall not have repaid such amount to the
Administrative Agent, the Administrative Agent shall charge the
Borrowers' account with the Administrative Agent in the amount of the
reimbursement obligation, in accordance with Section 2.17(c).
(c) Obligations Irrevocable. The obligations of a Lender to make
payments to the Administrative Agent for the account of the
Administrative Agent with respect to a Letter of Credit Guarantee or
the Letter of Credit Issuer with respect to a Letter of Credit (and of
the Borrowers to reimburse the Lenders for such payments) shall be
irrevocable, without any qualification or exception whatsoever and
shall be made in accordance with the terms and conditions of this
Agreement under all circumstances, including, without limitation, any
of the following circumstances:
(i) any lack of validity or enforceability of this Agreement
or any of the other Loan Documents;
(ii) the existence of any claim, setoff, defense or other
right which a Borrower may have at any time against a beneficiary
named in such Letter of Credit or any transferee of such Letter
of Credit (or any Person for whom any such transferee may be
acting), the Administrative Agent, the Letter of Credit Issuer,
any Lender, or any other Person, whether in connection with this
Agreement, such Letter of Credit, the transactions contemplated
herein or any unrelated transactions (including any underlying
transactions between either Borrower or any other party and the
beneficiary named in such Letter of Credit);
(iii) any draft, certificate or any other document presented
under such Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents;
19
(v) any failure by the Administrative Agent to provide any
notices required pursuant to this Agreement relating to such
Letter of Credit;
(vi) any payment by the Letter of Credit Issuer under any of
the Letters of Credit against presentation of a draft or
certificate which does not comply with the terms of such Letter
of Credit; or
(vii) the occurrence of any Default or Event of Default.
SECTION 2.19. Request for Issuance. Any Borrower may from time to
time, upon notice not later than 12:00 noon, New York City time, at
least three Business Days in advance, request the Administrative Agent
to assist the Borrowers in establishing or opening a Letter of Credit
by delivering to the Administrative Agent, with a copy to the Letter
of Credit Issuer, a Letter of Credit Application, together with any
necessary related documents. The Administrative Agent shall not
provide support, pursuant to the Letter of Credit Guaranty, if the
Administrative Agent shall have received written notice from the
Required Lenders on the Business Day immediately preceding the
proposed issuance date for such Letter of Credit that one or more of
the conditions precedent in Section 5.01 will not have been satisfied
on such date, and the Administrative Agent shall not otherwise be
required to determine that, or take notice whether, the conditions
precedent set forth in Section 5.01 have been satisfied.
SECTION 2.20. Letter of Credit Fees. The Borrowers shall pay to
the Administrative Agent with respect to any Letter of Credit, (i) a
letter of credit fee equal to one-eighth of one percent (1/8 of 1%) of
the face amount of each Letter of Credit requested and issued
hereunder payable to the Administrative Agent at its Domestic Lending
Office on the date of issuance of such Letter of Credit in immediately
available funds, plus (ii) a monthly letter of credit fee equal to
one-eighth of one percent (1/8 of 1%) of the average monthly face
amount of all Letters of Credit arranged for under or in connection
with this Agreement (plus customary bank charges at the rate
customarily made available to the Administrative Agent by the
applicable Letter of Credit Issuers for letters of credit of similar
amounts and terms), payable to the Administrative Agent at its
Domestic Lending Office on the first Business Day of each month in
arrears in immediately available funds. The Borrowers hereby authorize
the Administrative Agent to, and the Administrative Agent may, from
time to time, charge the
20
Borrowers' account with the Administrative Agent, pursuant to Section
2.17(c) of this Agreement, with the amount of any letter of credit
fees or charges due under this Section 2.20. The Administrative Agent
shall disburse to each Lender such Lender's pro rata share of any
payment of fees referred to in clauses (i) and (ii) above in
immediately available funds within two (2) Business Days of the
Administrative Agent's receipt of such payment."
1.24 A new Schedule 2.17(j), which reads as Schedule 2.17(j) annexed
hereto, is hereby added to and made a part of the Credit Agreement.
1.25 Article IV of the Credit Agreement is hereby amended by adding a new
Section 4.22 which reads as follows:
"SECTION 4.22. Inventory. All Eligible Inventory is of good and
merchantable quality, free from defects, and is not obsolete or
slow-moving. All Eligible inventory is located only at the locations
identified on Schedule I to the Security Agreement. The Borrowers keep
accurate records of their inventories and the costs thereof."
1.26 Section 5.01(a) of the Credit Agreement is hereby amended in its
entirety to read as follows:
"(a) The Administrative Agent shall have received a notice of
borrowing or request to assist in the issuance of a Letter of Credit
as required by Section 2.03 or 2.19 hereof."
1.27 Section 5.01(d) of the Credit Agreement is hereby amended in its
entirety to read as follows:
"(d) Each borrowing and request to assist in the issuance of a
Letter of Credit shall be deemed a recertification by each Borrower as
to its compliance with (b) and (c) above and a certification that
after giving effect to each Revolving Credit Loan and each Letter of
Credit, Availability is zero or greater."
