Exhibit 10.2
State Street Bank 000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
April 2, 1998
Hyde Athletic Industries, Inc.
00 Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xx. Xxxxxxx Xxxxxxxxx, Executive Vice President
Ladies and Gentlemen:
State Street Bank and Trust Company ("State Street") and CoreStates Bank, N.A.
("CoreStates" and together with State Street, collectively, the "Banks") has
made available to Hyde Athletic Industries, Inc. (the "Borrower") a $15,000,000
revolving credit facility and a $15,000,000 demand line of credit each as
described in a Credit Agreement dated August 31, 1993 by and between the
Borrower and the Bank, as amended from time to time (as amended, the "Credit
Agreement"). Terms not otherwise defined herein shall be used as defined in the
Credit Agreement.
The Borrower has requested a waiver of certain financial covenants contained in
the Credit Agreement, and the Banks have agreed to such waiver pursuant to the
terms hereof. Therefore, for good and valuable consideration, the receipt of
which is hereby acknowledged, the Borrower and the Banks hereby agree as
follows:
I. Waiver
1. Pursuant to Section 4.9 of the Credit Agreement, the Borrower is required
to have a consolidated Tangible Net Worth of the Borrower and its Subsidiaries
not less than $45,315,000 as of the fiscal quarter ending January 2, 1998.
Based upon financial statements of the Borrower as of January 2, 1998, the
Borrower's Tangible Net Worth was $41,156,000 as of the fiscal quarter ending
January 2, 1998. As a result of the foregoing, an Event of Default has occurred
under Section 7.1(c) of the Credit Agreement.
2. Pursuant to Section 4.12 of the Credit Agreement, the Borrower is required
to maintain a ratio of the consolidated Net Cash Flow of the Borrower and its
consolidated Subsidiaries to the consolidated interest expense of the Borrower
and its consolidated Subsidiaries of at least 3.5 to 1 for each fiscal year.
Based upon financial statements of the Borrower as of January 2, 1998, the
Borrower's ratio was (3.02) to 1. As a result of the foregoing, an Event of
Default has occurred under Section 7.1(c) of the Credit Agreement.
3. Pursuant to Section 5.11 of the Credit Agreement, the Borrower is required
to maintain a Net Income of the Borrower and its consolidated Subsidiaries of
not less than negative $500,000 in any fiscal quarter, not less than negative
$1,000,000 in any fiscal year or not to incur a loss in more than two
consecutive fiscally quarters. Based upon financial statements of the Borrower
as of January 2, 1998, the Net Income of the Borrower and its consolidated
Subsidiaries was negative $4,961,000 for the fiscal quarter ending January 2,
1998 and negative $4,737,000 for fiscal year 1997, and, in addition, the
Borrower and its consolidated Subsidiaries have incurred a loss in more than two
consecutive fiscal quarters. As a result of the foregoing, an Event of Default
has occurred under Section 7.1(c) of the Credit Agreement.
4. The Borrower has also informed the Banks that as of April 3, 1998, the
Borrower may be in violation of each of the above-described covenants, as well
as the quick ratio covenant set forth in Section 4.10 of the Credit Agreement
pursuant to which the Borrower is to maintain a quick ratio of not less than 1.5
to 1. As a result of such possible violations, further Events of Default may
occur under Section 7.1(c) of the Credit Agreement.
5. The Bank hereby waives the foregoing Events of Default for the financial
performance described above for the periods ending as of January 2, 1998 and as
of April 3, 1998 only. This waiver is a waiver of the Events of Default
described above and only for the periods and financial performance described
above. This waiver shall not be deemed to constitute a waiver of compliance
with any of the foregoing covenants for any other time period. In addition,
this waiver shall not be deemed to constitute a waiver of compliance with any
other financial performance or of any other term of the Credit Agreement or any
related document.
II. Miscellaneous
1. All terms and conditions of the Credit Agreement, the notes executed in
connection therewith, and all related documents are ratified and affirmed as of
the date hereof and the Borrower represents and warrants to the Bank that no
default or event of default has occurred thereunder other than as waived in
writing by the Bank.
2. Upon receipt of a fully executed copy of this letter agreement and such
other documents or instruments as the Bank may reasonably request, this letter
agreement shall be deemed to be an instrument under seal to be governed by the
laws of The Commonwealth of Massachusetts.
3. This letter agreement may be executed in counterparts each of which shall
be deemed to be an original document.
If the foregoing is acceptable to you, please have an authorized officer of the
Borrower execute this letter agreement below where indicated and return the same
to the undersigned.
Very truly yours,
State Street Bank and Trust Company
By: /s/ Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxx
Vice President
Accepted and Agreed:
Borrower:
Hyde Athletic Industries, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxxx
Executive Vice President
