EXHIBIT 10.50
[EXECUTION COPY]
RATIFICATION AND AMENDMENT AGREEMENT
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RATIFICATION AND AMENDMENT AGREEMENT (this "Agreement") dated as of
December 29, 1998, made by and among XXXXXX CORPORATION ("Borrower" and
sometimes hereinafter referred to as "Debtor") as Debtor and
Debtor-in-Possession, CLANTEXPORT, INC., XXXXXX XXXXX, INC., XXXX
LICENSING, INC., X.X. XXXXXX CLOTHING, INC., FROST BROS. ENTERPRISES, INC.,
SLT SOURCING, INC. and XXXXXX CANADA INC. (individually, "Guarantor",
collectively "Guarantors" and together with Borrower sometimes hereinafter
referred to individually as "Obligor" and collectively as "Obligors") and
THE CIT GROUP/COMMERCIAL SERVICES, INC. ("Lender").
W I T N E S S E T H:
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WHEREAS, Borrower has commenced a case under Chapter 11 of Title 11 of
the United States Code in the United States Bankruptcy Court for the
Southern District of New York (the "Bankruptcy Court"), and Borrower has
retained possession of its assets and is authorized under the Bankruptcy
Code to continue the operation of its business as debtor-in-possession; and
WHEREAS, prior to the commencement of the Chapter 11 Case (as
hereinafter defined) by Borrower, Lender made loans and advances and caused
to be issued letters of credit to the Borrower secured by substantially all
of the personal and real property of the Borrower and the guaranties by the
Guarantors of the present and future obligations of the Borrower, which
guaranties are secured by substantially all of the personal property of the
Guarantors, all as set forth in the Financing Agreements (as hereinafter
defined); and
WHEREAS, the Bankruptcy Court has entered an Order Authorizing Interim
Financing, Granting Senior Liens and Priority Administrative Expense,
Modifying Automatic Stay and Authorizing Debtor to Enter into Agreements
with The CIT Group/Commercial Services, Inc. and Authorizing the Assumption
of Existing Financing Agreements with Debtor (the "Interim Financing
Order") pursuant to which Lender will, upon the terms and subject to the
conditions thereof, make post-petition loans and advances and cause to be
issued letters of credit to the Borrower secured by all assets and
properties of the Obligors; and
WHEREAS, the Interim Financing Order provides that as a condition to
the making of such post-petition loans and advances and such other
financial accommodations, Borrower shall execute and deliver and cause the
Guarantors to execute and deliver this Agreement; and
WHEREAS, the Obligors desire to reaffirm their respective obligations
pursuant to the Financing Agreements, and acknowledge their continuing
liabilities to Lender thereunder in order to induce Lender to make such
post-petition loans and advances and such other financial accommodations to
Borrower; and
WHEREAS, the Borrower has also requested that Lender make amendments
to the Credit Agreement (as hereinafter defined) and Lender is willing to
do so subject to the terms and conditions contained herein.
NOW THEREFORE, in consideration of the foregoing, the mutual covenants
and agreements contained herein and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Lender and
Obligors mutually covenant, warrant and agree as follows:
1. DEFINITIONS
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1.1 Additional Definitions. As used herein, the following terms shall
have the respective meanings given to them below and the Financing
Agreements shall be deemed and are hereby amended to include, in addition
and not in limitation, each of the following definitions:
(a) "Budget" shall mean the operating forecast dated November 19,
1998 setting forth Borrower's projected sales, expenditures and cash flow
for the periods covered thereby or any other projections or forecasts
prepared by or on behalf of Borrower and delivered by Borrower to Lender,
which are acceptable to Lender at the time of delivery thereof.
(b) "Chapter 11 Case" shall mean the Chapter 11 case of the
Debtor under the Bankruptcy Code referred to as In re Xxxxxx Corporation,
Chapter 11 Case No. ________________, currently pending in the Bankruptcy
Court.
(c) "Credit Agreement" shall mean the Revolving Credit, Factoring
and Security Agreement, dated September 20, 1993, by and between Lender and
Borrower, and any and all amendments thereto, as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced.
(d) "Existing Valid Liens" shall have the meaning set forth in
Section 2.2 of this Agreement.
(e) "Financing Agreements" shall mean, collectively, the Credit
Agreement, together with all amendments thereto, including, without
limitation, this Agreement, supplements, agreements, documents,
instruments, guarantees, security agreements and mortgages at any time
executed and/or delivered by any of the Obligors in connection therewith or
related thereto, including, but not limited to, the documents comprising
Exhibits "A" and "B" to the Debtor's Motion for the Interim Financing
Order, as all of the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
(f) "Financing Order" shall mean and include the Interim
Financing Order and such other orders relating thereto or authorizing the
granting of credit by Lender to the Borrower on an emergency, interim or
permanent basis (the "Final Financing Order") pursuant to Section 364 of
the Bankruptcy Code as may be entered by the Bankruptcy Court, each in form
and substance satisfactory to Lender.
(g) "Petition Date" shall mean the date of the commencement of
the Chapter 11 Case.
(h) "Pre-Petition Collateral" shall mean, collectively, all
"Collateral" as such term may be defined in any of the Financing Agreements
and all other security for the Pre-Petition Obligations (as hereinafter
defined) as provided in the Financing Agreements immediately prior to the
Petition Date.
(i) "Pre-Petition Obligations" shall mean all loans, advances,
debts, obligations, liabilities, indebtedness, covenants and duties of
Obligors to Lender of every kind and description, however evidenced,
whether direct or indirect, absolute or contingent, joint or several,
secured or unsecured, due or not due, primary or secondary, liquidated or
unliquidated, arising before the Petition Date and whether arising under or
related to the Financing Agreements, by operation of law or otherwise and
whether incurred by any of the Obligors as principal, surety, endorser,
guarantor or otherwise and including, without limitation, all principal,
interest, letter of credit guaranty fees, forbearance fees, other fees of
Lender, factoring commissions, costs, expenses and attorneys' and
accountants' fees and expenses incurred in connection with any of the
foregoing and all indebtedness of Borrower to Lender arising from
Borrower's purchase of goods or services from any concern whose accounts
receivable are factored or financed by Lender.