1.28 Section 6.03 of the Credit Agreement is hereby amended by inserting
the words "and the Administrative Agent" immediately after all references to
"Agent" (other than in the 24th and 29th lines thereof) appearing therein.
1.29 Section 6.05 (excluding subsection (i) which is amended as set forth
below) of the Credit Agreement is hereby amended by deleting all references to
"Agent" appearing therein and substituting the words "Administrative Agent"
therefor.
21
1.30 Section 6.05(g) of the Credit Agreement is hereby amended by (a)
deleting the word "quarterly" appearing in the second parenthetical thereof and
substituting the word "monthly" therefor and (b) adding the following
parenthetical at the end thereof:
"(such projections to be updated by the Borrowers on a quarterly basis
thereafter)"
1.31 Section 6.05(i) of the Credit Agreement is hereby amended in its
entirety to read as follows:
"(i) the following information, documents or instruments no later
than the dates indicated without the benefit of any grace period
provided for in subparagraph (d) of Article VIII hereof:
(i) By May 31, 1997, real property mortgages, title policies
(with survey exceptions) and opinions of counsel and by June 30,
1997, real property surveys and amended title policies without
survey exceptions, in each case in form and substance
satisfactory to the Agent, covering all real property identified
on Schedule 6.05(i) hereto;
(ii) Weekly, no later than the second Business Day of each
week, an aging schedule of Receivables and a certificate executed
by the Financial Officer of the Borrowers calculating the
Borrowing Base and demonstrating compliance with the Availability
requirement;
(iii) Monthly, no later than the second Business Day of the
first full week of each month, a certificate, which shall be in
the form of Exhibit H hereto and which shall be in substance
acceptable to the Administrative Agent, executed by a Responsible
Officer of the Borrowers, detailing the locations of the
inventory and the total value of such inventory, the value of
such inventory designated as "excess inventory", and the value of
such inventory not designated as "excess inventory", by division,
at each such location;
(iv) Weekly, no later than the second Business Day of each
week, a certificate executed by a Responsible Officer of the
Borrowers, detailing the total value of the inventory, the value
of the inventory designated as "excess inventory" and the value
of the inventory not designated as "excess inventory";
22
(v) By the last day of each month through and including June
30, 1997, weekly cash flow and collateral projections for the
eight-week period immediately following such month; and
(vi) In addition to the foregoing, such other information
(including, without limitation, tax returns) regarding the
operations, business affairs and financial condition of the
Parent and its Subsidiaries as the Agent, the Administrative
Agent or any Lender may reasonably request."
1.32 The last three sentences of Section 6.08 of the Credit Agreement are
hereby amended in their entirety to read as follows:
"The Administrative Agent shall have the right to audit, as often as
it may request, the existence and condition of the accounts
receivable, inventory, accounts payable, books and records of the
Borrowers and their Subsidiaries and to review their compliance with
the terms and conditions of this Agreement and the other Loan
Documents. The Borrowers shall pay to the Administrative Agent for its
own account an audit fee for each such audit equal to $750 per day per
auditor."
1.33 All references in Sections 6.06, 6.07, 6.12 and 6.13 of the Credit
Agreement to the term "Agent" shall mean both the Agent and the Administrative
Agent.
1.34 Article VI of the Credit Agreement is hereby amended by adding a new
Section 6.15 which reads as follows:
"SECTION 6.15. Obligation to Liquidate Excess Inventory. If on
the last day of any month, Excess Inventory exceeds the amount set
forth below opposite such month, expeditiously dispose of such Excess
Inventory in accordance with the Borrowers' past business practices.
The proceeds of any such disposition shall be used to prepay
outstanding Revolving Credit Loans (without regard to minimum
aggregate principal or integral multiple requirements).
Month Excess Inventory Amount
----- -----------------------
April 1997 $9,900,000
May 1997 9,200,000
June 1997 7,700,000
July 1997 6,300,000
August 1997 4,100,000
September 1997 2,600,000
23
October 1997 1,700,000
November 1997 800,000
December 1997 800,000
January 1998 800,000
February 1998 800,000
March 1998 800,000"
1.35 All references in Section 7.01(c) of the Credit Agreement to the term
"Agent" shall mean both the Agent and the Administrative Agent.
1.36 Schedule 7.01(f) to the Credit Agreement is hereby amended in its
entirety to read as Schedule 7.01(f) annexed hereto.
1.37 Section 7.03 of the Credit Agreement is hereby amended by (a) deleting
the word "and" appearing immediately before clause (viii) thereof and
substituting a "," therefor and (b) deleting the "." at the end thereof and
substituting the following therefor:
", (ix) Guarantees by one Borrower of another Borrower's Indebtedness
to trade creditors (incurred in the ordinary course of such Borrower's
business) pursuant to agreements in form and substance satisfactory to
the Lenders and (x) Guarantees by a Borrower or a Guarantor of a
Borrower's (other than MegaKnits) factoring arrangements pursuant to
agreements in form and substance satisfactory to the Lenders."
