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EXHIBIT 10.1
FORBEARANCE AGREEMENT AND SECOND
AMENDMENT TO THIRD AMENDED AND
RESTATED LOAN AND SECURITY AGREEMENT
THIS FORBEARANCE AGREEMENT AND SECOND AMENDMENT TO THIRD AMENDED AND
RESTATED LOAN AND SECURITY AGREEMENT (hereinafter, "this Agreement") is executed
on this 30th day of June, 1998 (to be effective as of the relevant date
hereinafter specified), by FLEET CAPITAL CORPORATION ("Fleet"), a Rhode Island
corporation ("Fleet"), BANKBOSTON, N.A., a national banking association
("Boston") (Fleet and Boston are collectively referred to as "Lenders" or each
individually as "Lender"), Fleet, as agent for Lenders (Fleet, in such capacity,
the "Agent"), BRAZOS SPORTSWEAR, L.L.C., a Delaware limited liability
corporation ("Brazos"), successor-in-interest by operation of law to Brazos,
Inc., a Texas corporation ("Brazos Inc."), and MORNING SUN, INC., a Washington
corporation ("Morning Sun") (Brazos and Morning Sun being hereinafter
individually and collectively referred to as "Borrowers", as governed by the
provisions of Section 1.5 and Section 1.6 of the Loan Agreement [as hereinafter
defined]).
RECITALS
A. Morning Sun, Brazos Inc., Lenders and Agent have entered into that
certain Third Amended and Restated Loan and Security Agreement, dated July 2,
1997 (the Third Amended and Restated Loan and Security Agreement, as amended
from time to time, being hereinafter referred to as the "Loan Agreement").
Brazos has by operation of law succeeded to all right, title and interest of
Brazos Inc. in the Loan Agreement and the other Loan Documents (as defined in
the Loan Agreement).
B. On the date this document is executed, Borrower is in default of
certain obligations to Lenders and Agent under the Loan Agreement and the other
Loan Documents.
C. Borrower has requested that Lenders and Agent forbear from
exercising their rights and remedies with respect to such existing defaults up
to and including November 30, 1998.
D. Borrower hereby agrees and acknowledges that Lenders and Agent have
no obligation to extend such forbearance past November 30, 1998.
E. Lenders and Agent have agreed to forbear from exercising their
rights and remedies with respect to such existing defaults up to and including
November 30, 1998, such forbearance to be upon the terms and conditions set
forth in this Agreement.
F. Borrower has also requested that the Lenders and Agent amend the
Loan Agreement in the manner set forth in this Agreement and Lenders and Agent
are willing to do so upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties, intending to be legally bound, agree as
follows:
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ARTICLE I
DEFINITIONS
1.01 Capitalized terms used in this Agreement, to the extent not
otherwise defined herein, shall have the same meaning as in the Loan Agreement,
as amended hereby.
ARTICLE II
EFFECTIVE DATE
2.01 Except as otherwise provided herein, the Forbearance (as defined in
Section 4.01 hereof) and the agreements, consents and amendments contained in
this Agreement shall each be effective on the date that all conditions precedent
in Section 6.01 hereof are satisfied, and once effective shall be deemed to have
been effective as of June 30, 1998.
ARTICLE III
EXISTING DEFAULTS
3.01 As of the date of execution of this Agreement, Borrower hereby
acknowledges, confirms and agrees that the following event has occurred (the
"Existing Default"), which presently constitutes an Event of Default and
entitles Lenders and Agent to exercise their rights and remedies under the Loan
Documents: based on financial information supplied to Lenders and Agent by
Borrower, Borrower will fail to maintain for the twelve-month period ending on
July 4, 1998, a Fixed Charge Ratio of not less than the ratio set forth in
Section 9.3(B) of the Loan Agreement.
ARTICLE IV
FORBEARANCE
4.01 In reliance upon the representations, warranties and covenants of
Borrower contained in this Agreement and subject to the terms and conditions of
this Agreement and any documents or instruments executed in connection herewith,
each of the Lenders and Agent hereby agrees to forbear up to and including
November 30, 1998, from exercising its rights and remedies under the Loan
Documents as a result of the Existing Default (the "Forbearance"). If not sooner
terminated pursuant to the terms of this Agreement, the Forbearance shall
automatically terminate on December 1, 1998, and on and after such date each of
the Lenders and Agent shall be entitled to exercise its available rights and
remedies without further notice. Except as limited and/or modified by this
Agreement and by the documents executed in connection herewith, the Loan
Documents shall be deemed to be in full force and effect during the period of
this Agreement, and all provisions of the Loan Documents relating to the rights
and remedies of Lender shall continue to be in effect until such time as all
Obligations have been finally paid in full.