(j) "Post-Petition Collateral" shall mean, collectively, all now
existing or hereafter acquired personal and real property and fixtures of
the estate of the Debtor, wherever located, of any kind or nature,
including, without limitation, all of the types or items of property
described as Collateral in the Financing Agreements, all other security for
the Pre-Petition Obligations and Post-Petition Obligations as provided in
the Financing Agreements and all property of the Debtor's estate upon which
Lender is granted a security interest or lien pursuant to a Financing Order
or by any United States Bankruptcy or District Court Judge.
(k) "Post-Petition Obligations" shall mean all now existing and
hereafter arising loans, advances, debts, obligations, liabilities,
covenants and duties of Debtor to Lender of every kind and description,
however evidenced, whether direct or indirect, absolute or contingent,
joint or several, secured or unsecured, due or not due, primary or
secondary, liquidated or unliquidated, arising on and after the Petition
Date and whether arising on or after the conversion or dismissal of the
Chapter 11 Case, or before, during and after the confirmation of any plan
of reorganization in the Chapter 11 Case, and whether arising under or
related to this Agreement, the other Financing Agreements, a Financing
Order, by operation of law or otherwise, and whether incurred by the Debtor
as principal, surety, endorser, guarantor or otherwise and including,
without limitation, all principal, interest, facility continuation fees,
early termination fees, letter of credit guaranty fees, collateral
management fees, other fees of Lender, factoring commissions, costs,
expenses and attorneys' and accountants' fees and expenses incurred in
connection with any of the foregoing and all indebtedness of Debtor to
Lender arising from the purchase by Debtor of goods or services from any
concern whose accounts receivable are factored or financed by Lender.
1.2 Amendments to Definitions in Financing Agreement.
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(a) All references to the term "Collateral" in any of the
Financing Agreements or any other similar term referring to the security
for the Pre-Petition Obligations in any of the Financing Agreements are
hereby amended to mean, collectively, the Pre-Petition Collateral and the
Post-Petition Collateral.
(b) All references to the Debtor, including, without limitation,
to the terms "Borrower", "Debtor", "us", "we" or "our" in any of the
Financing Agreements shall be deemed and each such reference is hereby
amended to mean the Debtor as defined herein, and its successors and
assigns (including any trustee or other fiduciary hereafter appointed as
its legal representatives or with respect to the property of the estate of
Debtor whether under Chapter 11 of the Bankruptcy Code or any subsequent
Chapter 7 case and its successors upon conclusion of the Chapter 11 Case).
(c) All references to the term "Financing Agreements" in any of
the Financing Agreements shall be deemed and each such reference is hereby
amended to include, in addition and not in limitation, this Agreement, all
of the Financing Agreements as ratified, assumed and adopted by the Debtors
pursuant to the terms hereof, as amended and supplemented hereby, and the
Financing Order, as each of the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
(d) All references to the term "Credit Agreement" in any of the
Financing Agreements shall be deemed and each such reference is hereby
amended to mean the Credit Agreement, as defined herein and amended hereby
and ratified, assumed and adopted by Borrower pursuant to the terms hereof
and the Financing Order, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
(e) All references to the term "Obligations" in this Agreement
and in any of the Financing Agreements shall be deemed to mean and each
such reference in the Financing Agreements is hereby amended to mean, both
the Pre-Petition Obligations and the Post-Petition Obligations.
1.3 Interpretation.
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(a) All references to the terms "Lender", the "Debtor" the
"Obligors" or any other person pursuant to the definitions in the recitals
hereto or otherwise shall include their respective successors and assigns
(and including as to the Debtor, any trustee or other fiduciary hereafter
appointed as its legal representatives or with respect to the property of
the estate of Debtor whether under Chapter 11 of the Bankruptcy Code or any
subsequent Chapter 7 case and its successor upon conclusion of the Chapter
11 Case).
(b) All references to any term in the singular shall include the
plural and all references to any term in the plural shall include the
singular.
(c) All terms not specifically defined herein which are defined
in the Uniform Commercial Code ("UCC") shall have the meaning set forth
therein, except that the term "Lien" or "lien" shall have the meaning set
forth in ss.E101(37) of the Bankruptcy Code.
2. ACKNOWLEDGMENT
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2.1 Pre-Petition Obligations. Each Obligor hereby acknowledges,
confirms and agrees that it is indebted to Lender for the Pre-Petition
Obligations, both absolute and contingent, as of December 28, 1998, in
respect of the loans and advances made to Borrower and letters of credit
caused to be issued for the account of Borrower pursuant to the Financing
Agreements and for the indebtedness of Borrower to Lender arising from the
purchase by Borrower of goods or services from any concern whose accounts
receivables are factored or financed by Lender in the aggregate principal
amount of approximately $70,547,401, together with interest accrued and
accruing thereon, letter of credit guaranty fees, and costs, expenses, fees
(including attorneys' fees) and other charges now or hereafter owed by
Obligors to Lender, all of which is unconditionally owing by Obligors to
Lender, without offset, defense or counterclaim of any kind, nature and
description whatsoever.
2.2 Acknowledgment of Security Interests. Each Obligor hereby
acknowledges, confirms and agrees that, subject only to the prior liens on
its property existing on the Petition Date, but only to the extent that
such liens are valid, perfected and non-voidable in accordance with
applicable law ("Existing Valid Liens"), Lender has and shall continue to
have valid, enforceable and perfected first priority and senior liens upon
and security interests in all Pre-Petition Collateral heretofore granted to
Lender pursuant to the Financing Agreements as in effect prior to the date
hereof to secure all of the Obligations, as well as valid and enforceable
first priority and senior liens upon and in all Post-Petition Collateral
granted to Lender under the Financing Order or hereunder or under any other
Financing Agreements or otherwise granted to or held by Lender.
2.3 Binding Effect of Documents. Each Obligor hereby acknowledges,
confirms and agrees that: (a) the Financing Agreements to which it is a
party have been duly executed and delivered to Lender by it and are in full
force and effect as of the date hereof, (b) the agreements and obligations
of each Obligor contained in the Financing Agreements to which it is a
party constitute the legal, valid and binding obligation of such Obligor
enforceable against it in accordance with their respective terms and such
Obligor has no valid defense, offset or counterclaim to the enforcement of
such obligations, and (c) Lender is and shall be entitled to all of the
rights, remedies and benefits provided for in the Financing Agreements.