1.38 Section 7.05 of the Credit Agreement is hereby amended in its entirety
to read as follows:
"SECTION 7.05. Consolidations, Mergers and Sales of Assets.
Consolidate with or merge into any other person, or sell, lease,
transfer or assign to any persons or otherwise dispose of (whether in
one transaction or a series of transactions) any of its assets
(whether now owned or hereafter acquired), or sell any of its
inventory other than in the normal course of business, or permit
another person to merge into it, or acquire all or substantially all
the capital stock or assets of any other person, except as required
under Section 6.15 hereof and except as set forth on Schedule 7.05
annexed hereto."
1.39 A new Schedule 7.05, which reads as Schedule 7.05 annexed hereto, is
hereby added to and made a part of the Credit Agreement.
1.40 Schedule 7.06 to the Credit Agreement is hereby amended in its
entirety to read as Schedule 7.06 annexed hereto.
24
1.41 Section 7.07 of the Credit Agreement is hereby amended to delete the
amount "$2,000,000" appearing therein and substitute the amount "$1,500,000"
therefor.
1.42 Section 7.08 of the Credit Agreement is hereby amended by deleting it
in its entirety and substituting "SECTION 7.08. Intentionally Omitted"
therefor.
1.43 Section 7.09 of the Credit Agreement is hereby amended by deleting it
in its entirety and substituting "SECTION 7.09. Intentionally Omitted"
therefor.
1.44 Section 7.10 of the Credit Agreement is hereby amended by deleting it
in its entirety and substituting "SECTION 7.10. Intentionally Omitted"
therefor.
1.45 Section 7.11 of the Credit Agreement is hereby amended in its entirety
to read as follows:
"SECTION 7.11. Pre-Tax Income. Permit the sum of the Net Income
and federal, state and local income taxes of the Parent and its
Subsidiaries (in each case computed and calculated in accordance with
GAAP) on a Consolidated basis, computed at the end of each fiscal
quarter for the four consecutive fiscal quarters then ended, to be
less than ($4,000,000), commencing with the fiscal quarter ending
December 31, 1997."
1.46 Section 7.12 of the Credit Agreement is hereby amended in its entirety
to read as follows:
"SECTION 7.12. Tangible Net Worth. Permit the Tangible Net Worth
of the Parent and its Subsidiaries on a Consolidated basis to be less
than (a) $15,000,000 at June 30, 1997 and June 30, 1998 and (b)
$18,000,000 at the end of any other fiscal quarter commencing with
March 31, 1997."
1.47 Section 7.14 of the Credit Agreement is hereby amended by (a) adding
the words "or the Administrative Agent" immediately following the word "Agent"
appearing in clause (ii) thereof and (b) deleting the following therefrom
"(iii) maturity factoring arrangements with respect to receivables generated in
Western Europe, or (iv)" and substituting "or (iii)" therefor.
1.48 Schedule 7.14 to the Credit Agreement is hereby amended in its
entirety to read as Schedule 7.14 annexed hereto.
1.49 Article VII of the Credit Agreement is hereby amended by adding a new
Section 7.21 which reads as follows:
25
"SECTION 7.21. Application of Tax Attributes. Apply the excess of
any amount paid to satisfy Federal, state, local or foreign tax
liability of the Parent and its Subsidiaries for a particular period
over the actual tax liability of such Persons for such period
(including, without limitation, amounts any such Person is entitled to
receive as a refund) to offset the tax liability of such Persons for
any other taxable period (it being understood that neither the
Borrowers nor the Parent nor any Subsidiary thereof shall elect to
receive any tax refunds in a form other than cash)."
1.50 Article VIII of the Credit Agreement is hereby amended as follows:
(a) by inserting the words "or Letter of Credit Guaranties"
immediately after the words "Letter(s) of Credit" appearing in clauses (b)
and (c) thereof;
(b) by amending in its entirety clause (n) thereof to read as follows:
"(n) ▇▇▇▇▇▇ Appelle shall cease to be the Chairman of the Parent,
unless a replacement reasonably satisfactory to the Required Lenders
is found within 180 days; or";
(c) by adding a new clause (o) to read as follows:
"(o) any Borrower (other than MegaKnits) shall not maintain a
factoring arrangement on terms and conditions acceptable to each of
the Agent and the Administrative Agent, with either CIT or another
financial institution acceptable to the Required Lenders or such
arrangement shall be amended in a manner as to cause a Material
Adverse Effect (it being understood and agreed that, for purposes
hereof, any amendment to such arrangement in respect of, or that
results solely in, a change to any fees, rates or charges thereunder
or customer credits thereunder solely with respect to any surcharge or
split-risk arrangements shall not be deemed to cause a Material
Adverse Effect; it being further understood and agreed that the
foregoing is not intended to be, nor shall the foregoing be deemed to
be, an exclusive list of amendments to a Borrower's factoring
arrangement that shall not be deemed to cause a Material Adverse
Effect) or CIT terminates the factoring arrangements with the
Borrowers (other than MegaKnits) entered into on the Amendment Date.";
(d) by deleting all references to "Agent" appearing therein (other
than such reference in clause (ii) of the last paragraph thereof
26
which shall remain the "Agent") and substituting the words "Administrative
Agent" therefor; and
(e) by deleting the words "to issue Letters of Credit" in lines 27
through 28 of the last paragraph thereof and substituting the words "to
issue or participate in Letter of Credit Guaranties" therefor.
