Exhibit 10.1
▇▇▇▇-▇▇ KNITWEAR, INC.
(formerly JJ Acquisition Corp.)
▇▇▇▇▇▇▇▇▇▇ APPAREL GROUP INC.
(formerly Norton ▇▇▇▇▇▇▇▇▇▇, Inc.)
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
September 28, 2000
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
c/o Currants
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Agreement of Purchase and Sale dated as of April 15,
1998, as amended (the "Agreement"), by and among JJ
Acquisition Corp. (now ▇▇▇▇-▇▇ Knitwear, Inc.), Norton
▇▇▇▇▇▇▇▇▇▇, Inc. (now ▇▇▇▇▇▇▇▇▇▇ Apparel Group Inc.),
▇▇▇▇-▇▇ Knitwear Inc., ▇▇▇▇▇ ▇▇▇▇▇, and the
Stockholders of ▇▇▇▇▇ ▇▇▇▇▇, Inc.
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Ladies and Gentlemen:
Reference is made to the Agreement. Capitalized terms used and not
defined below shall have the meanings assigned to such terms in the Agreement.
For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby amend the Agreement as set forth
below.
1. Section 2.02(d)(A)(ii) of the Agreement is hereby deleted in its
entirety and amended to read as follows:
"(ii) as a condition to the Purchaser's and Norton's obligations
under subclause (A)(iii) below in respect of the Third Initial Payment,
simultaneously with the delivery of the Third Initial Payment, the
Stockholder Representative shall deliver the Earn Out Letter of Credit to
Norton for cancellation."
2. Section 2.02(d)(A)(iii) of the Agreement is amended to read in
its entirety as follows:
"(iii) (1) at or before 3:00 p.m. on October 2, 2000 (time being of
the essence), the Purchaser and Norton shall pay $10,000,000 (the "Second
Initial Payment"), together with interest on $30,000,000 (that is, in
respect of both the Second Initial Payment and the Third Initial Payment)
at a rate per annum equal to 8.25% computed for the actual number of days
elapsed during the period from and including August 29, 2000 to but
excluding October 2, 2000 and on the basis of a 360-day year and (2) at or
before 3:00 p.m. on the date (the "Date") which is the earlier to occur of
(a) January 15, 2001 and (b) the closing of Norton's proposed amended and
restated $225 million senior secured credit facility (the "New Credit
Facility") (time being of the essence), the Purchaser and Norton shall pay
$20,000,000 (the "Third Initial
2
Payment"; the Third Initial Payment, together with the First Initial
Payment and the Second Initial Payment, collectively, the "Initial
Payment"), together with interest, from and after October 2, 2000, on the
Third Initial Payment as set forth in the next sentence of this Section
2.02(d)(A)(iii), in each case, to the Designees by wire transfer of
immediately available funds to a bank account(s) designated by the
Designees. The Purchaser and Norton shall pay interest on the outstanding
amount of the Third Initial Payment, from and after October 2, 2000 and
until paid in full, at a rate per annum equal to 8.25%, on the first
Business Day of each month (commencing with November 1, 2000) and on the
date on which the Third Initial Payment is paid in full, in each case,
computed for the actual number of days elapsed during the period from and
including the last date on which interest has been paid in respect of the
Third Initial Payment to but excluding the date on which interest is so
paid and on the basis of a 360-day year, in each case, to the Designees by
wire transfer of immediately available funds to a bank account(s)
designated by the Designees."
3. Section 2.02(d) of the Agreement is amended to add thereto
subclause (A)(iv) as follows:
"(iv) as a condition to the Purchaser's and Norton's
obligations under clause (A)(iii) above in respect of the Second
Initial Payment, simultaneously with the delivery of the Second
Initial Payment the Stockholder Representative shall deliver the
Earn Out Letter of Credit to Norton for the purpose of attaching
thereto and making a part thereof an amendment in the form of
Exhibit A to the Amendment to the Agreement dated September 28,
2000 (1) reducing the face amount of the Earn Out Letter of
Credit from $30,000,000 to $20,000,000 and (2) extending the
expiry date thereunder to February 28, 2001, whereupon Norton
shall simultaneously return the Earn Out Letter of Credit (as so
amended) to the Stockholder Representative. Notwithstanding
anything to the contrary contained in the Agreement, for all
purposes of the Agreement, from and after the satisfaction of the
terms of this subclause (A)(iv), the "Earn Out Letter of Credit"
shall mean the Earn Out Letter of Credit as previously defined in
the Agreement and as amended by such Exhibit A."
