CREDIT AGREEMENT AND GUARANTY
Exhibit 10.15
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CREDIT AGREEMENT AND GUARANTY dated as of August 15, 2003 among HAMPSHIRE GROUP, LIMITED, as Borrower, HAMPSHIRE Group, LIMITED, HAMPSHIRE DESIGNERS, INC., and ITEM-EYES, INC. as Letter of Credit Account Parties, HAMPSHIRE DESIGNERS, INC., HAMPSHIRE INVESTMENTS, LIMITED, GLAMOURETTE FASHION XXXXX, INC., and ITEM-EYES, INC. as Guarantors, and HSBC BANK USA, JPMORGAN CHASE BANK, THE CIT GROUP/COMMERCIAL SERVICES, INC., FLEET NATIONAL BANK, ISRAEL DISCOUNT BANK OF NEW YORK and BANK OF AMERICA, N.A. as Banks, and HSBC BANK USA, as Agent
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS, ACCOUNTING TERMS AND RULES OF CONSTRUCTION..........1
Section 1.01 Definitions................................................1
Section 1.02 Accounting Terms..........................................21
Section 1.03 Computation of Time Periods...............................22
Section 1.04 Rules of Construction.....................................22
ARTICLE II REVOLVING CREDIT LOANS.........................................22
Section 2.01 Revolving Credit..........................................22
Section 2.02 Notice and Manner of Borrowing............................22
Section 2.03 Conversions...............................................23
Section 2.04 Non-Receipt of Funds by Agent.............................23
Section 2.05 Interest..................................................23
Section 2.06 Notes.....................................................24
Section 2.07 Optional and Mandatory Prepayments........................24
Section 2.08 Method of Payment.........................................25
Section 2.09 Use of Proceeds...........................................26
Section 2.10 Minimum Amounts...........................................26
Section 2.11 Establishment of Loan Account; Collection of Accounts.....26
Section 2.12 Closing Fee............................................. .26
Section 2.13 Commitment Fee............................................26
ARTICLE III LETTERS OF CREDIT.............................................27
Section 3.01 Trade Letters of Credit; Cash Collateral for Letters of
Credit Expiring After Termination Date................................27
Section 3.02 Reimbursement Obligation..................................27
Section 3.03 Payment of Commissions, Expenses and Interest.............28
Section 3.04 Proper Drawing; Letter of Credit Issuing Bank's Honoring..28
Section 3.05 Standby Letters of Credit.................................29
Section 3.06 Amendment; Change; Modification; No Waiver................29
Section 3.07 U.C.P. and I.S.P.; Agreements and Acknowledgments;
Indemnification.......................................................29
Section 3.08 Licenses; Insurance; Regulations..........................31
Section 3.09 Airway and Steamship Guaranties...........................31
Section 3.10 Additional Security.......................................31
Section 3.11 Continuing Rights and Obligations.........................31
Section 3.12 Instructions; No Liability................................32
Section 3.13 Steamship Guaranty........................................32
Section 3.14 Letter of Credit Application and Agreement................32
Section 3.15 Existing Letters of Credit; Use of Term "Letter of
Credit Issuing Bank"..................................................33
Section 3.16 Borrower's Obligations Under Letters of Credit............33
ARTICLE IV PARTICIPATION..................................................33
Section 4.01 Participating Banks' Pro Rata Shares......................33
Section 4.02 Sale and Purchase of Participation........................33
Section 4.03 Participation in Fees and Collateral; Relationship........34
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Section 4.04 Procedures................................................34
Section 4.05 Collections and Remittances...............................34
Section 4.06 Sharing of Setoffs and Collections........................35
Section 4.07 Indemnification; Costs and Expense........................35
Section 4.08 Administration; Standard of Care..........................36
Section 4.09 Independent Investigation by the Participating Banks......37
Section 4.10 Participating Banks' Ownership of Interests in the
Participation; Repurchases by the Letter of Credit Issuing Banks......37
ARTICLE V GUARANTY........................................................38
Section 5.01 Guaranty..................................................38
Section 5.02 Guarantor's Guaranty Obligations Unconditional............38
Section 5.03 Waivers...................................................39
Section 5.04 Subrogation...............................................39
Section 5.05 Limitation of Liability...................................39
ARTICLE VI CONDITIONS PRECEDENT...........................................39
Section 6.01 Conditions Precedent to Initial Use of a Credit
Facility on and after the Effective Date..............................39
Section 6.02 Conditions Precedent to All Credit Facilities.............42
Section 6.03 Deemed Representation.....................................42
ARTICLE VII REPRESENTATIONS AND WARRANTIES................................43
Section 7.01 Incorporation.............................................43
Section 7.02 Corporate Power and Authority; No Conflicts...............43
Section 7.03 Legally Enforceable Agreements............................43
Section 7.04 Litigation................................................43
Section 7.05 Financial Statements......................................43
Section 7.06 Ownership and Liens.......................................44
Section 7.07 Taxes.....................................................44
Section 7.08 ERISA.....................................................44
Section 7.09 Subsidiaries; Ownership of Guarantors; Investments........44
Section 7.10 Operation of Business.....................................45
Section 7.11 No Default on Outstanding Judgments or Orders.............45
Section 7.12 No Defaults on Other Agreements...........................45
Section 7.13 Labor Disputes and Acts of God............................45
Section 7.14 Governmental Regulation...................................45
Section 7.15 Partnerships..............................................45
Section 7.16 Environmental Protection..................................45
Section 7.17 Solvency..................................................46
Section 7.18 Properties; Priority of Liens.............................46
ARTICLE VIII AFFIRMATIVE COVENANTS........................................46
Section 8.01 Maintenance of Existence..................................46
Section 8.02 Conduct of Business.......................................46
Section 8.03 Maintenance of Properties.................................46
Section 8.04 Maintenance of Records....................................46
Section 8.05 Maintenance of Insurance..................................46
Section 8.06 Compliance with Laws......................................46
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Section 8.07 Right of Inspection.......................................47
Section 8.08 Reporting Requirements....................................47
Section 8.09 Compliance With Environmental Laws........................49
ARTICLE IX NEGATIVE COVENANTS.............................................49
Section 9.01 Debt......................................................50
Section 9.02 Guaranties................................................50
Section 9.03 Liens.....................................................51
Section 9.04 Sale of Assets............................................52
Section 9.05 Transactions with Affiliates..............................52
Section 9.06 Investments; Acquisitions.................................53
Section 9.07 Mergers...................................................54
Section 9.08 Leases....................................................54
Section 9.09 Dividends.................................................54
Section 9.10 Restricted Payments.......................................54
Section 9.11 Fiscal Year...............................................54
Section 9.12 Changes, Amendments or Modifications......................54
Section 9.13 Nature of Business........................................55
Section 9.14 Double Negative Pledge....................................55
Section 9.15 Senior Secured Debt.......................................55
Section 9.16 Insurance Company Provisions..............................55
Section 9.17 Factoring Agreements......................................55
ARTICLE X FINANCIAL COVENANTS.............................................55
Section 10.01 Consolidated Tangible Net Worth..........................55
Section 10.02 Consolidated Fixed Charge Coverage Ratio.................55
Section 10.03 Consolidated Average Current Ratio.......................55
Section 10.04 Consolidated Capital Expenditures........................56
Section 10.05 Revolving Credit Loan and Insurance Loan Coverage........56
ARTICLE XI EVENTS OF DEFAULT..............................................56
Section 11.01 Events of Default........................................56
Section 11.02 Remedies.................................................58
ARTICLE XII THE AGENT AND COLLATERAL MONITOR..............................59
Section 12.01 Appointment, Powers and Immunities of Agent..............59
Section 12.02 Reliance by Agent........................................59
Section 12.03 Defaults.................................................59
Section 12.04 Rights of Agent as a Bank................................60
Section 12.05 Indemnification of Agent.................................60
Section 12.06 Documents................................................60
Section 12.07 Non-Reliance on Agent and Other Banks....................60
Section 12.08 Failure of Agent to Act..................................61
Section 12.09 Resignation or Removal of Agent..........................61
Section 12.10 Amendments Concerning Agency Function....................61
Section 12.11 Liability of Agent.......................................61
Section 12.12 Transfer of Agency Function..............................61
Section 12.13 Withholding Taxes........................................62
Section 12.14 Collateral Monitor.......................................62
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ARTICLE XIII YIELD PROTECTION.............................................63
Section 13.01 Additional Costs.........................................63
Section 13.02 Illegality...............................................64
Section 13.03 Certain Compensation.....................................64
ARTICLE XIV MISCELLANEOUS.................................................64
Section 14.01 Amendments and Waivers...................................64
Section 14.02 Usury....................................................65
Section 14.03 Expenses; Indemnification................................65
Section 14.04 Assignment; Participation; Additional Bank...............66
Section 14.05 Notices..................................................67
Section 14.06 Setoff; Sharing..........................................67
Section 14.07 Jurisdiction; Immunities.................................68
Section 14.08 Governing Law............................................68
Section 14.09 Counterparts.............................................68
Section 14.10 Exhibits and Schedules...................................69
Section 14.11 Table of Contents; Headings..............................69
Section 14.12 Severability.............................................69
Section 14.13 Integration..............................................69
Section 14.14 Jury Trial Waiver........................................69
Section 14.15 Spin-off of HIL..........................................69
Section 14.16 HSBC.....................................................70
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EXHIBITS AND SCHEDULES
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Exhibits
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Exhibit A.........Form of Pledge Agreement
Exhibit B.........Form of Security Agreement
Exhibit C.........Form of Trademark Security Agreement
Exhibit D.........Form of Borrowing Notice
Exhibit E.........Form of Borrowing Base Certificate
Exhibit F.........Form of Note
Exhibit G.........Form of Assignment and Acceptance
Exhibit H.........Form of Intercompany Demand Note
Schedules
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Schedule 1.01(a)..Eligible Inventory Locations
Schedule 1.01(b)..Eligible Trade Letter of Credit Locations
Schedule 1A.01....Existing Letters of Credit
Schedule 7.04.....Litigation
Schedule 7.06.....Trademarks
Schedule 7.08.....ERISA Matters
Schedule 7.09.....Direct and Indirect Subsidiaries; Ownership of Guarantors,
Investments
Schedule 7.13.....Labor Disputes and Acts of God
Schedule 9.03.....Permitted Liens
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CREDIT AGREEMENT AND GUARANTY dated as of August 15, 2003, among HAMPSHIRE
GROUP, LIMITED, ("Borrower"), HAMPSHIRE DESIGNERS, INC., ("Designers"),
HAMPSHIRE INVESTMENTS, LIMITED ("HIL"), GLAMOURETTE FASHION XXXXX, INC.,
("Glamourette"), ITEM-EYES, INC. ("Item-Eyes"), HSBC BANK USA ("HSBC"), JPMORGAN
CHASE BANK ("Chase"), THE CIT GROUP/COMMERCIAL SERVICES, INC. ("CIT"), FLEET
NATIONAL BANK, ("Fleet"), ISRAEL DISCOUNT BANK OF NEW YORK ("IDB") and BANK OF
AMERICA, N.A. ("BOA") (HSBC, Chase, CIT, Fleet, IDB and BOA individually a
"Bank" and collectively the "Banks"), HSBC BANK USA as Letter of Credit Issuing
Bank for all Letters of Credit other than Existing Letters of Credit, JPMORGAN
CHASE BANK as Letter of Credit Issuing Bank for the Existing Letters of Credit
and HSBC BANK USA, as Agent for the Banks (in such capacity, together with any
successors in such capacity, the "Agent").
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS, ACCOUNTING TERMS AND RULES OF CONSTRUCTION
Section 1.01 Definitions. As used in this Agreement, the following
terms have the following meanings (terms defined in the singular to have a
correlative meaning when used in the plural and vice versa):
"Accounts" means all of the accounts receivable as defined in the Borrower
Security Agreement and the Guarantor Security Agreements.
"Affiliate" means, as to any Person, any other Person: (a) which directly
or indirectly controls, or is controlled by, or is under common control with
such Person; (b) which directly or indirectly beneficially owns or holds five
percent (5%) or more of any class of voting stock of the such Person; or (c)
five percent (5%) or more of the voting stock of which is directly or indirectly
beneficially owned or held by such Person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise. The term "Affiliate"
shall include, without limitation, HIL.
"Agent" means HSBC, when acting in its capacity as Agent under any of the
Loan Documents, and any successor thereto.
"Agent's Office" means the address of HSBC as set forth on the signature
page of this Agreement, or such other address as HSBC may designate by written
notice to Borrower, the Guarantors and the Banks.
"Agreement" means this Credit Agreement and Guaranty.
"Airway Guaranty" has the meaning specified in Section 3.09 hereof.
"Applicable Margin" means with respect to a Eurodollar Loan, one and eight
tenths (1.80%) percent.
"Application" means the application by a Letter of Credit Party for a
Letter of Credit.
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"Assignment and Acceptance" means an Assignment and Acceptance
substantially in the form of Exhibit G hereto.
"Assignment of Proceeds Agreement" means Assignment of Factored Credit
Balance and Proceeds Agreement, in form and substance satisfactory to Agent,
duly executed by Borrower and the Restricted Subsidiaries and any Factor and a
Consent and Acknowledgment thereto duly executed by such Factor.
"Authorized Person" means any duly authorized officer or employee, or
combination thereof of Borrower.
"Availability for Revolving Credit Loans" means the lesser of (a) the
Revolving Credit Commitment minus the sum of: (i) the Letter of Credit
Obligations and (ii) the aggregate amount of Borrower's and its Restricted
Subsidiaries' outstanding obligations under the Unsecured Lines and (b) the Net
Borrowing Base minus the Letter of Credit Obligations.
"Availability Reserves" shall mean, as of any date of determination, such
reserves in amounts as Agent may from time to time establish and revise in good
faith in accordance with customary credit practices in the commercial finance
industry reducing the amount of Revolving Credit Loans and Letters of Credit
which would otherwise be available to the Borrower under the lending formula(s)
provided for herein: (a) to reflect events, conditions, contingencies or risks
which, as determined in good faith by Agent in accordance with its customary
credit practices, do or could reasonably be expected to adversely affect either
(i) the Collateral or its value, (ii) the assets or business of the Borrower or
any Restricted Subsidiary of the Borrower or (iii) the security interests and
other rights of Agent in the Collateral (including the enforceability,
perfection and priority thereof) or (b) to reflect Agent's good faith belief
that any collateral report or financial information furnished to it any Bank by
or on behalf of the Borrower or any Subsidiary of the Borrower, is or may have
been incomplete, inaccurate or misleading in any material respect or (c) in
respect of any state of facts which Agent determines in good faith constitutes
an Event of Default or may, with notice or the passage of time or both,
constitute an Event of Default. The amount of any Availability Reserve
established by Agent shall have a reasonable relationship to the event,
condition or other matter which is the basis for such reserve as determined by
Agent in good faith.
"Bank" or "Banks" has the meaning specified in the preamble to this
Agreement.
"Bank Parties" means Agent, each of the Banks and each of the Letter of
Credit Issuing Banks.
"Banking Day" means any day on which commercial banks are not authorized or
required to close in London, England, New York City, New York, Greenville, South
Carolina or Anderson, South Carolina.
"Board of Governors" means the Board of Governors of the Federal Reserve
System or any successor.
"Book Value" shall mean, as to any inventory in respect of which such
amount is to be determined, the lower of (a) the cost (as reflected in the
general ledgers of Designers, Item-Eyes, or, with the approval of Agent, any
other existing or future Subsidiary of the Borrower), as applicable or (b)
market value (both cost and market value being determined in accordance with
GAAP calculated on a first in first out basis).
"Borrower Pledge Agreement" means the Pledge Agreement executed by Borrower
in favor of Agent for the ratable benefit of the Bank Parties.
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"Borrower Security Agreement" means the Security Agreement executed by
Borrower in favor of Agent for the ratable benefit of the Bank Parties.
"Borrower Trademark Security Agreement" means the Trademark Security
Agreement executed by Borrower in favor of Agent for the ratable benefit of the
Bank Parties.
"Borrowing Base" shall mean, at any time, an amount equal to the sum of
(without duplication):
(a) eighty-five percent (85%) of the Net Amount of Eligible Accounts, plus
(b) the lesser of: (x) fifty percent (50%) of Net Amount of Eligible
Inventory, or (y) the amount for the period in any given year indicated below:
(i) $30,000,000 for the period January 1 through March 31,
(ii) $35,000,000 for the period April 1 through May 31,
(iii) $50,000,000 for the period June 1 through October 31, and
(iv) $25,000,000 for the period November 1 through December 31, plus
(c) fifty percent (50%) of the aggregate undrawn amount of all outstanding
Eligible Trade Letters of Credit, plus
(d) fifty percent (50%) of the amount of Eligible In-Transit Inventory,
plus
(e) the Supplemental Amount, less
(f) Availability Reserves.
"Borrowing Base Certificate" means the certificate substantially in the
form of Exhibit E annexed hereto.
"Borrowing Notice" has the meaning specified in Section 2.02 hereof.
"Capital Lease" means any lease which has been or should be capitalized on
the books of the lessee in accordance with GAAP.
"Cash Collateral" means a deposit by Borrower, made in immediately
available funds, to a savings, checking or time deposit account at HSBC or the
purchase by Borrower of a certificate of deposit issued by HSBC and the
execution of all documents and the taking of all steps required to give Agent a
perfected security interest for the benefit of the Banks in such deposit or
certificate of deposit.
"Change of Control" means any "person" or "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange Act) shall have become the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of Voting
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Shares entitled to exercise more than 51% of the total power of all outstanding
Voting Shares of the Borrower (including any Voting Shares which are not then
outstanding of which such person or group is deemed the beneficial owner). For
purposes of this definition, the term "Voting Shares" shall mean all outstanding
shares of any class or classes (however designated) of capital stock of the
Borrower entitled to vote generally in the election of members of the Board of
Directors thereof.
"Chase" means JPMorgan Chase Bank.
"CIT" has the meaning specified in Section 9.03(f) hereof.
"Code" means the Internal Revenue Code of 1986.
"Collateral" means any and all personal property subject to a Lien granted
by any of the Security Documents and this Agreement.
"Collateral Monitor" means HSBC, when acting in its capacity as Collateral
Monitor under any of the Loan Documents, and any successor thereto.
"Commitment" means, collectively, the Revolving Credit Commitment, the
Trade Letter of Credit Commitment and the Standby Letter of Credit Commitment.
"Consolidated Amortization" means the amortization or write-off of impaired
value adjustments of the intangible assets of Borrower and the Restricted
Subsidiaries, on a consolidated basis, all as determined in accordance with
GAAP.
"Consolidated Capital Expenditures" means the Dollar amount of gross
expenditures (including the principal portion of payments under Capital Leases)
made for real property, fixed assets, property, plant and equipment, and all
renewals, improvements and replacements thereto (including, but not limited to,
maintenance and repairs thereof but only to the extent required to be
capitalized in accordance with GAAP) incurred or paid by Borrower and the
Restricted Subsidiaries.
"Consolidated Depreciation" means depreciation of Borrower and its
Restricted Subsidiaries, on a consolidated basis, all as determined in
accordance with GAAP.
"Consolidated Earnings Before Interest, Taxes, Depreciation and
Amortization" means, for any period, Consolidated Net Income, plus Consolidated
Interest Expense, plus Consolidated Taxes, plus Consolidated Depreciation, plus
Consolidated Amortization, all for such period.
"Consolidated Fixed Charge Ratio" means a ratio of: (i) (a) Consolidated
Earnings Before Interest, Taxes, Depreciation and Amortization for such period,
less (b) Consolidated Capital Expenditures made by the Borrower or any
Restricted Subsidiary during such period, less (c) Consolidated Taxes paid
during such period, to (ii) the sum of (a) Consolidated Interest Expense for
such period, plus (b) Consolidated Principal Amortization for such period, in
each case excluding the performance of HIL from any of the foregoing
calculations.
"Consolidated Interest Expense" means, for any period, all interest paid or
required to be paid by Borrower and its Restricted Subsidiaries on all of their
respective Debt, including the Obligations, during such period.
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"Consolidated Inventory" means, at any time, the Inventory of Borrower and
its Restricted Subsidiaries on a consolidated basis, all as determined in
accordance with GAAP.
"Consolidated Net Income" means, for any period, the net income of Borrower
and its Restricted Subsidiaries, on a consolidated basis, all as determined in
accordance with GAAP.
"Consolidated Principal Amortization" means scheduled consolidated
principal payments of all funded debt of Borrower and the Restricted
Subsidiaries.
"Consolidated Subsidiaries" means all existing and future Subsidiaries of
Borrower, except HIL and any subsidiary of HIL, that should be included in
Borrower's consolidated financial statements, all as determined in accordance
with GAAP.
"Consolidated Tangible Net Worth" means the sum of (a) Consolidated Total
Tangible Assets less (b) Consolidated Total Liabilities, less (c) the investment
in HIL by Borrower or the Restricted Subsidiaries, at cost, without adjustment
for losses or income of HIL, and less (d) without duplication, the equity of
HIL, any advances or loans to HIL and guaranties by Borrower or its Restricted
Subsidiaries of the obligations of HIL.
"Consolidated Taxes" means, for any period, the income and franchise taxes
of Borrower and its Restricted Subsidiaries, on a consolidated basis, all as
determined in accordance with GAAP.
"Consolidated Total Tangible Assets" means the total assets of Borrower and
its Restricted Subsidiaries, on a consolidated basis, minus all intangible
assets (other than deferred taxes), including, but not limited to, non-compete
contracts, employment contracts, deferred or prepaid transactions cost,
capitalized research and development cost, capitalized interest, debt discount
and expenses, goodwill, patents, trademarks, copyrights, franchises, licenses
and other intangible assets, all as determined in accordance with GAAP.
"Consolidated Total Liabilities" means total liabilities and all
mandatorily redeemable preferred stock of Borrower and its Restricted
Subsidiaries, on a consolidated basis, all as determined in accordance with
GAAP.
"Credit Facilities" means, collectively, the Revolving Credit Loans and the
Letters of Credit.
"Debt" means: (a) indebtedness or liability for borrowed money, or for the
deferred purchase price of property or services (including trade obligations);
(b) the principal portion of obligations as lessee under Capital Leases; (c)
obligations under letters of credit issued for the account of any Person; (d)
all obligations arising under bankers' or trade acceptance facilities of any
Person; (e) all guarantees, endorsements (other than for collection or deposit
in the ordinary course of business), and other contingent obligations to
purchase any of the items included in this definition, to provide funds for
payment, to supply funds to invest in any Person, or otherwise to assure a
creditor against loss; and (f) all obligations secured by any Lien on property
owned by such Person, whether or not the obligations have been assumed. For
purposes of the foregoing, the amount of any Debt described in clause (e) shall
be equal to the lesser of (A) the amount of the primary obligation in respect to
which such guaranty is issued and (B) the maximum liability amount under the
terms of such guaranty.
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"Default" means any event which, with the giving of notice or lapse of
time, or both, would become an Event of Default.
"Default Rate" means, at any time, a rate of interest equal to 2% per annum
plus the highest rate that would then be applicable to Prime Rate Loans;
provided, that, if the Default Rate is implemented and the applicable Obligation
is a Revolving Credit Loan, Default Rate shall mean, with respect to an amount
of any such Revolving Credit Loan not paid when due, a rate per annum equal to
two percent (2%) above the Interest Rate then in effect thereon.
"Designers" means Hampshire Designers, Inc., a Delaware corporation.
"Designers Pledge Agreement" means the Pledge Agreement executed by
Designers in favor of Agent for the ratable benefit of the Bank Parties.
"Designers Security Agreement" means the Security Agreement executed by
Designers in favor of Agent for the ratable benefit of the Bank Parties.
"Designers Trademark Security Agreement" means the Trademark Security
Agreement executed by Designers in favor of Agent for the ratable benefit of the
Bank Parties.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"Effective Date" means on the date as of which (a) this Agreement shall be
executed by all the parties hereto and delivered to the Agent and (b) all the
conditions precedent required to have been satisfied on or before the first
extension of credit hereunder pursuant to Article 6 hereof shall have been
satisfied or waived (whether temporarily or otherwise) in writing by the Agent.
The Agent shall notify the Borrower and the Banks of the Effective Date if other
than the date of the execution of this Agreement; provided, however, that, the
failure to give such notice shall not alter the Effective Date or any of any
Bank Party's rights under this Agreement and the other Loan Documents.
"Eligible Accounts" shall mean (a) the trade accounts receivable created in
the ordinary course of business by Designers, Item-Eyes and, with the approval
of Agent and the Required Banks, any other existing or future Subsidiary of the
Borrower, which (i) are subject to a valid, first priority, fully perfected
security interest in favor of Agent for the ratable benefit of the Bank Parties
and which conform to the representations and warranties contained herein and in
the Loan Documents, and (ii) at all times shall continue to be acceptable to
Agent in all respects (the "Non-Factored Accounts"), and, (b) the trade accounts
receivable of Designers, Item-Eyes and, with the approval of Agent, any other
existing or future Subsidiary of the Borrower, created in the ordinary course of
business which have been purchased, credit approved and continue to be credit
approved by the Factor under a Factoring Agreement, provided that such factored
accounts receivable remain subject to an Assignment of Proceeds Agreement which
is satisfactory in all respects to Agent (the "Factored Accounts").
In general, the Non-Factored Accounts may, as determined by Agent in good
faith, be deemed eligible if:
(a) delivery of the merchandise has been completed;
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(b) no return, rejection or repossession has occurred;
(c) the merchandise has been accepted by the account debtor without
dispute, setoff, defense or counterclaim;
(d) such trade account receivable is unconditionally payable in Dollars
within 90 days of the invoice date and is not evidenced by a promissory note,
chattel paper or any other instrument or document, Notwithstanding the prior
sentence, a trade account receivable payable more than 90 days but less than 150
days from the invoice date may be eligible (the "Over 90 Receivables") provided
that, (i) such receivable is due from Marmaxx Group, Inc., Burlington Coat
Factory or Xxxx Stores, Inc. or such other customer approved by Agent, (iii)
such receivable is scheduled in sufficient detail to the Borrowing Base
Certificate which includes such receivable, and (iv) such receivable is not more
than 15 days past due;
(e) except as otherwise provided pursuant to subclause "(d)" above with
respect to the Over 90 Receivables, no more than 60 days has elapsed from the
invoice due date and no more than 120 days has elapsed from the invoice date;
(f) the account debtor is not an Affiliate of the Borrower or any
Restricted Subsidiary;
(g) such trade account receivable does not constitute an obligation of the
United States or any other Governmental Authority;
(h) the chief executive office of the account debtor with respect thereto
is located in the continental United States, unless the Receivable is supported
by a letter of credit or other similar obligation satisfactory to Agent or Agent
has received evidence that credit insurance with respect to such Non-Factored
Account has been assigned to Agent and names Agent as loss payee;
(i) the account debtor with respect thereto is not also a supplier or a
creditor of the Borrower or any Restricted Subsidiary, unless such supplier or
creditor has executed a no offset letter satisfactory to Agent (but the portion
of the Non-Factored Accounts of such account debtor in excess of the amount at
any time and from time to time owed by such Subsidiary of Borrower to such
account debtor or claimed to be owed may deemed an Eligible Account);
(j) not more than 50% of the aggregate amount of all trade account
receivables from an account debtor with respect thereto remain unpaid more than
60 days past the invoice due date or 120 days past the invoice date;
(k) the account debtor is not insolvent, subject to a bankruptcy,
reorganization, receivership, insolvency arrangement or any similar proceeding;
and
(l) no facts, events or occurrences exist that would impair the validity,
enforceability or collectibility of such trade account receivable or reduce the
amount payable, or delay payment thereunder, all as determined in the good faith
by Agent (provided, that, as to facts, events or occurrences that reduce the
amount payable under such receivable the amount payable thereunder as so
reduced, may be deemed an Eligible Account).