1.51 Article IX of the Credit Agreement is hereby amended in its entirety
to read as follows:
"IX. AGENTS
In order to expedite the transactions contemplated by this
Agreement, (a) The Chase Manhattan Bank is hereby appointed to act as
Agent on behalf of the Lenders and (b) The CIT Group/Commercial
Services, Inc. is hereby appointed to act as Administrative Agent on
behalf of the Lenders. Each of the Lenders and each subsequent holder
of any Note or Letter of Credit Issuer by its acceptance thereof,
irrevocably authorizes the Agent to take such action on its behalf and
to exercise such powers hereunder and under the Security Documents and
other Loan Documents as are specifically delegated to or required of
the Agent by the terms hereof and the terms thereof together with such
powers as are reasonably incidental thereto. Each of the Lenders and
each subsequent holder of any Note or any Letter of Credit Issuer by
its acceptance thereof, irrevocably authorizes the Administrative
Agent to take such action on its behalf and to exercise such powers
hereunder and under the other Loan Documents as are specifically
delegated to or required of the Administrative Agent by the terms
hereof and the terms thereof together with such powers as are
reasonably incidental thereto. Neither the Agent, the Administrative
Agent, nor any of their respective directors, officers, employees or
agents shall be liable as such for any action taken or omitted to be
taken by it or them hereunder or under any of the Security Documents
and other Loan Documents or in connection herewith or therewith (a) at
the request or with the approval of the Required Lenders (or, if
otherwise specifically required hereunder or thereunder, the consent
of all the Lenders) or (b) other than to the extent that such action
or omission directly results in a loss, claim or liability arising out
of the gross negligence or willful misconduct of the Agent or
Administrative Agent (as the case may be) or any of their respective
directors, officers, employees or agents, as determined by a final
judgment of a court of competent jurisdiction.
27
The Administrative Agent is hereby expressly authorized on behalf
of the Lenders, without hereby limiting any implied authority, to
receive on behalf of each of the Lenders any payment of principal of
or interest on the Notes outstanding hereunder and all other amounts
accrued hereunder paid to the Administrative Agent, and promptly to
distribute to each Lender its proper share of all payments so
received. Each of the Administrative Agent and the Agent are hereby
expressly authorized on behalf of the Lenders, without hereby limiting
any implied authority, (a) to distribute to each Lender copies of all
notices, agreements and other material as provided for in this
Agreement or in the Security Documents and other Loan Documents as
received by the Agent or the Administrative Agent (as the case may be)
and (b) to take all actions with respect to this Agreement and the
Security Documents and other Loan Documents as are specifically
delegated to the Administrative Agent or the Agent (as the case may
be).
In the event that (a) any Borrower fails to pay when due the
principal of or interest on any Note, any amount payable under any
Letter of Credit or Letter of Credit Guaranty, or any fee payable
hereunder or (b) the Administrative Agent receives written notice of
the occurrence of a Default or an Event of Default, the Administrative
Agent within a reasonable time shall give written notice thereof to
the Lenders, and the Agent (upon the occurrence and continuance of an
Event of Default) or the Administrative Agent shall take such action
with respect to such Event of Default or other condition or event as
it shall be directed to take by the Required Lenders; provided,
however, that, unless and until the Administrative Agent or the Agent
(as the case may be) shall have received such directions, the
Administrative Agent or the Agent (as the case may be) may take such
action or refrain from taking such action hereunder or under the
Security Documents or other Loan Documents with respect to a Default
or Event of Default as it shall deem advisable in the best interests
of the Lenders.
Neither the Agent nor the Administrative Agent shall be
responsible in any manner to any of the Lenders for the effectiveness,
enforceability, perfection, value, genuineness, validity or due
execution of this Agreement, the Notes or any of the other Loan
Documents or Collateral or any other agreements or certificates,
requests, financial statements, notices or opinions of counsel or for
any recitals, statements, warranties or representations contained
herein or in any such instrument or be under any obligation to
ascertain or inquire as to the performance or observance of any of the
terms, provisions, covenants, conditions, agreements or obligations of
this Agreement or any of
28
the other Loan Documents or any other agreements on the part of the
Borrowers and, without limiting the generality of the foregoing, each
of the Agent and the Administrative Agent shall, in the absence of
knowledge to the contrary, be entitled to accept any certificate
furnished pursuant to this Agreement or any of the other Loan
Documents as conclusive evidence of the facts stated therein and shall
be entitled to rely on any note, notice, consent, certificate,
affidavit, letter, telegram, teletype message, statement, order or
other document which it believes in good faith to be genuine and
correct and to have been signed or sent by the proper person or
persons. It is understood and agreed that each of the Agent and the
Administrative Agent may exercise its rights and powers under other
agreements and instruments to which it is or may be a party
(including, without limitation, factoring arrangements), and engage in
other transactions with the Borrowers, as though it were not Agent or
Administrative Agent (as the case may be) of the Lenders hereunder.