4.02 Borrower hereby agrees and acknowledges that Lenders and Agent
have no obligation to extend the Forbearance past November 30, 1998.
ARTICLE V
AMENDMENTS TO LOAN AGREEMENT AND OTHER AGREEMENTS
5.01 AMENDMENT TO SECTION 1.1 OF THE LOAN AGREEMENT; AMENDMENT AND
RESTATEMENT OF CERTAIN DEFINITIONS. Effective as of the effective date of this
Agreement, the definitions of "Borrowing Base," "Existing Boston Revolving
Credit Note," "Existing Fleet Revolving Credit Note," "Revolving
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Credit Commitment," "Revolving Credit Notes" and "Seasonal Inventory Overadvance
Agreement" set forth in Section 1.1 of the Loan Agreement are hereby amended and
restated in their entirety to read as follows:
"Borrowing Base - as at any date of determination thereof, an amount
equal to the lesser of:
(a) (i) the Revolving Credit Commitment; minus (ii) 100% of
the face amount of all standby Letters of Credit issued by Agent or
covered by the provisions of an LC Risk Participation Agreement which
are outstanding at such date; minus (iii) 45% of the face amount of all
documentary Letters of Credit issued by Agent or covered by the
provisions of an LC Risk Participation Agreement which are outstanding
at such date; minus (iv) any reserves for accrued and unpaid royalty
payments established by Agent and/or Lenders from time to time pursuant
to Section 2.1(A) hereof (based on the amount of such accrued and
unpaid royalty payments which are shown on Borrower's financial
statements, as adjusted by Lenders in the exercise of their credit
judgment); minus (v) all other reserves established by Agent and/or
Lender from time to time pursuant to Section 2.1(A) hereof; minus (vi)
the FX Amount; or
(b) an amount equal to:
(i) (A) 85% (or such lesser percentage as Lenders may
in their discretion determine from time to time after the
occurrence of a Default) of the net amount of Eligible
Accounts outstanding as of the applicable Calculation Date
plus (B) the lesser of $1,000,000 or 85% (or such lesser
percentage as Lenders may in their discretion determine from
time to time after the occurrence of a Default) of the net
amount of Eligible Dated Accounts outstanding as of the
applicable Calculation Date; plus (C) 85% (or such lesser
percentage as Lenders may in their discretion determine from
time to time after the occurrence of a Default) of the lesser
of (a) $1,500,000 or (b) the net amount of Japanese Accounts
outstanding as of the applicable Calculation Date;
PLUS
(ii) the lesser of (A) during the time period
beginning June 30, 1998 and continuing through October 30,
1998, $45,000,000, and thereafter $35,000,000 or (B) the sum
of: (1) (x) the lesser of (I) $5,000,000 or (II) 55% (or such
lesser percentage as Lenders may in their discretion determine
from time to time after the occurrence of a Default) of the
value of Eligible Finished Goods Inventory consisting of
"printed" finished goods as of the applicable Calculation Date
plus (y) 55% (or such lesser percentage as Lenders may in
their discretion determine from time to time after the
occurrence of a Default) of the value of Eligible Inventory
(other than Eligible Finished Goods Inventory consisting of
"printed" finished goods), as of the applicable Calculation
Date plus (2) the Seasonal Inventory Overadvance Amount as of
the applicable Calculation Date.
MINUS
(subtract from the sum of clauses (i) and (ii) above)
(iii) the sum of: (a) 100% of the face amount of all
standby Letters of Credit issued by Agent or covered by the
provisions of an LC Risk Participation Agreement
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which are outstanding at such date, (b) 45% of the face amount
of all documentary Letters of Credit issued by Agent or
covered by the provisions of an LC Risk Participation
Agreement which are outstanding at such date, (c) any reserves
for accrued and unpaid royalty payments established by Agent
and/or Lenders from time to time pursuant to Section 2.1(A)
hereof and based on the amount of such accrued and unpaid
royalty payments which are shown on Borrower's financial
statements, (d) all other reserves established by Agent and/or
Lenders from time to time pursuant to Section 2.1(A) hereof,
and (e) the FX Amount.