-7-
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The aggregate amount of all Eligible Accounts of Designers, Item-Eyes and,
with the approval of Agent, any other existing or future Subsidiary of the
Borrower, shall be reduced by any reserves deemed necessary by Agent in good
faith, including a reserve in an amount which would represent the historical or
anticipated ratio of dilution (i.e. returns, discounts, claims, credits, and
allowances) to collections to the extent that such amounts are not already
included in the Availability Reserves.
"Eligible Inventory" shall mean inventory of Designers, Item-Eyes and, with
the approval of Agent and the Required Banks, any other existing or future
Subsidiary of the Borrower, comprised solely of uncut fabric, yarn and finished
goods located in the United States which meets all of the following
specifications:
(a) the inventory is owned by Designers, Item-Eyes and, with the approval
of Agent, any other existing or future Subsidiary of the Borrower, free and
clear of any existing Lien (other than warehouseman's and landlord's liens as
long as a satisfactory waiver has been entered into with Agent), other than the
liens and security interests in favor of Agent under the Loan Documents, it is
not held on consignment and may be lawfully sold and it continues to be in full
conformity with any representations and warranties made under the Loan Documents
by the Borrower and its Restricted Subsidiaries to Agent with respect thereto;
(b) Designers, Item-Eyes and, with the approval of Agent, any other
existing or future Subsidiary of the Borrower, has the right to assignment
thereof and the power to grant liens thereon and security interests with respect
thereto;
(c) the inventory arose or was acquired in the ordinary course of business
of Designers, Item-Eyes or, with the approval of Agent, any other existing or
future Subsidiary of the Borrower, as applicable and does not represent
returned, second quality or damaged goods;
(d) the inventory is readily marketable for sale by Designers, Item-Eyes
and, with the approval of Agent and the Required Banks, any other existing or
future Subsidiary of the Borrower;
(e) the inventory is located at one of the addresses for locations of
Collateral set forth on Schedule 1.01(a) and with respect to which inventory
Agent, for the ratable benefit of the Bank Parties, has been granted and has
perfected a valid, first priority security interest therein;
(f) the inventory is not goods to be returned to a supplier of the Borrower
or any Restricted Subsidiary, or, with the approval of Agent, any other existing
or future Subsidiary of the Borrower;
(g) the inventory is not samples;
(h) if the inventory is sold under a licensed trademark, with respect to
each Required Licensor, Agent shall have entered into a licensor waiver letter,
in form and substance satisfactory to Agent, with such Required Licensor with
respect to the rights of Agent to use the trademark to sell or otherwise dispose
of such inventory;
(i) the inventory is Eligible Prior Season Inventory;
(j) the inventory is not obsolete, slow-moving or unmerchantable and is and
at all times shall continue to be acceptable to Agent in all respects as
determined by Agent in good faith;
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(k) the inventory, other than Eligible In-Transit Inventory, is not located
in a warehouse or on leased premises unless Agent has entered into a
warehouseman's waiver or landlord's waiver, as the case may be, on terms
reasonably satisfactory to Agent.
"Eligible In-Transit Inventory" shall mean "in transit" fabric, yarn or
finished goods inventory of Designers, Item-Eyes and, with the approval of Agent
and the Required Banks, any other existing or future Subsidiary of the Borrower,
shipped under an Eligible Trade Letter of Credit, the amount of which is equal
to the face amount of the related Eligible Trade Letter of Credit, provided that
such inventory (a) has been paid for by the Borrower and has not otherwise been
included in Eligible Inventory or under an Eligible Trade Letter of Credit, and
(b) such inventory would otherwise qualify as Eligible Inventory and is
otherwise satisfactory in all respects as determined by Agent in good faith.
"Eligible Prior Season Inventory" shall mean Prior Season Inventory which
Agent determines, in good faith, to be eligible inventory. In general, Prior
Season Inventory may be deemed Eligible Prior Season Inventory if (a) it is
subject to a confirmed purchase order, (b) the cost of such inventory is an
amount in the general ledger of Designers, Item-Eyes, or such other existing or
future Subsidiary of the Borrower approved by Agent, as the case may be, which
will produce, when such inventory is sold, a gross profit margin which is
satisfactory to Agent, and (c) such inventory would otherwise qualify as
Eligible Inventory and is otherwise satisfactory in all respects to Agent in
good faith.
"Eligible Trade Letter of Credit" shall mean a commercial letter of credit
issued by Agent for the account of the Borrower covering fabric, yarn or
finished goods inventory of Designers, Item-Eyes and, with the approval of Agent
and the Required Banks, any other existing or future Subsidiary of the Borrower,
for which (a) the documents of title have been or will be consigned to Agent,
(b) the underlying goods have been or will be insured to the satisfaction of
Agent, and (c) the underlying goods have been or will be shipped to an eligible
location in the United States set forth on Schedule 1.01(b).
"Environmental Discharge" means any discharge or release by Borrower or any
Restricted Subsidiaries of any Hazardous Materials in violation of any
applicable Environmental Law.
"Environmental Law" means any Law relating to pollution of the environment,
including Laws relating to noise or to emissions, discharges, releases or
threatened releases of Hazardous Materials into the workplace, the community or
the environment, or otherwise relating to the generation, manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials.
"Environmental Notice" means any complaint, order, citation, letter,
inquiry, notice or other written communication from any Governmental Authority
(a) affecting or relating to Borrower's or any Restricted Subsidiaries'
violation of any Environmental Law in connection with any activity or operations
at any time conducted by Borrower or such Restricted Subsidiary, (b) relating to
the unpermitted occurrence or Presence of or exposure to or possible or
threatened or alleged occurrence or presence of or exposure to Environmental
Discharges or Hazardous Materials at any of Borrower's or any Restricted
Subsidiary's locations or facilities, including, without limitation: (i) the
existence of any contamination or possible or threatened contamination at any
such location or facility and (ii) remediation of any Environmental Discharge or
Hazardous Materials at any such location or facility or any part thereof; and
(c) any violation or alleged violation of any relevant Environmental Law.
-9-
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"ERISA" means the Employee Retirement Income Security Act of 1974,
including any rules and regulation promulgated thereunder.
"ERISA Affiliate" means any corporation or trade or business which is a
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as Borrower or any Guarantor or is under common
control (within the meaning of Section 414(c) of the Code) with Borrower or such
Guarantor; provided however, that for purposes of provisions herein concerning
minimum funding obligations (imposed under Section 412 of the Code or Section
302 of ERISA), the term "ERISA Affiliate" shall also include any entity required
to be aggregated with Borrower or any Guarantor under Section 414(m) or 414(o)
of the Code.
"Eurodollar Base Rate" means with respect to any Interest Period for a
Eurodollar Loan, the arithmetic mean, as calculated by Agent, of the respective
rates per annum (rounded upwards, if necessary, to the nearest 1/16 of 1 %)
quoted at approximately 11:00 A.M. London time by the principal London branch of
Agent two (2) Banking Days prior to the first day of such Interest Period for
the offering to leading banks in the London interbank market of Dollar deposits
in immediately available funds, for a period, and in an amount, comparable to
the Interest Period and principal amount of the Eurodollar Loan which shall be
made by Agent and outstanding during such Interest Period.
"Eurodollar Loan" means any Revolving Credit Loan when and to the extent
the Interest Rate therefor is determined on the basis of the definition
"Eurodollar Base Rate."
"Eurodollar Rate" means, for any Eurodollar Loan for any Interest Period
therefor, a rate per annum (rounded upwards, if necessary to the nearest 1/100
of 1%) determined by Agent to be equal to the quotient of (a) the Eurodollar
Base Rate for such Loan for such Interest Period, divided by (b) one minus the
Reserve Requirement for such Loan for such Interest Period.
"Event of Default" has the meaning specified in Section 11.01 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Agreement" means the Amended and Restated Credit Agreement and
Guaranty, dated as of September 5, 2000, by and among Borrower, the guarantors
that are party thereto, Chase, as agent and the financial institutions parties
thereto as lenders (as amended, modified or supplemented from time to time).
"Existing Letters of Credit" means the trade (documentary) letters of
credit issued by Chase for the account and/or benefit of Borrower or its
Restricted Subsidiaries under the Existing Agreement, as more fully set forth on
Schedule 1A.01.
"Existing Loan Documents" means, collectively, the Existing Agreement and
all agreements, instruments and documents executed or delivered pursuant to or
in connection therewith (as amended, modified or supplemented from time to
time).
"Factor" shall have the meaning set forth in Section 9.03(f) hereof.
"Factored Accounts" "shall have the meaning set forth under "Eligible
Accounts."
"Factoring Agreement" means any factoring agreement by and between Borrower
and/or any Restricted Subsidiary and a Factor.
-10-
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"Federal Funds Rate" means, for any day, the rate per annum (rounded, if
necessary, to the next greater 1/100 of 1%) equal to the rate per annum at which
the Agent is offered overnight Federal funds by a Federal funds broker selected
by the Agent at or about 2:00 p.m., New York time, on such day, provided that if
such day is not a Banking Day, the Federal Funds Rate for such day shall be such
rate at which the Agent is offered overnight Federal funds by such Federal funds
broker at or about 2:00 p.m., New York time, on the next preceding Banking Day.
"Fiscal Month" means each of the twelve (12) monthly periods of Borrower's
Fiscal Year.
"Fiscal Month End Date" means the last day of any Fiscal Month of each
Fiscal Year.
"Fiscal Quarter" means each of the four (4) quarterly periods of Borrower's
Fiscal Year.
"First Quarterly Date" means the last day of the first Fiscal Quarter of
each Fiscal Year.
"Fiscal Year" means each calendar year ending December 31.
"Foreign Lender" means any Bank that is organized under the laws of a
jurisdiction other than that in which Borrower is located. For purposes of this
definition, the United States of America, each State thereof and the District of
Columbia shall be deemed to constitute a single jurisdiction.
"Fourth Quarterly Date" means the last day of the fourth Fiscal Quarter of
each Fiscal Year.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect on the date hereof, applied on a basis consistent with
those used in the preparation of the financial statements referred to in Section
7.05 hereof.
"Glamourette" means Glamourette Fashion Xxxxx, Inc., a Delaware
corporation.
"Glamourette Security Agreement" means the Security Agreement executed by
Glamourette in favor of Agent for the ratable benefit of the Bank Parties.
"GMAC" has the meaning specified in Section 9.03(f) hereof.
"Good Faith Contest" means the contest of an item if: (a) the item is
diligently contested in good faith by appropriate proceedings timely instituted;
(b) adequate reserves are established in accordance with GAAP; (c) during the
period of such contest, the enforcement of any contested item is effectively
stayed; and (d) the failure to pay or comply with the contested item during the
period of the Good Faith Contest is not likely to result in a Material Adverse
Change.
"Governmental Approvals" means any authorization, consent, approval,
license, permit, certification, or exemption of registration or filing with or
report or notice to any Governmental Authority.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
-11-
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"Guarantor Security Agreements" means any Security Agreements executed by
any of Designers, Item-Eyes and Glamourette to secure the Guaranty Obligations.
"Guarantor" and "Guarantors" means (i) with respect to all Obligations
other than the Letter of Credit Obligations, Designers, Item-Eyes, Glamourette
and HIL and any future Restricted Subsidiaries and (ii) with respect to all
Letter of Credit Obligations, Borrower, Designers, Item-Eyes, Glamourette and
HIL and any future Restricted Subsidiaries.
"Guaranty" means, collectively, all of the guarantees provided by the
Guarantors pursuant to Section 5.01 hereof.
"Guaranty Obligations" has the meaning specified in Section 5.01 hereof.
"Hazardous Materials" means any pollutant, effluents, emissions,
contaminants, toxic or hazardous wastes or substances, as any of those terms are
defined from time to time in or for the purposes of any applicable Environmental
Law, including asbestos fibers and friable asbestos, polychlorinated biphenyls,
and any petroleum or hydrocarbon-based products or derivatives.
"HIL" means Hampshire Investments, Limited, a Delaware corporation.
"HIL Spin-off Transaction" means the sale of all of the issued and
outstanding capital stock of HIL by Borrower to a Person other than the Borrower
or any direct or indirect Subsidiary of Borrower.
"HSBC" means HSBC Bank USA, a New York State chartered bank and its
successors and assigns and any Person acting as agent or nominee for HSBC Bank
USA and any corporation the stock of which is owned or controlled directly or
indirectly by, or is under common control with, HSBC Bank USA and/or HSBC
Holdings plc.
"Instructions" means oral or written instructions or instructions
transmitted by teleprocess given on behalf of Borrower by one or more Authorized
Persons.
"Instrument" means with respect to any Letter of Credit or Steamship
Guaranty, Airway Guaranty, any draft, receipt, acceptance, teletransmission,
including, but not limited to, telex or cable, or other written demand for
payment under such Letter of Credit.
"Insurance Companies" shall mean Phoenix Life Insurance Company and The
Ohio National Life Insurance Company.
"Insurance Company Loan Documents" means the Senior Secured Notes and the
agreements and documents among the Insurance Companies and Borrower and/or
Guarantors providing for the purchase by the Insurance Companies of the Senior
Secured Notes of Borrower and the giving of security therefor.
"Intercreditor Agreement" means the agreement among the Banks, the Agent
and the Insurance Companies and the Agent for the Insurance Companies.
"Intercompany Demand Note" means a negotiable demand promissory note made
by HIL to the order of Borrower evidencing loans by Borrower to HIL,
substantially in the form of Exhibit H.
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"Interest Period" means, with respect to any Eurodollar Loan, a period of
one, two, three or six months commencing on the date such Loan is made,
converted from another type of Loan or renewed, as Borrower may select in
accordance with Section 2.02 hereof, provided that, each such Interest Period,
which commences on the last Banking Day of a calendar month (or on any day for
which there is no numerically corresponding day in the appropriate subsequent
calendar month), shall end on the last Banking Day of the appropriate calendar
month; provided, further, that,
(a) If any Interest Period would otherwise end on a day which is not a
Banking Day, that Interest Period shall be extended to the next succeeding
Banking Day unless such Interest Period is with respect to a Eurodollar Loan and
the result of such extension would be to extend such Interest Period into
another calendar month, in which event such Interest Period shall end on the
immediately preceding Banking Day.
(b) No Interest Period with respect to a Revolving Credit Loan shall extend
beyond the Revolving Credit Termination Date.
"Interest Rate" means either (a) with respect to a Prime Rate Loan, the
Prime Rate minus one quarter of one percent or (b) with respect to a Eurodollar
Loan, the Eurodollar Rate plus the Applicable Margin.
"Interest Rate Contracts" means interest rate swap agreements, interest
rate cap agreements, interest rate collar agreements, interest rate insurance
and other agreements or arrangements designed to provide protection against
fluctuation in interest rates, in each case, in form and substance reasonably
satisfactory to the Agent.
"International Standby Practices" means the "International Standby
Practices (ISP98)," as promulgated by the Institute of International Banking Law
& Practice, Inc., approved by the International Chamber of Commerce ("ICC")
Commission on Banking Technique and Practice, and issued by the ICC as
Publication No. 590, or any successor code of standby letter of credit practices
among banks adopted by the Bank as a standby letter of credit issuer in the
ordinary course of its business and in effect at the time of reference.
"Inventory" shall have the meaning set forth in the Borrower Security
Agreement and the Security Agreements that have been executed by the Guarantors.
"Item-Eyes" means Item-Eyes, Inc., a Delaware corporation.
"Item-Eyes Security Agreement" means the Security Agreement executed by
Item-Eyes in favor of Agent for the ratable benefit of the Bank Parties.
"Item-Eyes Trademark Security Agreement" means the Trademark Security
Agreement executed Item-Eyes by in favor of Agent for the ratable benefit of the
Bank Parties.
"Law" means any applicable federal, state or local statute, law, rule,
regulation, ordinance, order, code, policy or rule of common law, now or
hereafter in effect, and any applicable judicial or administrative
interpretation thereof by a Governmental Authority or otherwise, including any
judicial or administrative order, consent decree or judgment.
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"Letters of Credit" means Trade Letters of Credit and the Standby Letters
of Credit.
"Letter of Credit Account Party" means the Borrower, Designers, Item-Eyes
or any other Restricted Subsidiary, as the case may be.
"Letter of Credit Account Parties" means the Borrower, Designers, Item-Eyes
and all other Restricted Subsidiaries.
"Letter of Credit Fee" means the Trade Letter of Credit Fee and the Standby
Letter of Credit Fee.
"Letter of Credit Issuing Bank" means (i) HSBC with respect to all Letters
of Credit other than the Existing Letters of Credit and (ii) Chase with respect
to all Existing Letters of Credit.
"Letter of Credit Obligations" means at any time an amount equal to the sum
of (a) the aggregate amount of Trade Letter of Credit Obligations, (b) the
aggregate amount of Standby Letter of Credit Obligations and (c) any Letter of
Credit Fee due and payable.
"Lien" means any mortgage, deed of trust, pledge, security, interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), or preference, priority, or other security agreement or preferential
arrangement, charge, or encumbrance of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable Law of any jurisdiction to evidence any of the
foregoing).
"Loan Account" shall have the meaning set forth in Section 2.11(a) hereof.
"Loan Document(s)" means this Agreement, the Notes, the Letters of Credit,
the Security Documents, the Intercreditor Agreement and any and all documents
executed in connection with the Letters of Credit and the Intercreditor
Agreement.
"Material Adverse Change" means either (a) a material adverse change in the
status of the business, assets, liabilities, results of operations, condition
(financial or otherwise) or property or prospects of Borrower and its Restricted
Subsidiaries, taken as a whole, or (b) any event or occurrence of whatever
nature which is likely to have a material adverse effect on Borrower's ability
to perform its obligations under the Loan Documents to which it is a party. For
the avoidance of doubt, no matter affecting the business, operations, affairs,
financial condition, assets or properties of HIL or any Subsidiary thereof in
and of itself shall be deemed to cause a material adverse change in the status
of the business, assets, liabilities, results of operations, condition
(financial or otherwise), property or prospects of Borrower or Borrower's
ability to perform its obligations under any Loan Document.
"Monthly Date(s)" means the first Banking Day of each calendar month
occurring on or after the Effective Date.
"Multiemployer Plan" means a Plan defined as such in Section 3(37) of
ERISA.
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"Net Amount of Eligible Accounts" shall mean and include at any time,
without duplication, the gross amount of Eligible Accounts at such time less (a)
sales, excise or similar taxes and (b) returns, discounts, claims, credits,
allowances, of any nature at any time issued, owing, granted, outstanding,
available or claimed; provided, that such amounts have not already otherwise
been deducted.
"Net Amount of Eligible Inventory" shall mean, at any time, the aggregate
Book Value of Eligible Inventory.
"Net Availability" shall mean, at any date, (a) the Availability for
Revolving Credit Loans less (b) the aggregate principal amount of all
outstanding Revolving Credit Loans.
"Net Borrowing Base" shall mean, at any date, (a) the Borrowing Base less
(b) the sum of (i) the outstanding principal amount of indebtedness of Borrower
and Restricted Subsidiaries to the Insurance Companies in respect to the Senior
Secured Notes and (ii) the outstanding indebtedness of Borrower and its
Restricted Subsidiaries under the Unsecured Lines.
"Net Worth Adjustment Amount" means (i) as to any Fiscal Year beginning
with the Fiscal Year ending December 31, 2003, fifty percent (50%) of the
Borrower's Consolidated Net Income (without any deduction for loss) for such
Fiscal Year determined on a cumulative basis in accordance with GAAP and (ii)
for any first, second or third Fiscal Quarter of the Borrower, beginning with
the Fiscal Quarter ending March 29, 2003, fifty percent (50%) percent of the
amount of Consolidated Net Income (or loss) as reflected in the quarterly
financial statements required to be delivered to Agent under Section 8.08(a)
hereof, calculated on a quarterly (cumulative) basis. For purposes of
determining the minimum Consolidated Tangible Net Worth required to be
maintained:
(x) with respect to the adjustment required under subpart (i) above,
the Net Worth Adjustment Amount shall be determined as at the last day of
each Fiscal Year of the Borrower and shall be added, on a cumulative basis,
to the minimum Consolidated Tangible Net Worth required to be maintained
and such minimum Consolidated Tangible Net Worth shall be maintained at all
times during the period beginning on such date until the last day of the
immediately following Fiscal Quarter at which time the minimum Consolidated
Tangible Net Worth shall increase (or decrease) as provided below, until
the last day of the immediately following Fiscal Year, at which time and at
each subsequent Fiscal Year end the minimum Consolidated Tangible Net Worth
required to be maintained shall again be increased and maintained as
provided in this subpart (x); and
(y) with respect to the adjustment required under subpart (ii) above,
the Net Worth Adjustment Amount shall be determined as at the last day of
each first, second and third Fiscal Quarter of the Borrower and shall be
added, or subtracted (in the case of a net loss), on a cumulative basis, to
the minimum Consolidated Tangible Net Worth required to be maintained and
such minimum Consolidated Tangible Net Worth shall be maintained at all
times during the period beginning on such date until the last day of the
immediately following Fiscal Quarter at which time and at each subsequent
Fiscal Quarter end the minimum Consolidated Tangible Net Worth required to
be maintained shall again be increased (or decreased) and maintained
accordingly until the last day of the Fiscal Year, at which time the
minimum Consolidated Tangible Net Worth shall be increased in the manner
provided above.
"Note(s)" means the Revolving Credit Notes.
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"Obligations" shall mean any and all Revolving Credit Loans, Letter of
Credit Obligations and all other indebtedness, liabilities and obligations of
every kind, nature and description owing by Borrower, a Letter of Credit Account
Party or Guarantors (excluding the Obligations of HIL other than Obligations of
HIL arising under its Guaranty) to each Bank Party, the Banks and/or their
Affiliates, arising out of or in connection with the Notes, the Letters of
Credit, including Airway Guaranty or Steamship Guaranty, this Agreement, the
other Loan Documents and any and all Interest Rate Contracts (but solely to the
extent a Bank is a counter-party to such Interest Rate Contract), including
without limitation for principal, interest, charges, fees, expenses,
reimbursement obligations and foreign exchange obligations, however evidenced,
whether as principal, surety, endorser, guarantor or otherwise, arising under
this Agreement, whether now existing or hereafter arising, whether arising
before, during or after the Revolving Credit Termination Date or after the
commencement of any case with respect to Borrower, any Letter of Credit Account
Party or any Guarantor under the Bankruptcy Code or any similar statute, whether
direct or indirect, absolute or contingent, joint or several, due or not due,
primary or secondary, liquidated or unliquidated, secured or unsecured,
original, renewed or extended and whether arising directly or howsoever acquired
by the Banks including from any other entity outright, conditionally or as
collateral security, by assignment, merger with any other entity, participations
or interests of the Banks in the obligations of Borrower, Letter of Credit
Account Parties or Guarantors to others, assumption, operation of law,
subrogation or otherwise and shall also include all amounts chargeable to
Borrower, any Letter of Credit Account Party or any Guarantor under this
Agreement or in connection with any of the foregoing, provided however, that
indebtedness and obligations due to any of the Banks in connection with
transactions between Borrower or any Guarantor and any such Bank separate from
this Agreement, excluding those in connection with Interest Rate Contracts,
shall not be deemed "Obligations".
"Optional Prepayment" has the meaning specified in Section 2.07 hereof.
"Outstanding Credit Facilities" means at any time an amount equal to the
sum of (a) the aggregate principal amount of all outstanding Revolving Credit
Loans plus (b) the Letter of Credit Obligations.
"Participating Banks" means each Bank other than HSBC.
"Participation" has the meaning set forth in Section 4.01 hereof.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Permitted Investments" means any of the following:
----------------------------------------------------- ------------------------
Maximum Minimum
Investment Type Maturity Rating
----------------------------------------------------- ------------------------
T Bills 6 months N/A
----------------------------------------------------- ------------------------
T Notes 1 year N/A
----------------------------------------------------- ------------------------
US Government Agency Bills, Notes and Bonds 1 year N/A
----------------------------------------------------- ------------------------
Commercial Paper 9 months A2/P2
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Asset Backed Commercial Paper 9 months A2/P2
----------------------------------------------------- ------------------------
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Bankers Acceptances 6 months N/A
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Repurchase Agreements 1 month N/A
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Domestic Certificate of Deposit 1 year N/A
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Euro Certificate of Deposit 1 year N/A
----------------------------------------------------- ------------------------
Medium Term Notes 1 year AAA
----------------------------------------------------- ------------------------
Variable Rate Demand Notes 3 months AAA
----------------------------------------------------- ------------------------
Corporate Bonds 1 year AAA
----------------------------------------------------- ------------------------
Municipal Notes/ Bonds 1 year AAA
----------------------------------------------------- ------------------------
Tax Exempt or Taxable Money Market Funds N/A AAA
----------------------------------------------------- ------------------------
Stock, obligations or securities received in N/A N/A
settlement of debts (created in the ordinary course of
business) owing to the Borrower.
----------------------------------------------------- ------------------------
"Permitted Liens" has the meaning set forth in Section 9.03 hereof.
"Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan" means any plan, agreement, arrangement or commitment which is an
employee benefit plan, as defined in Section 3(3) of ERISA, maintained by
Borrower, any Guarantor or any ERISA Affiliate or with respect to which
Borrower, any Guarantor or any ERISA Affiliate at any relevant time has any
liability or obligation to contribute.
"Pledge Agreement" means a Pledge Agreement substantially in the form of
Exhibit A hereto, to be delivered by Borrower and certain Guarantors under the
terms of this Agreement.
"Presence" when used in connection with any Environmental Discharge or
Hazardous Materials, means and includes presence, generation, manufacture,
installation, treatment, use, storage, handling, repair, encapsulation,
disposal, transportation, spill, discharge and release.
"Prime Rate" means that rate of interest from time to time announced by
HSBC at its Principal Office as its prime commercial lending rate. The Prime
Rate is a reference rate and does not necessarily represent the lowest or best
rate being charged to any customer. The interest rate for Prime Rate Loans shall
change when and as the Prime Rate changes and which changes in the rate of
interest resulting from changes in the Prime Rate shall take effect immediately
without notice or demand of any kind.
"Prime Rate Loan" means any Revolving Credit Loan when and to the extent
the Interest Rate therefor is based on the Prime Rate.
"Principal Office" means the principal office of HSBC, presently located at
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
"Prior Season Inventory" shall mean finished goods inventory of Designers ,
Item-Eyes and, with the approval of Agent and the Required Banks, any other
existing or future Subsidiary of the Borrower, which was manufactured for sale
in a shipping season prior to the current shipping season, as the case may be,
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of Designers, Item-Eyes or such other existing or future Subsidiary of the
Borrower which has been approved by Agent and the Required Banks (for purposes
of this definition, the term "shipping season" means the period of time in which
Inventory of Designers, Item-Eyes and, with the approval of Agent and the
Required Banks, any other existing or future Subsidiary of the Borrower, is
shipped for sale, such period to be determined in a manner consistent with such
Persons' past business practices).