Each of the Agent and the Administrative Agent shall promptly
give notice to the Lenders of the receipt or sending of any notice,
schedule, report, projection, financial statement or other document or
information pursuant to this Agreement or any of the other Loan
Documents and shall promptly forward a copy thereof to each Lender.
Neither the Agent, the Administrative Agent, nor any of their
respective directors, officers, employees or agents shall have any
responsibility to the Borrowers on account of the failure or delay in
performance or breach by any Lender other than the Agent or
Administrative Agent (as the case may be) of any of its obligations
hereunder or to any Lender on account of the failure of or delay in
performance or breach by any other Lender or the Borrowers of any of
their respective obligations hereunder or in connection herewith.
Each of the Agent and the Administrative Agent may consult with
legal counsel selected by it in connection with matters arising under
this Agreement or any of the other Loan Documents and any action taken
or suffered in good faith by it in accordance with the opinion of such
counsel shall be full justification and protection to it. Each of the
Agent and the Administrative Agent may exercise any of its powers and
rights and perform any duty under this Agreement or any of the other
Loan Documents through agents or attorneys.
29
The Administrative Agent and the Borrowers may deem and treat the
payee of any Note as the holder thereof until written notice of
transfer shall have been delivered as provided herein by such payee to
the Administrative Agent and the Borrowers.
With respect to the Loans made hereunder, the Notes issued to it
and any other Credit Event applicable to it, each of the Agent and the
Administrative Agent in its individual capacity and not as an Agent or
an Administrative Agent (as the case may be) shall have the same
rights, powers and duties hereunder and under any other agreement
executed in connection herewith as any other Lender and may exercise
the same as though it were not the Agent or the Administrative Agent
(as the case may be), and each of the Agent and the Administrative
Agent and their respective affiliates may accept deposits from, lend
money to and generally engage in any kind of business (including,
without limitation, factoring arrangements) with the Borrowers or
other affiliate thereof as if it were not the Agent or the
Administrative Agent (as the case may be).
Each Lender agrees (i) to reimburse the Administrative Agent and
the Agent in the amount of such Lender's pro rata share (based on its
Total Commitment hereunder) of any expenses incurred for the benefit
of the Lenders by the Administrative Agent or the Agent (as the case
may be), including counsel fees and compensation of agents and
employees paid for services rendered on behalf of the Lenders, not
reimbursed by the Borrowers and (ii) to indemnify and hold harmless
the Administrative Agent and the Agent and any of their respective
directors, officers, employees or agents, on demand, in the amount of
its pro rata share, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever
(including, without limitation, attorneys fees and disbursements)
which may be imposed on, incurred by or asserted against it in its
capacity as the Administrative Agent or the Agent (as the case may be)
or any of them in any way relating to or arising out of this Agreement
or any of the other Loan Documents or any action taken or omitted by
them or any of them under this Agreement or any of the other Loan
Documents, to the extent not reimbursed by the Borrowers; provided,
however, that no Lender shall be liable to the Agent or the
Administrative Agent (as the case may be) for any portion of such
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements to the extent that
such liabilities, obligations, losses, damages, penalties, actions,
judgment, suits, costs, expenses or disbursements directly
30
resulted from the gross negligence or willful misconduct of the Agent
or the Administrative Agent (as the case may be) or any of their
respective directors, officers, employees or agents, as determined by
a final judgment of a court of competent jurisdiction.
Each Lender acknowledges that it has, independently and without
reliance upon the Agent, the Administrative Agent or any other Lender
and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into
this Agreement and any other Loan Document to which such Lender is
party. Each Lender also acknowledges that it will, independently and
without reliance upon the Agent, the Administrative Agent or any other
Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own decisions in taking
or not taking action under or based upon this Agreement, any other
Loan Document, any related agreement or any document furnished
hereunder.
Subject to the appointment and acceptance of a successor Agent or
successor Administrative Agent as provided below, each of the Agent
and the Administrative Agent may resign at any time by notifying the
Lenders and the Borrowers. Upon any such resignation, the Lenders
shall have the right to appoint a successor Agent or successor
Administrative Agent (as the case may be). If no successor Agent or
successor Administrative Agent (as the case may be) shall have been so
appointed by such Lenders and shall have accepted such appointment
within 30 days after the retiring Agent or Administrative Agent (as
the case may be) gives notice of its resignation, then the retiring
Agent or Administrative Agent (as the case may be) may, on behalf of
the Lenders, appoint a successor Agent or successor Administrative
Agent (as the case may be) which shall be a financial institution with
an office (or an affiliate with an office) in New York, New York,
having a combined capital and surplus of at least $500,000,000. Upon
the acceptance of any appointment as Agent or Administrative Agent (as
the case may be) hereunder by a successor financial institution, such
successor shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent or
Administrative Agent (as the case may be) and the retiring Agent or
Administrative Agent (as the case may be) shall be discharged from its
duties and obligations hereunder and under each of the other Loan
Documents. After any Agent's or Administrative Agent's resignation
hereunder, the provisions of this Article shall continue in effect for
its benefit in respect of any actions taken or omitted
31
to be taken by it while it was acting as Agent or Administrative Agent
(as the case may be).