2.4 No Release. Nothing contained herein shall be deemed to terminate,
modify or release any obligations of any Obligor or any non-debtor
guarantor or any other obligor to Lender with respect to the Pre-Petition
Obligations, the Post-Petition Obligations or otherwise.
3. ADOPTION AND RATIFICATION
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Each of the Obligors hereby (a) ratifies, assumes, adopts and agrees
to be bound by the Financing Agreements and (b) agrees to pay all of the
Pre-Petition Obligations. All of the Financing Agreements are hereby
incorporated herein by reference and hereby are and shall be deemed adopted
and assumed in full by each of the Obligors party thereto, and considered
as agreements between the respective Obligors and Lender. Each of the
Obligors hereby ratifies, affirms and confirms all of the terms and
conditions of the Financing Agreements to which it is a party, as amended
and supplemented pursuant hereto and the Financing Order, and each of the
Obligors agrees to be fully bound by the terms of the Financing Agreements
to which it is a party.
4. GRANT OF SECURITY INTEREST
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As collateral security for the prompt performance, observance and
payment in full of all of the Obligations (including the Pre-Petition
Obligations and the Post-Petition Obligations), Debtor, as
Debtor-in-Possession, hereby grants, pledges and assigns to Lender (subject
to Existing Valid Liens), and also confirms and reaffirms the prior grant
to Lender of, a continuing security interest in and liens upon, and rights
of setoff against, all of the Collateral (subject, as to priority only,
only to the fees of the United States Trustee and the Fee Carve-Out (as
defined in the Financing Order), wherever located, of any kind or nature,
including without limitation, the Pre-Petition Collateral, and all now
existing and hereafter acquired personal and real property of the estate of
the Debtor effective from the Petition Date, including, but not limited to,
the following:
(a)(i) all of Debtor's present and future accounts, including
without limitation, all of Debtor's rights to payment for goods sold or
leased or for services rendered, whether now existing or hereafter arising,
whether or not earned by performance, and whether invoiced under the name
of Debtor or any tradename or division of Debtor, (collectively,
"Accounts"); (ii) all right, title and interest in, to and in respect of
all goods described in invoices, documents, contracts or instruments with
respect to , or otherwise representing or evidencing, any Account or other
Collateral, including, without limitation, all returned, reclaimed or
repossessed goods, and (iii) all right, title and interest, and all
enforcement and other rights, remedies, and security and liens, in, to and
in respect of the Accounts and other Collateral, including, without
limitation, rights of stoppage in transit, replevin, repossession and
reclamation and other rights and remedies of an unpaid vendor, lienor or
secured party, guaranties or other contracts of suretyship with respect to
the Accounts, deposits or other security for the obligation of any account
debtor and credit and other insurance with respect to Accounts;
(b) all of Debtor's now owned or hereafter acquired chattel paper
instruments and documents;
(c) all of Debtor's general intangibles, rights, interests,
choses in action, causes of action (exclusive of causes of action and
recoveries under xx.xx. 510, 545, 547, 548, 549, 550 and 553 of the
Bankruptcy Code) and all other intangible personal property of every kind
and nature (other than Accounts) now owned or licensed or hereafter
acquired or licensed, including, without limitation, corporate or other
business records, loans and other obligations receivable, inventions,
designs, patents, patent applications, service marks, trademarks, trademark
applications, trade names, trade secrets, goodwill, registrations
copyrights, licenses, royalties, leasehold interests in real and personal
property, rights under any future contracts, customer lists, supplier
contracts, firm sale orders, partnerships and joint ventures, other
contracts and contract rights, tax refund claims, rights to
indemnification, reversionary interests in pension and profit sharing plans
and reversionary, beneficial, and residual interests in trusts
(collectively, "General Intangibles");
(d) all of Debtor's inventory, or every kind and description, now
or hereafter owned or acquired by or in the custody or possession, actual
or constructive, of Debtor, wherever located, including, without
limitation, all raw materials, work-in-process, and finished inventory of
any kind, nature or description, including, without limitation, men's,
women's, and children's apparel and accessories and any other personal
property held for sale, exchange or lease or furnished or to be furnished
under a contract of service or an exchange arrangement or used or consumed
in the business or in connection with the manufacturing, packing, shipping,
advertising, selling or finishing or such goods, inventory, merchandise and
other personal property, and all names or marks affixed to or to be affixed
thereto for purposes of selling the same by the seller, manufacturer,
lessor or licensor thereof and all right, title and interest therein and
thereto, wherever located, whether now owned or hereafter acquired
(collectively, "Inventory");
(e) all of Debtor's now owned and hereafter acquired equipment
and fixtures, of every kind and description, wherever located, including,
without limitation, any and all machinery used in connection with the
manufacture, sale, exchange or lease of goods or rendition of services,
machinery, tooling, tools, telephone equipment, computers, computer
hardware and related computer equipment and accessories (including software
and records), vehicles, furniture, trade fixtures and fixtures, all
attachments, components, parts, accessions and property now or hereafter
affixed thereto,installed thereon or used in connection therewith,and all
additions to and substitutions and replacements thereof and all existing
and future leasehold interests in equipment and fixtures, wherever located,
whether now owned or hereafter acquired and all licenses and other rights
of Debtor relating thereto, whether in the possession and control of Debtor
or in the possession and control of a third person for the account of
Debtor and all claims to the proceeds of insurance thereon and all
maintenance and warranty records relating thereto (collectively,
"Equipment");
(f) all of Debtor's now owned and hereafter acquired real
property, wherever located, of every kind and description, including, but
not limited to, all fee interests and leasehold interests, together with
all buildings, structures and other improvements located thereon and all
licenses, easements and appurtenances relating thereto (collectively, "Real
Estate");
(g) all present and future books and records relating to any of
the above, including, without limitation, all ledgers, books of account,
records, tapes, cards, computer programs, computer disks or tape files,
computer printouts, computer runs, computer data and other computer
prepared information in the possession or control of Debtor, any computer
service bureau or other third Person (collectively, "Books and Records");
and
(h) all products and proceeds of the foregoing, in any form,
including, without limitation, any insurance proceeds ("Insurance
Proceeds") and any claims against third persons for loss or damage to or
destruction of any or all of the foregoing.
5. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS
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In addition to the continuing representations, warranties and
covenants heretofore and hereafter made by Borrower to Lender, whether
pursuant to the Financing Agreements or otherwise, and not in limitation
thereof, Borrower hereby represents, warrants and covenants to Lender the
following (which shall survive the execution and delivery of this
Agreement), the truth and accuracy of which, or compliance with, being a
continuing condition of the making of loans by Lender:
5.1 Financing Order. The Interim Financing Order has been duly
entered, is valid, subsisting and continuing and has not been vacated,
modified, reversed on appeal, or vacated or modified by any Bankruptcy
Judge or District Court Judge and is not subject to any pending appeal or
stay.
5.2 Use of Proceeds. Except as otherwise provided by order of a court
of competent jurisdiction or in this Section 5.2, all loans and advances
and letters of credit provided by Lender to Borrower pursuant to a
Financing Order, the Financing Agreements or otherwise, shall be used
exclusively for general operating and working capital purposes of Borrower
in the ordinary course of its business and as set forth in the Budget. No
portion of any administrative expense claim or other claim relating to the
Chapter 11 Case shall be paid with the proceeds of such loans provided by
Lender to Borrower, other than those administrative expense claims and
other claims relating to the Chapter 11 Case directly attributable to the
operation of the business of the Borrower. Upon entry of the Final
Financing Order, in form and substance satisfactory to Lender, Borrower
shall pay the Pre-Petition Obligations in full or to the extent available
from the proceeds of the first loan thereafter made by Lender to Borrower,
it being understood that the amount of such loan may not exceed limitations
contained in the Financing Agreement or the Final Financing Order.
5.3 Budget. The Budget has been prepared by Borrower and presented to
Lender. The Budget has been thoroughly reviewed by Borrower and its
management and sets forth the working capital requirements of Borrower for
the period covered thereby. The Borrower will act in accordance with the
Budget and Lender has relied upon the Budget in determining to enter into
the post-petition financing arrangements provided for herein. The Borrower
shall provide Lender with a new Budget and projections not less than thirty
(30) business days prior to the end of the period covered by any prior
Budget or at Lender's request.
6. AMENDMENTS
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6.1 Amendments to Section 1. Section 1 of the Credit Agreement is
amended as follows:
(a) Section 1.5A of the Credit Agreement is amended and restated
in its entirety as follows:
"1.5A. 'Applicable Margin' shall mean (a) for the
initial 150 day term of this Agreement, 1.00%, (b)
for the next 90 day term of this Agreement, 1.25%,
and (c) thereafter, 1.75%."
(b) The following is added to Section 1 of this Credit Agreement
as Section 1.7A thereof:
"1.7A 'Availability Reserve' shall mean, at any
time of determination, Bankruptcy Court fees and
expenses incurred by professionals retained by
Borrower and by the Committee, as defined in the
Interim Financing Order, equal to the maximum
amount of the Fee Carve-Out, as defined in the
Financing Order, but in no event less than
$2,000,000."
(c) Section 1.18 of the Credit Agreement is amended and restated
in its entirety to read as follows:
"1.18 'Collateral' shall mean, collectively, the
Pre-Petition Collateral and the Post-Petition
Collateral."
(d) Sections 1.28(a) through (e) are amended and restated in
their entirety to read as follows:
"1.28 'Eligible Inventory' shall mean that
Inventory consisting of first quality finished
goods held for sale in the ordinary course of
business of Borrower and domestic raw materials
for Xxxxx Xxxxx Inventory and belts held for sale
by Borrower's Accessories Division that, at any
time when eligibility is to be determined, meets
all of the following requirements:
(a) Inventory that complies in all material respects with
all representations, warranties, covenants and other
applicable provisions of this Agreement and the other
Financing Agreements;
(b) Inventory that is subject to the first perfected
security interest of Lender and no other liens or
security interests except as permitted by this
Agreement;
(c) Inventory that is merchantable and fit for sale;
(d) Inventory that is not consigned to Borrower;
(e) Inventory consisting of finished goods that meets the
following criteria (and all other requirements for
Eligible Inventory):
Made for Sale
In Season Indicated Eligibility
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Prior to Fall 1998 No eligibility.
Fall 1998 Eligible through 3/31/99 and
ineligible thereafter with the
exception that such Inventory
related to the Childrenswear
Division of Borrower will be
eligible through 2/28/99.
Holiday 1998 Eligible through 3/31/99 and
ineligible thereafter with the
exception that such Inventory
related to the Childrenswear
Division will be eligible through
2/28/99.
Spring 1999 Eligible through 9/30/99 and
ineligible thereafter.
Transition/Summer 1999 Eligible through 9/30/99 and
ineligible thereafter.
Fall 1999 Eligible through 12/31/99 and
ineligible thereafter.
Holiday 1999/
Spring 2000 Eligible through 12/31/99 and
ineligible thereafter.
Notwithstanding the foregoing, all Childrenswear Division
Inventory will be ineligible after 2/28/99. In addition, all
Inventory of Non-Xxxxx Xxxxx Business Units will be
ineligible after 7/31/99;"
(e) Section 1.62A of the Credit Agreement is amended and restated
in its entirety to read as follows:
"1.62A 'Non-Notification Accounts' shall mean
Accounts of Borrower arising from sales made by
Borrower's Non-Xxxxx Xxxxx Business Units from
January 1, 1999 through May 31, 1999."
(f) The following is added to Section 1 as Section 1.62A-1
thereof:
"1.62A-1 'Non-Xxxxx Xxxxx Business Unit' shall
mean a division, subsidiary or other business unit
of Borrower which does not sell Xxxxx Xxxxx
Inventory."
(g) The following is added to Section 1 of the Credit Agreement
as Section 1.62A-2 thereof:
"1.62A-2 'Non-Xxxxx Xxxxx Eligible Inventory'
shall mean all Eligible Inventory other than Xxxxx
Xxxxx Eligible Inventory."