"Pro Rata Share" means (a) with respect to each Bank's Revolving Credit
Commitment, a fraction, the numerator of which is such Bank's portion of the
Revolving Credit Commitment and the denominator of which is the total of all the
Bank's Revolving Credit Commitments; (b) with respect to each payment on the
Revolving Credit Loans, a fraction, the numerator of which is the outstanding
principal amount of all such Revolving Credit Loans owed to such Bank, and the
denominator of which is the outstanding principal amount of all such Revolving
Credit Loans owed to all Banks; and (c) with respect to Letters of Credit, the
percentages set forth in Section 4.01 hereof.
As of the date of this Agreement, the amount of each Bank's Revolving
Credit Commitment and its Pro Rata Share of such Revolving Credit Commitment is
as follows:
Bank Commitment Pro Rata Share
-------- ----------- --------------
HSBC $22,000,000 22.0%
CIT $20,000,000 20.0%
Fleet $16,500,000 16.5%
BOA $15,000,000 15.0%
Chase $15,000,000 15.0%
IDB $11,500,000 11.5%
"Prohibited Transaction" means any transaction prohibited under Section 406
of ERISA or Section 4975 of the Code.
"Quarterly Date" means the last Banking Day of each March, June, September,
and December.
"Ratable Portion" means, at any time, a fraction, the numerator of which is
the outstanding principal amount of the Outstanding Credit Facilities at such
time, and the denominator of which is the sum of (a) the aggregate principal
amount of the Senior Secured Notes outstanding at such time plus (b) the
aggregate principal amount of the Outstanding Credit Facilities at such time.
"Regulatory Change" means, with respect to any Bank, any change after the
date of this Agreement in the United States federal, state, municipal or foreign
laws or regulations (including without limitation Regulation D) or the adoption
or making after such date of any interpretations, directives or requests
applying to a class of banks including any of the Banks of or under any United
States federal, state, municipal or foreign laws or regulations (whether or not
having the force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof.
"Reportable Event" means any of the events set forth in Section 4043(c) of
ERISA or in the regulations thereunder except for any such event for which the
30-day notice requirement is waived.
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"Required Banks" means at any time the Banks holding sixty-six and
two-thirds (66.67 %) percent of the aggregate Revolving Credit Commitment. In
calculating the Revolving Credit Commitment of each Bank for purposes of this
definition of "Required Banks", each Bank (other than HSBC) shall be deemed to
have a portion of the Trade Letter of Credit Commitment or the Standby Letter of
Credit Commitment, as the case may be, equal to that Bank's Pro Rata Share of
the Trade Letter of Credit Commitment or the Standby Letter of Credit
Commitment, as the case may be, and HSBC shall be deemed to have a portion of
such Trade Letter of Credit Commitment or Standby Letter of Credit Commitment
equal to one hundred percent (100%) minus the sum of the Pro Rata Shares of the
other Banks.
"Required Licensor" means, with respect to inventory of the Borrower or a
Restricted Subsidiary that is sold under a licensed trademark, each licensor
that has licensed such trademark to the Borrower and/or the Restricted
Subsidiaries to the extent that the gross revenues received or to be received by
the Borrower and/or the Restricted Subsidiaries with respect to the sale of
inventory subject to such licensed trademark equals or is in excess of
$5,000,000 for any twelve month period (taking into account sales as well as
unfilled orders). The Required Licensors as of the Effective Date are Xxxxxxxx
Xxxxx, Inc. (as to the "Xxxxxxxx Xxxxx" licensed trademark) and Levi Xxxxxxx &
Co. (as to the "Dockers" and "Dockers Premium" licensed trademarks).
"Reserve Requirement" means, for any Eurodollar Loan for any Interest
Period therefor, the rate at which reserves (including any marginal,
supplemental or emergency reserves) are required to be maintained during such
Interest Period under Regulation D by member banks of the Federal Reserve System
in New York City with deposits exceeding $1,000,000,000 against in the case of
Eurodollar Loans, "Eurocurrency Liabilities" (as such term is used in Regulation
D). Without limiting the effect of the foregoing, the Reserve Requirement shall
reflect any other reserves required to be maintained by such member banks by
reason of any Regulatory Change against (a) any category of liabilities which
includes deposits by reference to which the Eurodollar Base Rate is to be
determined as provided in the definition of "Eurodollar Base Rate" in this
Section 1.01 hereof or (b) any category of extensions of credit or other assets
which include Eurodollar Loans. Agent will use its best efforts to promptly
notify Borrower of any change of such Reserve Requirement.
"Restricted Payment" means (i) any advances or payments to, investments in,
or guaranties for the benefit of HIL, (ii) any guaranties other than those
guaranties permitted by Section 9.02 hereof, and/or (iii) any repurchase of any
shares of the Borrower.
"Restricted Subsidiaries" means, individually and collectively, Designers,
Glamourette, Item-Eyes and any existing and future Subsidiaries of Borrower,
except HIL and any Subsidiary of HIL, together with their respective successors
and assigns.
"Revolving Credit Commitment" means the commitment of the Banks to lend,
pursuant to their Pro Rata Share, One Hundred Million ($100,000,000) Dollars to
Borrower pursuant to the terms of this Agreement as such commitment may be
reduced in accordance with Section 2.07 hereof.
"Revolving Credit Loan(s)" has the meaning specified in Section 2.01
hereof.
"Revolving Credit Note(s)" has the meaning specified in Section 2.06
hereof.
"Revolving Credit Termination Date" means April 30, 2007.
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"Second Quarterly Date" means the last day of the second Fiscal Quarter of
each Fiscal Year.
"Secured Parties" means Agent and each of the Banks.
"Security Agreement" means a Security Agreement substantially in the form
of Exhibit B hereto, to be delivered by Borrower and certain Guarantors under
the terms of this Agreement.
"Security Documents" means the Borrower Security Agreement, the Guarantor
Security Agreements, the Borrower Pledge Agreement, the Designers Pledge
Agreement, the Borrower Trademark Security Agreement, the Designers Trademark
Security Agreement, the Item-Eyes Trademark Security Agreement, and each other
Security Agreement, Pledge Agreement and Trademark Security Agreement, to the
extent executed, separately or jointly, by any party obligated in connection
with the Obligations.
"Senior Secured Notes" means the Senior Secured Notes issued by Borrower in
favor of the Insurance Companies pursuant to the Insurance Company Loan
Documents in the original principal amount of $15,000,000 due January 2, 2008,
as amended, transferred or exchanged from time to time, in accordance with the
Insurance Company Loan Documents.
"Solvent" means, when used with respect to any Person, that (a) the fair
value of the property of such Person, on a going concern basis, is greater than
the total amount of liabilities (including, without limitation, contingent
liabilities) of such Person, (b) the present fair saleable value of the assets
of such Person, on a going concern basis, is not less than the amount that will
be required to pay the probable liabilities of such Person on its debts as they
become absolute and matured, (c) such Person does not intend to, and does not
believe that it will incur debts or liabilities beyond such Person's ability to
pay as such debts and liabilities mature, and (d) such Person is not engaged in
business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute unreasonably
small capital after giving due consideration to the prevailing practice in the
industry in which such Person is engaged. Contingent liabilities will be
computed at the amount that, in light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
"Standby Letter of Credit" means a Standby Letter of Credit issued by HSBC
for the account of Borrower.
"Standby Letter of Credit Commitment" shall have the meaning set forth in
Section 3.05 hereof.
"Standby Letter of Credit Fee" has the meaning specified in Section 3.05
hereof.
"Standby Letter of Credit Obligations" means at any time an amount equal to
the sum of (a) the aggregate unused face amount of all outstanding Standby
Letters of Credit, plus any variance allowed under the terms of the Standby
Letter of Credits, (b) the aggregate amount of all unreimbursed obligations on
Standby Letters of Credit and (c) the aggregate amount of all outstanding
overdrafts created to satisfy any of the foregoing obligations.
"Steamship Guaranty" has the meaning specified in Section 3.09 hereof.
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"Subsidiary" means, as to any Person, a corporation of which shares of
stock having ordinary voting power (other than stock having such power only by
reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation are at the time owned, or the
management of which is otherwise controlled, directly, or indirectly through one
or more intermediaries, or both, by such Person.
"Supplemental Amount" shall mean, for each of the periods set forth below,
the following amounts (unless reconsidered pursuant to Section 8.08(i), in which
case, such reconsidered amount):
Period Supplemental Amount
------------------------------------------------------- -------------------
Effective Date through and including August 30, 2003 $ 6,000,000
August 31, 2003 through and including February 28, 2004 $ 0
February 29, 2004 through and including April 3, 2004 $ 2,000,000
April 4, 2004 through and including May 1, 2004 $ 9,000,000
May 2, 2004 through and including May 29, 2004 $18,000,000
May 30, 2004 through and including June 3, 2004 $13,000,000
July 4, 2004 through and including July 31, 2004 $ 8,000,000
August 1, 2004 through and including August 28, 2004 $ 6,000,000
From August 29, 2004 through and including the
The Revolving Credit Termination Date $ 0
"Third Quarterly Date" means the last day of the third Fiscal Quarter of
each Fiscal Year.
"Trade Letter of Credit" has the meaning specified in Section 3.01 hereof.
"Trade Letter of Credit Commitment" shall have the meaning set forth in
Section 3.01 hereof.
"Trade Letter of Credit Fee" has the meaning specified in Section 3.03
hereof.
"Trade Letter of Credit Obligations" means at any time an amount equal to
the sum of (a) the aggregate unused face amount of all outstanding Trade Letters
of Credit, plus any variance allowed under the terms of the Trade Letter of
Credits, (b) the aggregate amount of all unreimbursed obligations on Trade
Letters of Credit, (c) the aggregate amount of all outstanding overdrafts
created to satisfy any of the foregoing obligations and (d) the aggregate amount
of all Airway Guaranties and Steamship Guaranties.
"Trademark Security Agreement" means a Trademark Collateral Assignment and
Security Agreement, substantially in the form of Exhibit C hereto, to be
delivered by Borrower and certain Guarantors under the terms of this Agreement.
"Uniform Customs and Practices" means, with regard to each Letter of
Credit, the Uniform Customs and Practices for Documentary Letters of Credit
(1993 Revisions), International Chamber of Commerce Publication No. 500, and any
subsequent revision thereof adhered to by HSBC on the date such Letter of Credit
is issued.
"Unsecured Lines" shall have the meaning set forth in Section 9.01(f)
hereof.
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Section 1.02 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP, and all financial
data required to be delivered hereunder shall be prepared in accordance with
GAAP. Section 1.03 Computation of Time Periods. Except as otherwise provided
herein, in this Agreement, in the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including" and words "to" and "until" each means "to but excluding".
Section 1.04 Rules of Construction. When used in this Agreement: (a) "or"
is not exclusive; (b) a reference to a law includes any amendment or
modification to such law and any statutory amendments and recodifications; (c) a
reference to a Person includes its permitted successors and permitted assigns;
and (d) a reference to an agreement, instrument or document shall include such
agreement, instrument or document as the same may be amended, modified or
supplemented from time to time in accordance with its terms and as permitted by
the Loan Documents.
ARTICLE II
REVOLVING CREDIT LOANS
Section 2.01 Revolving Credit. Subject to the terms and conditions of this
Agreement, each of the Banks severally agrees to make loans (the "Revolving
Credit Loans") according to each such Bank's Pro Rata Share of the Revolving
Credit Commitment, to Borrower from time to time during the period from the
Effective Date up to but not including the Revolving Credit Termination Date,
provided that the aggregate principal amount of all Revolving Credit Loans
outstanding at any time does not exceed the Availability for Revolving Credit
Loans. Each Revolving Credit Loan which shall not utilize the Availability for
Revolving Credit Loans in full shall be in the minimum amount set forth in
Section 2.10 hereof. Subject to the terms hereof, the Borrower may borrow, make
an Optional Prepayment pursuant to Section 2.07 hereof, and reborrow under this
Section 2.01 hereof.
The failure of any Bank to make any requested Revolving Credit Loan to be
made by it on the date specified for such Revolving Credit Loan shall not
relieve any other Bank of its obligation (if any) to make such Revolving Credit
Loan on such date, but no Bank shall be responsible for the failure by any other
Bank to make such Revolving Credit Loans.
Section 2.02 Notice and Manner of Borrowing. Borrower shall give Agent
telephonic notice, to be followed by written or telegraphic or facsimile notice
in the form of Exhibit D hereto (irrevocable and effective upon receipt) of any
Revolving Credit Loan, such notice to indicate whether such Revolving Credit
Loan shall be a Prime Rate Loan or Eurodollar Loan. Each of the foregoing
notices (a "Borrowing Notice") must specify the date and the amount of such
Revolving Credit Loan to the Agent and the Agent will promptly notify each Bank
of receipt by the Agent of a Borrowing Notice and of the contents thereof. In
the case of a Eurodollar Loan, the Borrowing Notice shall be received not later
than three (3) Banking Days prior to such Eurodollar Loan and shall specify the
Interest Period selected and in the case of a Prime Rate Loan, the Borrowing
Notice shall be received not later than noon (New York time) on the date of such
proposed Prime Rate Loan. Not later than 1:00 P.M. (New York time) on the date
of a Revolving Credit Loan, each Bank will cause to be transmitted to the Agent,
to an account designated by the Agent, in immediately available funds, such
Bank's Pro Rata Share of such Revolving Credit Loan. After the Agent's receipt
of such funds, not later than 3:00 P.M. (New York time) on the date of a
Revolving Credit Loan, and upon fulfillment of the applicable conditions set
forth in Article VI, the Agent will make such Revolving Credit Loan available to
Borrower in immediately available funds by crediting the amount thereof to the
accounts as designated by Borrower to Agent.
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Section 2.03 Conversions. Borrower shall have the right to convert one type
of Revolving Credit Loan into another type of Revolving Credit Loan at any time
or from time to time; provided that: (a) Borrower shall give the Agent at least
three (3) Banking Days notice of the conversion of a Prime Rate Loan into a
Eurodollar Loan and (b) Eurodollar Loans may be prepaid or converted only on the
last day of an Interest Period for such Eurodollar Loan. Agent shall promptly
notify each Bank of any such conversion.
Section 2.04 Non-Receipt of Funds by Agent. Unless the Agent shall have
received notice from a Bank, prior to the date on which such Bank is to provide
funds to the Agent for a Revolving Credit Loan to be made by such Bank, that
such Bank will not make available to the Agent such funds, the Agent may assume
that such Bank has made such funds available to Agent on the date of such
Revolving Credit Loan in accordance with Section 2.02 hereof and the Agent, in
its sole discretion, may, but shall not be obligated to, in reliance upon such
assumption, make available to Borrower on such date a corresponding amount. If
and to the extent such Bank shall not have made such funds available to the
Agent, such Bank agrees to repay the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to Borrower until the date such amount is repaid
to the Agent, for three (3) Banking Days, at the Federal Funds Rate and
thereafter, at the Prime Rate. If such Bank shall repay to the Agent such
corresponding amount, such amount so repaid shall constitute such Bank's
Revolving Credit Loan for purposes of this Agreement. If such Bank does not pay
such corresponding amount forthwith upon Agent's demand therefor, the Agent
shall promptly notify Borrower, and Borrower shall immediately pay such
corresponding amount to the Agent with the interest thereon, for each day from
the date such amount is made available to Borrower until the date such amount is
repaid to the Agent, at the rate of interest applicable at the time to such
proposed Revolving Credit Loan. Unless the Agent shall have received notice from
Borrower prior to the date on which any payment is due to any Bank hereunder
that Borrower will not make such payment in full, the Agent may assume that
Borrower has made such payment in full to the Agent on such date and the Agent,
in its sole discretion, may, but shall not be obligated to, in reliance upon
such assumption, cause to be distributed to each Bank on such due date an amount
equal to the amount then due such Bank. If and to the extent Borrower shall not
have so made such payment in full to the Agent, each Bank shall repay to the
Agent forthwith on demand such amount distributed to such Bank together with
interest thereon, for each day from the date such amount is distributed to such
Bank until the date such Bank repays such amount to the Agent, for three (3)
Banking Days, at the Federal Funds Rate and thereafter at the Prime Rate.
Section 2.05 Interest. Borrower shall pay interest to the Agent, for the
account of the applicable Bank, on the outstanding and unpaid principal amount
of the Revolving Credit Loans at a rate per annum equal to the Interest Rate.
Any principal or interest amount not paid when due (at maturity, by acceleration
or otherwise) shall bear interest thereafter, payable on demand, at the Default
Rate.
The interest rate on each Prime Rate Loan shall change when the Prime Rate
changes. Interest on each Revolving Credit Loan shall not exceed the maximum
amount permitted under applicable Law and shall be calculated on the basis of a
year of three hundred sixty (360) days for the actual number of days elapsed.
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Accrued interest shall be due and payable (a) in the case of a Prime Rate
Loan (i) in arrears on each Monthly Date, commencing with the first such date
after such Prime Rate Loan, and (ii) upon each payment or prepayment of
principal on such Prime Rate Loan and (b) in the case of a Eurodollar Loan, at
the end of each Interest Period and, in the case of a Eurodollar Loan with an
Interest Period of more than three months' duration, each day prior to the last
day of such Interest Period that occurs at intervals of three months' duration
after the first day of such Interest Period, and (c) in the case of a prepayment
that reduces the Revolving Credit Commitment in accordance with Section 2.07
hereof, upon each such prepayment.
Section 2.06 Notes. All Revolving Credit Loans made by each Bank under this
Agreement shall be evidenced by, and repaid with interest in accordance with, a
single promissory note of Borrower in substantially the form of Exhibit F duly
completed, in the principal amount equal to such Bank's Pro Rata Share of the
total Revolving Credit Commitment, dated the date such bank becomes a Bank,
payable to such Bank and maturing as to principal on the Revolving Credit
Termination Date (the "Revolving Credit Notes"). Each Bank is hereby authorized
by Borrower to endorse on the schedule attached to the Revolving Credit Note
held by it the amount of each Revolving Credit Loan, and the payment amount of
each principal payment received by such Bank on account of the Revolving Credit
Loans, which endorsement shall, in the absence of manifest error, be conclusive
as to the outstanding balance of the Revolving Credit Loans made by such Bank;
provided however, that the failure to make such notation with respect to any
Revolving Credit Loan or payment shall not limit or otherwise affect the
obligations of Borrower under this Agreement or the Revolving Credit Note held
by such Bank. Each Bank agrees that prior to any assignment of the Revolving
Credit Note, it will endorse the schedule attached to its Revolving Credit Note.
Section 2.07 Optional and Mandatory Prepayments.
(a) Borrower may prepay a Prime Rate Loan, in whole or in part, with
accrued interest to the date of such prepayment on the amount prepaid, provided
that, each partial prepayment shall be in a principal amount of not less than
One Hundred Thousand Dollars ($100,000) (each such payment, an "Optional
Prepayment"). Eurodollar Loans may only be prepaid at end of any Interest
Period.
(b) During the term of this Agreement, Borrower shall make mandatory
prepayments (i) in an amount equal, during any Fiscal Year, to the net proceeds
received in excess of $250,000 in the aggregate, from the sale (other than a
sale in the ordinary course of business) of all or any part of the assets of any
Restricted Subsidiary; (ii) in an amount equal to the net proceeds received by
Borrower or any Restricted Subsidiary from the sale or issuance of any debt
instrument, and (iii) in an amount equal to the net proceeds received by
Borrower or any Restricted Subsidiary under any insurance policy, to the extent
that, in the case of property and casualty insurance, such proceeds are not used
by Borrower or such Restricted Subsidiary to repair or replace the property
which was the subject of such insurance claim, with a reasonable period of time
but in no event later than six (6) months from the date such proceeds are
received by the Borrower or such Subsidiary, unless Borrower or such Subsidiary
has taken action to affect such repair or replacement, as determined by the
Agent in good faith, or unless otherwise agreed to by the Agent. So long as the
Intercreditor Agreement remains in effect, notwithstanding anything to the
contrary contained herein, the Banks shall be entitled to receive their Ratable
Portion of the prepayments required to be paid under this Section 2.07(b) and if
Agent shall be in receipt of any proceeds of such prepayments in excess of the
Bank's Ratable Portion of such prepayments (the "Excess Prepayments"), Agent
shall deliver such Excess Prepayments to the Noteholder Agent (as defined in the
Intercreditor Agreement). With respect to prepayments received by the Agent for
the ratable benefit of Banks under this Section 2.07(b), such prepayments shall
be applied first, to the repayment of the then outstanding Revolving Credit
Loans and second, at the discretion of Agent, to be held as Cash Collateral to
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secure Letter of Credit Obligations; provided that, any mandatory prepayment of
the Revolving Credit Loans or held as Cash Collateral to secure Letters of
Credit hereunder shall permanently reduce the Supplemental Amount and the
Revolving Credit Commitment on a dollar for dollar basis to the extent such
proceeds are received by the Agent in accordance with the terms of the
Intercreditor Agreement (with respect to secured Letter of Credit Obligations
such reduction will occur as Letter of Credit Obligations are satisfied by the
Cash Collateral).
(c) To the extent that, at any given time, (i) the Outstanding Credit
Facilities exceed the then effective Revolving Credit Commitment, or (ii) the
Outstanding Credit Facilities exceed the sum of the Availability for Revolving
Credit Loans plus the Letter of Credit Obligations, or (iii) the Revolving
Credit Loans exceed the Availability for Revolving Credit Loans, or (iv) the
Obligations exceed any of the other borrowing limitations set forth in this
Agreement, in each case the Borrower shall immediately pay to the Agent for the
ratable benefit of the Banks a mandatory prepayment of the Revolving Credit
Loans in an amount equal to such excess and/or Borrower shall immediately
provide Cash Collateral for the Letter of Credit Obligations to the extent
required to eliminate such excess. Any Cash Collateral deposited with the Agent
for the ratable benefit of the Banks in accordance with the terms of this
Section 2.07 shall be credited, for purposes of the calculation of Availability
for Revolving Credit Loans under Section 2.01 hereof, against the outstanding
Letter of Credit Obligations subject to Section 2.07(d) hereof.
(d) In the event Eurodollar Loans are outstanding at the time of any
mandatory prepayment under this Section 2.07 hereof, such mandatory prepayment
shall be applied first to reduce any Prime Rate Loans outstanding to zero. Any
remaining mandatory prepayment amount shall be deemed to be Cash Collateral and
shall be deposited by Agent in a segregated account to be applied to the
Eurodollar Loans. The Cash Collateral in such segregated account shall represent
a reduction of the Eurodollar Loans then outstanding and such amount shall be
credited against Revolving Credit Loans for purposes of calculating Availability
for Revolving Credit Loans. Agent shall hold such amounts in such segregated
account and use it to pay the Eurodollar Loans as such loans mature. If the
amounts in the segregated account are sufficient to pay (at maturity) the then
outstanding Eurodollar Loans, any remaining mandatory prepayment shall then be
applied to Letter of Credit Obligations in accordance with Section 2.07(c)
hereof.
(e) Borrower may, without premium or penalty, reduce the Revolving Credit
Commitment to an amount not less than the sum of the aggregate unpaid principal
amount of all Revolving Credit Loans and Letter of Credit Obligations then
outstanding. Each such reduction (i) shall be in an amount which is an integral
multiple of $1,000,000, (ii) shall be made providing not less than ten (10)
Banking Days written notice to Agent, which notice shall state the amount of the
payment to be made and shall conform to the amount of the Revolving Credit
Commitment after giving effect to such payment, (iii) shall reduce, on a
permanent basis, the Revolving Credit Commitment by an amount equal to the
amount of such reduction, and (iv) shall be irrevocable. Once reduced the
Revolving Credit Commitment may not be increased. Borrower may reduce the
Revolving Credit Commitment to $0 provided the Revolving Credit Termination Date
occurs simultaneously therewith.
Section 2.08 Method of Payment. Borrower shall make each payment under this
Agreement and under the Notes, without setoff or counterclaim, not later than
2:00 p.m. (New York time) on the date when due in Dollars to the Agent at the
Agent's Office in immediately available funds and if received after 2:00 p.m.
New York time, then such payment shall be credited the next Banking Day. The
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Agent will promptly thereafter cause to be distributed to each Bank (a) such
Bank's Pro Rata Share of the payments of principal and interest in like funds,
and (b) fees or sums payable to such Bank in accordance with the terms of this
Agreement, including, but not limited to, amounts due in accordance with Article
XIII.
Borrower hereby authorizes the Agent to charge, from time to time, against
any account it maintains with the Agent or any Bank, any such amount so due to
the Agent and/or the Banks.
Except to the extent provided in this Agreement, whenever any payment to be
made under this Agreement or under the Notes shall be stated to be due on any
day other than a Banking Day, such payment shall be made on the next succeeding
Banking Day, and such extension of time shall, in such case, be included in the
computation of the payment of interest and other fees, as the case may be.
Section 2.09 Use of Proceeds. On and after the date hereof, the proceeds of
the Revolving Credit Loans will be used by Borrower to provide working capital
for Borrower and its Restricted Subsidiaries, and the Trade Letters of Credit
will be used for importation and purchasing of inventory by Borrower and its
Restricted Subsidiaries.
Borrower will not, directly or indirectly, use any part of such proceeds
for the purpose of purchasing or carrying any margin stock within the meaning of
Regulation U of the Board of Governors or to extend credit to any Person for the
purpose of purchasing or carrying any such margin stock.
Section 2.10 Minimum Amounts. Each Prime Rate Loan shall be in an amount at
least equal to One Hundred Thousand ($100,000) Dollars and each Eurodollar Loan
shall be in an amount at least equal to One Million Five Hundred Thousand
($1,500,000) Dollars.
Section 2.11 Establishment of Loan Account; Collection of Accounts.
(a) Agent shall maintain a loan account (the "Loan Account") on its books
in which shall be recorded the Revolving Credit Loans and other Obligations and
the Collateral, all payments made by or on behalf of Borrower and all other
appropriate debits and credits as provided in this Agreement, including fees,
charges, costs, expenses and interest. All entries in the Loan Account shall be
made in accordance with Agent's customary practices as in effect from time to
time. The records of Agent shall be conclusive and binding, in the absence of
manifest error.
(b) Upon and during the continuance of any Event of Default, all proceeds
of Collateral shall be deposited by Borrower and Restricted Subsidiaries into
lockbox accounts with or under the control of Agent (for the ratable benefit of
the Bank Parties).
Section 2.12 Closing Fee. Borrower shall pay to Agent, for the ratable
benefit of Banks, a closing fee in the amount of $150,000, which fee shall be
fully earned and payable as of the date hereof.
Section 2.13 Commitment Fee. If, for any Agreement Quarter (as defined
below) during the term of this Agreement, the average daily unpaid balance of
the Revolving Credit Loans plus Letter of Credit Obligations for Borrower for
each day of such quarter does not equal the Revolving Credit Commitment, then
Borrower shall pay to Agent, for the ratable benefit of Banks, a fee at a rate
equal to one eighth of one percent (.125%) per annum on the amount by which the
Revolving Credit Commitment exceeds such aggregate average daily unpaid balance
of the Revolving Credit Loans plus Letter of Credit Obligations for Borrower.