The Lenders hereby acknowledge that neither the Agent nor the
Administrative Agent shall be under any duty to take any discretionary
action permitted to be taken by the Agent or Administrative Agent (as
the case may be) pursuant to the provisions of this Agreement or any
of the other Loan Documents unless it shall be requested in writing to
do so by the Required Lenders.
Except for the references to "Agent" in Article X hereof (which
references to "Agent" shall mean only the Agent) and except as
expressly set forth in this Agreement (giving effect to the amendment
hereto entered into on the Amendment Date) all references in this
Agreement to the term "Agent" shall mean both the Agent and the
Administrative Agent."
1.52 Section 11.01 of the Credit Agreement is hereby amended by deleting
the word "and" at the end of clause (b) thereof, renumbering clause (c) thereof
to clause (d) thereof and adding a new clause (c) which reads as follows:
"(c) if to the Administrative Agent, at The CIT Group/Commercial
Services, Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇ ▇▇▇▇▇▇, with a copy to Fried, Frank, Harris, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇▇ First, Esq; and"
1.53 Section 11.03 of the Credit Agreement is hereby amended as follows:
(a) all references to "Agent" appearing in subsections (a), (b) and
(d) thereof shall mean the Agent and the Administrative Agent;
(b) subsection (c) thereof is amended by deleting the references to
"Agent" appearing in clauses (ii) and (iii) thereof and substituting the
words "Administrative Agent" therefor and by inserting the words "each of
the Administrative Agent and" immediately before each other reference to
"the Agent" appearing therein;
(c) subsection (e) thereof is amended by deleting the reference to
"Agent" appearing in the first line thereof and substituting the words
"Administrative Agent" therefor and by inserting a comma followed by the
words "the Administrative Agent" after the reference to "Agent" appearing
in the ninth line thereof; and
32
(d) subsection (f) thereof is amended by deleting the references to
"Agent" appearing therein and substituting the words "Administrative Agent"
therefor.
1.54 Section 11.04 of the Credit Agreement is hereby amended in its
entirety to read as follows:
"SECTION 11.04. Expenses; Indemnity. (a) Each Borrower agrees to
pay all reasonable out-of-pocket expenses incurred by each of the
Agent, the Administrative Agent and the Lenders in connection with the
preparation of this Agreement and the other Loan Documents or with any
amendments, modifications, waivers, extensions, renewals,
renegotiations or "workouts" of the provisions hereof or thereof
(whether or not the transactions hereby contemplated shall be
consummated) or incurred by the Agent, the Administrative Agent or any
of the Lenders in connection with the enforcement or protection of its
rights in connection with this Agreement or any of the other Loan
Documents or with the Loans made or the Notes or Letters of Credit
issued hereunder, or in connection with any pending or threatened
action, proceeding, or investigation relating to the foregoing,
including but not limited to the reasonable fees and disbursements of
counsel for each of the Agent and the Administrative Agent and
(without in any way limiting the audit fees payable by the Borrowers
to the Administrative Agent under Section 6.08 hereof) ongoing field
examination expenses and charges, and, in connection with such
enforcement or protection, the reasonable fees and disbursements of
counsel for the Lenders. Each Borrower further indemnifies the Lenders
from and agrees to hold them harmless against any documentary taxes,
assessments or charges made by any governmental authority by reason of
the execution and delivery of this Agreement or the Notes.
(b) Each Borrower indemnifies each of the Agent and the
Administrative Agent and each Lender and their respective directors,
officers, employees and agents against, and agrees to hold the Agent,
the Administrative Agent, each Lender and each such person harmless
from, any and all losses, claims, damages, liabilities and related
expenses, including reasonable counsel fees and expenses, incurred by
or asserted against the Lender or any such person arising out of, in
any way connected with, or as a result of (i) the use of any of the
proceeds of the Loans, (ii) this Agreement, the Guarantees, any of the
Security Documents or the other documents contemplated hereby or
thereby, (iii) the performance by the parties hereto and thereto of
their respective obligations hereunder and thereunder (including but
not limited to
33
the making of the Total Commitment) and consummation of the
transactions contemplated hereby and thereby, (iv) breach of any
representation or warranty, or (v) any claim, litigation,
investigation or proceedings relating to any of the foregoing, whether
or not the Agent, the Administrative Agent, any Lender or any such
person is a party thereto; provided, however, that such indemnity
shall not, as to the Agent, the Administrative Agent or any Lender,
apply to any such losses, claims, damages, liabilities or related
expenses to the extent that they directly result from the gross
negligence or willful misconduct of the Agent, the Administrative
Agent or any Lender as determined by a final judgment of a court of
competent jurisdiction.