For purposes of clause (b)(i) above, the net amount of Eligible
Accounts or Eligible Dated Accounts, as the case may be, at any time shall be
the face amount of such Eligible Accounts or such Eligible Dated Accounts, as
the case may be, less any and all returns, rebates, discounts (which may, at
Agent's option, be calculated on shortest terms), credits, allowances or excise
taxes of any nature at any time issued, owing, claimed by Account Debtors,
granted, outstanding or payable in connection with such Account at such time.
For purposes of clause (b)(ii) above and the definition of `Seasonal
Inventory Overadvance Amount,' the value of Eligible Inventory on a date shall
be calculated on the basis of the lower of cost or market. Cost shall be
calculated on a first-in, first-out basis.
Without limiting Lenders' discretion to adjust advance rates from time
to time after the occurrence of a Default as provided above, Borrower
acknowledges that Lenders may from time to time before or after the occurrence
of a Default reduce the Inventory advance rate if Lenders determine that the
size mix of Borrower's finished goods has materially changed from size mix as of
the Closing Date."
"Existing Boston Revolving Credit Note - that certain Third Amended and
Restated Revolving Credit Note, dated September 29, 1997, in the original
principal amount of $28,840,000.00 executed by Borrower and payable to the order
of Boston."
"Existing Fleet Revolving Credit Note - that certain Third Amended and
Restated Revolving Credit Note, dated September 29, 1997, in the original
principal amount of $41,160,000.00 executed by Borrower and payable to the order
of Fleet."
"Revolving Credit Commitment - During the time period beginning June
30, 1998 and continuing through October 30, 1998, $75,000,000.00, and thereafter
$70,000,000.00. Fleet's maximum portion of the Revolving Credit Commitment
during the time period beginning June 30, 1998 and continuing through October
30, 1998 is $44,100,000.00, i.e., Fleet's Revolving Credit Commitment during the
time period beginning June 30, 1998 and continuing through October 30, 1998 is
$44,100,000.00. Beginning October 31, 1998 and continuing thereafter, Fleet's
maximum portion of the Revolving Credit Commitment is $41,160,000.00, i.e.,
Fleet's Revolving Credit Commitment during that time period is $41,160,000.00.
Boston's maximum portion of the Revolving Credit Commitment during the time
period beginning June 30, 1998, and continuing through October 30, 1998 is
$30,900,000.00, i.e. Boston's Revolving Credit Commitment during the time period
beginning on June 30, 1998 and continuing through October 30, 1998, is
$30,900,000.00. Beginning October 31, 1998, and continuing thereafter, Boston's
maximum portion of the Revolving Credit Commitment is $28,840,000.00 i.e.,
Boston's Revolving Credit Commitment during that time period is $28,840,000.00.
"Revolving Credit Notes - those certain Fourth Amended and Restated
Revolving Credit Notes, to be executed by Borrower on or about the date of the
Second Amendment, in favor of each Lender, to
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evidence Borrower's indebtedness to such Lender for its Revolving Credit
Percentage, the Fourth Amended and Restated Revolving Credit Note in favor of
Fleet to be in the form of Annex I attached to the Second Amendment, as the same
may be amended, renewed, extended, modified or restated from time to time, the
provisions of which are in amendment and restatement of, and in replacement for,
the provisions of the Existing Fleet Revolving Credit Note, and the Fourth
Amended and Restated Revolving Credit Note in favor of Boston to be in the form
of Annex II attached to the Second Amendment, as the same may be amended,
renewed, modified, extended or restated from time to time, the provisions of
which are in amendment and restatement of, and in replacement for, the
provisions of the Existing Boston Revolving Credit Note."
"Seasonal Inventory Overadvance Amount - during the period (but only
during the period) beginning June 30, 1998 and continuing through October 31,
1998, the lesser of (a) $7,000,000.00 or (b) 10% (or such lesser percentage as
Lenders may in their discretion determine from time to time after the occurrence
of a Default) of the value of the Eligible Inventory consisting of "blank"
finished goods inventory of Borrower at such date. Beginning November 1, 1998,
and continuing through March 31, 1999, the Seasonal Inventory Overadvance Amount
shall be $0.00. Beginning with calendar year 1999, and continuing through each
succeeding calendar year during the term of this Agreement, the Seasonal
Inventory Overadvance Amount shall be during the period (but only during the
period) beginning April 1 and continuing through September 30 of each such
calendar year the lesser of (a) $4,500,000 or (b) 10% (or such lesser percentage
as Lenders may in their discretion determine from time to time after the
occurrence of a Default) of the value of Eligible Inventory consisting of
"blank" finished goods inventory of Borrower at such date. Beginning October 1
of each such calendar year and continuing through March 31 of the following
year, the Seasonal Inventory Overadvance Amount shall be $0.00."