(h) Section 1.62B of the Credit Agreement is amended and restated
in its entirety to read as follows:
"1.62B 'Notification Accounts' shall mean Accounts
of Borrower arising from sales made by Borrower's
Non-Xxxxx Xxxxx Business Units after June 1,
1999."
(i) The following is added to Section 1 of the Credit Agreement
as Section 1.65A thereof:
"1.65A 'Xxxxx Xxxxx Business Unit' shall mean a
division, subsidiary or other business unit of
Borrower which sells Xxxxx Xxxxx Inventory."
(j) The following is added to Section 1 of the Credit Agreement
as Section 1.65B thereof:
"1.65B 'Xxxxx Xxxxx Eligible Inventory' shall mean
Eligible Inventory subject to any license
agreement between Xxxxx Xxxxx International Inc.
and Borrower, including, without limitation,
Eligible Inventory bearing any trademark licensed
to Borrower by Xxxxx Xxxxx International Inc. and
held for sale by a Xxxxx Xxxxx Business Unit of
Borrower and Eligible Inventory consisting of
belts held for sale by Borrower's Accessories
Division and domestic raw materials for such
belts."
(k) The following is added to Section 1 of the Credit Agreement
as Section 1.65C thereof:
"1.65C 'Xxxxx Xxxxx Inventory' shall mean
Inventory subject to any license agreement between
Xxxxx Xxxxx International Inc. and Borrower,
including, without limitation, Inventory bearing
any trademark licensed to Borrower by Xxxxx Xxxxx
International Inc."
6.2 Amendment of Section 3.1(a)(iii). Section 3.1(a)(iii) of the
Credit Agreement is amended and restated in its entirety to read as
follows:
(iii) Sixty percent (60%) of Xxxxx Xxxxx Eligible Inventory,
plus
(iv) (x) for the first 120 days of the initial term of this
Agreement, fifty-five percent (55%) of Non-Xxxxx Xxxxx
Eligible Inventory and (y) after such 120 day period,
fifty percent (50%) of Non-Xxxxx Xxxxx Eligible
Inventory,
provided, however, at no time shall sum of (x) the outstanding amount of
all Obligations plus (y) the Availability Reserve exceed the lesser of (A)
the aggregate amount of Revolving Loans and Letter of Credit Accommodations
available to Borrower under the Advance Formulas and (B) the Maximum
Credit.
6.3 Amendment of Section 3.1(c). Section 3.1(c) of the Credit
Agreement is amended and restated in its entirety to read as follows:
"(c) Notwithstanding anything to the contrary
contained herein or in any of the other Financing
Agreements, except in Lender's discretion, the
aggregate unpaid principal amount of Revolving
Loans outstanding at any time based on the value
of all Eligible Inventory shall not exceed (i)
$40,000,000 for the first 120 days of the initial
term of this Agreement and (ii) $25,000,000 at all
times after such 120 period (the 'Inventory
Sublimit')."
6.4 Amendment of Section 3.1(e). Section 3.1(e) of the Credit
Agreement is amended and restated in its entirety to read as follows:
"(e) Notwithstanding anything to the contrary
contained in this Agreement or in any of the other
Financing Agreements, at the request of Borrower,
Lender may, in its sole discretion, subject to the
Maximum Credit, make Revolving Loans and Letter of
Credit Accommodations to Borrower in excess of the
aggregate amount available under the Advance
Formulas, which excess shall be repayable in full
upon demand."
6.5 Addition of Section 3.1B. The Credit Agreement is hereby amended
by adding thereto the following Section 3.1B thereto:
"3.1B. No New Eurodollar Loans; Conversion of
Eurodollar Loans to Prime Rate Loans.
Notwithstanding anything to the contrary contained
in this Agreement, as of the Petition Date all
Eurodollar Loans shall be converted to Prime Rate
Loans, and from and after the Petition Date
Borrower shall not have the right to request, and
Lender shall have no obligation to make,
Eurodollar Loans."
6.6 Amendment of Section 3.2(f). Section 3.2(f) of the Credit
Agreement is amended and restated in its entirety to read as follows:
"(f) Notwithstanding anything to the contrary
contained herein or in any of the other Financing
Agreements, except in Lender's discretion, the
aggregate amount of all Letter of Credit
Accommodations pursuant hereto and all other
commitments and obligations made or incurred by
lender pursuant hereto for the account or benefit
of Borrower in connection therewith outstanding at
any time shall not exceed $30,000,000 (the 'Letter
of Credit Sublimit'."
6.7 Amendment of Section 3.3. Section 3.3 of the Credit Agreement is
amended and restate in its entirety to read as follows:
"3.3 Maximum Credit
--------------
The aggregate principal amount of Revolving Loans
and Letter of Credit Accommodations at any time
outstanding shall not exceed $85,000,000 (the
"Maximum Credit")."
6.8 Addition of Section 3.4A. Section 3.4A is added to the Credit
Agreement as follows:
"3.4A Collateral Management Fee
-------------------------
Borrower shall pay to Lender on the first day of
each month a collateral management fee in the
amount of $4,167 per month. The collateral
management fee provided for herein shall be in
addition to all other amounts payable by Borrower
under this Agreement and shall constitute part of
the Obligations. Such fee may, at Lender's option,
be charged directly to any account of Borrower
maintained with Lender."
6.9 Addition of Section 3.4B. Section 3.4B is added to the Credit
Agreement as follows:
"3.4B Field Examination Fee
---------------------
Borrower shall pay to Lender a per diem charge in
the amount of $750 per day for each of Lender's
field examiners, in the field and at any office of
Borrower, plus all out-of-pocket expenses and
costs incurred by Lender during the course of
Lender's field examinations. The field examination
fee provided herein shall be in addition to all
other amounts payable by Borrower under this
Agreement and the other Financing Agreements and
shall constitute part of the Obligations. Such fee
may, at Lender's option, be charged directly to
any account of Borrower maintained with Lender."