(c) Each Borrower indemnifies, and agrees to defend and hold
harmless the Agent, the Administrative Agent and the Lenders and their
respective officers, directors, shareholders, agents and employees
(collectively, the "Indemnitees") from and against any loss, cost,
damage, liability, lien, deficiency, fine, penalty or expense
(including, without limitation, reasonable attorneys' fees and
reasonable expenses for investigation, removal, cleanup and remedial
costs and modification costs incurred to permit, continue or resume
normal operations of any property or assets or business of the
Borrowers or any Subsidiary thereof) arising from a violation of, or
failure to comply with any Environmental Law and to remove any Lien
arising therefrom (except to the extent directly resulting from the
gross negligence or willful misconduct of any Indemnitee, as
determined by a final judgment of a court of competent jurisdiction)
which any of the Indemnitees may incur or which may be claimed or
recorded against any of the Indemnitees by any person.
(d) The provisions of this Section 11.04 shall remain operative
and in full force and effect regardless of the expiration of the term
of this Agreement, the consummation of the transactions contemplated
hereby, the repayment of any of the Loans, the invalidity or
unenforceability of any term or provision of this Agreement or the
Notes, or any investigation made by or on behalf of the Agent, the
Administrative Agent or any Lender. All amounts due under this Section
11.04 shall be payable on written demand therefor."
1.55 Sections 11.06 and 11.07 of the Credit Agreement are hereby amended by
deleting all references to "Agent" appearing therein and substituting the words
"Administrative Agent" therefor.
34
1.56 Section 11.08 of the Credit Agreement is hereby amended by adding the
words "or the Administrative Agent (as the case may be)" immediately after all
references to "Agent" appearing therein.
1.57 Article XII of the Credit Agreement is hereby amended by adding the
words "or the Administrative Agent" immediately after all references to "Agent"
appearing therein.
1.58 New Exhibit G and Exhibit H, which read as Exhibit A and Exhibit B
annexed hereto, are hereby added to and made a part of the Credit Agreement.
1.59 Exhibit E to the Credit Agreement is hereby replaced in its entirety
to read as Exhibit C annexed hereto.
1.60 Schedule 4.01 to the Credit Agreement is hereby amended to delete the
state "Pennsylvania" set forth under the reference to "▇▇▇▇▇▇▇ Industries
Corporation."
SECTION 2. CONDITIONS PRECEDENT
Upon the execution and delivery of counterparts of this Eighth
Amendment Agreement (this "Agreement") by the parties listed below and the
fulfillment of the following conditions, which conditions must be satisfied on
or before April 30, 1997 in order for this Agreement to become effective, this
Agreement shall be deemed to have become effective as of the date hereof:
2.1 All representations and warranties contained in this Agreement, the
Credit Agreement or otherwise made in writing to the Agent or any Lender in
connection herewith shall be true and correct in all material respects after
giving effect to the amendments contained in this Agreement.
2.2 The Agent shall have received amendments to the Security Documents,
together with appropriate UCC-1 amendments, in form and substance satisfactory
to the Agent, such that the Agent for the ratable benefit of the Lenders and
itself has perfected security interests in all Grantors' receivables,
machinery, equipment, trademarks, intangibles and all inventory.
2.3 Each Lender shall have received its Term Note and Revolving Credit Note
(such Notes, with respect to certain Lenders, may be issued in replacement of
Notes delivered under the Credit Agreement prior to the Amendment Date), duly
executed by the Borrowers, payable to its order and otherwise complying with
the provisions of Section 2.04 of the Credit Agreement.
2.4 The Agent shall have received a Pledge Agreement (in form and substance
satisfactory to the Agent) relating to the pledge by the Parent, DKA and BIC of
all of the capital stock of the Borrowers (including MegaKnits) to the Agent,
for its own benefit and the ratable benefit of the Lenders, and certificates
evidencing the Pledged Stock (as defined in said Pledge Agreement), together
with undated stock
35
powers executed in blank, each duly executed by the Parent, DKA and BIC (as
applicable).
2.5 The Agent shall have received certified copies of requests for copies
of information on Form UCC-11 or reports from a reporting company satisfactory
to the Agent, listing all effective UCC financing statements, tax liens and
judgment liens which name as debtor any Borrower (including MegaKnits) and
which are filed in the appropriate offices in the states in which are located
the chief executive office and other operating offices of such Person, together
with copies of such financing statements.
2.6 No event shall have occurred and be continuing which constitutes a
Default or an Event of Default.
2.7 The Agent shall have received the $250,000 remaining balance of a
$500,000 amendment fee for the ratable benefit of the Lenders (based upon each
Lender's Total Commitment).
2.8 The Lenders shall have received the favorable written opinion of
outside counsel for the Borrowers and each of the Guarantors and Grantors,
substantially in the form of Exhibit D hereto, dated the Amendment Date,
addressed to the Lenders and satisfactory to the Agent.