Such fee shall be payable by Borrower to Agent in arrears on the last day of
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each calendar quarter, shall be fully earned as of the date of payment and shall
not be subject to refund, rebate or proration for any reason whatsoever. For the
purposes of this Section 2.13 only, the term "Agreement Quarter" shall mean each
calendar quarter of each calendar year.
ARTICLE III
LETTERS OF CREDIT
Section 3.01 Trade Letters of Credit; Cash Collateral for Letters of Credit
Expiring After Termination Date. Letter of Credit Issuing Bank agrees, on the
terms and conditions hereinafter set forth, to issue trade letters of credit
payable at sight with a maturity date of up to one hundred eighty (180) days
from the date of issuance (such Letters of Credit issued by Letter of Credit
Issuing Bank after the Effective Date, and all the Existing Letters of Credit
are collectively referred to herein as the "Trade Letters of Credit") for the
account of a Letter of Credit Account Party, during the period from the
Effective Date to five (5) Banking Days prior to the Revolving Credit
Termination Date; provided that, at no time will the outstanding Trade Letter of
Credit Obligations exceed the lesser of (a) Eighty Five Million Dollars
($85,000,000) less all Letter of Credit Obligations (other than Trade Letter of
Credit Obligations), or (b) the Revolving Credit Commitment less outstanding
Revolving Credit Loans and Letter of Credit Obligations (other than Trade Letter
of Credit Obligations) or (c) the Net Borrowing Base less outstanding Revolving
Credit Loans and Letter of Credit Obligations (other than Trade Letter of Credit
Obligations) (the "Trade Letter of Credit Commitment"); provided further that,
Letter of Credit Issuing Bank will not be required to issue a Trade Letter of
Credit with a maturity (expiration) date of more than 90 days after the
Revolving Credit Termination Date and, with respect to all Letters of Credit
with a maturity (expiration) date after the Revolving Credit Termination Date,
all of such outstanding Trade Letters of Credit Obligations and/or Standby
Letters of Credit Obligations, as of five (5) Banking Days prior to the
Revolving Credit Termination Date, shall be secured by Cash Collateral at one
hundred and five (105%) percent of the face amount thereof.
Title documents shall be consigned to Agent at Agent's request; provided
that with respect to any Existing Letters of Credit for delivery of goods from
outside of the United States into the United States, within five (5) Banking
Days of the Effective Date, at Agent's request Borrower shall apply for
amendments to such Letters of Credit to provide that all title documents related
to such goods shall be consigned to Agent.
Section 3.02 Reimbursement Obligation. With respect to each Letter of
Credit, the Letter of Credit Account Party for which such Letter of Credit has
been issued will pay Letter of Credit Issuing Bank, on demand at Letter of
Credit Issuing Bank's Principal Office, in immediately available funds, the
amount required to reimburse Letter of Credit Issuing Bank in respect of Letter
of Credit Issuing Bank's payment of each Instrument applicable and/or relating
to such Letter of Credit. Such reimbursement shall be made with interest at the
Default Rate from the date of Letter of Credit Issuing Bank's demand for
reimbursement of such Instrument to the date of reimbursement. If the Instrument
is in foreign currency, such reimbursement shall be in Dollars at Letter of
Credit Issuing Bank's selling rate for cable transfers to the place of payment
of the Instrument current on the date of payment or of Letter of Credit Issuing
Bank's settlement of its obligation, as Letter of Credit Issuing Bank may
require. If, for any cause, on the date of payment or settlement, as the case
may be, there is no selling rate or other rate of exchange generally current in
New York for effecting such transfers, each applicable Letter of Credit Account
Party will pay Letter of Credit Issuing Bank on demand an amount in Dollars
equivalent to Letter of Credit Issuing Bank's actual cost of settlement of its
obligation however or whenever Letter of Credit Issuing Bank shall make such
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settlement, with interest at the Prime Rate for Revolving Credit Loans from the
date of settlement to the date of payment. Each Letter of Credit Account Party
will comply with all governmental exchange regulations now or hereafter
applicable to each Letter of Credit or Instrument or payments related thereto
and will pay Letter of Credit Issuing Bank, on demand, in Dollars, such amount
as Letter of Credit Issuing Bank may be or may have been required to expend on
account of such regulations. HSBC may debit, or direct any other Bank to debit,
any account or accounts maintained by any other Letter of Credit Account Party
with any office of HSBC or any other Bank or any of their respective
Subsidiaries or Affiliates (now or in the future) and apply the proceeds to the
payment of any and all amounts owed by any Letter of Credit Account Party to
Letter of Credit Issuing Bank hereunder, and such Bank, Subsidiary or Affiliate
shall be authorized to act in accordance herewith and shall treat this
authorization as irrevocable.
Section 3.03 Payment of Commissions, Expenses and Interest. Each Letter of
Credit Account Party will pay interest where chargeable, including reasonable
fees and charges of counsel, or reasonable costs allocated by Letter of Credit
Issuing Bank's internal legal department in connection with the enforcement of
this Agreement or any Letter of Credit. Unless otherwise agreed:
(a) interest payable under this Article III on amounts not paid when due
shall be at the lesser of (i) the maximum rate permissible under applicable Law
and (ii) the Default Rate; and
(b) each Letter of Credit Account Party shall pay to Letter of Credit
Issuing Bank on demand such amounts as Letter of Credit Issuing Bank, in its
sole discretion, determines are necessary to compensate it for any cost
attributable to its issuing or having outstanding such Letter of Credit
resulting from the application of any Law or regulation applicable to Letter of
Credit Issuing Bank regarding any reserve, assessment, capital adequacy or
similar requirements relating to letters of credit or the reimbursement
agreements with respect thereto or to similar liabilities or assets of Letter of
Credit Issuing Bank whether existing at the time of issuance of the Letter of
Credit or adopted thereafter including, but not limited to, fees and amounts
payable with respect to amendments to and increases of a Letter of Credit. Each
Letter of Credit Account Party acknowledges that there may be various methods of
allocating costs to the Letter of Credit and agrees that Letter of Credit
Issuing Bank's allocation for purposes of determining the costs referred to
above shall be conclusive and binding upon each Letter of Credit Account Party
provided such allocation is made in good faith.
In addition to other expenses to be paid by the Letter of Credit Account
Parties with respect to a Letter of Credit (all of which shall be for the Letter
of Credit Issuing Bank's own account), each Letter of Credit Account Party shall
pay to Agent, for the ratable benefit of the Banks, under a Trade Letter of
Credit issued for its account a fee for each draw in the amount of (i) with
respect to the Existing Letters of Credit, one quarter of one percent (.25%) of
the amount drawn under such Existing Letter of Credit and (ii) with respect to
all Trade Letters of Credit other than the Existing Letters of Credit, one fifth
of one percent (.20%) of the amount drawn under such Trade Letter of Credit
(collectively the "Trade Letter of Credit Fee). All such fees shall be due and
payable at the time of drawing.
Section 3.04 Proper Drawing; Letter of Credit Issuing Bank's Honoring.
Letter of Credit Issuing Bank may accept or pay any Instrument presented to it
on or before the expiration date of the applicable Letter of Credit. Except
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insofar as written instructions may be given by an Authorized Person expressly
to the contrary, and prior to Letter of Credit Issuing Bank's issuance of a
Letter of Credit:
(a) Letter of Credit Issuing Bank may honor the related Instrument(s) in an
amount or amounts not exceeding the amount of such Letter of Credit, although
shipment(s) in excess of the quantity called for under such Letter of Credit are
made, and
(b) Letter of Credit Issuing Bank may honor, as complying with the terms of
such Letter of Credit and of the Application relating to it, any Instrument or
other document otherwise in order signed or issued by a person purporting to be
an administrator, executor, trustee in bankruptcy, debtor in possession,
assignee for the benefit of creditors, liquidator, receiver or other legal
representative of the party authorized under such Letter of Credit to draw or
issue such Instruments or other documents.
Section 3.05 Standby Letters of Credit. During the period from the
Effective Date to five (5) Banking Days prior to the Revolving Credit
Termination Date, Letter of Credit Issuing Bank may open, at the request of and
for the account of a Letter of Credit Account Party, Standby Letters of Credit;
provided, that, at no time will the outstanding Standby Letter of Credit
Obligations exceed the lesser of (a) Five Million Dollars ($5,000,000), or (b)
the Revolving Credit Commitment less outstanding Revolving Credit Loans and
Letter of Credit Obligations (other than Standby Letter of Credit Obligations)
or (c) the Net Borrowing Base less outstanding Revolving Credit Loans and Letter
of Credit Obligations (other than Standby Letter of Credit Obligations) (the
"Standby Letter of Credit Commitment"). No Standby Letter of Credit shall have a
stated expiration date later than the earlier of (a) the Revolving Credit
Termination Date (unless collateralized as provided in Section 3.01 hereof) or
(b) 364 days from the date of issuance. For the purpose of calculating the Net
Availability, Standby Letters of Credit shall be deemed Revolving Loans. In
addition to the Letter of Credit Issuing Bank's standard fees and charges for
Letters of Credit and all other fees, commissions and other amounts otherwise
payable with respect to issuance of Letters of Credit (all of which shall be for
the Letter of Credit Issuing Bank's own account), each Letter of Credit Account
Party shall pay to Agent (for the pro rata benefit of the Lenders) an amount
equal 1.8% of the face amount of each Standby Letter of Credit issued for the
account of such Letter of Credit Account Party, payable upon issuance (the
"Standby Letter of Credit Fee").
Section 3.06 Amendment; Change; Modification; No Waiver. In the event of
any amendment, change or modification relating to a Letter of Credit or any
Instruments or documents called for thereunder, including waiver of
noncompliance of any such Instruments or documents with the terms of such Letter
of Credit, this Agreement shall be binding upon each Letter of Credit Account
Party with regard to such Letter of Credit as so amended, changed, or modified,
and to any act taken by Letter of Credit Issuing Bank or any of its
correspondents relating thereto. No amendment, change, waiver, or modification
to which Letter of Credit Issuing Bank has consented shall be deemed to mean
that Letter of Credit Issuing Bank will consent or has consented to any other or
subsequent request to amend, change, modify or waive a term of such Letter of
Credit. Letter of Credit Issuing Bank shall not be deemed to have waived any of
its rights hereunder, unless Letter of Credit Issuing Bank or its authorized
agent shall have signed such waiver in writing. No such waiver, unless expressly
stated therein, shall be effective as to any transaction which occurs subsequent
to the date of such waiver, nor as to any continuance of a breach after such
waiver.
Section 3.07 U.C.P. and I.S.P.; Agreements and Acknowledgments;
Indemnification. The Uniform Customs and Practice and the International Standby
Practices shall be binding on each Letter of Credit Account Party and Letter of
Credit Issuing Bank, except to the extent it is otherwise expressly agreed. It
is also agreed that:
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(a) user(s) of a Letter of Credit shall not be deemed agents of Letter of
Credit Issuing Bank;
(b) none of Letter of Credit Issuing Bank, its Affiliates, Subsidiaries, or
its correspondents shall be responsible for:
(i) failure of any Instrument to bear any reference to the related
Letter of Credit or inadequate reference in any Instrument to such Letter
of Credit, or failure of any document (other than documents expressly
required to be presented under such Letter of Credit) to accompany any
Instrument at negotiation, or failure of any person to note the amount of
any Instrument on the reverse of a Letter of Credit, or to surrender or
take up a Letter of Credit or to forward documents apart from Instruments
as required by the terms of such Letter of Credit, each of which
provisions, if contained in a Letter of Credit itself, it is agreed may be
waived by Letter of Credit Issuing Bank; or
(ii) errors, omissions, interruptions or delays in transmission, or
delivery of any message, by mail, telex, cable, telegraph, wireless or
other teletransmission or by oral instructions, whether or not they may be
in cipher;
(c) Letter of Credit Issuing Bank shall not be responsible for any act,
error, neglect or default, omission, insolvency or failure in business of any of
its correspondents;
(d) Each Letter of Credit Account Party will promptly examine:
(i) any copy of a Letter of Credit (and of any amendments the thereof)
sent to it by Letter of Credit Issuing Bank; and
(ii) all Instruments and documents delivered to it, from time to time,
and, in the event of any claim of non compliance with a Letter of Credit
Account Party's instructions or other irregularity, the applicable Letter
of Credit Account Party will immediately notify Letter of Credit Issuing
Bank thereof in writing, each Letter of Credit Account Party being
conclusively deemed to have waived any such claim against Letter of Credit
Issuing Bank and its correspondents unless such notice is given as
aforesaid;
(e) any action, inaction or omission on the part of Letter of Credit
Issuing Bank or any of its correspondents, under or in connection with a Letter
of Credit or the related Instruments, documents or property, if, in good faith,
shall be binding upon each Letter of Credit Account Party and shall not place
Letter of Credit Issuing Bank or any of its correspondents under any liability
to any Letter of Credit Account Party; and
(f) in the event that Letter of Credit Issuing Bank shall pre-assign a
letter of credit number or numbers to any Letter of Credit Account Party, each
Letter of Credit Account Party shall keep such number(s) confidential and shall
not disclose any such number to any Person until the Letter of Credit to which
such number relates has been approved by Letter of Credit Issuing Bank.
Each Letter of Credit Account Party agrees to hold HSBC, each Affiliate and
Subsidiary of HSBC, Letter of Credit Issuing Bank, Collateral Monitor, Agent,
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each Bank, each Affiliate and Subsidiary of each Bank, each of their officers,
directors, employees and correspondents indemnified and harmless against any and
all claims, loss, liability or damage, including reasonable counsel fees,
howsoever arising from or in connection with any Letter of Credit or any
Application, including, without limitation, any such claim, loss, liability or
damage arising out of any transfer, sale, delivery, surrender or endorsement of
any document at any time(s) held by Letter of Credit Issuing Bank or any of its
Affiliates or Subsidiaries, or held for the account of any one of them by any
correspondent of any of them, or arising out of any action for injunctive or
other judicial or administrative relief arising out of or in connection with any
Letter of Credit and affecting, directly or indirectly, HSBC, or each Affiliate
or Subsidiary of HSBC.
Section 3.08 Licenses; Insurance; Regulations. Each Letter of Credit
Account Party will procure promptly any necessary import, export or other
licenses for the import, export or shipping of the property shipped under or
pursuant to or in connection with each Letter of Credit, and will comply with
all foreign and domestic governmental regulations in regard to the shipment of
such property or the financing thereof, and will furnish such certificates in
that respect as Letter of Credit Issuing Bank may, at any time(s), require, and
will keep such property adequately covered by insurance in amounts, against
risks and with companies satisfactory to Agent, and will assign the policies or
certificates of insurance to Agent, or will make the loss or adjustment, if any,
payable to Agent, at Agent's option, and will furnish Agent, on its demand, with
evidence of acceptance by the insurers of such assignment. Should the insurance
upon such property for any reason be unsatisfactory to Agent, Agent may, at
Borrower's expense, obtain insurance satisfactory to Agent.
Each Application for a Trade Letter of Credit hereunder shall constitute
the warranty and certification made by each Letter of Credit Account Party that
is a party to such Application that no shipment or payment to be made in
connection with such Trade Letter of Credit violates or will violate any Law or
any United States export, currency control, or other regulations.
Section 3.09 Airway and Steamship Guaranties. HSBC may, in its discretion,
issue a letter of indemnity or such other document requested by the party in
possession of merchandise to enable a Letter of Credit Account Party to take
possession of such merchandise forthwith without production of the shipping
documents (an "Airway Guaranty" or "Steamship Guaranty", as the case may be).
Such Airway Guaranty or Steamship Guaranty shall be deemed a part of the Letter
of Credit Obligations and shall be included, without duplication, as such in the
calculation of the Borrowing Base, the Net Borrowing Base, the Availability for
Revolving Credit Loans, the Trade Letter of Credit Commitment and the Standby
Letter of Credit Commitment, provided, however, that any merchandise which is
the subject of such Airway Guaranty or Steamship Guaranty shall not be included
in Eligible Inventory or Eligible In-Transit Inventory or Eligible Trade Letters
of Credit.
Section 3.10 Additional Security. If a temporary restraining order or an
injunction (preliminary or permanent) or any similar order is issued in
connection with any Letter of Credit or any Instrument or documents relating
thereto, which order, injunction, or similar order may apply, directly or
indirectly, to Letter of Credit Issuing Bank, each Letter of Credit Account
Party shall, on demand, deliver, convey, transfer, or assign to the Agent
additional security of a value and character satisfactory to Agent and Letter of
Credit Issuing Bank, or make such payment as Agent and/or Letter of Credit
Issuing Bank may require.
Section 3.11 Continuing Rights and Obligations. Agent's and Letter of
Credit Issuing Bank's rights hereunder shall continue unimpaired, and each
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Letter of Credit Account Party shall be and remain obligated in accordance with
the terms and provisions hereof, notwithstanding the release and/or substitution
of any property which may be held as Collateral at any time(s), or of any rights
or interest therein. No delay, extension of time, renewal, compromise or other
indulgence which may occur or be granted by Agent and/or Letter of Credit
Issuing Bank shall impair Agent's and/or Letter of Credit Issuing Bank's rights
or powers hereunder.
Section 3.12 Instructions; No Liability. Instructions may be honored by
Agent and Letter of Credit Issuing Bank when received from an Authorized Person.
Each Letter of Credit Account Party may furnish Agent and Letter of Credit
Issuing Bank with written confirmation of any such Instruction, but Agent's and
Letter of Credit Issuing Bank's responsibility with respect to any Instruction
shall not be affected by its failure to receive, or the content of, such
confirmation. Neither Agent nor Letter of Credit Issuing Bank shall have
responsibility to notify any Letter of Credit Account Party of any discrepancies
between such Letter of Credit Account Party's instructions and its written
confirmation, and in the event of any such discrepancy, the original Instruction
shall govern. Agent and Letter of Credit Issuing Bank shall be fully protected
in, and shall incur no liability to any Letter of Credit Account Party for,
acting upon any Instructions or any oral, written, telephone, teleprocess,
electronic, or other amendments thereto which it in good faith believes to have
been given by any Authorized Person, and in no event shall Agent or Letter of
Credit Issuing Bank be liable for special, consequential, or punitive damages.
Agent and Letter of Credit Issuing Bank may, at its option, use any means of
verifying any Instruction received by it. Agent and Letter of Credit Issuing
Bank also may, at its option, refuse to act upon any instruction or other
communication or any part thereof, without incurring any responsibility for any
loss, liability or expense arising out of such refusal. All such authorizations
and instructions shall continue in full force and effect unless Letter of Credit
Issuing Bank may elect to act upon additional instructions delivered to it by
any Letter of Credit Account Party prior to the issuance of a Letter of Credit
in reliance upon the original Instructions. Notwithstanding anything to the
contrary contained herein, each Letter of Credit Issuing Bank is authorized to
delegate to one or more of its Affiliates any or all of its rights and
obligations with respect to any or all Letters of Credit issued by such Letter
of Credit Issuing Bank; provided, that, no Letter of Credit may be issued by,
and no obligations under outstanding Letters of Credit may be delegated to, an
Affiliate of a Letter of Credit Issuing Bank unless (i) such Letter of Credit is
confirmed by a Letter of Credit Issuing Bank, or (ii) such Affiliate of a Letter
of Credit Issuing Bank has the same or better credit rating as the applicable
Letter of Credit Issuing Bank based on the credit rating assigned to each by
Xxxxx'x Investors Service, Inc. or Standard & Poor's Ratings Group (a division
of The McGraw Hill Companies, Inc.) (or any successor or assignee of the
business of each such company in the business of rating securities credit
rating).
Section 3.13 Steamship Guaranty. Any Steamship Guaranty which the Letter of
Credit Issuing Bank may issue from time to time at its sole discretion will be
deemed Letter of Credit Obligations.
Section 3.14 Letter of Credit Application and Agreement. If requested by
the Letter of Credit Issuing Bank, each Letter of Credit Account Party also
shall submit an Application and/or letter of credit reimbursement agreement on
the Letter of Credit Issuing Bank's standard forms in connection with any
request for a Letter of Credit. In the event of any inconsistency between the
terms and conditions of this Agreement and the terms and conditions of any
Application and/or letter of credit reimbursement agreement and/or any other
agreement submitted by a Letter of Credit Account Party to, or entered into by a
Letter of Credit Account Party with, the Letter of Credit Issuing Bank relating
to any Letter of Credit, the terms and conditions of this Agreement shall
control.
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Section 3.15 Existing Letters of Credit; Use of Term "Letter of Credit
Issuing Bank". Banks, Borrower, Guarantors, Agent and Letter of Credit Issuing
Bank hereby acknowledge and agree that the Existing Letters of Credit constitute
Letters of Credit hereunder and commencing the date of this Agreement, each Bank
shall be deemed to have purchased from the Letter of Credit Issuing Bank an
undivided participating interest in the obligations of the Letter of Credit
Issuing Bank under and in connection with such Existing Letters of Credit
pursuant to Article IV hereof. Notwithstanding anything to the contrary
contained in this Agreement, with respect to all Letters of Credit, to the
extent that any consent or action is required by, or any notice is required to
be provided to, the Letter of Credit Issuing Bank for any matter relating to
Letters of Credit, (i) to the extent same relates to Letters of Credit other
than Existing Letters of Credit, the Letter of Credit Issuing Bank shall be
deemed to mean only HSBC and such consent, action and/or notice shall only be
required of/to HSBC and (ii) to the extent same relates to Existing Letters of
Credit, the Letter of Credit Issuing Bank shall be deemed to mean only Chase and
such consent, action and/or notice shall only be required of/to Chase.
Section 3.16 Borrower's Obligations Under Letters of Credit. With respect
to Letters of Credit issued for the account of a Letter of Credit Account Party
that is not the Borrower, the Borrower hereby agrees that, in addition to each
other Letter of Credit Account Party for whose account such Letter of Credit has
been issued, the Borrower shall be primarily obligated for all reimbursement
obligations and Letter of Credit Fees in connection with any and all such
Letters of Credit to the same extent as if such Letters of Credit had named the
Borrower as the account party therefore.
ARTICLE IV
PARTICIPATION
Section 4.01 Participating Banks' Pro Rata Shares. Subject to the terms and
conditions hereinafter set forth in this Article IV, Letter of Credit Issuing
Bank hereby agrees to sell and each Participating Bank hereby agrees to purchase
a risk participation ("Participation") from Letter of Credit Issuing Bank in
each Letter of Credit to the extent of the percentage set forth below opposite
such Bank's name (as such percentage may be reduced or otherwise modified from
time to time in accordance with the terms of this Article IV):
Bank Pro Rata Share
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HSBC 22.0%
CIT 20.0%
Fleet 16.5%
BOA 15.0%
Chase 15.0%
IDB 11.5%
Section 4.02 Sale and Purchase of Participation. Each Participating Bank
hereby irrevocably and unconditionally agrees to purchase, and Letter of Credit
Issuing Bank hereby agrees to sell and transfer to each Participating Bank, an
undivided fractional interest equal to such Participating Bank's Pro Rata Share
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in each Letter of Credit upon issuance thereof and each draw thereunder upon
such drawing, and in the obligations of the Letter of Credit Account Parties in
respect of each such Letter of Credit under this Agreement and the Letter of
Credit (including all related payments and recoveries to which such
Participating Bank is entitled pursuant to Section 4.05 hereof).
Section 4.03 Participation in Fees and Collateral; Relationship. Agent
shall pay each Participating Bank its Pro Rata Share of each Trade Letter of
Credit Fee and Standby Letter of Credit Fee. This fee shall be due and payable
promptly, after such Fee is paid to Agent, in arrears on each Quarterly Date.
The relationship between Letter of Credit Issuing Bank (in its capacity as
seller of a Participation pursuant to this Article IV) and each Participating
Bank (in its capacity as purchaser of a Participation pursuant to this Article
IV) is and shall be that of a purchaser and seller of a property interest and
not a creditor-debtor relationship or joint venture. Letter of Credit Issuing
Bank (in its capacity as seller of a Participation pursuant to this Article IV)
shall owe each Participating Bank (in its capacity as purchaser of a
Participation pursuant to this Article IV) no duty except as specifically set
forth in this Article IV.
Section 4.04 Procedures. Whenever a draw shall be made under a Letter of
Credit and a Letter of Credit Account Party shall fail to reimburse Letter of
Credit Issuing Bank therefor in accordance with this Agreement, Letter of Credit
Issuing Bank will promptly notify each Participating Bank regarding such draw as
follows: (a) the date of such draw, and (b) the amount of such draw or payment.
Although Letter of Credit Issuing Bank shall be responsible for paying each such
draw on each Letter of Credit, each Participating Bank shall bear its Pro Rata
Share of the credit risk associated with each such draw. Accordingly, in the
event that the amount of any such draw is not paid in full by or on behalf of a
Letter of Credit Account Party when required in accordance with the terms of
this Agreement, for any reason, Letter of Credit Issuing Bank shall give prompt
notice by telephone (promptly confirmed in writing) or telex to each
Participating Bank of such event. Upon receipt of such telephone or telex
notice, each Participating Bank shall cause to be transmitted to Letter of
Credit Issuing Bank, to an account to be specified by Letter of Credit Issuing
Bank, an amount in immediately available funds equivalent to its Pro Rata Share
of such draw or payment in such manner to ensure that such funds are received
by, and available to, Letter of Credit Issuing Bank by 3:00 P.M., New York City
time, on the date demand therefor was made by Letter of Credit Issuing Bank (if
demand was made by 11:00 A.M., New York City time) or by 10:00 A.M., New York
City time, on the Banking Day following the date demand therefore was made (if
demand was made after 11:00 A.M., New York City time) and any such payment by
each Participating Bank shall be deemed a Revolving Loan.
Letter of Credit Issuing Bank shall advise each Participating Bank
quarterly of its Pro Rata Share of the Letter of Credit Obligations (but shall
have no liability for its failure to do so). In addition, Letter of Credit
Issuing Bank shall supply any notices of reasonable requests in the ordinary
course of business.
Section 4.05 Collections and Remittances. Whenever Letter of Credit Issuing
Bank receives any payment, interest reimbursement, collection, recovery, setoff,
counterclaim or banker's lien on account of a Letter of Credit, whether from a
Letter of Credit Account Party, the Collateral, or otherwise, it shall allocate
such receipt as follows:
(a) First, to the payment of taxes, assessments, insurance premiums, legal
fees, or for similar purposes as required by the Letter of Credit, as the case
may be, or any other Loan Document, and, if previously paid by Agent or Letter
of Credit Issuing Bank, such sums shall be retained by Agent or Letter of Credit
Issuing Bank, as the case may be; and
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(b) Second, in the event a Letter of Credit Account Party fails to
reimburse Letter of Credit Issuing Bank, when due, for any draw under a Letter
of Credit, and Letter of Credit Issuing Bank receives a payment of or on account
of such defaulted amount as to which a Participating Bank has paid Letter of
Credit Issuing Bank the amount of its Pro Rata Share pursuant to Section 4.04
hereof, that portion of the amount received shall be allocated between each such
Participating Bank and Letter of Credit Issuing Bank pro rata, with each such
Participating Bank's percentage of the principal amount based on its Pro Rata
Share and with each such Participating Bank's portion of the interest and fees
on its Pro Rata Share based upon the amounts set forth above.