4. The references to "(as amended by the August Agreement and
hereby)" set forth in paragraph 5 of the Amendment to the Agreement dated as of
August 29, 2000 are hereby deleted and replaced with references to "(as amended
by the August Agreement, hereby and the Amendment to the Agreement dated
September 28, 2000)".
5. The parties hereto understand and agree that attached hereto as
Exhibit B is an unsigned preliminary Summary of Terms and Conditions with
respect to the New Credit Facility referred to in this amendment. It is further
agreed by Norton that it shall give written notice to the Designees of any
closing of the New Credit Facility, which notice shall be given promptly prior
to such closing.
6. Except as amended by this amendment, the Agreement is hereby
ratified and confirmed in all respects. Nothing in this amendment shall confer
or deemed to confer any right, remedy, benefit or entitlement to any third party
(other than the Designees). This amendment shall be construed pursuant to and
in accordance with the laws of the State of New York, without regard to conflict
of law principles, and may be executed in counterparts, including by telecopy,
each of which shall be deemed an original, and all of which taken together shall
constitute one and the same amendment.
* * *
3
Very truly yours,
▇▇▇▇-▇▇ KNITWEAR, INC.
▇▇▇▇▇▇▇▇▇▇ APPAREL GROUP INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Agreed as of the date first
above written:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Exhibit A
September 28, 2000
AMENDMENT TO IRREVOCABLE STANDBY CREDIT NUMBER: 933394
AMENDMENT NO. 4
Beneficiary Applicant
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, as the Stockholder Norton ▇▇▇▇▇▇▇▇▇▇ of ▇▇▇▇▇▇,
Representative Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
This amendment is to be considered an integral part of the above credit and must
be attached thereto.
The above mentioned credit is amended as follows:
The amount of this credit has been decreased by USD 10,000,000.00
The aggregate amount of the credit is now USD 20,000,000.00
The expiration date is amended to: February 28, 2001.
All other terms and conditions remain unchanged.
This amendment will become effective upon our receipt of the beneficiary's
written advice of consent purportedly signed by an authorized ▇▇▇▇▇▇ of the
beneficiary, sent to us attention of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. If the beneficiary
chooses, they may sign and return the attached copy indicating their consent or
rejection.
If you require any assistance or have any questions regarding this amendment,
please call ▇▇▇-▇▇▇-▇▇▇▇.
____________________________ ____________________________
Authorized Signature Authorized Signature
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X Amendment Accepted _____ Amendment Refused
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Date October 2, 2000
--------------------
Signature________________
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Exhibit B
SUMMARY OF TERMS AND CONDITIONS
▇▇▇▇▇▇▇▇▇▇ APPAREL GROUP INC.
$225,000,000 SENIOR SECURED CREDIT FACILITY
BORROWER: ▇▇▇▇▇▇▇▇▇▇ Apparel Group, Inc., a Delaware corporation (the
"Parent") and those subsidiaries determined by the Lenders (collectively, the
"Borrowers").
GUARANTORS: The Senior Credit Facility (defined below) shall be guaranteed by
all existing and future direct and indirect domestic subsidiaries of the Parent,
that are not Borrowers, upon consummation of the Transaction. In addition
Borrowers will cross guarantee the obligations of other Borrowers. All
guarantees shall be guarantees of payment and not of collection.
ADMINISTRATIVE AGENT: The CIT Group/Commercial Services, Inc. (the
"Administrative Agent" or "CIT") will act as sole and exclusive administrative
agent. Together with the Syndication Agent and Documentation Agent,
collectively, the "Agents".