6.10 Amendment of Section 3.6(h). Section 3.6(h) of the Credit
Agreement is amended and restated in its entirety to read as follows:
"(h) For providing factoring services hereunder,
Borrower shall pay a factoring commission on the
Factored Accounts created in each calendar month
during the term of this Agreement in the amount
seventy-five hundredths of one percent (.75%) of
the gross face amount of such Factored Accounts,
less trade and cash discounts thereon. Factoring
commissions with respect to any calendar month
shall be due and payable by Borrower and shall be
charged to Borrower's account on such day that
sales are assigned to Lender."
6.11 Amendment of Section 3.6(k). Section 3.6(k) of the Credit
Agreement is deleted in its entirety and replaced with the following:
"(k) [Intentionally Deleted]"
6.12 Amendment of Section 3.6A. Section 3.6A of the Credit Agreement
is hereby deleted in its entirety and replaced with the following:
"3.6A [Intentionally Deleted]"
6.13 Amendment of Section 7.10. Section 7.10 is amended by adding the
following at the end thereof:
"In the event of (a) a sale of a Non-Xxxxx Xxxxx Business Unit of
Borrower or any part of the Accessories Division of Borrower,
then all of the net proceeds from such sale shall, subject to
Existing Valid Liens on the assets sold, be remitted by Borrower
to Lender for application to the Obligations or (b) a sale of
Inventory of a Non-Xxxxx Xxxxx Business Unit or the Accessories
Division of Borrower made other than in the ordinary course of
business, then the Person (including an employee of Borrower) who
sells such inventory for or on behalf of Borrower shall be
satisfactory to Lender. No such sale shall be made without the
prior written consent of Lender."
6.14 Addition of Section 7.17(f). Section 7.17(f) is added to the
Credit Agreement as follows:
"(f) Borrower shall deliver to Lender copies of all financial
reports, schedules and other materials and information at any
time furnished by Borrower to the Bankruptcy Court, any
creditors' committee, the U.S. Trustee or any of Borrower's
shareholders, concurrently with the delivery thereof to the
Bankruptcy Court, creditors' committee, U.S. Trustee or
shareholders, as the case may be."
6.15 Amendment of Section 8.1. Section 8.1 of the Credit Agreement is
amended and restated in its entirety to read as follows:
"8.1 Events of Default. The occurrence of any one or more of the
following event shall constitute an "Event of Default" hereunder:
(a) Borrower shall fail to pay any of the Obligations when
due; or
(b) any present or future representation, warranty or
statement of fact, other than as set forth in Section
6.11 above, when made by or on behalf of Borrower or
any Guarantor to Lender is false or misleading in any
material respect; or
(c) any present or future representation, warranty or
statement of fact made by Borrower as set forth in
Section 6.11 above when made by or on behalf of
Borrower is false or misleading in a respect or to an
extent that materially and adversely affects the
business, properties, operations or condition,
financial or otherwise, of Borrower; or
(d) Borrower or any Guarantor shall fail to observe or
perform any covenant or agreement contained in this
Agreement, the other Financing Agreements (other than a
Financing Order) or in any other document or instrument
referred to herein or therein other than as described
in Section 8.1(a) above; provided that if such failure
is capable of being remedied, such failure continues
unremedied for thirty (30) days after Lender has
notified borrower thereof; or
(e) an "event of default" (as defined in any of the other
Financing Agreements) shall occur; or
(f) there is a Change or Control; or
(g) after the commencement of the Chapter 11 Case Borrower
or any Guarantor shall default in the payment of any
amounts at any time due on any Indebtedness in excess
of $500,000 at any time owing to any one person other
than Lender or in the performance of any other term or
covenant or any evidence of same or other agreement
relating thereto or securing same or with respect to
any contract, lease, license or other obligation owed
to any person other than lender, which default
continues beyond the applicable cure period, if any,
with respect thereto; or
(h) after the commencement of the Chapter 11 Case a
judgement is rendered against Borrower or any Guarantor
in excess of $250,000 in any one case or in excess of
$500,000 in the aggregate and the same shall remain
undischarged for a period in excess of thirty (30) days
or execution shall at any time not be effectively
stayed; or
(i) Borrower shall suspend or discontinue doing business
for any reason other than by reason of the sale of
non-Xxxxx Xxxxx Units or Xxxxx Xxxxx Inventory of
Borrower's Accessories Division; or
(j) any Guarantee or any other guarantee of the Obligations
shall at any time cease to be in full force and effect,
or shall be declared void or invalid or the validity or
enforceability thereof shall be contested by any
Guarantor or any Guarantor shall deny it has any
further liability or obligation, or shall fail to
perform its obligations, under any Guarantee; or
(k) Xxxxxx XxxXxxxx Xxxxx & Co., LLC ceases to be business
consultant to Borrower and is not replaced within five
(5) days by a business consultant satisfactory to
Lender; or
(l) any event or circumstance occurs after entry of the
Interim Financing Order that materially and adversely
affects the business, properties, operations or
condition, financial or otherwise, of Borrower; or
(m) a violation of any Financing Order (other than as a
result of a modification thereof as approved by the
Bankruptcy Court, which modification, if initiated or
supported by Borrower, shall have been approved by
Lender) occurs during the pendency of the Chapter 11
Case; or
(n) the Chapter 11 Case is converted to a proceeding under
Chapter 7 of the Bankruptcy Code, or is terminated or
dismissed prior to confirmation of a plan of
reorganization; or
(o) if Borrower or any Guarantor is enjoined, restricted or
in any material way prevented by Court order from
continuing to conduct all or any material part of its
business affairs; or
(p) the occurrence of any condition or event which permits
Lender to exercise any of the remedies set forth in the
Financing Order, including, without limitation, any
'Event of Default', as defined in the Financing Order;
or
(q) conversion of the Chapter 11 Case to a Chapter 7 case
under the Bankruptcy Code; or
(r) dismissal of the Chapter 11 Case or any subsequent
Chapter 7 case either voluntarily or involuntarily; or
(s) any failure by Borrower observe or perform any of the
terms or conditions of any order or stipulation entered
by the Bankruptcy Court in its Chapter 11 Case; or
(t) the granting of a lien on or other interest in any of
any of Borrower's property, or an administrative
expense claim by any Bankruptcy or District Court Judge
which is superior to or ranks in parity with Lender's
security interest in or lien upon the Collateral or any
part thereof, the other Financing Agreements or the
Financing Order; or
(u) the Financing Order shall be modified without consent
of Lender reversed, revoked, remanded, stayed,
rescinded, vacated or amended on appeal or by any
Bankruptcy or District Court Judge; or
(v) Borrower or any Guarantor shall fail to pay when due
any post-petition rent, mortgage payment or charge of
any nature or description pursuant to any real property
lease, mortgage or contract with respect to premises at
which any Inventory is located (subject to any
applicable grace or cure period), including, but not
limited to, any warehouse utilized by any Borrower or
Guarantor and any and all other locations of the
Borrower and Guarantors; or
(w) entry of any Financing Order not consented to by Lender
or any financing order with respect to another lender
not consented to by Lender.