2.9 The Lenders shall have received (i) a copy of the certificate or
articles of incorporation or constitutive documents, in each case as amended to
date, of each of the Borrowers, the Grantors and the Guarantors, certified as
of a recent date by the Secretary of State or other appropriate official of the
state of its organization, and a certificate as to the good standing of each
from such Secretary of State or other official, in each case dated as of a
recent date; (ii) a certificate of the Secretary of each Borrower, Grantor and
Guarantor, dated the Amendment Date and certifying (A) that attached thereto is
a true and complete copy of such person's By-laws as in effect on the date of
such certificate and at all times since a date prior to the date of the
resolution described in item (B) below, (B) that attached thereto is a true and
complete copy of authorizing resolutions adopted by such person's Board of
Directors, and that such resolutions have not been modified, rescinded or
amended and are in full force and effect, (C) that such person's certificate or
articles of incorporation or constitutive documents has not been amended since
the date of the last amendment thereto shown on the certificate of good
standing furnished pursuant to (i) above, and (D) as to the incumbency and
specimen signature of each of such person's officers executing this Agreement
or any other documents delivered in connection herewith; (iii) a certificate of
another of such person's officers as to incumbency and signature of its
Secretary; and (iv) such other documents as the Agent or any Lender may
reasonably request.
2.10 Each of the Borrowers (other than MegaKnits) shall have entered into a
factoring arrangement with CIT relating to the Borrowers' (other than
MegaKnits)
36
Receivables, in form and substance satisfactory to the Administrative Agent and
the Agent.
2.11 The Administrative Agent and the Agent shall have entered into an
agreement with CIT relating to the Borrowers' (other than MegaKnits) factoring
arrangement with CIT in form and substance satisfactory to the Administrative
Agent and the Agent.
2.12 The Agent shall have received such other documents as the Lenders or
the Agent or Agent's counsel shall reasonably deem necessary.
SECTION 3. MISCELLANEOUS
3.1 Each of the Borrowers (including MegaKnits) reaffirms and restates the
representations and warranties set forth in the Credit Agreement, as
applicable, and all such representations and warranties shall be true and
correct on the date hereof with the same force and effect as if made on such
date after giving effect to the amendments contained in this Agreement.
3.2 Except as herein expressly amended, the Credit Agreement and the other
documents executed and delivered in connection therewith are each ratified and
confirmed in all respects and shall remain in full force and effect in
accordance with their respective terms.
3.3 Except as specifically set forth herein, nothing herein contained shall
constitute a waiver or be deemed to be a waiver of any existing Defaults or
Events of Default, and the Lenders and Agent reserve all rights and remedies
granted to them by the Credit Agreement, the other documents executed and
delivered in connection therewith, by law and otherwise.
3.4 This Agreement may be executed by the parties hereto individually or in
combination, in one or more counterparts, each of which shall be an original
and all of which shall constitute one and the same agreement. A facsimile
signature page shall constitute an original for the purposes hereof.
3.5 The Borrowers (including MegaKnits), in addition to paying the
reasonable fees and expenses of counsel to the Agent and the Administrative
Agent, shall also pay the reasonable fees and expenses of counsel retained by
any of the Lenders in connection with this Agreement (it being understood and
agreed that each of the Agent and the Administrative Agent is engaging separate
outside counsel in connection with this Agreement and the transactions
contemplated hereby and that the Borrowers' joint and several obligations to
pay attorneys' fees and expenses apply to each such outside counsel).
3.6 Each of the Guarantors, by its signature below, (i) confirms in favor
of the Lenders that it consents to this Agreement, (ii) agrees that it has no
defense, offset,
37
claim, counterclaim or recoupment with respect to any of its obligations or
liabilities with respect to its guarantee and (iii) hereby irrevocably and
unconditionally confirms to the Agent, the Administrative Agent and the Lenders
that its guarantee is and shall continue to be in full force and effect in
accordance with its terms and shall continue to be applicable to the Credit
Agreement, as amended hereby.
3.7 THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
38
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
DONNKENNY APPAREL, INC.
By:
-------------------------------
Name:
Title:
▇▇▇▇▇▇▇ INDUSTRIES CORPORATION
By:
-------------------------------
Name:
Title:
CHRISTIANSBURG GARMENT
COMPANY INCORPORATED
By:
-------------------------------
Name:
Title:
MEGAKNITS, INC.
By:
-------------------------------
Name:
Title:
DONNKENNY, INC.
By:
-------------------------------
Name:
Title:
▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ BANK
(formerly known as Chemical Bank),
as Agent and Lender
By:
-------------------------------
Name:
Title:
THE CIT GROUP/COMMERCIAL SERVICES, INC.,
as Administrative Agent and Lender
By:
-------------------------------
Name:
Title:
THE BANK OF NEW YORK
By:
-------------------------------
Name:
Title:
FLEET BANK N.A.
By:
-------------------------------
Name:
Title:
40