SYNDICATION AGENT: Banc of America Commercial Corporation (the "Syndication
Agent", "Collateral Agent" or "Bank of America") will act as sole and exclusive
syndication agent and collateral agent.
DOCUMENTATION AGENT: Fleet Capital Corporation (the "Documentation Agent" or
"Fleet") will act as sole and exclusive documentation agent.
LEAD ARRANGER: Banc of America Securities LLC ("BAS").
JOINT BOOK MANAGERS: Banc of America Securities LLC ("BAS") and Fleet
Securities, Inc. ("FSI").
LENDERS: A syndicate of financial institutions (including CIT, Bank of America
and Fleet) arranged by BAS and FSI, which institutions shall be acceptable to
the Borrower and the Agents (collectively, the "Lenders").
SENIOR CREDIT FACILITY: An aggregate principal amount of up to $225 million
will be available upon the terms and conditions hereinafter set forth:
Revolving Credit Facility: $225 million revolving credit facility (the
--------------------------
"Revolving Credit Facility"), which will include a $130 million sublimit for the
issuance of standby and commercial letters of credit (each a "Letter of
Credit:"), a $110 million sublimit for cash borrowings and a $30 million
sublimit for overadvances (the "Overadvance Amount"). Letters of Credit will be
issued by Bank of America,N.A. (in such capacity, the "Letter of Credit Issuing
Lender"), and each Lender will purchase an irrevocable and unconditional
participation in each Letter of Credit. Aggregate outstandings under the
Revolving Credit Facilities including Letters of Credit shall not exceed $225
million.
PURPOSE: The proceeds of the Senior Credit Facility shall be used: (i) for
working capital, capital expenditures, and other lawful corporate purposes; (ii)
to finance the earn-out payment pertaining to the acquisition of ▇▇▇▇-▇▇
Knitwear, Inc.; and (iii) to refinance the existing credit facility.
CLOSING: The execution of definitive loan documentation, to occur on or before
November 15, 2000.
INTEREST RATES: As set forth in Addendum I.
MATURITY: The Revolving Credit Facility shall terminate and all amounts
outstanding thereunder shall be due and payable in full three years from
Closing.
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AVAILABILITY/SCHEDULED AMORTIZATION: Revolving Credit Facility: Loans under
--------------------------
the Revolving Credit Facility ("Revolving Credit Loans") may be made, and
Letters of Credit may be issued, on a revolving basis in each case subject to
availability up to the lessor of (A) $225 million or (B) the difference between:
(1) the sum of (i) 85% of eligible receivables of the Borrower and its
subsidiaries plus (ii) 60% of eligible inventory of the Borrower and its
subsidiaries plus (iii) the Overadvance Amount less (2) reserves, as
appropriate; provided, however, that the percentages set forth above are subject
to modification based upon the results of a field examination to be conducted on
behalf of the Agents.
SECURITY: The Administrative Agent (on behalf of the Lenders) shall receive a
first priority perfected security interest in all of the capital stock of the
Borrower and each of the domestic subsidiaries (direct or indirect) of the
Borrower and 65% of the capital stock of each foreign subsidiary (direct or
indirect) of the Borrower, which capital stock shall not be subject to any other
lien or encumbrance. The guarantees shall be secured by a first priority
perfected security interest in all other present and future assets and
properties of the Borrower and its subsidiaries (including, without limitation,
accounts receivable, inventory, real property, machinery, equipment, contracts,
trademarks, copyrights, patents, license rights and general intangibles).