6.16 Amendment of Section 8.2(d). Section 8.2(d) of the Credit
Agreement is amended by adding the following after the first sentence
thereof:
"Without limiting the generality of the foregoing,
Lender may, in its discretion, apply proceeds of
Collateral, first to the Pre-Petition Obligations,
until such Pre-Petition Obligations are paid and
satisfied in full."
6.17 Amendment of Section 9.1(b). The first three sentences of Section
9.1(b) of the Credit Agreement are amended in their entirety to read as
follows:
"(b) Any checks or other forms of remittance
which may be received directly by Borrower in
respect of the Non-Notification Accounts, the
Non-Factored Accounts and other Collateral shall
not be commingled with Borrower's property, but
shall be segregated, held by Borrower in trust for
Lender as Lender's exclusive property and
immediately deposited by Borrower, in the
identical form received, with proper endorsements,
into such account or accounts as Lender may
designate from time to time. All amounts received
by Lender in respect of Non-Notification Accounts,
Non-Factored Accounts or other Collateral in
immediately available funds will be credited to
any account or accounts maintained by Lender
pursuant to this Agreement when received by
Lender, provided that solely for the purpose of
the calculation of interest, such immediately
available funds shall be deemed received two (2)
business days after receipt thereof, calculated at
a per annum rate of Prime Rate plus the Applicable
Margin. All amounts received by Lender in respect
of Non-Notification Accounts, Non-Factored
Accounts or other Collateral in remittances which
are not immediately available, will be credited to
any account or accounts maintained by Lender
pursuant to this Agreement two (2) business days
after such remittances have been collected,
calculated at a per annum interest rate of Prime
Rate plus the Applicable Margin."
6.18 Amendment of Section 10.1(a). Section 10.1(a) of the Credit
Agreement is amended and restated in its entirety to read as follows:
"Section 10.1 (a) Term; Termination. This
Agreement and the other Financing Agreements shall
become effective as of the date the initial
Financing Order is entered and shall continue in
full force and effect for a term ending one
hundred fifty (150) days after the initial
Financing Order is entered unless sooner
terminated pursuant to the terms of this Agreement
or pursuant to the terms of the Financing Order,
or unless extended upon the written consent of
Lender, at its sole option, for an additional
ninety (90) day term and thereafter, at Lender's
sole option, for an additional one hundred twenty
(120) day term. Notwithstanding the foregoing,
Lender may terminate this Agreement at any time
without notice upon the occurrence of an Event of
Default. All Obligations shall become due and
payable as of any termination of this Agreement
and, pending a final accounting, Lender may
withhold any balances in the Borrower's account
(unless supplied with an indemnity satisfactory to
Lender) to cover all of the Borrower's
Obligations, whether absolute or contingent. All
of Lender's rights, liens and security of
interests shall continue notwithstanding any such
termination until all Obligations have been paid
and satisfied in full."
6.19 Amendment of Section 10.1(b). Section 10.1(b) of the Credit
Agreement is amended and restated in its entirety to read as follows:
"(b) If an order confirming a plan of
reorganization with respect to Borrower has not
been entered by the end of the initial 150 day
term of this Agreement and Lender elects to renew
the Agreement for an additional ninety (90) term
after such initial 150 day term, then Borrower
shall pay to Lender a facility continuation fee in
the amount of $250,000 in consideration of
Lender's renewal of this Agreement for such
additional ninety (90) day term. If an order
confirming a plan of reorganization with respect
to Borrower has not been entered by the end of
such additional ninety (90) day term of this
Agreement and Lender elects to renew this
Agreement for an additional one hundred twenty
(120) day term, then Borrower shall pay to Lender
an additional facility continuation fee in the
amount of $250,000 in consideration of Lender's
renewal of this Agreement for such additional one
hundred twenty (120) day term. The facility
continuation fee and the additional facility
continuation fee provided for herein shall be in
addition to all other amounts payable by Borrower
under this Agreement and the Other Financing
Agreements and shall constitute part of the
Obligations. Such fees may, at Lender's option, be
charged directly to any account of Borrower
maintained with Lender.
6.20 Addition of Section 10.1(g). Section 10.1(g) is added to the
Credit Agreement as follows:
"(g) In the event that prior to consummation of a
plan of reorganization in the Chapter 11 Case, all
Obligations of Borrower to Lender are paid in full
from the proceeds of a loan or loans made to
Borrower by one or more other lenders, then
Borrower shall pay to Lender an early termination
fee in the amount of $250,000. Such early
termination fee shall be in addition to all other
amounts payable by Borrower under this Agreement
and constitute part of the Obligations. Such fee
may, at Lender's option, be charged directly to
any account of Borrower maintained with Lender."
6.21 Amendment of Section 10.8. Section 10.8 of the Credit Agreement
is amended and restated in its entirety to read as follows:
"10.8 This Agreement and the other Financing
Agreements and all other documents referred to
herein or therein have been executed and delivered
in New York, New York and, together with all
transactions and the obligations and rights
hereunder and thereunder, shall be governed by,
construed and interpreted in accordance with the
laws of the State of New York, except to the
extent that the provisions of the Bankruptcy Code
are applicable and specifically conflict with the
foregoing."