If any payment received by Letter of Credit Issuing Bank and distributed or
credited to a Participating Bank is later rescinded or is otherwise returned by
Letter of Credit Issuing Bank for whatever reason (including, without
limitation, settlement of an alleged claim), each such Participating Bank, upon
demand by Letter of Credit Issuing Bank, shall immediately pay to Letter of
Credit Issuing Bank, such Participating Bank's Pro Rata Share of the amount so
returned, with interest at the Federal Funds Rate from and after the date of
demand. The covenants contained in this paragraph shall survive the termination
of this Agreement.
Section 4.06 Sharing of Setoffs and Collections. Each Participating Bank
agrees that to the extent any payment is received by it on any of a Letter of
Credit Account Party's obligations under a Letter of Credit, whether by
counterclaim, setoff, banker's lien, by realizing on collateral or otherwise and
such payment results in such Participating Bank receiving a greater payment than
it would have been entitled to under Section 4.05 hereof had the total amount of
such payment been paid directly to Letter of Credit Issuing Bank for
disbursement according to that Section, then such Participating Bank shall
immediately purchase for cash from Letter of Credit Issuing Bank an additional
Participation and a participation from the other Participating Banks in such
Letter of Credit (subject to the same terms and conditions provided for herein),
sufficient in amount so that such payment shall effectively be shared pro rata
with HSBC and the other Participating Banks in accordance with the amount, and
to the extent, of their respective interests in the Letter of Credit; provided
however, that if all or any portion of such payment is thereafter recovered from
such Participating Bank at any time, the purchase shall be rescinded and the
purchase price returned to the extent of such recovery upon demand by such
Participating Bank with interest at the Federal Funds Rate from and after the
date of demand.
Section 4.07 Indemnification; Costs and Expense. To the extent not
reimbursed by a Letter of Credit Account Party, and without limiting the
obligation of the Letter of Credit Account Parties to do so, each Participating
Bank agrees to, on demand, reimburse each Letter of Credit Issuing Bank for,
indemnify each Letter of Credit Issuing Bank against, and hold each Letter of
Credit Issuing Bank harmless from, to the extent of each such Participating
Banks Pro Rata Share of, any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, or disbursements of any
kind whatsoever (including, without limitation, disbursements necessary, in the
reasonable judgment of such Letter of Credit Issuing Bank, to preserve or
protect the Collateral), that may, at any time, be imposed on, incurred by, or
asserted against such Letter of Credit Issuing Bank in any way relating to this
Agreement, a Letter of Credit, the Collateral or any other Revolving Credit Loan
Document or other instrument relating to any of the foregoing, or the
transactions contemplated thereby and hereby, or any action taken or omitted by
such Letter of Credit Issuing Bank under or in connection with any of the
foregoing; provided however, that no Participating Bank shall be liable for the
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, or disbursements
resulting from such Letter of Credit Issuing Bank's gross negligence or willful
misconduct. The covenants contained in this Section 4.07 hereof shall survive
the termination of this Agreement.
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Section 4.08 Administration; Standard of Care. Letter of Credit Issuing
Bank will administer each Letter of Credit in the ordinary course of business
and in accordance with its usual practices, modified from time to time as it
deems appropriate under the circumstances. Except as expressly set forth in the
third paragraph of this Section 4.08, Letter of Credit Issuing Bank shall be
entitled to use its discretion in taking or refraining from taking any actions
in connection with any of the foregoing as if it were the sole party involved in
any of the foregoing and no Participation existed.
Each Participating Bank acknowledges that its Participation hereunder is
without recourse to any Letter of Credit Issuing Bank and that each such
Participating Bank expressly assumes all risk of loss in connection with its
Participation in the Letters of Credit as if such Participating Bank had
directly provided such Letters of Credit. No Letter of Credit Issuing Bank shall
have any liability express or implied, for any action taken or omitted to be
taken by such Letter of Credit Issuing Bank or for any failure or delay in
exercising any right or power possessed by such Letter of Credit Issuing Bank
under any of the Loan Documents except for actual losses, if any, suffered by
any Participating Bank that are proximately caused either by such Letter of
Credit Issuing Bank's gross negligence or by such Letter of Credit Issuing
Bank's willful misconduct. Without limiting the foregoing, each Letter of Credit
Issuing Bank (a) may consult with legal counsel, independent public accountants,
appraisers, and other experts, selected by such Letter of Credit Issuing Bank,
and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such persons, (b) shall be entitled
to rely on, and shall incur no liability by acting upon, any conversation,
notice, consent, certificate, statement, order, or any document or other writing
(including, without limitation, telegraph, telex, telecopy, TWX, or other
telecommunication device) believed by such Letter of Credit Issuing Bank to be
genuine and correct and to have been signed, sent, or made by the proper person,
(c) makes no warranty or representation of any kind or character relating to any
Letter of Credit Account Party or the Collateral, and shall not be responsible
for any warranty or representation made in or in connection with any of the Loan
Documents, (d) makes no warranty or representation as to, and shall not be
responsible for the correctness as to form, the due execution, legality,
validity, enforceability, genuineness, sufficiency, or collectability of any of
the Loan Documents, for any failure by any Letter of Credit Account Party or any
Person to perform its obligations thereunder, for a Letter of Credit Account
Party's use of the proceeds therefrom, or for the preservation of the Collateral
or the loss, depreciation, or release thereof, (e) makes no warranty or
representation as to, and assumes no responsibility for, the authenticity,
validity, accuracy, or completeness of any notice, financial statement, or other
document or information received by such Letter of Credit Issuing Bank or any
Participating Bank in connection with, or otherwise referred to in, any of the
Loan Documents, and (f) shall not be required to make any inquiry concerning the
observance or performance of any agreement contained in, or conditions of, any
of the Loan Documents, or to inspect the property, books, or records of any
Letter of Credit Account Party or any Person.
Notwithstanding the provisions of the first paragraph of this Section 4.08,
each Letter of Credit Issuing Bank agrees that it will not waive any Event of
Default without the consent of the requisite Banks and it will not take any of
the following actions without the written consent of each Participating Bank:
(i) [reserved]; (ii) extend the maturity date of any Letter of Credit beyond
ninety (90) days after the Revolving Credit Termination Date; (iii) increase the
amount of the Trade Letter of Credit Commitment or the Standby Letter of Credit
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Commitment; (iv) reduce the fees charged on the Letters of Credit below the
amount required to be paid to such Letter of Credit Issuing Bank or to the
Participating Banks pursuant to the terms of this Article IV; or (v) release any
Guarantor or any Collateral, except as otherwise contemplated in any Loan
Documents. Each Letter of Credit Issuing Bank shall be fully justified in
failing or refusing to take any action under any of the Loan Documents unless it
shall first receive such advice or concurrence of the requisite Participating
Banks.
Each Letter of Credit Issuing Bank and the Participating Banks may lend
money to, accept deposits from, and generally engage in any kind of business
with each Letter of Credit Account Party as freely as though no Participation
had been granted to a Participating Bank.
Section 4.09 Independent Investigation by the Participating Banks. Each
Participating Bank acknowledges (a) that each Letter of Credit Issuing Bank has
provided such Participating Bank with copies of all of the Loan Documents and
each Letter of Credit Account Party and each Letter of Credit Issuing Bank has
provided or granted such Participating Bank access to, certain financial data
and other information pertaining to the Letter of Credit Account Parties and the
Guarantors that such Participating Bank has requested in order to enable it to
make an independent, informed judgment with respect to the desirability of
purchasing Participation in the Letters of Credit, (b) that no Letter of Credit
Issuing Bank has made any representations or warranties to such Participating
Bank and that no prior or future act by any Letter of Credit Issuing Bank,
including, without limitation, any review of the affairs of any Letter of Credit
Account Party, shall be deemed to constitute a representation or warranty of
such Letter of Credit Issuing Bank, and (c) that such Participating Bank has
independently, without reliance upon any Letter of Credit Issuing Bank, and
based on such information as such Participating Bank has deemed appropriate,
made its own appraisal of and investigation into the business, operations,
property, financial condition, and general credit worthiness of each Letter of
Credit Account Party, made its own analysis of the value and Lien status of any
Collateral, and made its own decision to execute this Agreement and thereby
purchase from the applicable Letter of Credit Issuing Bank(s) a Participation in
accordance with this Article IV in the Letters of Credit. Each Participating
Bank agrees that, independently and without reliance upon any Letter of Credit
Issuing Bank or any representations or statements of any Letter of Credit
Issuing Bank, and based on such information as such Participating Bank deems
appropriate at the time, it will continue to make and rely upon its own credit
analysis and decisions in taking or not taking any action under this Article IV
or any of the Loan Documents.
Section 4.10 Participating Banks' Ownership of Interests in the
Participation; Repurchases by the Letter of Credit Issuing Banks. Each
Participating Bank hereby represents and warrants to each Letter of Credit
Issuing Bank that the purchase of its Participation in the Letters of Credit (a)
is a legal investment pursuant to the Law under which such Participating Bank is
organized and operates, (b) has been duly authorized and approved by all
necessary action of the management of such Participating Bank, and (c) is made
for such Participating Bank's own account for the purpose of investment only and
with no present intention of disposing of the same.
Upon the occurrence of an Event of Default and failure to consent to a
change in this Agreement where such Participating Bank's consent is required
pursuant to this Article IV, each Letter of Credit Issuing Bank, or any party
designated by it, shall have the right (but not the obligation) to repurchase
such Participating Bank's Participation in any Letter of Credit for a purchase
price equal to any unpaid amount due the Participating Bank with respect to such
Participation. Upon demand and payment therefor, such Participating Bank shall
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promptly transfer to such Letter of Credit Issuing Bank its Participation in any
such Letter of Credit by executing and delivering to such Letter of Credit
Issuing Bank an instrument of transfer in form and substance satisfactory to
such Letter of Credit Issuing Bank and such Participating Bank; provided
however, that failure by such Participating Bank to do so shall not affect such
Letter of Credit Issuing Bank's repurchase of such Participating Bank's
Participation in any such Letter of Credit, which repurchase shall be effective
upon payment therefor by such Letter of Credit Issuing Bank to such
Participating Bank. At any time before each payment, such Letter of Credit
Issuing Bank may withdraw and terminate its offer to repurchase such
Participating Bank's Participation in any such Letter of Credit prior to the
payment of such price.
ARTICLE V
GUARANTY
Section 5.01 Guaranty. Each Guarantor hereby, jointly and severally,
irrevocably, absolutely and unconditionally guarantees to each Bank Party and
their successors, endorsees, transferees and assigns the prompt and complete
payment by Borrower and each Letter of Credit Account Party, as and when due and
payable (whether at stated maturity or by required prepayment, acceleration,
demand or otherwise), of all Obligations and agrees to pay on demand any and all
expenses (including counsel fees and expenses) which may be paid or incurred by
any Bank Party in collecting any or all of the Obligations and/or enforcing any
rights under any of the Loan Documents or under the Obligations (the
"Guaranty"). The Guaranty of each Guarantor of the payment of the Obligations is
such Guarantor's "Guaranty Obligation".
Section 5.02 Guarantor's Guaranty Obligations Unconditional.
(a) Each Guarantor hereby guarantees that the Obligations will be paid
strictly in accordance with the terms of the Loan Documents, regardless of any
Law now or hereafter in effect in any jurisdiction affecting any such terms or,
the rights of any Bank Party with respect thereto. The obligations and
liabilities of each Guarantor under this Guaranty shall be to the extent
permitted by applicable law absolute and unconditional irrespective of: (i) any
lack of validity or enforceability of any of the Obligations, any Loan
Documents, or any agreement or instrument relating thereto; (ii) any change in
the time, manner or place of payment of, or in any other term in respect of, all
or any of the Obligations, or any other amendment or waiver of or consent to any
departure from any Loan Documents or any other documents or instruments executed
in connection with or related to the Obligations; (iii) any exchange or release
of, or non-perfection of any Lien on or in, any Collateral, or any release or
amendment or waiver of or consent to any departure from any other guaranty, for
all or any of the Obligations; or (iv) any other circumstances which might
otherwise constitute a defense (other than indefeasible payment in full)
available to, or a discharge of, Borrower, any Letter of Credit Account Party or
any other guarantor in respect of the Obligations of any Guarantor in respect of
this Guaranty.
(b) This Guaranty is a continuing guaranty and shall remain in full force
and effect until: (i) the payment in full of all the Obligations and the
termination of the Commitment; and (ii) the payment of the other expenses to be
paid by the Guarantors pursuant hereto. This Guaranty shall continue to be
effective or shall be reinstated, as the case may be, if, at any time, any
payment, or any part thereof, of any of the Obligations is rescinded or must
otherwise be returned by any Bank Party upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of Borrower and/or any Letter of
Credit Account Party or otherwise, all as though such payment had not been made.
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(c) The obligations and liabilities of each Guarantor under this Guaranty
shall not be conditioned or contingent upon the pursuit by the Agent or any Bank
or any other Person at any time of any right or remedy against Borrower, any
Letter of Credit Account Party or any other Person which may be or become liable
in respect of all or any part of the Obligations or against any Collateral or
security or guarantee therefor or right of setoff with respect thereto.
(d) Each Guarantor hereby consents that, without the necessity of any
reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Obligations made
by any Bank Party may be rescinded by such Bank Party and any of the Obligations
continued after such rescission.
Section 5.03 Waivers. To the extent permitted by applicable law, each
Guarantor hereby waives: (a) promptness and diligence; (b) notice of or proof of
reliance by any Bank Party upon this Guaranty or acceptance of this Guaranty;
(c) notice of the incurrence of any Obligation by Borrower and/or any Letter of
Credit Account Party or the renewal, extension or accrual of any Obligation; (d)
notice of any actions taken by any Bank Party or Borrower, any Letter of Credit
Account Party or any other party under any Loan Document, or any other agreement
or instrument relating to the Obligations; (e) all other notices, demands and
protests, and all other formalities of every kind other than such as are
provided for in the Loan Documents in connection with the enforcement of the
Obligations or of the obligations of any Guarantor hereunder, the omission of or
delay or which, but for the provisions of this Section 5.03, might constitute
grounds for relieving any Guarantor of its obligations hereunder; and (f) any
requirement that any Bank Party protect, secure, perfect or insure any Lien on
any property subject thereto or exhaust any right or take any action against
Borrower, any Letter of Credit Account Party or any other Person or any
Collateral.
Section 5.04 Subrogation. Each Guarantor agrees that it hereby defers any
rights which it may acquire by way of subrogation under this Guaranty, whether
acquired by any payment made hereunder, by any setoff or application of funds of
such Guarantor by any Bank Party or otherwise until the Obligations have been
paid in full.
Section 5.05 Limitation of Liability. The obligations of each Guarantor
hereunder shall be limited to an aggregate amount equal to the largest amount
that would not render its obligations hereunder subject to avoidance under
Section 548 of the United States Bankruptcy Code or any comparable provision of
any applicable state law.
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.01 Conditions Precedent to Initial Use of a Credit Facility on
and after the Effective Date. The obligations of the Banks on or after the date
of this Agreement to make a Revolving Credit Loan and the obligation of HSBC to
issue the initial Letter of Credit and for the Existing Letters of Credit to
become Letters of Credit hereunder is subject to the condition precedent that
the Banks shall have received on or before the Effective Date each of the
following documents, in form and substance satisfactory to the Banks and their
counsel, and each of the following requirements shall have been fulfilled:
(a) Evidence of Due Organization and all Corporate Actions by Borrower and
each Guarantor. A certificate of the Secretary or Assistant Secretary of
Borrower and each Guarantor, dated the date of this Agreement, attesting to the
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certificate of incorporation and by-laws of Borrower and each Guarantor and all
amendments thereto and to all corporate actions taken by Borrower and each
Guarantor, including resolutions of its board of directors, authorizing the
execution, delivery and performance of the Loan Documents, and each other
document to be delivered pursuant to the Loan Documents;
(b) Incumbency and Signature Certificates of Borrower and each Guarantor. A
certificate of the Secretary or Assistant Secretary of Borrower and each
Corporate Guarantor, dated the date of this Agreement, certifying the names and
true signatures of the officers of Borrower and each Guarantor authorized to
sign the Loan Documents to which it is a party, and the other documents to be
delivered pursuant to the Loan Documents;
(c) Good Standing Certificates of Borrower and each Guarantor. A
Certificate, dated reasonably near the date of this Agreement, from the
Secretary of State (or other appropriate official) of the jurisdiction of
incorporation of Borrower and each Guarantor certifying as to the due
incorporation and good standing of Borrower or such Guarantor and certificates,
dated reasonably near the date of this Agreement, from the Secretary of State
(or other appropriate official) of each other jurisdiction where Borrower and
each Guarantor is required to be qualified to conduct business, certifying that
Borrower or such Guarantor is duly qualified to do such business and is in good
standing in each such state;
(d) Notes. The Revolving Credit Notes;
(e) Borrower Security Agreement. Borrower Security Agreement duly executed
by Borrower together with (i) financing statements (UCC-1) to be filed under the
Uniform Commercial Code of all jurisdictions necessary or, in the opinion of the
Agent or any Bank, desirable to perfect the security interest created by such
Security Agreement; (ii) Uniform Commercial Code searches identifying all of the
financing statements on file with respect to Borrower in all jurisdictions
referred to under (i), including the financing statements filed by the Agent
against such party indicating that no party other than the Agent claims an
interest in any of the Collateral except with respect to Permitted Liens and
(iii) endorsement, without recourse, of the Intercompany Demand Note payable to
the order of Borrower and the original of each such Intercompany Demand Note;
(f) Guarantor Security Agreements. Security Agreements duly executed by the
Guarantors (other than HIL) together with (i) financing statements (UCC-1) to be
filed under the Uniform Commercial Code of all jurisdictions necessary or, in
the opinion of the Agent or any Bank, desirable to perfect the security interest
created by such Security Agreement and (ii) Uniform Commercial Code searches
identifying all of the financing statements on file with respect to the
Guarantors (other than HIL) in all jurisdictions referred to under (i) including
the financing statements filed by the Agent against such party indicating that
no party other than the Agent claims an interest in any of the Collateral except
with respect to Permitted Liens;
(g) Borrower Pledge Agreement. Borrower Pledge Agreement duly executed by
Borrower, together with the certificates representing the shares pledged
pursuant to such Pledge Agreement and undated stock powers executed in blank for
each such certificate;
(h) Designers Pledge Agreement. Designers Pledge Agreement duly executed by
Designers, together with the certificates representing the shares pledged
pursuant to the such Pledge Agreement and undated stock powers executed in blank
for such certificates;
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(i) Borrower Trademark Security Agreement. Borrower Trademark Security
Agreement and the Special Power of Attorney related thereto each duly executed
by Borrower;
(j) Designers Trademark Security Agreement. Designers Trademark Security
Agreement and the Special Power of Attorneys related to the foregoing, duly
executed by Designers;
(k) Item-Eyes Trademark Security Agreement. Item-Eyes Trademark Security
Agreement and the Special Power of Attorneys related to the foregoing, each duly
executed by Item-Eyes;
(l) Intercreditor Agreement. The Intercreditor Agreement duly executed by
each of the Insurance Companies, the Agent for the Insurance Companies, the
Banks and the Agent;
(m) Existing Loan Documents. The Agent shall have received (i) a payoff
letter (in form and substance reasonable satisfactory to the Agent) with respect
to the obligations under the Existing Loan Documents (other than the Existing
Letters of Credit) which shall include an agreement or authorization by Chase to
file uniform commercial code termination statements with respect to all
financing statements filed naming Chase as secured party and naming as debtor
either Borrower, a Guarantor or a trade name of the foregoing and (ii) a
direction letter from Borrower to satisfy all such obligations with the first
advance under this Agreement.
(n) Opinions of Counsel for Borrower and Guarantors. A favorable opinion of
Xxxxxxx Xxxx & Xxxxxxxxx, counsel for Borrower and each Guarantor, addressed to
all Banks, dated the date of this Agreement;
(o) Insurance Coverage. A certificate from Borrower's and Guarantors'
insurance carriers evidencing the coverage required by Section 8.05 hereof
(which certificates shall show that the Agent or the Insurance Companies is an
additional insured and loss payee);
(p) Payment of Fees. Payment in full to the Agent of all fees required to
be paid to the Agent pursuant to the terms of a separate letter agreement
between Agent and Borrower; and payment in full of all other fees required to be
paid in accordance with the Loan Documents;
(q) Officer's Certificate. The following statements shall be true and the
Agent shall have received a certificate signed by a duly authorized officer of
Borrower dated the date of this Agreement stating that:
(i) The representations and warranties contained in this Agreement and
in each of the other Loan Documents are correct on and as of the date of
this Agreement as though made on and as of such date; and
(ii) No Default or Event of Default has occurred and is continuing;
(r) Terminations. Termination or Assignment of UCC Financing Statements
terminating or assigning Liens other than Permitted Liens;
(s) Assignment of Proceeds Agreement. Assignment of Proceeds Agreement duly
executed by Borrower and the Restricted Subsidiaries and a Consent and
Acknowledgment thereto duly executed by Factor;
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(t) Field Examination. Collateral Monitor and/or its designee shall have
conducted an examination of the books and records of Borrower and its
Subsidiaries, at the expense of the Borrower, and the results of such
examination shall be in form and substance reasonably satisfactory to the
Required Banks; provided, that, the signature of a Bank to this Agreement shall
be deemed to be its approval of such field examination.
(u) Pre-Closing Borrowing Base Certificate. Based upon Collateral Monitor's
completion of an updated field examination of the books and records of Borrower
and its Subsidiaries and, after giving effect to any Revolving Credit Loans and
Letter of Credit Obligations and any other extension of credit to be made by the
Banks on the date of this Agreement, a Borrowing Base Certificate of Borrower
and its Restricted Subsidiaries showing Net Availability of a positive amount
(the Borrowing Base Certificate shall reflect all extensions of credit to be
made on the Effective Date and other than such extensions of credit to be made
on the Effective Date, all information in the Borrowing Base Certificate shall
be as of August 2, 2003); and
(v) Additional Documentation. Such other approvals, opinions or documents
as the Agent or any Bank may reasonably request.
Section 6.02 Conditions Precedent to All Credit Facilities. The obligations
of the Bank Parties, as the case may be, to provide each Credit Facility, shall
be subject to the further conditions precedent that on the date of providing
such Credit Facility:
(a) The following statements shall be true:
(i) (A) the representations and warranties with a materiality
provision contained in this Agreement and in each of the other Loan
Documents are correct on and as of the date of providing such Credit
Facility as though made on and as of such date and (B) all the
representations and warranties with no materiality provision contained in
this Agreement and in each of the other Loan Documents are correct in all
material respects on and as of the date of providing such Credit Facility
as though made on and as of such date, except, in each case, to the extent
that such representations and warranties expressly relate to an earlier
date (in which case, such representations and warranties shall have been
correct on and as of such earlier date); and
(ii) no Default or Event of Default has occurred and is continuing, or
could result from providing such Credit Facility;
(b) The Agent shall have received such other approvals, opinions or
documents as the Agent or any Bank may reasonably request.
Section 6.03 Deemed Representation. Each request under a Credit Facility
and acceptance by Borrower of any proceeds of such Revolving Credit Loan or the
issuance of any Letter of Credit, as the case may be, shall constitute (a) for
representations and warranties with a materiality provision, a representation
and warranty that the statements contained in Section 6.02(a) hereof are true
and correct both on the date of such notice and as of the date of the providing
of such Revolving Credit Loan or issuance of such Letter of Credit, as the case
may be, and (b) for representations and warranties with no materiality
provision, a representation and warranty that the statements contained in
Section 6.02(a) hereof are true and correct in all material respects both on the
date of such notice and as of the date of the providing of such Revolving Credit
Loan or issuance of such Letter of Credit, as the case may be.
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ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Borrower and each Guarantor hereby represents and warrants that:
Section 7.01 Incorporation. Good Standing and Due Qualification. Borrower
and each Guarantor is duly incorporated, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, has the corporate power
and authority to own its assets and to transact the business in which it is now
engaged or proposed to be engaged, and is duly qualified as a foreign
corporation and in good standing under the laws of each other jurisdiction in
which such qualification is required, except to the extent that its failure to
be so qualified could not result in a Material Adverse Change.
Section 7.02 Corporate Power and Authority; No Conflicts. The execution,
delivery and performance by Borrower and each Guarantor of the Loan Documents to
which it is a party have been duly authorized by all necessary corporate action
and do not and will not: (a) require any consent or approval of its stockholders
which has not been obtained; (b) contravene its certificate of incorporation or
by-laws; (c) violate any provision of, or require any filing (other than the
filing of the financing statements contemplated by the Security Documents),
registration, consent or approval under any Law (including, without limitation,
Regulations T, U and X of the Board of Governors), order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to Borrower or any Guarantor; (d) result in a breach of or
constitute a default under or require any consent under any indenture or loan or
credit agreement or any other agreement, lease or instrument to which Borrower
or any Guarantor is a party or by which it or its properties may be bound or
affected; (e) result in, or require, the creation or imposition of any Lien
(other than as created under the Security Documents), upon or with respect to
any of the properties now owned or hereafter acquired by Borrower or any
Guarantor; or (f) cause such corporation to be in default under any such Law,
order, writ, judgment, injunction, decree, determination or award or any such
indenture, agreement, lease or instrument.
Section 7.03 Legally Enforceable Agreements. Each Loan Document to which
Borrower and each Guarantor is a party is a legal, valid and binding obligation
of Borrower and each Guarantor, enforceable against Borrower and each Guarantor
in accordance with its terms, except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency and other similar laws affecting
creditors' rights generally.
Section 7.04 Litigation. There are no actions, suits or proceedings
(private or governmental) pending or, to the knowledge of Borrower or any
Guarantor, threatened, against or affecting Borrower or any Guarantor before any
Governmental Authority or arbitrator, except as set forth in Schedule 7.04. None
of the actions set forth on Schedule 7.04 are reasonably expected to result in a
Material Adverse Change.
Section 7.05 Financial Statements. Each of: (a) the consolidated balance
sheets of Borrower and its Subsidiaries as of December 31, 2002 and the related
consolidated statements of income and retained earnings, and consolidated
statements of cash flows of Borrower and its Subsidiaries for the Fiscal Year,
then ended, and the accompanying footnotes, together, with the opinion thereon,
dated December 31, 2002, of Deloitte & Touche LLP, independent certified public
accountants, copies of which have been furnished to the Banks, and (b) the
internally prepared financial statements as of December 31, 2002 showing
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Borrower and the Restricted Subsidiaries and the internally prepared financial
statements as of March 29, 2003 showing Borrower and the Restricted
Subsidiaries, fairly present the financial condition of Borrower and its
Subsidiaries as at such dates and the results of the operations of Borrower and
its Subsidiaries for the periods covered by such statements, all in accordance
with GAAP consistently applied except as set forth in the notes thereto and
subject in the case of interim financials statements to normal year end
adjustments. There has been no Material Adverse Change since December 31, 2002.