MANDATORY PREPAYMENTS AND COMMITMENT REDUCTIONS: As long as an Overadvance
Amount is outstanding, the Senior Credit Facility will be prepaid by an amount
equal to (i) 100% of the net cash proceeds of all asset sales by the Borrower or
any subsidiary of the Borrower (including sales of stock of subsidiaries),
subject to de minimus baskets and reinvestment provisions to be agreed upon and
net of selling expenses and taxes to the extent such taxes are paid; (ii) 75%
(if the Funded Debt to EBITDA Ratio (to be defined in the loan documentation) is
equal to or greater than 3.0: 1) or 50% (if the Funded Debt to EBITDA Ratio is
less than 3.0: 1) of Excess Cash Flow (to be defined in the loan documentation)
pursuant to an annual cash sweep arrangement; (iii) 100% of the net cash
proceeds from the issuance of any debt (excluding certain permitted debt to be
agreed) by the Borrower or any of its subsidiaries; and (iv) 100% of the net
cash proceeds from the issuance of equity by the Borrower or any of its
subsidiaries.
In addition to the foregoing, the outstanding Overadvance Amount will be reduced
in accordance with the following schedule:
Date Reduction Amount
---- ----------------
November 4, 2000 TBD
January 31, 2001 TBD
February 28, 2001 TBD
March 31, 2001 TBD
April 30, 2001 TBD
May 31, 2001 TBD
OPTIONAL PREPAYMENTS AND COMMITMENT REDUCTIONS: The Borrower may prepay the
Senior Credit Facility in whole or in part at any time without penalty, subject
to reimbursement of the Lenders' breakage and redeployment costs in the case of
prepayment of LIBOR borrowings. The unutilized portion of any commitment under
the Senior Credit Facility in excess of the stated amount of all Letters of
Credit may be irrevocably canceled by the Borrower in whole or in part.
CONDITIONS PRECEDENT TO CLOSING: The Closing (and the initial funding) of the
Senior Credit Facility will be subject to satisfaction of the conditions
precedent deemed appropriate by the Administrative Agent and the Lenders
including, but not limited to, the following:
(i) The negotiation, execution and delivery of definitive documentation
for the Senior Credit Facility satisfactory to BAS, FSI, the
Administrative Agent and the Lenders, which shall include, without
being limited to (a) satisfactory opinions of counsel to the Borrower
and each Guarantor and such other customary closing documents as the
Administrative Agent shall reasonably request and (b)
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satisfactory evidence that the Administrative Agent (on behalf of the
Lenders) holds a perfected, first priority lien in all of the
collateral for the Senior Credit Facility, subject to no other liens
except for permitted liens to be determined.
(ii) Receipt and satisfactory review by the Administrative Agent of the
consolidated financial statements of the Borrower and its
subsidiaries for the fiscal years ended October 31, 1998, November 6,
1999 and October [ ], 2000including balance sheets, income and cash
flow statements audited by independent public accountants of
recognized national standing and prepared in conformity with GAAP,
unaudited consolidated financial statements for the most recently
published fiscal quarter, and such other financial information as the
Administrative Agent may request.
(iii) There shall not have occurred a material adverse change since July
31, 2000 in the business, assets, liabilities (actual or contingent),
operations, condition (financial or otherwise) or prospects of the
Borrower and its subsidiaries taken as a whole or in the facts and
information regarding such entities as represented to date.
(iv) The absence of any action, suit, investigation or proceeding pending
or threatened in any court or before any arbitrator or governmental
authority that purports (a) to materially and adversely affect the
Borrower or its subsidiaries, or (b) to affect any transaction
contemplated hereby or the ability of the Borrower and its
subsidiaries or any other obligor under the guarantees or security
documents to perform their respective obligations under the
documentation for the Senior Credit Facility.
(v) Receipt and review, with results satisfactory to the Administrative
Agent and its counsel, of information regarding litigation, tax,
accounting, labor, insurance, pension liabilities (actual or
contingent), real estate leases, material contracts, debt agreements,
property ownership, environmental matters, contingent liabilities and
management of the Borrower and its subsidiaries, which information
shall include asset appraisal reports with respect to all of the real
and personal property owned by the Borrower and its subsidiaries.
(vi) At Closing, the Borrower shall have not less than $[ ] million of
availability under the Revolving Credit Facility and, (b) the
Borrower shall have received a minimum of $30 million of additional
capital in form and structure satisfactory to the Agents.