7. CONDITIONS PRECEDENT
--------------------
The following are conditions to Lender's extending further
revolving loans and letters of credit accommodations to Borrower pursuant
to the Credit Agreement and are in addition to such conditions contained in
the Credit Agreement:
(a) Borrower shall furnish to Lender all financial
information, projections, budgets, business plans, cash flows and
such other information as Lender shall reasonably request from
time to time;
(b) no trustee or examiner with expanded powers (beyond
those set forth in Section 1106(a)(3) and (4) of the Bankruptcy
Code) shall have been appointed or designated with respect to
Borrower, as Debtor or Debtor-in-Possession, or any of the
Guarantors, as Debtors or Debtors-in-Possession, or their
respective businesses, properties and assets and no motion or
proceeding shall be pending seeking such relief;
(c) the execution and/or delivery of this Agreement and all
other Financing Agreements to be delivered in connection herewith
by Borrower and Guarantors, in form and substance satisfactory to
Lender;
(d) all Bankruptcy Court Orders shall be satisfactory to
Lender's counsel;
(e) Debtor shall comply in full with the notice and other
requirements of the Bankruptcy Code and applicable Bankruptcy
Rules with respect to any relevant Financing Order in a manner
reasonably acceptable to Lender and its counsel;
(f) no material impairment of the value or priority of
Lender's security interests in the Collateral shall have occurred
from the date of the latest field examinations of Lender to the
Petition Date; and
(g) each Financing Order shall be satisfactory to Lender.
8. MISCELLANEOUS
-------------
8.1 Amendments and Waivers. Neither this Agreement nor any other
instrument or document referred to herein or therein may be changed,
waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought.
8.2 Further Assurances. Each Obligor shall, at its expense, at any
time or times duly execute and deliver, or cause to be duly executed and
delivered, such further agreements, instruments and documents and do or
cause to be done such further acts as may be necessary or proper in
Lender's opinion to evidence, perfect, maintain and enforce Lender's
security interest and the priority thereof in the Collateral and to
otherwise effectuate the provisions or purposes of this Agreement, any of
the other Financing Agreements or the Financing Order. Upon the request of
Lender, at any time and from time to time, each Obligor shall, at its cost
and expense, do, make, execute, deliver and record, register or file,
financing statements, and other instruments, acts, pledges, assignments and
transfers (or cause the same to be done) and will deliver to Lender such
instruments evidencing items of Collateral as may be requested by Lender.
8.3 Headings. The headings used herein are for convenience only and do
not constitute matters to be considered in interpreting this Agreement.
8.4 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of
which shall together constitute one and the same agreement.
8.5 Costs and Expenses. Borrower shall pay to Lender on demand all
reasonable costs and expenses that Lender pays or incurs in connection with
the negotiation, preparation, consummation, administration, enforcement,
and termination of this Agreement and the other Financing Agreements and
the Financing Order, including, without limitation: (a) attorneys' and
paralegals' fees and disbursements of counsel to Lender; (b) costs and
expenses (including attorneys' and paralegals' fees and disbursements) for
any amendment, supplement, waiver, consent, or subsequent closing in
connection with this Agreement, the other Financing Agreements, the
Financing Order and the transactions contemplated thereby; (c) costs and
expenses of lien and title searches and title insurance; (d) taxes, fees
and other charges for recording any agreements or documents with the Office
of Patents and Trademarks or any other governmental authority, and the
filing of UCC financing statements and continuations, and other actions to
perfect, protect, and continue the security interests and liens of Lender
in the Collateral; (e) sums paid or incurred to pay any amount or take any
action required of the Borrower under the Financing Agreements or the
Financing Order that the Borrower fails to pay or take; (f) costs of
appraisals, environmental audits, inspections and verifications of the
Collateral and including travel, lodging, and meals for inspections of the
Collateral and the Borrower's operations by Lender or its agent and to
attend court hearings or otherwise in connection with the Chapter 11 Case;
(g) costs and expenses of forwarding loan proceeds, collecting checks and
other items of payment, and establishing and maintaining payment accounts
and lock boxes; (h) costs and expenses of preserving and protecting the
Collateral; and (i) costs and expenses (including attorneys' and
paralegals' fees and disbursements) paid or incurred to obtain payment of
the Obligations, enforce the security interests and liens of Lender, sell
or otherwise realize upon the Collateral, and otherwise enforce the
provisions of this Agreement, the other Financing Agreements and the
Financing Order, or to defend any claims made or threatened against Lender
arising out of the transactions contemplated hereby (including, without
limitation, preparations for and consultations concerning any such
matters). The foregoing shall not be construed to limit any other
provisions of the Financing Agreements regarding costs and expenses to be
paid by the Obligors. All sums provided for in this Section 8.5 shall be
part of the Obligations, shall be payable on demand, and shall accrue
interest after demand for payment thereof at the highest rate of interest
then payable under the Financing Agreements. Lender is hereby irrevocably
authorized to charge any amounts payable hereunder directly to any of the
account(s) maintained by Lender with respect to Borrower.
8.6 Effectiveness. This Agreement shall become effective upon the
execution hereof by Lender and the entry of the Financing Order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
XXXXXX CORPORATION
Debtor and Debtor-in-Possession
By: /s/ Xxxx Xxxx
--------------------------------
Title: Executive Vice President &
General Counsel
CLANTEXPORT, INC.
By: /s/ Xxxx Xxxx
--------------------------------
Title: Executive Vice President
XXXXXX XXXXX, INC.
By: /s/ Xxxx Xxxx
--------------------------------
Title: Executive Vice President
XXXX LICENSING, INC.
By: /s/ Xxxx Xxxx
--------------------------------
Title: Executive Vice President
X.X. XXXXXX CLOTHING, INC.
By: /s/ Xxxx Xxxx
--------------------------------
Title: Executive Vice President
FROST BROS. ENTERPRISES, INC.
By: /s/ Xxxx Xxxx
--------------------------------
Title: Executive Vice President
SLT SOURCING, INC.
By: /s/ Xxxx Xxxx
--------------------------------
Title: Executive Vice President
XXXXXX CANADA INC.
By: /s/ Xxxx Xxxx
--------------------------------
Title: Executive Vice President
THE CIT GROUP/COMMERCIAL SERVICES, INC.
By: /s/ Xxxxxxx Xxxxxxxx
--------------------------------
Title: Senior Vice President