There are no liabilities of Borrower or any of the Subsidiaries, fixed or
contingent, which are material but are not reflected in the financial statements
referred to above or in the notes thereto, other than liabilities arising in the
ordinary course of business since December 31, 2002. No information, exhibit, or
report furnished by Borrower or any Restricted Subsidiaries to the Agent or any
Bank in connection with the negotiation of this Agreement and the other Loan
Documents contained any material misstatement of fact or omitted to state a
material fact or any fact necessary to make the statements contained therein not
materially misleading.
Section 7.06 Ownership and Liens. Borrower and each Restricted Subsidiary
have title to, or valid leasehold interests in, all of their properties and
assets, real and personal, including the properties and assets, and leasehold
interests reflected in the financial statements referred to in Section 7.05
hereof (other than any properties or assets disposed of in the ordinary course
of business), and none of the properties and assets owned by Borrower or any
Restricted Subsidiary and none of their leasehold interests are subject to any
Lien, except as may be permitted under this Agreement. Neither Borrower nor any
Restricted Subsidiary has any copyright or patent. All trademarks owned by
Borrower and/or the Restricted Subsidiaries are indicated on Schedule 7.06
hereto.
Section 7.07 Taxes. Borrower and each Guarantor have filed all tax returns
(federal, state and local) required to be filed and have paid all taxes,
assessments and governmental charges and levies thereon to be due, including
interest and penalties, except to the extent they are the subject of a Good
Faith Contest.
Section 7.08 ERISA. Each Plan is administered in compliance in all material
respects with all applicable provisions of ERISA and the Code except where such
failure would not reasonably be expected to result in a Material Adverse Change.
Neither a Reportable Event nor a Prohibited Transaction has occurred with
respect to any Plan; no notice of intent to terminate a Plan has been filed nor
has any Plan been terminated; no circumstance exists which constitutes grounds
under Section 4042 of ERISA entitling the PBGC to institute proceedings to
terminate, or appoint a trustee to administer, a Plan, nor has the PBGC
instituted any such proceedings; neither Borrower nor any Guarantor nor any
ERISA Affiliate has completely or partially withdrawn under Section 4201 or 4204
of ERISA from a Multiemployer Plan; and no Plan which is a Multiemployer Plan is
in reorganization (within the meaning of Section 4241 of ERISA), is insolvent
(within the meaning of Section 4245 of ERISA) or is terminating; Borrower, each
Guarantor and each ERISA Affiliate has met its minimum funding requirements
under ERISA with respect to all of its Plans subject to Title IV of ERISA and
there are no unfunded vested liabilities except as set forth in Schedule 7.08;
and neither Borrower nor any Guarantor nor any ERISA Affiliate has incurred any
liability to the PBGC under ERISA; and neither Borrower, any Guarantor, nor any
ERISA Affiliate has liability for retiree medical, life insurance or other death
benefits (contingent or otherwise) other than as a result of a continuation of
medical coverage required under Section 4980B of the Code or as required
pursuant to an employment agreement.
Section 7.09 Subsidiaries; Ownership of Guarantors; Investments. As of the
Effective Date, all of the outstanding capital stock or other interest of each
Guarantor is set forth on Schedule 7.09 and has been validly issued, is fully
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paid and nonassessable and, is owned free and clear of all Liens other than
Permitted Liens. As of the Effective Date, Schedule 7.09 lists each of the
Borrower's direct and indirect Subsidiaries and all other capital stock and
other equity securities or other debt or equity investments owned or held by
Borrower or any Restricted Subsidiary.
Section 7.10 Operation of Business. Borrower and each Restricted Subsidiary
possesses all licenses, permits, franchises, and trade names, or rights thereto,
to conduct its business substantially as now conducted and as presently proposed
to be conducted, and Borrower and each Restricted Subsidiary is not in violation
of any valid rights of others with respect to any of the foregoing.
Section 7.11 No Default on Outstanding Judgments or Orders. Borrower and
each Guarantor have satisfied all judgments and Borrower and each Guarantor are
not in default with respect to any judgment, writ, injunction, or decree of any
court, arbitrator or any rule or regulation of any federal, state, municipal or
other Governmental Authority, commission, board, bureau, agency or
instrumentality, domestic or foreign.
Section 7.12 No Defaults on Other Agreements. Neither Borrower nor any
Restricted Subsidiary is a party to any indenture, loan or credit agreement or
any lease or other agreement or instrument or subject to any certificate of
incorporation or corporate restriction which is likely to result in a Material
Adverse Change. Neither Borrower nor any Restricted Subsidiary is in default in
any respect in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any agreement or instrument.
Neither Borrower nor any Guarantor is a party to any agreement which restricts
or prohibits any Guarantor from declaring and/or paying dividends to Borrower.
Section 7.13 Labor Disputes and Acts of God. Neither the business nor the
properties of Borrower or any Restricted Subsidiary are affected by any fire,
explosion, accident, strike, lockout or other labor dispute, drought, storm,
hail, earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance), except as specified in Schedule 7.13.
Section 7.14 Governmental Regulation. Neither Borrower nor any Guarantor is
subject to regulation under the Public Utility Holding Company Act of 1935, the
Investment Company Act of 1940, the Interstate Commerce Act, the Federal Power
Act or any statute or regulation limiting its ability to incur indebtedness for
money borrowed as contemplated hereby.
Section 7.15 Partnerships. Neither Borrower nor any Restricted Subsidiary
is a partner in any partnership.
Section 7.16 Environmental Protection. Borrower and each Restricted
Subsidiary have obtained all permits, licenses and other authorizations which
are required under all Environmental Laws, except to the extent failure to have
any such permit, license or authorization is not likely to result in a Material
Adverse Change. Borrower and each Restricted Subsidiary are in compliance with
all Environmental Laws and the terms and conditions of the required permits,
licenses and authorizations, and is also in compliance with all other applicable
limitations, restrictions, obligations, schedules and timetables contained in
those Laws or contained in any plan, order, decree, judgment, injunction, notice
or demand letter issued, entered, promulgated or approved by a Governmental
Authority thereunder, except to the extent failure to comply is not likely to
result in a Material Adverse Change.
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The Collateral contains no Hazardous Materials that, under any
Environmental Law then in effect, (a) would impose liability on Borrower or any
Guarantor that could result in a Material Adverse Change or (b) could result in
the imposition of a Lien on the Collateral or any portion thereof or any other
assets of Borrower or any Guarantor, in each case if not properly handled in
accordance with applicable Law.
Section 7.17 Solvency. Borrower and each Guarantor is, and upon
consummation of the transactions contemplated by this Agreement, the other Loan
Documents, and any other documents, instruments or agreements relating thereto,
will be Solvent.
Section 7.18 Properties; Priority of Liens. All of the properties and
assets owned by the Borrower and the Guarantors (excluding HIL) are owned by
each of them, respectively, free and clear of any Lien of any nature whatsoever,
except as provided for in the Security Documents, and Permitted Liens. The Liens
that, simultaneously with the execution and delivery of this Agreement and the
consummation of the initial extensions of credit, have been created and granted
by the Security Documents constitute valid perfected first Liens on the
properties and assets covered by the Security Documents, subject to no prior or
equal Lien except Permitted Liens.
ARTICLE VIII
AFFIRMATIVE COVENANTS
So long as any of the Notes shall remain unpaid or any Letter of Credit
Obligation shall remain outstanding or any Bank Party shall have a Commitment
hereunder, or any other amount is owing by Borrower to any Bank Party hereunder
or under any other Loan Document, Borrower and each Guarantor, (except HIL and
its Subsidiaries as to the covenants contained in Sections 8.07, 8.08, and 8.10
hereof), shall:
Section 8.01 Maintenance of Existence. Preserve and maintain its corporate
existence and good standing in the jurisdiction of its incorporation, and
qualify and remain qualified as a foreign corporation in each jurisdiction in
which such qualification is required, except to the extent that its failure to
so qualify could not result in a Material Adverse Change.
Section 8.02 Conduct of Business. Continue to operate its business in a
manner consistent with the conduct of it on and prior to the Effective Date.
Section 8.03 Maintenance of Properties. Maintain, keep and preserve all of
its properties, (tangible and intangible) necessary or used in the proper
conduct of its business in good working order and condition, ordinary wear and
tear excepted.
Section 8.04 Maintenance of Records. Keep adequate records and books of
account, in which complete entries will be made in accordance with GAAP,
reflecting all of its financial transactions.
Section 8.05 Maintenance of Insurance. Maintain insurance with financially
sound and reputable insurance companies or associations in such amounts and
covering such risks as are usually carried by companies engaged in the same or a
similar business and similarly situated and such other insurance as reasonably
required by the Banks.
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Section 8.06 Compliance with Laws. Comply in all respects with all
applicable Laws, such compliance to include, without limitation, paying before
the same become delinquent all taxes, assessments and governmental charges
imposed upon it or upon its property, except (a) in the case of the failure to
pay taxes, such taxes are the subject of a Good Faith Contest, and (b) to the
extent that its failure to so comply is not likely to result in a Material
Adverse Change.
Section 8.07 Right of Inspection.
(a) Permit Collateral Monitor and/or its designee, at any time and from
time to time, upon reasonable prior notice, to examine and make copies of the
extracts from the books and records of Borrower and its Subsidiaries, and visit
the properties of Borrower and its Subsidiaries, and discuss the affairs,
finances and accounts of Borrower and its Subsidiaries with any of their
respective employees, officers, directors and independent accountants examine
and audit the inventory and receivables of Borrower and each Subsidiary (such
foregoing right of inspection and review to be referred to as the "Field
Examination"), with the cost of one such Field Examination during each twelve
month period from and after the Effective Date being borne by the Borrower;
provided, that, for each such Field Examination the Borrower shall not be
required to pay more than $750 per day per examiner plus the reasonable
out-of-pocket costs incurred by Collateral Monitor in conducting such Field
Examination, capped at $20,000.00 for each such Field Examination; provided,
further, that, if a Default has not occurred, only one such Field Examination
may be conducted in any twelve month period from and after the Effective Date
and at any time a Default has occurred and is continuing, Collateral Monitor
and/or its designee shall be authorized to conduct at any time and from time to
time (without any requirement for prior notice) as many Field Examinations as
it, the Agent or the Required Banks request and the Borrower shall be required
to pay the entire cost of all such Field Examinations (even if more than one
Field Examination is conducted in a twelve month period).
(b) In consideration for serving as Collateral Monitor, pay to Collateral
Monitor (i) a fee of $10,000, non-refundable and earned regardless of
circumstances, on the date of this Agreement and (ii) an additional $10,000 on
each anniversary thereof. Such fee is in addition to the payment to Collateral
Monitor of any other fees referred to in this Section 8.07.
Section 8.08 Reporting Requirements. Furnish directly to each of the Banks:
(a) Borrower's Quarterly Financial Statements. As soon as available and in
any event within forty-five (45) days after the end of each of the first three
quarters of each Fiscal Year of Borrower, the consolidating balance sheets of
Borrower, and (i) its Restricted Subsidiaries, and (ii) all of its Subsidiaries
as of the end of such quarter, consolidated and consolidating statements of
income, statements of stockholders' equity and cash flow statements of Borrower
and (A) its Restricted Subsidiaries and (B) all of its Subsidiaries both for
such quarter and for the period commencing at the end of the previous Fiscal
Year and ending with the end of such quarter, all in reasonable detail and
stating in comparative form corresponding unaudited consolidated figures for the
corresponding date and period in the previous Fiscal Year and all prepared in
accordance with GAAP consistently applied and certified by the chief financial
officer of Borrower (subject to year-end adjustments).
(b) Borrower's Annual Financial Statements. As soon as available and in any
event within one hundred twenty (120) days after the end of each Fiscal Year of
Borrower: (i) for Borrower and its Subsidiaries, on a consolidated and
consolidating basis, the balance sheets, statements of changes in stockholders'
equity, income statements and statements of cash flow for such Fiscal Year, all
in reasonable detail and stating in comparative form the respective consolidated
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figures for the corresponding date and period in the Fiscal Year and all
prepared in accordance with GAAP consistently applied, and the consolidated
financials referenced in this Section 8.08(b)(i) shall be audited by such
independent certified public accountants selected by Borrower and acceptable to
Banks and the consolidating financial statements referenced in this Section
8.08(b)(i) shall be certified by the chief financial officer of Borrower; and
(ii) for Borrower and the Restricted Subsidiaries, on a consolidated and
consolidating basis, the balance sheets, statements of changes in stockholders'
equity, income statements and statements of cash flow for such Fiscal Year, all
in reasonable detail and stating in comparative form the respective consolidated
figures for the corresponding date and period for such Fiscal Year and all
prepared in accordance with GAAP consistently applied, and which shall be
certified by the chief financial officer of Borrower, and (iii) for Borrower and
the Restricted Subsidiaries, the balance sheets and income statements prepared
on a consolidated basis in accordance with GAAP consistently applied, and which
shall be audited by such independent certified public accountants selected by
Borrower and acceptable to Banks. As of the date hereof, Deloitte & Touche, LLP
is acceptable to Banks.
(c) Borrowing Base Certificate. Within twenty-one (21) days after each
Fiscal Month End Date, a Borrowing Base Certificate, in form and substance
satisfactory to the Agent reporting that all Revolving Credit Loans and Letter
of Credit Obligations as of such Fiscal Month End Date are in compliance with
the Net Borrowing Base as of such Fiscal Month End Date and such Borrowing Base
Certificate shall be accompanied by a summary accounts receivable aging.
(d) Management Letters. Promptly upon receipt thereof, copies of any
reports submitted to Borrower and any Consolidated Subsidiary by independent
certified public accountants in connection with the examination of the financial
statements of such Borrower and Consolidated Subsidiary made by such
accountants.
(e) Certificate of No Default. Within forty-five (45) days after the end of
each quarter of each Fiscal Year of Borrower, a certificate of the chief
financial officer of Borrower (i) certifying that no Default or Event of Default
has occurred and is continuing or, if a Default or Event of Default has occurred
and is continuing, a statement as to the nature thereof and the action which is
proposed to be taken with respect thereto, and (ii) with computations
demonstrating compliance with the covenants contained in Article X, as of the
end of that fiscal period.
(f) Notice of Litigation. Promptly after receipt of notice of the
commencement thereof, notice of all actions, suits, and proceedings before any
Governmental Authority, affecting Borrower or any Restricted Subsidiary which,
if determined adversely to Borrower or any Restricted Subsidiary, could result
in a Material Adverse Change.
(g) Notices of Defaults and Events of Default. As soon as possible and in
any event within ten (10) days after the occurrence of each Default or Event of
Default a written notice setting forth the details of such Default or Event of
Default and the action which is proposed to be taken with respect thereto.
(h) ERISA Reports. As soon as possible and in any event within twenty (20)
days after Borrower knows or has reason to know that any Reportable Event or
Prohibited Transaction has occurred with respect to any Plan or that the PBGC or
Borrower has instituted or will institute proceedings under Title IV of ERISA to
terminate any Plan or that Borrower, or any ERISA Affiliate has completely or
partially withdrawn from a Multiemployer Plan or that a Plan which is a
Multiemployer Plan is in reorganization (within the meaning of Section 4241 of
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ERISA), is insolvent (within the meaning of Section 4245 of ERISA) or is
terminating, Borrower will deliver to each of the Banks a certificate of the
chief financial officer of Borrower setting forth details as to such Reportable
Event or Prohibited Transaction or Plan termination or withdrawal or
reorganization or insolvency and the action Borrower proposes to take with
respect thereto.
(i) Annual Business Plan. As soon as possible and in any event no later
than March 31 in any year, a copy of an annual consolidated business plan in
form and substance acceptable to the Banks with respect to the subsequent Fiscal
Year (consisting of consolidated balance sheets of Borrower and its
Subsidiaries, and consolidated statements of earnings and cash flow statements
of Borrower and its Subsidiaries, prepared on a quarterly basis for such year)
for Borrower and its Subsidiaries approved by Borrower's Board of Directors,
together with the assumptions and projections on which the business plan is
based. Based on the information provided in the submitted annual business plan,
the Banks may reconsider, in their sole and absolute discretion, the amount of
the Supplemental Amount for such subsequent Fiscal Year; provided, that, any
change to the Supplemental Amount shall require the consent of all Banks (in
their sole and absolute discretion). Any material changes made to the plan
during the year will be provided by Borrower as soon as possible.
(j) Insurance. Upon the occurrence of any casualty, damage or loss, whether
or not giving rise to a claim under any insurance policy, in an amount greater
than Five Hundred Thousand ($500,000) Dollars, notice thereof, together with
copies of any document relating thereto (including copies of any such claim) in
possession or control of Borrower and any Restricted Subsidiary or any agent of
Borrower and any Restricted Subsidiary; and immediately after the occurrence
thereof, written notice of any cancellation of any insurance policy required to
be maintained by Borrower and any Restricted Subsidiary pursuant to Section 8.05
hereof.
(k) Material Adverse Change. As soon as possible and in any event within
five (5) days after the occurrence of any event or circumstance which is likely
to result in or has resulted in a Material Adverse Change, written notice
thereof.
(l) Environmental Notices. As soon as possible and in any event within ten
(10) days after receipt by any corporate executive officer, copies of all
Environmental Notices received by Borrower or any Restricted Subsidiary which
are not received in and do not relate to the ordinary course of Borrower or such
Restricted Subsidiary's business.
(m) Required Licensors. At any time a licensor that has licensed a
trademark to the Borrower and/or a Restricted Subsidiary becomes a Required
Licensor, written notice thereof as soon as possible and in any event within
five (5) days after such licensor becomes a Required Licensor.
(n) General Information. Such other information respecting the conditions
or operations, financial or otherwise, of Borrower or any Restricted Subsidiary
as the Agent or any Bank may from time to time reasonably request.
Section 8.09 Compliance With Environmental Laws. Comply in all respects
with all applicable Environmental Laws where the failure to comply could result
in a Material Adverse Change.
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ARTICLE IX
NEGATIVE COVENANTS
So long as any of the Notes shall remain unpaid or any Letter of Credit
Obligation shall remain outstanding or any Bank Party shall have any Commitment
hereunder or any other amount is owing by Borrower to any Bank Party hereunder
or under any other Loan Document, Borrower and each Guarantor (excluding HIL and
its Subsidiaries with respect to this Article IX), shall not:
Section 9.01 Debt. Create, incur, assume or suffer to exist any Debt,
except:
(a) Debt of Borrower and the Guarantors under this Agreement, the Notes, or
any other Loan Document;
(b) Accounts payable to any Person that supplies goods or services to
Borrower or any Guarantor, and other current liabilities (other than Debt)
incurred, in the ordinary course of business; provided that, all such accounts
and liabilities are paid in the ordinary course of business;
(c) Debt of Borrower under the Insurance Company Loan Documents;
(d) Debt secured by purchase money Liens (i) permitted by Section 9.03
hereof and (ii) of acquired properties and acquired Persons who become
Restricted Subsidiaries;
(e) up to an aggregate Three Million ($3,000,000) Dollars in unsecured
lines of credit to be used for general corporate purposes, which is currently
provided exclusively by Merchant National Bank;
(f) up to an aggregate Two Million ($2,000,000) Dollars in unsecured lines
of credit to be used for trade letters of credit payable at sight (the
"Unsecured Lines"), which is currently provided exclusively by Regions Bank;
(g) Guaranties permitted under Section 9.02 hereof;
(h) Debt under Interest Rate Contracts with a counter-party that is a Bank
or with another counter-party that is reasonably satisfactory to the Agent and
the Required Banks; and
(i) Debt owing by Borrower to HIL in an aggregate amount at any one time
outstanding not in excess of $10,000,000; provided that, such Debt shall only be
permitted to the extent HIL remains a Guarantor as long as such Debt remains
outstanding and only as long as, upon the occurrence and during the continuance
of a Default, such Debt is completely subordinated to the Obligations pursuant
to a subordination agreement in form and substance satisfactory to Agent.
Section 9.02 Guaranties. Assume, guarantee, endorse or otherwise be or
become directly or contingently responsible or liable (including, but not
limited to an agreement to purchase any obligation, stock, assets, goods or
services or to supply or advance any funds, assets, goods or services, or an
agreement to maintain or cause such Person to maintain a minimum working capital
or net worth or otherwise to assure the creditors of any Person against loss)
for the obligations of any Person, except:
(a) guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
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(b) the Guaranty Obligations;
(c) guaranties by Borrower or any Restricted Subsidiary of accounts payable
incurred in the ordinary course of business by Borrower or any Restricted
Subsidiary, as the case may be;
(d) guaranties by Borrower and the Restricted Subsidiaries for the benefit
of HIL, but not in excess of the amount provided in Section 9.10 hereof;
(e) guaranties under Insurance Company Loan Documents;
(f) guaranties of trade obligations of HIL provided such guaranties are
Restricted Payments permitted under Section 9.10 hereof and guarantees of up to
$200,000 of trade obligations of Borrower or a Restricted Subsidiary or; and
(g) Guaranties permitted under Section 9.06(e) hereof.
Section 9.03 Liens. Create, incur, assume or suffer to exist any Lien, upon
or with respect to any of its real or personal properties (including, without
limitation, leasehold interests, leasehold improvements and any other interest
in real property or fixtures), now owned or hereafter acquired, except the
following ("Permitted Liens"):
(a) Liens granted under and pursuant to the Loan Documents;
(b) Liens granted under and pursuant to the Insurance Company Loan
Documents.
(c) Liens for taxes or assessments or other government charges or levies if
not yet due and payable or if due and payable if they are the subject of a Good
Faith Contest;
(d) Liens imposed by law, such as mechanic's, materialmen's, landlord's,
warehousemen's and carrier's Liens, and other similar Liens, securing
obligations incurred in the ordinary course of business which are not past due
for more than ninety (90) days, or which are the subject of a Good Faith
Contest;
(e) Liens under workmen's compensation, unemployment insurance, social
security or similar legislation (other than ERISA) or to secure letters of
credit obtained in connection therewith;
(f) Liens of GMAC Commercial Credit LLC ("GMAC") and/or The CIT
Group/Commercial Services, Inc. ("CIT"), or any other Person, each in its
capacity as factor for Borrower or a Restricted Subsidiary and/or provides
credit protection with respect to the Accounts of Borrower or a Restricted
Subsidiary (each a "Factor") so long as, with respect to each such Factor, Agent
has obtained the following in form and substance satisfactory to Agent: (i) a
copy of the executed Factoring Agreement; (ii) a duly executed Assignment of
Proceeds Agreement and (iii) an agreement duly executed by Factor pursuant to
which Factor agrees, among other things, (A) not to make any loans or advances
to Borrower or a Restricted Subsidiary or to guaranty on behalf of Borrower or
any Restricted Subsidiary any amounts and (B) to waive the right of setoff
against Accounts or proceeds thereof of amounts owed by Borrower or a Restricted
Subsidiary to Factor or Factor's clients arising out of claims or accounts
receivable owed by Borrower or a Restricted Subsidiary to such other clients of
Factor or other third parties and (C) except for Accounts factored by Factor,
that the Lien of Agent in the property of Borrower and each Restricted
Subsidiary is senior to the Lien of Factor in such property;
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(g) Liens, deposits or pledges to secure the performance of bids, tenders,
contracts (other than contracts for the payment of money), leases (permitted
under the terms of this Agreement), public or statutory obligations, surety,
stay, appeal, indemnity, performance or other similar bonds, or other similar
obligations arising in the ordinary course of business;
(h) judgment and other similar Liens arising in connection with court
proceedings, provided that, the existence of such Liens does not constitute an
Event of Default;
(i) easements, rights-of-way, restrictions, zoning and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use and enjoyment by Borrower or any Guarantor of the property or
assets encumbered thereby in the normal course of its business or materially
impair the value of the property subject thereto;
(j) each of the Liens listed on Schedule 9.03 securing the Debt specified
on such schedule, including any extension or modification thereof but not the
extension of such Lien to other property in whole or in part;
(k) purchase money Liens on any real property, fixtures or equipment
hereafter acquired or the assumption of or taking subject to any Lien on real
property, fixtures or equipment existing at the time of such acquisition, or a
Lien incurred in connection with any conditional sale or other title retention
agreement or a Capital Lease; provided that:
(i) any property subject to any of the foregoing is acquired by
Borrower or any Guarantor in the ordinary course of its business and the
Lien on any such property (if not preexisting) is created contemporaneously
with such acquisition or within 90 days thereof;
(ii) the Debt secured by any Lien so created, assumed or existing
shall not exceed one hundred percent (100%) of the lesser of the cost or
fair market value as of the time of acquisition of the property covered
thereby including shipping and installation costs; and
(iii) each such Lien shall attach only to the property so acquired and
fixed improvements thereon.
Section 9.04 Sale of Assets. Sell, lease, assign, transfer or otherwise
dispose of any of its now owned or hereafter acquired assets to any Person or
any capital stock of the Borrower's Subsidiaries to any Person, except for (a)
inventory disposed of in the ordinary course of business; (b) the sale or other
disposition of worn out or obsolete assets or no longer necessary for the
conduct of its business; (c) the sale or other dispositions of assets not
exceeding Three Hundred Thousand ($300,000) Dollars per Fiscal Year; (d) the
leasing of assets having an aggregate book value at any one time not exceeding
Three Hundred Thousand ($300,000) Dollars; (e) accounts receivable pursuant to a
Factoring Agreement acceptable to Agent in its sole discretion; (f) Borrower's
issuance of capital stock or other equity interest or options to purchase such
capital stock or equity interests.
Section 9.05 Transactions with Affiliates. Enter into any transaction,
including, without limitation, the purchase, sale or exchange of property or the
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rendering of any service, with any Affiliate other than Borrower or any
Restricted Subsidiary or enter into any transaction, including, without
limitation, the purchase, sale or exchange of property or the rendering of any
service, with any such Affiliate, except for transactions among Borrower and its
Restricted Subsidiaries or in the ordinary course of and pursuant to the
reasonable requirements of Borrower's or the Restricted Subsidiary's business
and upon fair and reasonable terms no less favorable to Borrower or Restricted
Subsidiary than it would obtain in a comparable arms' length transaction with a
Person not an Affiliate, provided however that Borrower and Restricted
Subsidiaries may make loans, and advances to and investments in HIL; provided
that, all such loans, advances, investments, together with guaranties provided
in Section 9.02, hereof do not, in the aggregate, exceed the amount of permitted
Restricted Payments allowed in Section 9.10 hereof.