(vii) The continuance of the existing Accounts Receivable Factoring
Facility beyond the maturity date of the Senior Credit Facility.
CONDITIONS PRECEDENT TO ALL LOANS: Usual and customary for transactions of
this type, to include without limitation: (i) all representations and
warranties are true and correct as of the date of each loan, and (ii) no event
of default under the Senior Credit Facility or incipient default has occurred
and is continuing, or would result from such loan.
REPRESENTATIONS AND WARRANTIES: Usual and customary for transactions of this
type, to include without limitation: (i) corporate existence and status; (ii)
corporate power and authority/enforceability; (iii) no violation of law or
contracts or organizational documents; (iv) no material litigation; (v)
correctness of specified financial statements and no material adverse change;
(vi) no required governmental or third party approvals; (vii) use of
proceeds/compliance with margin regulations; (viii) status under Investment
Company Act; (ix) ERISA matters; (x) environmental matters; (xi) payment of
taxes; (xii) accuracy of disclosure; and (xiii) perfected liens and security
interests.
COVENANTS: Usual and customary for transactions of this type, to include
without limitation: (i) delivery of financial statements and other reports; (ii)
delivery of compliance and borrowing base certificates; (iii) delivery of
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notices of default, material litigation and material governmental and
environmental proceedings; (iv) compliance with laws (including environmental
laws and ERISA matters) and material contractual obligations; (v) payment of
taxes; (vi) maintenance of insurance; (vii) limitation on liens; (viii)
limitation on mergers, consolidations and sales of assets; (ix) limitation on
incurrence of debt; (x) limitation on dividends, stock redemptions and the
redemption and/or prepayment of other debt; (xi) limitation on investments
(including loans and advances) and acquisitions; (xii) limitation on capital
expenditures; and (xiii) limitation on transactions with affiliates.
Financial covenants to include (but not be limited to):
1. Maintenance at all times of Consolidated Working Capital at the end of
each Fiscal Quarter of an amount not less than:
Fiscal Quarter Ended Amount
-------------------- ------
November 4, 2000 $400,000
January 2001 $3.7 million
April 2001 $16.0 million
July 2001 $25.0 million
October 2001 $36.0 million
January 2002 $40.0 million
April 2002 $54.0 million
July 2002 $63.0 million
October 2002 $75.0 million
January 2003 $78.0 million
April 2003 $93.0 million
July 2003 $106.0 million
October 2003 $122.0 million
2. Maintenance at all times of a Minimum Consolidated Net Worth, at the
end of each Fiscal Quarter of an amount not less than:
Fiscal Quarter Ended Amount
-------------------- ------
November 4, 2000 93.0 million
January 2001 4.0 million
April 2001 103.0 million
July 2001 108 million
October 2001 16 million
January 2002 18 million
April 2002 $129 million
July 2002 $137 million
October 2002 $147 million
January 2003 $149 million
April 2003 $163 million
July 2003 $173 million
October 2003 $185 million
3. Maintenance, on a rolling four quarter basis, of a Minimum Interest
Coverage (calculated as the ratio of Consolidated EBIT to Consolidated
Net Interest Expense) at the end of each Fiscal Quarter of an amount
not less than:
Fiscal Quarter Ended Amount
-------------------- -----------------
November 4, 2000 3.11
January 2001 2.73
April 2001 2.53
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July 2001 2.35
October 2001 2.41
January 2002 2.49
April 2002 2.65
July 2002 2.81
October 2002 3.00
January 2003 3.19
April 2003 3.47
July 2003 3.78
October 2003 4.15
4. Maintenance, on a rolling four quarter basis, of a Minimum Fixed
Charge Ratio (calculated as Consolidated EBITDA to Consolidated Fixed
Charges) at the end of each Fiscal Quarter of an amount not less than:
Fiscal Quarter Ended Amount
-------------------- -------
November 4, 2000 1.56
January 2001 1.38
April 2001 1.47
July 2001 1.46
October 2001 1.54
January 2002 1.69
April 2002 1.63
July 2002 1.67
October 2002 2.53
January 2003 2.58
April 2003 2.62
July 2003 2.66
October 2003 3.14
5. Maintenance, on a rolling four quarter basis, of a Maximum Leverage
Ratio (calculated as the ratio of Funded Debt to Consolidated EBITDA)
at the end of each Fiscal Quarter of an amount not greater than:
Fiscal Quarter Ended Amount
-------------------- -------
November 4, 2000 3.42
January 2001 3.62
April 2001 3.48
July 2001 3.51
October 2001 2.95
January 2002 2.72
April 2002 2.69
July 2002 2.78
October 2002 2.31
January 2003 2.02
April 2003 2.00
July 2003 2.00
October 2003 2.00
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6. Capital Expenditures for any Fiscal Year may not exceed:
Fiscal Year Ended Amount
----------------- ------
November 2000 $8,000,000
October 2001 and every fiscal year
thereafter $5,000,000
EVENTS OF DEFAULT: Usual and customary in transactions of this type, to
include without limitation: (i) nonpayment of principal, interest, fees or other
amounts, (ii) violation of covenants (with cure periods as applicable), (iii)
inaccuracy of representations and warranties, (iv) cross-default to other
material agreements and indebtedness, (v) bankruptcy and other insolvency
events, (vi) material judgments, (vii) ERISA matters, (viii) actual or asserted
invalidity of any loan documentation or security interests, (ix) change of
control and (x) termination of the Accounts Receivable Factoring Facility prior
to the maturity of the Senior Credit Facility.
ASSIGNMENTS AND PARTICIPATIONS: Each Lender will be permitted to make
assignments in acceptable minimum amounts to other financial institutions
approved by the Borrower (so long as no event of default under the Senior Credit
Facility or incipient default has occurred and is continuing) and the Agents,
which approval of Borrower shall not be unreasonably withheld. Lenders will be
permitted to sell participations with voting rights limited to significant
matters such as changes in amount, rate and maturity date and releases of all or
substantially all of the collateral and the Guarantors. An assignment fee of
$3,500 shall be payable to the Administrative Agent upon the effectiveness of
any such assignment (including, but not limited to, an assignment by a Lender to
another Lender).
WAIVERS AND AMENDMENTS: Amendments and waivers of the provisions of the loan
agreement and other definitive credit documentation will require the approval of
Lenders holding loans and commitments representing more than [50%] of the
aggregate amount of loans and commitments under the Senior Credit Facility,
except that the consent of all of the Lenders affected thereby shall be required
with respect to (a) increases in the commitment of such Lenders, (b) reductions
of principal, interest or fees, (c) extensions of scheduled maturities or times
for payment, and (d) releases of all or substantially all of the collateral and
the Guarantors.
INDEMNIFICATION: The Borrower shall indemnify the Agents, BAS, FSI and the
Lenders and their respective affiliates from and against all losses,
liabilities, claims, damages or expenses arising out of or relating to the
Senior Credit Facility, the Borrower's use of loan proceeds or the commitments,
including, but not limited to, reasonable attorneys' fees (including the
allocated cost of internal counsel) and settlement costs. This indemnification
shall survive and continue for the benefit of the indemnitees at all times after
the Borrower's acceptance of the Lenders' commitments for the Senior Credit
Facility, notwithstanding any failure of the Senior Credit Facility to close.
GOVERNING LAW: State of New York.
PRICING/FEES/EXPENSES: As set forth in Addendum I.
OTHER: This Summary of Terms is intended as an outline of certain of the
material terms of the Senior Credit Facility and does not purport to summarize
all of the conditions, covenants, representations, warranties and other
provisions which would be contained in definitive legal documentation for the
Senior Credit Facility contemplated hereby. The Borrower and the Guarantors
shall each waive its right to a trial by jury.