Section 9.06 Investments; Acquisitions. Without the written approval of the
Banks, except as provided in Sections 9.05 and 9.10 hereof, make any loan or
advance to any Person or purchase or otherwise acquire any capital stock,
assets, obligations or other securities of, make any capital contribution to, or
otherwise invest in, or acquire any interest in, any Person in an amount in
excess of $5,000,000 (which for purposes of acquisitions shall include the
amount of any Debt assumed), except the following: (a) Permitted Investments;
(b) investments made in accordance with Section 9.10 hereof; (c) the formation
(but not by way of acquisition) of additional wholly owned Subsidiaries of
Borrower or the Restricted Subsidiaries; provided, that, in connection
therewith, unless Agent shall waive such requirements, each such Subsidiary
shall deliver to Agent a joinder to this Agreement, the Intercreditor Agreement
shall be amended to the extent necessary to include such Subsidiary, the capital
stock or other equity interest of such Subsidiary shall be pledged to Agent for
the benefit of Banks and such Subsidiary shall deliver to Agent a Security
Agreement and, to the extent such Subsidiary owns stock of another Person, a
Pledge Agreement, and, to the extent such Subsidiary owns any intellectual
property, a Trademark Security Agreement and shares of stock, stock powers and
powers of attorney and each other agreement, document or instrument reasonably
requested by Agent in connection with the foregoing and in connection therewith
such Subsidiary shall satisfy the conditions precedent set forth in Sections
6.01(a), (b), (c), (f), (h) (except same shall be deemed to apply to such
Subsidiary instead of Designers), (j) except same shall be deemed to apply to
such Subsidiary instead of Designers), (n), (o), (p) and (r) to the same extent
as if such Subsidiary were an original party to this Agreement; (d) investments
in Borrower's common stock made with director and officer deferred compensation
pursuant to the terms Borrower's common stock purchase plan and investments made
with director or officer deferred compensation pursuant to Borrower's deferred
compensation plan; and (e) loans or advances to any employees of Borrower or a
Restricted Subsidiary or guaranties made by Borrower and the Restricted
Subsidiaries of indebtedness or obligations of any of their employees not to
exceed $200,000 in the aggregate during any Fiscal Year outstanding in the
ordinary course of business for reasonable and necessary work-related, moving,
entertainment and other ordinary business expenses to be incurred by such
employee(s) in connection with their employment, provided, that, as of the date
of such loan or guarantee and after giving effect thereto, no Event of Default
shall exist or have occurred; provided, further, with respect to the Permitted
Investments (1) all certificates of deposit, bankers acceptances and money
market funds shall be issued or offered by a domestic office of a commercial
bank organized under the laws of the United States of America or any State
thereof which has a combined capital and surplus and undivided profits ("Bank
Equity") of not less than $500,000,000, except that amounts up to the aggregate
of $5,000,000 is permitted with banks with Bank Equity of less than $500,000,000
but greater than $50,000,000; (2) all money market funds shall comply with the
criteria set forth in Securities and Exchange Commission Rule 2a-7 under the
Investment Company Act of 1940 and have portfolio assets of at least
$5,000,000,000; (3) the aggregate amount of commercial paper rated less than
A1/P1, asset backed commercial paper rated less than A1/P1, medium term notes,
variable rate demand notes, corporate bonds and municipal notes/bonds shall not
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exceed $20,000,000 at any time; and (4) the aggregate amount of Permitted
Investments of the type referred to in the preceding clause (3) with respect to
any individual issuer shall not exceed $10,000,000 at any time.
Section 9.07 Mergers. Merge or consolidate with, or sell, assign, lease or
otherwise dispose of (whether in one transaction or in a series of transactions)
all or substantially all of its assets (whether now owned or hereafter acquired)
to any Person or form any Subsidiary, except that the foregoing shall not
prohibit (i) the formation of a new Subsidiary in accordance with the
requirements of Section 9.06 hereof, or (ii) the merger of Restricted
Subsidiaries with and into each other or into Borrower (with the Borrower as the
surviving corporation), so long as at the time thereof or as a result thereof
there shall be no Default or Event of Default.
Section 9.08 Leases. Create, incur, assume, or suffer to exist any
obligation as lessee for the rental or hire of any real or personal property
except: (a) Capital Leases permitted under Section 9.03(k) hereof, (b) each of
the retail and warehouse leases in effect on this date and those retail and
warehouse leases entered into in the future, and (c) leases that do not in the
aggregate require Borrower and its Subsidiaries to make payments (including
taxes, insurance, maintenance, and similar expenses which Borrower is required
to pay under the terms of the lease but excluding all payments based upon a
percentage of sales or revenues) in any Fiscal Year in excess of the amount
permitted under Section 10.04 hereof.
Section 9.09 Dividends. Declare or pay any cash dividends on capital stock
of Borrower; or purchase, redeem, retire, or otherwise acquire for value any of
the capital stock or securities convertible into capital stock of Borrower now
or hereafter outstanding or make any distribution of assets to its stockholders
as such whether in cash, assets, or in obligations of Borrower or any Restricted
Subsidiary, or allocate or otherwise set apart any sum for the payment of any
dividend or distribution on, or for the purchase, redemption, or retirement of
any shares of its capital stock, except in all cases for transactions that are
(a) made in common stock of Borrower or (b) otherwise permitted under Section
9.10 hereof.
Section 9.10 Restricted Payments. Notwithstanding anything to the contrary
contained in this Article IX, make any Restricted Payment; except that, so long
as no Default exists and is continuing, (i) Borrower may repurchase treasury
stock in an aggregate amount not to exceed $1,500,000 from the date of this
Agreement and all times thereafter as long as this Agreement remains in effect,
net of amounts received by Borrower upon the sale of its capital stock,
including capital stock of Borrower which may be sold including those through
its stock plans and (ii) at any time prior to the consummation of the HIL
Spin-off Transaction, Borrower may make advances or payments to or investments
in, or issue guaranties for HIL as long as the aggregate amount of such
investments in, advances or payments to or investments in, or guaranties for
HIL, whether made prior or subsequent to the Effective Date, do not in the
aggregate, at any one time outstanding, as long as this Agreement remains in
effect, exceed $40,000,000. In calculating the amount of payments under
Subsection 9.10(ii), investments shall be valued at cost without adjustment for
losses or earnings incurred by HIL.
Section 9.11 Fiscal Year. Change its fiscal year to a period other than its
fiscal year in effect on the date hereof.
Section 9.12 Changes, Amendments or Modifications. Change, amend, modify or
supplement any of the following: (a) its certificate of incorporation; or (b)
by-laws, or (c) any other material agreement to which Borrower is a party, to
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the extent any of the foregoing is likely to result in a Material Adverse
Change.
Section 9.13 Nature of Business. Materially alter the nature of its
business.
Section 9.14 Double Negative Pledge. Enter into any agreement which
prohibits or limits the ability of the Borrower or any Restricted Subsidiary to
create, incur, assume or suffer to exist any Lien upon any of its property or
revenues, whether now owned or hereafter acquired.
Section 9.15 Senior Secured Debt. Permit the sum of (i) the aggregate
outstanding amount of the Debt of Borrower and the Guarantors under this
Agreement, the Notes, and/or the other Loan Documents, plus (ii) the aggregate
outstanding amount of Debt of Borrower under the Insurance Company Loan
Documents, to at any one time exceed One Hundred Ten Million ($110,000,000)
Dollars.
Section 9.16 Insurance Company Provisions. (i) Permit the financial
covenants contained in the Insurance Company Loan Documents to be amended from
those in existence on the date of this Agreement in a manner that is more
stringent as to the Borrower or any Guarantor (that is a Restricted Subsidiary),
unless the same financial covenant that is to be amended is contained in this
Agreement and the Agent and the requisite Banks have agreed, in their sole and
absolute discretion, to amend such financial covenant in the same manner as is
proposed to be amended in the Insurance Company Loan Documents, or (ii) provide
security or other sources of payment for obligations of the Borrower which have
not been provided hereunder or in connection herewith.
Section 9.17 Factoring Agreements. Enter into, amend or modify any
Factoring Agreement with a Factor unless same shall theretofore been approved in
writing by Agent.
ARTICLE X
FINANCIAL COVENANTS
So long as any of the Notes shall remain unpaid or any Letter of Credit
Obligation shall remain outstanding or any Bank Party shall have any Commitment
hereunder or any other amount hereunder is owing by Borrower to any Bank Party
hereunder or under any other Loan Document:
Section 10.01 Consolidated Tangible Net Worth. Borrower and its Restricted
Subsidiaries shall maintain at all times a Consolidated Tangible Net Worth of
not less than the $56,000,000, plus, or minus, as the case may be, the Net Worth
Adjustment Amount.
Section 10.02 Consolidated Fixed Charge Coverage Ratio. Borrower and its
Restricted Subsidiaries will maintain as at the last day of each fiscal quarter
of the Borrower, beginning with the fiscal quarter ending December 31, 2002, in
each case calculated on a rolling four (4) quarter basis, a Consolidated Fixed
Charge Ratio in a proportion of not less than 1.75 to 1.
Section 10.03 Consolidated Average Current Ratio. Borrower and its
Restricted Subsidiaries shall maintain a ratio of (a) consolidated current
assets (determined in accordance with GAAP) to (b) consolidated current
liabilities (determined in accordance with GAAP) in a proportion of not less
than 1.75 to 1.00, determined as at the last day of each fiscal quarter of the
Borrower on an average basis with respect to the most recent four fiscal
quarters then ending, in each case excluding the performance of HIL from any of
such calculations.
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Section 10.04 Consolidated Capital Expenditures. Borrower and its
Restricted Subsidiaries shall not, in any Fiscal Year, make Consolidated Capital
Expenditures in the aggregate amount in excess of $1,500,000.
Section 10.05 Revolving Credit Loan and Insurance Loan Coverage. During a
single period comprised of any sixty (60) consecutive days during each calendar
year, the sum of the aggregate amount of outstanding Revolving Credit Loans and
the aggregate Debt outstanding under the Insurance Company Loan Documents shall
not exceed eighty-five (85%) percent of the Net Amount of Eligible Accounts of
Borrower and the Restricted Subsidiaries.
ARTICLE XI
EVENTS OF DEFAULT
Section 11.01 Events of Default. Any of the following events shall be an
"Event of Default":
(a) (i) Borrower shall fail to pay the principal of any Note as and when
due and payable, or any Letter of Credit Account Party shall fail to reimburse
the Letter of Credit Issuing Bank on a Letter of Credit as and when due and
payable; (ii) Borrower shall fail to pay interest on any Note within five (5)
Banking Days of when such interest is due and payable; (iii) Borrower or any
Letter of Credit Account Party shall fail to pay within ten (10) days after the
request for payment is made any fees or expenses or other payments required to
be paid under the terms of any of the Loan Documents; (iv) Borrower shall fail
to make any payments or prepayments under Section 2.07 (b) hereof within three
(3) Banking Days; (iv) Borrower shall fail to make any payments under Section
2.07 (c) hereof on the date required by that Section or (v) Borrower shall fail
to deliver, in accordance with Section 8.08 (c) hereof, a Borrowing Base
Certificate showing all Revolving Credit Loans and Letter of Credit Obligations
as of such Fiscal Month End Date are in compliance with the Net Borrowing Base
as of such Fiscal Month End Date; or
(b) any representation or warranty made or deemed made by Borrower or any
Guarantor in this Agreement or in any other Loan Document to which it is a party
or which is contained in any certificate, document, opinion, financial or other
statement furnished at any time under or in connection with any Loan Document
shall prove to have been incorrect in any material respect on or as of the date
made or deemed made; or
(c) Borrower or any Guarantor shall fail to perform or observe any term,
covenant or agreement contained in this Agreement or any of the Loan Documents
(other than those covered by any other Event of Default) and such failure shall
continue for five (5) days or more following the earlier of the time (i) an
executive officer of Borrower knew or should have known of such Event of
Default; or (ii) written notice of such Event of Default is given to Borrower by
the Agent (except that this Section 11.01(c) shall not apply to the delivery of
a Borrowing Base Certificate not in compliance with Section 8.08(c) hereof); or
(d) Borrower or any Guarantor shall: (i) fail to pay any Debt of Borrower
or any Guarantor in an amount greater than Two Hundred Fifty Thousand ($250,000)
Dollars (other than the payment obligations described in (a) above or Debt under
the Insurance Company Loan Documents) when due (whether by scheduled maturity,
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required prepayment, acceleration, demand or otherwise) after giving effect to
any applicable grace period, (ii) or fail to pay all or any portion of the Debt
under the Insurance Company Loan Documents when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) after giving
effect to any applicable grace period; or (iii) fail to perform or observe any
term, covenant or condition on its part to be performed or observed or an event
of default has occurred under any agreement or instrument relating to the Debt
under the Insurance Company Loan Documents or any such other Debt, when required
to be performed or observed, the effect of which is to cause the Debt under the
Insurance Company Loan Documents or any such other Debt to become, or to permit
the Debt under the Insurance Company Loan Documents or any such other Debt to be
declared to be, due and payable prior to its scheduled maturity; or
(e) Borrower or any Guarantor: (i) shall generally not, or be unable to, or
shall admit in writing its inability to, pay its debts as such debts become due;
or (ii) shall make an assignment for the benefit of creditors, petition or apply
to any tribunal for the appointment of a custodian, receiver or trustee for it
or a substantial part of its assets; or (iii) shall commence any proceeding
under any bankruptcy, reorganization, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, whether now or
hereafter in effect; or (iv) shall have had any such petition or application
filed or any such proceeding shall have been commenced, against it, in which an
adjudication or appointment is made or order for relief is entered, or which
petition, application or proceeding remains undismissed or unstayed for a period
of sixty (60) days or more; or shall be the subject of any proceeding under
which its assets may be subject to seizure, forfeiture or divestiture; or (v) by
any act or omission shall indicate its consent to, approval of or acquiescence
in any such petition, application or proceeding or order for relief or the
appointment of a custodian, receiver or trustee for all or any substantial part
of its property; or (vi) shall suffer any such custodianship, receivership or
trusteeship to continue undischarged for a period of thirty (30) days or more;
or
(f) one or more judgments, decrees or orders for the payment of money in
excess of Five Hundred Thousand ($500,000) Dollars in the aggregate shall be
rendered against Borrower or any Guarantor, and such judgments, decrees or
orders shall continue unsatisfied and in effect for a period of thirty (30)
consecutive days without being vacated, discharged, satisfied or stayed or
bonded pending appeal; or
(g) any of the following events shall occur or exist with respect to
Borrower or any Guarantor or any ERISA Affiliate: (i) any Prohibited Transaction
involving any Plan; (ii) any Reportable Event shall occur with respect to any
Plan; (iii) the filing under Section 4041 of ERISA of a notice of intent to
terminate any Plan or the termination of any Plan; (iv) any event or
circumstance exists which might constitute grounds entitling the PBGC to
institute proceedings under Section 4042 of ERISA for the termination of, or for
the appointment of a trustee to administer, any Plan, or the institution by the
PBGC of any such proceedings; (v) complete or partial withdrawal under Section
4201 or 4204 of ERISA from a Multiemployer Plan or the reorganization,
insolvency, or termination of any Multiemployer Plan; (vi) an accumulated
funding deficiency (as defined in Section 302 of ERISA or Section 412 of the
Code) exists with respect to a Plan, whether or not waived; and in each case
above, such event or condition, together with all other events or conditions, if
any, would reasonably be expected to subject Borrower or any Guarantor or any
ERISA Affiliate to any tax, penalty, or other liability to a Plan, Multiemployer
Plan, the PBGC, or otherwise (or any combination thereof) which in the aggregate
exceeds or may exceed Three Hundred Fifty Thousand ($300,000) Dollars; or
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(h) Article V shall, at any time after the execution and delivery of this
Agreement and for any reason, cease to be in full force and effect or shall be
declared null and void, or the validity or enforceability thereof shall be
contested by any Guarantor or any Guarantor shall deny it has any further
liability or obligation under or shall fail to perform its obligations under
Article V; or
(i) the occurrence of a Change of Control; or
(j) the Liens of the Agent in any of the Collateral shall for any reason
fail to be perfected Liens, subject to no other Lien other than Permitted Liens
and such failure shall continue for ten (10) days or more following the earlier
of the time (i) an executive officer of Borrower knew or should have known of
such Event of Default; or (ii) written notice of such Event of Default is given
to Borrower by the Agent; or
(k) if on or before October 15, 2003, Agent shall not have entered into a
licensor waiver letter, in form and substance satisfactory to Agent, with
Xxxxxxxx Xxxxx, Inc. (and consented to by Borrower and each applicable
Guarantor) with respect to the rights of Agent to use the trademark to sell or
otherwise dispose of inventory sold under a licensed trademark from Xxxxxxxx
Xxxxx, Inc.; provided, that, notwithstanding this additional Event of Default
(and without limiting Agent's or any Bank's rights in connection therewith),
commencing on the date of this Agreement, no inventory sold under a licensed
trademark from Xxxxxxxx Xxxxx, Inc. shall be included in the Borrowing Base
unless and until the Agent shall have received such fully executed waiver
letter.
Section 11.02 Remedies. If any Event of Default shall occur and be
continuing, the Agent may and, upon request of the Required Banks, shall by
notice to Borrower, (a) declare the Revolving Credit Commitment, the Trade
Letter of Credit Commitment and the Standby Letter of Credit Commitment to be
terminated, whereupon the same shall forthwith terminate; (b) require Borrower
to provide Cash Collateral or the equivalent thereof in an aggregate amount of
one hundred and five percent (105%) of all outstanding Letter of Credit
Obligations; (c) declare the outstanding Notes, all interest thereon, and all
other amounts payable under this Agreement, and any other Loan Documents to be
forthwith due and payable, whereupon the Notes, all such interest, and all such
amounts due under this Agreement, and under any other Loan Document shall become
and be forthwith due and payable, without presentment, demand, protest, or
further notice of any kind, all of which are hereby expressly waived by
Borrower; (d) exercise any remedies provided in any of the Loan Documents;
and/or (e) exercise any remedies provided by Law; provided however, that upon
the occurrence of an Event of Default referred to in Section 11.01(e) hereof,
the Revolving Credit Commitment, and the Trade Letter of Credit Commitment or
Standby Letter of Credit Commitment shall automatically terminate and the
outstanding Notes, Letters of Credit, and any other amounts payable under this
Agreement or any of the other Loan Documents, and all interest on any of the
foregoing shall be forthwith due and payable without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived
by Borrower. Furthermore, upon and following an Event of Default, at the
direction of the Required Banks, all Revolving Credit Loans, any and all accrued
and unpaid interest, fee or amount due hereunder and all other Obligations, to
the extent permitted by applicable law, shall bear interest (payable on demand,
and in any event on the last day of each month, and computed daily on the basis
of a 360-day year for actual days elapsed) at the Default Rate until paid. In no
event, however, shall any amount payable hereunder be in excess of the maximum
rate of interest permitted under applicable law. The obligation to so pay
interest upon any Obligation shall not be construed so as to waive or limit any
of the other remedies hereinabove set forth or to waive the requirement for
payment on the same date that payment is to be made as set forth in this
Agreement.
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ARTICLE XII
THE AGENT AND COLLATERAL MONITOR
Section 12.01 Appointment, Powers and Immunities of Agent. Each Bank hereby
irrevocably appoints and authorizes the Agent to act as its agent hereunder and
under any other Loan Document with such powers as are specifically delegated to
the Agent by the terms of this Agreement and any other Loan Document, together
with such other powers as are reasonably incidental thereto. The Agent shall
have no duties or responsibilities except those expressly set forth in this
Agreement and any other Loan Document, and shall not by reason of this Agreement
be a trustee for any Bank. The Agent shall not be responsible to the Banks for
any recitals, statements, representations or warranties made by Borrower or any
Guarantor or any officer or official of the Borrower or any Guarantor or anyone
purporting to be an Authorized Person or any other Person contained in this
Agreement or any other Loan Document, or in any certificate or other document or
instrument referred to or provided for in, or received by any of them under,
this Agreement or any other Loan Document, or for the value, legality, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document or any other document or instrument referred to or
provided for herein or therein, for the perfection or priority of any Lien
securing the Obligations or for any failure by Borrower or any Guarantor to
perform any of its obligations hereunder or thereunder. The Agent may employ
agents and attorneys-in-fact and shall not be responsible, except as to money or
securities received by it or its authorized agents, for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it with
reasonable care. Neither the Agent nor any of its directors, officers, employees
or agents shall be liable or responsible for any action taken or omitted to be
taken by it or them hereunder or under any other Loan Document or in connection
herewith or therewith, except for its or their own gross negligence or willful
misconduct. Borrower shall pay any fee agreed to by Borrower and the Agent with
respect to the Agents services hereunder at the date of this Agreement and each
anniversary thereof during the term of this Agreement.
Section 12.02 Reliance by Agent. The Agent shall be entitled to rely upon
any certification, notice or other communication (including any thereof by
telephone, telecopy, telex, telegram or cable) reasonably believed by it to be
genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by the Agent. The Agent may
deem and treat each Bank as the holder of the Revolving Credit Loans made by it
and Participation purchased by it for all purposes hereof unless and until a
notice of the assignment or transfer thereof satisfactory to the Agent signed by
such Bank shall have been furnished to the Agent but the Agent shall not be
required to deal with any Person who has acquired a participation in any
Revolving Credit Loan or Bank. As to any matters not expressly or any other
Revolving Credit provided for by this Agreement, the Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder in accordance
with instructions signed by the Required Banks, and such instructions of the
Required Banks and any action taken or failure to act pursuant thereto shall be
binding on all of the Banks and any other holder of all or any portion of any
Revolving Credit Loan or Participation.
Section 12.03 Defaults. The Agent shall not be deemed to have knowledge of
the occurrence of a Default or Event of Default, other than a payment default,
unless the Agent has received notice from a Bank or Borrower or any Guarantor
specifying such Default or Event of Default and stating that such notice is a
"Notice of Default." In the event that the Agent receives such a notice of the
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occurrence of a Default or Event of Default, the Agent shall give prompt notice
thereof to the Banks. The Agent shall (subject to Section 12.08 hereof) take
such action with respect to such Default or Event of Default which is continuing
as shall be directed by the Required Banks; provided that, unless and until the
Agent shall have received such directions, the Agent may take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interest of the Banks; and
provided further that, the Agent shall not be required to take any such action
which it determines to be contrary to Law.
Section 12.04 Rights of Agent as a Bank. With respect to its Commitment and
the Revolving Credit Loans provided by it and the Letters of Credit issued by
it, the Agent in its capacity as a Bank hereunder shall have the same rights and
powers hereunder as any other Bank and may exercise the same as though it were
not acting as the Agent, and the term "Bank" or "Banks" shall, unless the
context otherwise indicates, include the Agent in its capacity as a Bank. The
Agent and its Affiliates may (without having to account therefor to any Bank)
accept deposits from, lend money to (on a secured or unsecured basis), and
generally engage in any kind of banking, trust or other business with Borrower
or any Guarantor and any of their Affiliates as if it were not acting as the
Agent, and the Agent may accept fees and other consideration from Borrower for
services in connection with this Agreement or otherwise without having to
account for the same to the Banks.
Section 12.05 Indemnification of Agent. The Banks agree to indemnify the
Agent (to the extent not reimbursed under Section 13.03 hereof or under the
applicable provisions of any other Loan Document, but without limiting the
obligations of Borrower under Section 13.03 hereof or such provisions), for its
Pro Rata Share of any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind and nature whatsoever which may be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of this Agreement, any
other Loan Document or any other documents contemplated by or referred to herein
or the transactions contemplated hereby or thereby (including, without
limitation, the costs and expenses which Borrower or any Guarantor are obligated
to pay under Section 13.03 hereof) or under the applicable provisions of any
other Loan Document or the enforcement of any of the terms hereof or thereof or
of any such other documents or instruments; provided that, no Bank shall be
liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Agent.
Section 12.06 Documents. The Agent will forward to each Bank, promptly
after the Agent's receipt thereof, a copy of each report, notice or other
document required by this Agreement or any other Loan Document to be delivered
to the Agent for such Bank.
Section 12.07 Non-Reliance on Agent and Other Banks. Each Bank agrees that
it has, independently and without reliance on the Agent, HSBC or any other Bank,
and based on such documents and information as it has deemed appropriate, made
its own credit analysis of Borrower and each Guarantor and the decision to enter
into this Agreement and that it will, independently and without reliance upon
the Agent, HSBC or any other Bank, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement or any other Loan
Document. The Agent shall not be required to keep itself informed as to the
performance or observance by Borrower or any Guarantor of this Agreement or any
other Loan Document or any other document referred to or provided for herein or
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therein or to inspect the properties or books of Borrower or any guarantor.
Except for notices, reports and other documents and information expressly
required to be furnished to the Banks by the Agent hereunder, the Agent shall
not have any duty or responsibility to provide any Bank with any credit or other
information concerning the affairs, financial condition or business of Borrower
or any Guarantor (or any of their Affiliates) which may come into the possession
of the Agent or any of its Affiliates. The Agent shall not be required to file
this Agreement, any other Loan Document or any document or instrument referred
to herein or therein, for record or give notice of this Agreement, any other
Loan Document or any document or instrument referred to herein or therein, to
anyone; provided however, the Agent shall (a) file each Trademark Security
Agreement with the United States Patent and Trademark Office, and (b) with
respect to Borrower and the Restricted Subsidiaries that a parties to a Security
Agreement, file financing statements (UCC-1) set forth in Section 6.01 hereof in
the state where such Borrower and Restricted Subsidiary is organized.
Section 12.08 Failure of Agent to Act. Except for action expressly required
of the Agent hereunder, the Agent shall in all cases be fully justified in
failing or refusing to act hereunder unless it shall have received further
assurances (which may include Cash Collateral) of the indemnification
obligations of the Banks under Section 12.05 hereof in respect of any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.
Section 12.09 Resignation or Removal of Agent. Subject to the appointment
and acceptance of a successor Agent as provided below, the Agent may resign at
any time by giving written notice thereof to the Banks, Borrower and each
Guarantor, and the Agent may be removed at any time with or without cause by the
Required Banks; provided that, Borrower, each Guarantor and the other Banks
shall be promptly notified thereof. Upon any such resignation or removal, the
Required Banks shall have the right to appoint a successor Agent, which, unless
an Event of Default shall have occurred and be continuing, shall be reasonably
acceptable to Borrower. If no successor Agent shall have been so appointed by
the Required Banks and shall have accepted such appointment within thirty (30)
days after the retiring Agent's giving of notice of resignation or the Required
Banks' removal of the retiring Agent, then the retiring Agent may, on behalf of
the Banks, appoint a successor Agent, which shall be a bank which has an office
in New York, New York and assets in an amount not less than One Billion
($1,000,000,000) Dollars, which, unless an Event of Default shall have occurred
and be continuing, shall be reasonably acceptable to Borrower. The Required
Banks or the retiring Agent, as the case may be, shall upon the appointment of a
successor Agent promptly so notify Borrower and the other Banks. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation or removal hereunder as Agent, the provisions of
this Article XII shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as the Agent.
Section 12.10 Amendments Concerning Agency Function. The Agent shall not be
bound by any waiver, amendment, supplement or modification of this Agreement or
any other Loan Document which affects its duties hereunder or thereunder unless
it shall have given its prior consent thereto.
Section 12.11 Liability of Agent. The Agent shall not have any liabilities
or responsibilities to Borrower or any Guarantor on account of the failure of
any Bank to perform its obligations hereunder or to any Bank on account of the
failure of Borrower or any Guarantor to perform its obligations hereunder or
under any other Loan Document.
Section 12.12 Transfer of Agency Function. Without the consent of Borrower,
any Guarantor or any Bank, the Agent may at any time or from time to time
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transfer its functions as Agent hereunder to any of its offices located in New
York, New York, provided that, the Agent shall promptly notify Borrower and the
Banks thereof.