ADDENDUM I PRICING, FEES AND EXPENSES
UNUSED LINE FEE: The Borrower will pay a fee (the "Unused Line Fee"),
determined in accordance with the Performance Pricing grid set forth below, on
the unused portion of each Lender's share of the Senior Credit Facility. The
Unused Line Fee is payable monthly in arrears commencing upon Closing.
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INTEREST RATES: The Revolving Credit Facility shall bear interest at a rate
equal to LIBOR plus the Applicable Margin or the Alternate Base Rate (to be
defined as the higher of (i) the Bank of America prime rate and (ii) the Federal
Funds rate plus .50%) plus the Applicable Margin. The Applicable Margin in each
case shall be determined in accordance with the Performance Pricing grid set
forth below.
The Borrower may select interest periods of 1, 2, 3 or 6 months for LIBOR
loans, subject to availability. Interest shall be payable at the end of the
selected interest period, but no less frequently than quarterly.
A default rate shall apply on all loans in the event of default under the
Senior Credit Facility at a rate per annum of 2% above the applicable interest
rate.
EARLY TERMINATION FEE: In the event that the Revolving Credit Facility is
terminated prior to its scheduled expiration date, Borrower would pay the Agents
for the pro rata benefit for the Lenders an early termination fee, in the
amounts set forth below, in order to compensate Lenders for their reliance
expenses and their loss of anticipated profits. If the effective date of
termination occurs in the first year of the term, then the early termination fee
would be one and one-half percent (1.50%) of the average loans and letters of
credit outstanding under the Revolving Credit Facility during the 180 days
preceding the effective date of termination; in the second year, the early
termination fee would be one percent (1.0%), and in the third year, the early
termination fee would be waived.
PERFORMANCE PRICING: The Unused Line Fee and Applicable Margin for any fiscal
quarter, shall be the applicable rate per annum set forth in the table below
opposite the ratio of Funded Debt to EBITDA determined as of the last day of the
immediately preceding fiscal quarter.
Applicable Margin Applicable Margin Letters of Credit
for LIBOR Loans for Alternate Base
Rate Loans
-----------------------------------------
Revolver Revolver Documentary Standby
Funded Debt to Unused Line
EBITDA Ratio Fee
---------------------------------------------------------------------------------------------------------
Overadvance period 50 bps 300 bps 175 bps 150 bps 150 bps
Greater than or 50 bps 250 bps 125 bps 150 bps 150 bps
equal to 3.00:1
Less than or equal 50 bps 225 bps 100 bps 125 bps 150 bps
to 3.00:1 but
greater than 2.50:1
Less than or equal 37.5 bps 200 bps 75 bps 100 bps 150 bps
to 2.50:1 but
greater than 2.00:1
Less than 2.00:1 37.5 bps 175 bps 50 bps 75 bps 150 bps
---------------------------------------------------------------------------------------------------------
CALCULATION OF INTEREST AND FEES: All calculations of interest and fees shall
be made on the basis of actual number of days elapsed in a 360 day year.
COST AND YIELD PROTECTION: Customary for transactions and facilities of this
type, including, without limitation, in respect of breakage or redeployment
costs incurred in connection with prepayments, changes in capital
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Bank of America.
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Confidential-DRAFT
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▇▇▇▇▇▇▇▇▇▇ Apparel Group Inc.
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adequacy and capital requirements or their interpretation, illegality,
unavailability, reserves without proration or offset and payments free and clear
of withholding or other taxes.
LETTER OF CREDIT FEES: Letter of credit fees are due monthly in arrears to be
shared proportionately by the Lenders. Fees will be calculated on the aggregate
stated amount for each Letter of Credit for the stated duration thereof.
EXPENSES: The Borrower will pay all reasonable costs and expenses associated
with the preparation, due diligence, administration, syndication and enforcement
of all documentation executed in connection with the Senior Credit Facility,
including, without limitation, the legal fees of counsel to the Administrative
Agent and BAS (including the allocated cost of internal counsel), regardless of
whether or not the Senior Credit Facility is closed. The Borrower will also pay
the expenses of each Lender in connection with the enforcement of any loan
documentation for the Facility.
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Bank of America.
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