Section 12.13 Withholding Taxes. Each Bank represents that it is entitled
to receive any payments to be made to it hereunder without the withholding of
any tax and will furnish to the Agent such forms, certifications, statements and
other documents as the Agent may request from time to time to evidence such
Bank's exemption from the withholding of any tax imposed by any jurisdiction or
to enable the Agent to comply with any applicable laws or regulations relating
thereto. Without limiting the effect of the foregoing, if any Bank is not
created or organized under the laws of the United States of America or any state
thereof, such Bank will furnish to the Agent Form 4224 or Form W-8BEN of the
Internal Revenue Service, or such other forms, certifications, statements or
documents, duly executed and completed by such Bank as evidence of such Bank's
complete exemption from the withholding of U.S. tax with respect thereto. The
Agent shall not be obligated to make any payments hereunder to such Bank in
respect of any Revolving Credit Loan or Participation or such Bank's Revolving
Credit Commitment or obligation to purchase a Participation until such Bank
shall have furnished to the Agent the requested form, certification, statement
or document.
Section 12.14 Collateral Monitor. Each Bank and Agent acknowledge and agree
that: (i) any and all reports prepared by Collateral Monitor are being supplied
to them solely to assist them in their own independent credit analysis of
Borrower and its Subsidiaries and (ii) Collateral Monitor makes absolutely no
representation or warranty whatsoever regarding (x) the accuracy completeness or
adequacy of such reports or (y) any financial or other information contained
therein or the financial condition of Borrower and its Subsidiaries. It is
further understood and agreed that Collateral Monitor shall not incur any
liability to Agent or Banks whatsoever in connection with the delivery of such
reports or the contents of such reports or their use thereof or reliance thereon
and Agent and Banks each hereby waive any and all claims that they may now or
hereafter have against Collateral Monitor in connection therewith.
Borrower and its Subsidiaries hereby waive any and all claims that they may
now or hereafter have against Collateral Monitor arising in connection with such
reports and/or Collateral Monitor's performance of its duties and functions as
Collateral Monitor and hereby indemnifies and holds Collateral Monitor harmless
from any and all loss liability or expense incurred by Borrower and its
Subsidiaries as a result of such reports or the contents thereof.
Collateral Monitor's reports may contain confidential information which is
non-public, confidential or proprietary in nature, and therefore is being
provided to Agent and Banks on a confidential basis and is to be used for the
sole purpose of assisting Agent and Banks in their independent credit analysis
of Borrower and its Subsidiaries as described above.
Except as may be required by applicable law or by any federal regulator or
any auditor of Agent or any Bank, each Bank and Agent will not disclose any of
the contents of such reports to any person, including Borrower and its
Subsidiaries, other than those officers, directors, employees, representatives
and professional advisors of such Bank or Agent or who need to know the contents
thereof for the purpose of such credit analysis described above.
The Collateral Monitor shall have no duties or responsibilities except
those expressly set forth in this Agreement and any other Loan Document. The
Collateral Monitor shall not be bound by any waiver, amendment, supplement or
modification of this Agreement or any other Loan Document which affects its
duties hereunder or thereunder unless it shall have given its prior written
consent.
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ARTICLE XIII
YIELD PROTECTION
Section 13.01 Additional Costs. (a) Borrower shall pay directly to the
Agent from time to time on demand such amounts as any Bank may reasonably
determine to be necessary to compensate it for any costs which the Bank
determines are attributable to its making or maintaining any Eurodollar Loans
under this Agreement or its obligation to make any such loans hereunder, or any
reduction in any amount receivable by the Bank hereunder in respect of any such
loans or such obligation (such increases in costs and reductions in amounts
receivable being herein called "Additional Costs"), resulting from any
Regulatory Change which: (i) changes the basis of taxation of any amounts
payable to the Bank under this Agreement in respect of any of such loans (other
than taxes imposed on the overall net income of the Bank for any of such loans
by the jurisdiction in which the Bank has its principal office or is deemed to
hold the loans); or (ii) imposes or modifies any reserve, special deposit,
deposit insurance or assessment, minimum capital, capital ratio or similar
requirements relating to any extensions of credit or other assets of, or any
deposits with or other liabilities of, the Bank (including any of such loans or
any deposits referred to in the definition of "Eurodollar Base Rate"; or (iii)
imposes any other condition affecting this Agreement (or any extensions of
credit or liabilities), except to the extent any such Regulatory Change has
previously resulted in a change in the calculation of Eurodollar Rate as a
result of being included in the Reserve Requirement used in calculating such
Eurodollar Rate. The Agent will notify Borrower of any event occurring after the
date of this Agreement which will entitle the Bank to compensation pursuant to
this Section 13.01(a) as promptly as practicable after it obtains knowledge
thereof and determines to request such compensation.
(b) Without limiting the effect of the foregoing provisions of this Section
13.01, in the event that, by reason of any Regulatory Change, the Bank either
(i) incurs Additional Costs based on or measured by the excess above a specified
level of the amount of a category of deposits or other liabilities of the Bank
which includes deposits by reference to which the interest rate on Eurodollar
Loans is determined as provided in this Agreement or a category of extensions of
credit or other assets of the Bank which includes Eurodollar Loans or (ii)
becomes subject to restrictions on the amount of such a category of liabilities
or assets which it may hold, then, if the Bank so elects by notice to Borrower,
the obligation of the Bank to make or renew, and to convert loans of any other
type into, loans of such type hereunder shall be suspended until the date such
Regulatory Change ceases to be in effect.
(c) Without limiting the effect of the foregoing provisions of this Section
13.01 (but without duplication), Borrower shall pay directly to the Agent from
time to time on request such amounts as the Agent may determine to be necessary
to compensate any Bank for any costs which it determines are attributable to the
maintenance by it or any of its affiliates pursuant to any Regulatory Change of
any court or governmental or monetary authority of capital in respect of its
loans hereunder or its obligation to make loans hereunder (such compensation to
include, without limitation, an amount equal to any reduction in return on
assets or equity of the Bank to a level below that which it could have achieved
but for such Regulatory Change), except to the extent the Eurodollar Base Rate
has been adjusted to reflect such costs. The Agent will notify Borrower if any
Bank is entitled to compensation pursuant to this Section 13.01(c) as promptly
as practicable after it determines to request such compensation.
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(d) Determinations and allocations by the Agent or Bank for purposes of
this Section 13.01 of the effect of any Regulatory Change pursuant to
subsections (a) or (b), or of the effect of capital maintained pursuant to
subsection (c), on its costs of making or maintaining loans or its obligation to
make loans, or on amounts receivable by, or the rate of return to, it in respect
of loans or such obligation, and of the additional amounts required to
compensate the Bank under this Section 13.01, shall be conclusive, provided
that, such determinations and allocations are made on a reasonable basis and
absent manifest error and having a retroactive effect of no more than one
hundred twenty (120) days.
Section 13.02 Illegality. Notwithstanding any other provision in this
Agreement, in the event that it becomes unlawful for a Bank to (a) honor its
obligation to make or renew Eurodollar Loans hereunder or convert loans of any
type into loans of such type, or (b) maintain Eurodollar Loans hereunder, then
the Bank shall promptly notify Borrower thereof and the Bank's obligation to
make or renew Eurodollar ^ Loans and to convert other types of loans into loans
of such type hereunder shall be suspended until such time as the Bank may again
make, renew, or convert and maintain such affected loans and the Bank's
outstanding Eurodollar ^ Loans shall be converted to Prime Rate Loans at the end
of the then current Interest Period unless earlier required by law.
Section 13.03 Certain Compensation. Borrower shall pay to the Agent, upon
the request of the Agent, such amount or amounts as shall be sufficient (in the
reasonable opinion of the Agent) to compensate any Bank for any loss, cost or
expense which the Bank determines is attributable to:
(a) any payment or prepayment of a Eurodollar Loan made by the Bank on a
date other than the last day of an Interest Period for such Loan (whether by
reason of acceleration or otherwise); or
(b) any failure by Borrower to borrow a Eurodollar Loan to be made by the
Bank on the date specified therefor in the relevant notice.
Without limiting the foregoing, such compensation shall include an amount
equal to the excess, if any, of (i) the amount of interest which otherwise would
have accrued on the principal amount so paid, prepaid or not borrowed for the
period from and including the date of such payment, prepayment or failure to
borrow to but excluding the last day of the then current Interest Period for
such Loan (or, in the case of a failure to borrow, to but excluding the last day
of the Interest Period for such Loan which would have commenced on the date
specified therefor in the relevant notice) at the applicable rate of interest
for such Loan provided for herein; over (ii) the amount of interest (as
reasonably determined by the Bank) the Bank would have bid in the London
interbank market for Dollar deposits for amounts comparable to such principal
amount and maturities comparable to such period. A determination of the Bank as
to the amounts payable pursuant to this Section 13.03 shall be conclusive absent
manifest error.
ARTICLE XIV
MISCELLANEOUS
Section 14.01 Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Loan Document nor consent to any
departure by Borrower or any Guarantor therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Agent and the
Required Banks and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided
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however, that no amendment, waiver or consent, shall, unless in writing and
signed by all Banks do any of the following: (a) increase the Revolving Credit
Commitment or the Trade Letter of Credit Commitment or Standby Letter of Credit
Commitment ; (b) reduce the principal of, or interest on (other than imposition
of the Default Rate), the Notes; (c) postpone the date fixed for the payment of
principal of, or interest on, the Notes or any other amount due hereunder or
under any Loan Document, or waive any default in the payment of principal,
interest or any other amount due hereunder or under any Loan Document; (d)
change the definition of "Required Banks" or "Pro Rata Share"; (e) release any
Guarantor or release or subordinate any Collateral (except as contemplated by
the Loan Documents); (f) change the definition of Borrowing Base, or Net
Borrowing Base or any defined term referenced therein or change the definition
of Supplemental Amount; or (g) amend this Section 14.01 or any other provision
requiring the consent of all Banks; provided further, that no amendment, waiver
or consent of any matter relating to a Letter of Credit, shall be effective
unless also signed by the Letter of Credit Issuing Bank that issued such Letter
of Credit. No failure on the part of the Agent or any Bank to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof or
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by Law.
Section 14.02 Usury. Anything herein to the contrary notwithstanding, the
obligations of Borrower and the Guarantors under this Agreement and the other
Loan Documents shall be subject to the limitation that payments of interest
shall not be required to the extent that receipt thereof would be contrary to
provisions of Law applicable to a Bank limiting rates of interest which may be
charged or collected by such Bank.
Section 14.03 Expenses; Indemnification. Borrower agrees to reimburse the
Agent, Collateral Monitor and each of the Banks, on demand for all costs,
expenses, and charges (including, without limitation, all reasonable fees and
charges of external legal counsel for the Agent, Collateral Monitor, HSBC and
each Bank) incurred by Agent, Collateral Monitor, or any Bank, in connection
with the preparation of the Loan Documents. Borrower agrees to reimburse the
Agent, Collateral Monitor, each Letter of Credit Issuing Bank, and each of the
Banks on demand for all costs, expenses, and charges (including, without
limitation, all fees and charges of external legal counsel for the Agent,
Collateral Monitor, and each Bank) incurred by the Agent, Collateral Monitor, or
any Bank in connection with the performance, or enforcement of this Agreement,
the Notes, or any other Loan Documents. Borrower agrees to indemnify the Agent,
Collateral Monitor, each Letter of Credit Issuing Bank and each Bank and their
respective directors, officers, employees and agents (collectively, the
"Indemnified Persons), from, and hold each of them harmless against, any and all
losses, liabilities, claims, damages or expenses incurred by any of them arising
out of or by reason of any investigation or litigation or other proceedings
(including any threatened investigation or litigation or other proceedings)
relating to any actual or proposed use by Borrower of the proceeds of the
Revolving Credit Loans or the Letters of Credit or to any violation or alleged
violation of any Environmental Law by Borrower or any Guarantor, including
without limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation or litigation or other proceedings (but
excluding any such losses, liabilities, claims, damages or expenses incurred by
reason of the gross negligence or willful misconduct of any Indemnified Person
or any other Indemnified Person of which such Indemnified Person is an affiliate
or agent).
The obligations of Borrower under this Section shall survive the repayment
of the Obligations and all amounts due under or in connection with any of the
Loan Documents and the termination of the Commitments.
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Section 14.04 Assignment; Participation; Additional Bank.
(a) This Agreement shall be binding upon, and shall inure to the benefit
of, Borrower, the Guarantors, the Agent, the Letter of Credit Issuing Bank and
their respective successors and permitted assigns. No Borrower or Guarantor may
assign or transfer its rights or obligations hereunder (and any attempted
assignment or transfer by the Borrower or any Subsidiary signatory hereto
without such consent shall be null and void). Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto) and their respective successors and assigns permitted hereby
(including any Affiliate of the Letter of Credit Issuing Bank that issues any
Letter of Credit) any legal or equitable right, remedy or claim under or by
reason of this Agreement.
(b) Any Bank may assign to one or more assignees all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Revolving Credit Loans and other Obligations at the time
owing to it); provided that (i) except in the case of an assignment to a Bank or
an Affiliate of a Bank, each of the Borrower and the Agent must give their prior
written consent to such assignment (which consent shall not be unreasonably
withheld), (ii) except in the case of an assignment to a Bank or an Affiliate of
a Bank or an assignment of the entire remaining amount of the assigning Bank's
Commitment, the amount of the Commitment of the assigning Bank subject to each
such assignment (determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to the Agent) shall not be less than
$10,000,000 unless each of the Borrower and the Agent otherwise consent, (iii)
each partial assignment shall be made as an assignment of a proportionate part
of all the assigning Bank's rights and obligations under this Agreement, (iv)
the parties to each assignment shall execute and deliver to the Agent an
Assignment and Acceptance, together with a processing and recordation fee of
$3,500, and (v) the assignee, if it shall not be a Bank, shall deliver to the
Agent an administrative questionnaire in form and substance reasonably
satisfactory to the Agent; and provided further that any consent of the Borrower
otherwise required under this paragraph shall not be required if an Event of
Default has occurred and is continuing. Subject to acceptance and recording
thereof pursuant to paragraph (d) of this Section, from and after the effective
date specified in each Assignment and Acceptance the assignee thereunder shall
be a party hereto and, to the extent of the interest assigned by such Assignment
and Acceptance, have the rights and obligations of a Bank under this Agreement,
and the assigning Bank thereunder shall, to the extent of the interest assigned
by such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all of the
assigning Bank's rights and obligations under this Agreement, such Bank shall
cease to be a party hereto but shall continue to be entitled to the benefits of
Article XIII hereof and Section14.03 hereof). Any assignment or transfer by a
Bank of rights or obligations under this Agreement that does not comply with
this paragraph shall be treated for purposes of this Agreement as a sale by such
Bank of a participation in such rights and obligations in accordance with
paragraph (e) of this Section.
(c) The Agent, acting for this purpose as an agent of the Borrower, shall
maintain at one of its offices in the City of New York a copy of each Assignment
and Acceptance delivered to it and a register for the recordation of the names
and addresses of the Bank's, and the Commitment of, and principal amount of the
Obligations owing to, each Bank pursuant to the terms hereof from time to time
(the "Register"). The entries in the Register shall be conclusive, and the
Borrower, the Agent, the Letter of Credit Issuing Bank and the Banks may treat
each Person whose name is recorded in the Register pursuant to the terms hereof
as a Bank hereunder for all purposes of this Agreement, notwithstanding notice
to the contrary. The Register shall be available for inspection by the Borrower,
the Agent and any Bank, at any reasonable time and from time to time upon
reasonable prior notice.
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(d) Upon its receipt of a duly completed Assignment and Acceptance executed
by an assigning Bank and an assignee, the assignee's completed administrative
questionnaire (unless the assignee shall already be a Bank hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b) of this
Section, the Agent shall accept such Assignment and Acceptance and record the
information contained therein in the Register. No assignment shall be effective
for purposes of this Agreement unless it has been recorded in the Register as
provided in this paragraph.
(e) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its portion of
the Revolving Credit Loans and the Participation. In the event of any such grant
by a Bank of a participating interest to a Participant, such Bank shall remain
responsible for the performance of its obligations hereunder, and Borrower and
the Agent shall continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations hereunder. Any agreement
pursuant to which any Bank may grant such a participating interest shall provide
that such Bank shall retain the sole right and responsibility to enforce the
obligations of Borrower and the Guarantors hereunder and under any other Loan
Document including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement or any other Loan
Document; provided that, such participation agreement may provide that such Bank
will not agree to any modification, amendment or waiver of this Agreement that
would require the consent of all Banks under Sections 14.01 (a) through (g)
hereof without the consent of the Participant.
(f) A Participant shall not be entitled to receive any greater payment
under Article XIII hereof than the applicable Bank would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the Borrower's prior
written consent. If a Participant is a Foreign Lender such Participant shall,
for the benefit of the Borrower, comply with Section 12.13 hereof as though it
were a Bank.
(g) Any Bank may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such
Bank, including any pledge or assignment to secure obligations to a Federal
Reserve Bank, and this Section shall not apply to any such pledge or assignment
of a security interest; provided that no such pledge or assignment of a security
interest shall release a Bank from any of its obligations hereunder or
substitute any such pledgee or assignee for such Bank as a party hereto.
Section 14.05 Notices. Unless the party to be notified otherwise notifies
the other party in writing as provided in this Section, and except as otherwise
provided in this Agreement, notices shall be given to the Agent by telephone,
confirmed by telex, telecopy or other writing, and to the Banks and to Borrower
by ordinary mail, telecopy or telex addressed to such party at its address on
the signature page of this Agreement. Copies of notices mailed to Borrower
should also be mailed by ordinary mail to Willkie, Xxxx & Xxxxxxxxx, 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, XX 00000, Attention: Xxxxxx X. Xxxxxxx, counsel to Borrower.
Notices shall be effective: (a) if given by mail upon receipt; and (b) if given
by telex, when the telex is transmitted to the telex number as aforesaid;
provided that, notices to the Agent, and the Banks shall be effective upon
receipt.
Section 14.06 Setoff; Sharing. Borrower agrees that, in addition to, and
without limitation of any right of setoff, bankers' lien or counterclaim a Bank
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may otherwise have, each Bank shall be entitled, at its option, to offset
balances (general or special, time or demand, provisional or final) held by it
for the account of Borrower at any of such Bank's offices, in Dollars or in any
other currency, against any amount payable by Borrower to such Bank under this
Agreement or such Bank's Note, or any other Loan Document which is not paid when
due (regardless of whether such balances are then due to Borrower), in which
case it shall promptly notify Borrower and the Agent thereof; provided that,
such Bank's failure to give such notice shall not affect the validity thereof.
Each Bank agrees that to the extent any such payment is received by it as the
result of a set-off or otherwise and such payment results in such Bank receiving
a greater payment than it would have been entitled to, had the total amount of
such payment been paid directly to the Agent for disbursement to the Banks, then
such Bank shall immediately purchase for cash from the other Banks
participations in the loans sufficient in amount so that such payment shall
effectively be shared pro rata with the other Banks in accordance with the
amount, and to the extent, of their respective interests in all the Revolving
Credit Loans; provided however, that if all or any portion of such payment is
thereafter recovered from such Bank at any time, the purchase shall be rescinded
and the purchase price returned to the extent of such recovery, but without
interest or other return thereof.
Section 14.07 Jurisdiction; Immunities. Borrower and each Guarantor hereby
irrevocably submit to the jurisdiction of any New York State or United States
Federal court sitting in New York City over any action or proceeding arising out
of or relating to this Agreement, the Notes, the Letters of Credit, or any other
Loan Document, and Borrower and each Guarantor hereby irrevocably agree that all
claims in respect of such action or proceeding may be heard and determined in
such New York State or Federal court. Borrower and each Guarantor irrevocably
consent to the service of any and all process in any such action or proceeding
by the mailing of copies of such process to Borrower and each Guarantor at their
respective addresses specified in Section 14.05 hereof. Borrower and each
Guarantor agree that a final non-appealable judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Borrower and each
Guarantor further waive any objection to venue in such State and any objection
to an action or proceeding in such State on the basis of forum non conveniens.
Borrower and each Guarantor agree that any action or proceeding brought against
the Agent or any Bank shall be brought only in New York State or United States
Federal Court sitting in New York County.
Nothing in this Section 14.07 hereof shall affect the right of the Agent or
any Bank to serve legal process in any other manner permitted by law or affect
the right of the Agent or any Bank to bring any action or proceeding against any
of Borrower or any Guarantor or their property in the courts of any other
jurisdictions.
To the extent that Borrower or any Guarantor has or hereafter may acquire
any immunity from jurisdiction of any court or from any legal process (whether
from service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property,
Borrower and each Guarantor hereby irrevocably waive such immunity in respect of
its obligations under this Agreement, the Notes, and any other Revolving Credit
Loan Document.
Section 14.08 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such State.
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Section 14.09 Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which, when so executed and delivered,
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof, each signed by less than all, but together signed by all of the parties
hereto.
Section 14.10 Exhibits and Schedules. The Exhibits and Schedules are a part
of this Agreement as if fully set forth herein.
Section 14.11 Table of Contents; Headings. The headings in the Table of
Contents and in this Agreement are for reference only, and shall not affect the
interpretation or construction of this Agreement.
Section 14.12 Severability. If any word, phrase, sentence, paragraph,
provision or section of this Agreement shall be held, declared, pronounced or
rendered invalid, void, unenforceable or inoperative for any reason by any court
of competent jurisdiction, governmental authority, statute or otherwise, such
holding, declaration, pronouncement or rendering shall not adversely affect any
other word, phrase, sentence, paragraph, provision or section of this Agreement,
which shall otherwise remain in full force and effect and be enforced in
accordance with its terms.
Section 14.13 Integration. The Loan Documents set forth the entire
agreement among the parties hereto relating to the transactions contemplated
thereby and supersede any prior oral or written statements or agreements with
respect to such transactions.
Section 14.14 Jury Trial Waiver. The Agent, the Banks, Borrower and its
Restricted Subsidiaries each waive any right it may have to a jury trial in any
action or proceeding which pertains directly or indirectly to this Agreement,
the Obligations, the Collateral or, in any way, directly or indirectly, arises
out of or relates to the relationship between or among Borrower, the Restricted
Subsidiaries, the Agent and the Banks.
Section 14.15 Spin-off of HIL. Notwithstanding anything to the contrary
contained in this Agreement or any other Loan Document, if the Borrower at any
time provides written evidence to Agent, in form and substance reasonably
satisfactory to Agent, that an HIL Spin-off Transaction is expected to occur, no
consent (except as qualified by the proviso set forth below) shall be required
from any Bank, Letter of Credit Issuing Bank or Agent in order for Borrower to
consummate such HIL Spin-off Transaction and upon consummation of such HIL
Spin-off Transaction, Agent, Letter of Credit Issuing Bank and each Bank agree
to (i) release HIL from its Guaranty, (ii) terminate any Lien Agent may have in
the Intercompany Demand Note and in connection with such termination return the
original Intercompany Demand Note in its possession to Borrower (it being
understood that Borrower, in its sole and absolute discretion, may forgive such
Intercompany Demand Note in connection with such transaction) and (iii) permit
the Borrower to advance to HIL amounts sufficient to fund certain of HIL's
unfunded commitments relating to real property owned by HIL as long as after
giving effect to such advance the Borrower remains in compliance with Section
9.10(ii) hereof; provided, that, the consent provided above is conditioned on
(x) Agent's being furnished a copy of an opinion as to the fairness of such
transaction, which opinion shall opine, among other things, that the value of
the sale is fair in light of the values attributed to HIL's underlying assets
and shall otherwise be in form and substance reasonably satisfactory to Agent,
(y) the Agent's receipt of a certificate from an authorized officer of the
Borrower confirming that neither the Borrower nor any of its Subsidiaries shall
have any guarantees (or similar contingent obligations) outstanding with respect
to any obligations of HIL after the consummation of such transaction and (z)
there being no Default at the time of such HIL Spin-off Transaction.
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Section 14.16 HSBC. Notwithstanding the definition of the name "HSBC" and
notwithstanding anything to the contrary contained in this Agreement or any
other Loan Document, no obligations of HSBC Bank USA as Agent or HSBC Bank USA
as Letter of Credit Issuing Bank may be delegated to any Affiliate of HSBC Bank
USA (other than in compliance with Section 3.12) unless such Affiliate has the
same or better credit rating as HSBC Bank USA based on the credit rating
assigned by Xxxxx'x Investors Service, Inc. or Standard & Poor's Ratings Group
(a division of The McGraw Hill Companies, Inc.) (or any successor or assignee of
the business of each such company in the business of rating securities credit
rating).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-70-
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by the respective officers hereunder duly authorized as of the day and
year first above written.
HAMPSHIRE GROUP, LIMITED, as a Borrower,
a Letter of Credit Account Party and a Guarantor
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Secretary and Treasurer
HAMPSHIRE DESIGNERS, INC., as a Letter of Credit
Account Party and a Guarantor
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President and Chief Financial Officer
HAMPSHIRE INVESTMENTS, LIMITED,
as a Guarantor
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President, Secretary and Treasurer
GLAMOURETTE FASHION XXXXX, INC.,
as a Guarantor
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Secretary and Treasurer
S-1 to Credit Agreement and Guaranty
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ITEM-EYES , INC., as a Letter of Credit
Account Party and a Guarantor
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
Address of Borrower, each Letter of Credit Account Party
and each Guarantor for Notices:
c/o Hampshire Group, Limited
000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
Fax Number: 000-000-0000
S-2 to Credit Agreement and Guaranty
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HSBC BANK USA , as a Bank, as Letter of Credit Issuing Bank
(for all Letters of Credit other than Existing Letters of Credit)
and as Agent
By: /s/ Xxxxxxxx Xxxxxxx
----------------------------------------------------
Name: Xxxxxxxx Xxxxxxx
Title: Vice President
Address for Notices:
HSBC Bank USA
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 1 0018
Attention: Xxxxxxxx Xxxxxxx
Fax Number: 000-000-0000
S-3 to Credit Agreement and Guaranty
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THE CIT GROUP/COMMERCIAL SERVICES, INC.,
as a Bank
By: /s/ Xxxx Xxxxxxxx
--------------------------------------------------
Name: Xxxx Xxxxxxxx
Title: Vice President
Address for Notices:
The CIT Group/Commercial Services, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxx
Fax Number: (000) 000-0000
S-4 to Credit Agreement and Guaranty
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JPMORGAN CHASE BANK, as a Bank and as Letter of Credit Issuing
Bank (for the Existing Letters of Credit)
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
Address for Notices:
JPMorgan Chase Bank
0000 Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Knnight
Fax Number: (000) 000-0000
S-5 to Credit Agreement and Guaranty
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FLEET NATIONAL BANK, as a Bank
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Vice President
Address for Notices:
Fleet National Bank
1185 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Attention:
Fax Number:
S-6 to Credit Agreement and Guaranty
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ISRAEL DISCOUNT BANK OF NEW YORK, as a Bank
By: /s/ Xxxxxxx Xxxxx
---------------------------------------
Name: Xxxxxxx Xxxxx
Title: Vice President
Address for Notices:
Israel Discount Bank of New York
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxx
Fax Number: (000) 000-0000
S-7 to Credit Agreement and Guaranty
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BANK OF AMERICA, N.A., as a Bank
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
Address for Notices:
Bank of America, N.A.
X.X. Xxx 000
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Location Code SC 2-530--04-4
Attention: Xxxxxxx X. Xxxxxxx
Fax Number: (000) 000-0000
S-8 to Credit Agreement and Guaranty
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