5.02 AMENDMENT TO SECTION 1.1 OF THE LOAN AGREEMENT; ADDITION OF
DEFINITION. Effective as of the effective date of this Agreement, Section 1.1 of
the Loan Agreement is hereby amended by adding thereto in alphabetical order the
following definition:
"Second Amendment - that certain Forbearance Agreement and
Second Amendment to Third Amended and Restated Loan and Security
Agreement, dated as of June 30, 1998, executed by Borrower, Lenders and
Agent."
5.03 AMENDMENT TO SUBSECTION 2.1(A) OF THE LOAN AGREEMENT. Effective as
of June 30, 1998, Subsection 2.1(A) of the Loan Agreement is amended by amending
and restating the fifth sentence of Subsection 2.1(A) to read in its entirety as
follows:
"Notwithstanding the foregoing provisions of this Section
2.1(A), Borrower and Lenders agree Agent shall have the right to
establish and/or eliminate reserves in such amounts, with respect to
such matters, as Agent shall in its sole discretion deem necessary or
appropriate, against the amount of Revolving Credit Loans which
Borrower may otherwise request under this Section 2.1(A), including,
without limitation, with respect to (i) price adjustments, damages,
unearned discounts, returned products or other matters for which credit
memoranda are issued in the ordinary course of Borrower's business;
(ii) shrinkage, spoilage and obsolescence of Inventory; (iii) slow
moving Inventory; (iv) other sums chargeable against Borrower's Loan
Account as Revolving Credit Loans under any section of this Agreement;
(v) tax liabilities and (vi) such other matters, events, conditions or
contingencies as to which Agent, in its sole discretion, determines
reserves should be established from time to time hereunder."
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5.04 ADDITION OF A NEW SECTION 2.11 TO THE LOAN AGREEMENT. Effective as
of June 30, 1998, a new Section 2.11 Structure of Credit Facility is hereby
added to the Loan Agreement, to read in its entirety as follows:
"2.11 Structure of Credit Facility. Each Borrower agrees and
acknowledges that the present structure of the credit facility detailed
in this Agreement is based in part upon the financial and other
information presently known to Agent and Lenders regarding each
Borrower, the organizational structure of Borrowers, and the present
financial condition of each Borrower. Each Borrower hereby agrees that
upon the occurrence of a Default, Agent shall have the right, in its
sole credit judgment, to require that any or all of the following
changes be made to this credit facility: (i) establish a separate
"borrowing base" for each Borrower, (ii) advance a Revolving Credit
Loan specifically to a specific Borrower, based on such Borrower's
availability under its own "borrowing base", (iii) restrict loans and
advances between Borrowers, (iv) establish separate lockbox and
dominion accounts for each Borrower, and (v) establish such other
procedures as shall be reasonably deemed by Agent to be useful in
tracking where Loans are made under this Agreement and the source of
payments received by Agent on such Loans."
5.05 AMENDMENT TO SUBSECTION 3.1(A) OF THE LOAN AGREEMENT. Effective as
of June 30, 1998, Subsection 3.1(A) of the Loan Agreement is hereby amended as
follows:
(a) The reference to the phrase "one and three-fourths percent
(1.75%)" is hereby deleted and substituted therefore is the phrase "two
and three fourths percent (2.75%)."
(b) The reference to the phrase "one-quarter percent (0.25%)"
is hereby deleted and substituted therefore is the phrase "one and
one-quarter percent (1.25%)."
5.06 AMENDMENT AND RESTATEMENT OF SUBSECTION 3.3(B) OF THE LOAN
AGREEMENT. Effective as of June 30, 1998, Subsection 3.3(B) of the Loan
Agreement is amended and restated to read in its entirety as follows:
"(B) At the effective date of any such termination by
Borrower, Borrower shall pay to Agent, for the benefit of Lenders, in
accordance with their respective Revolving Credit Percentage (in
addition to the then outstanding principal, accrued interest and other
charges owing under the terms of this Agreement and any of the other
Loan Documents), as liquidated damages for the loss of the bargain and
not as a penalty, an amount equal to (i) one and one-half percent
(1.5%) of the Average Daily Loan Balance for the one year period
preceding the date of termination if the termination occurs during the
period from June 30, 1998 to and including June 30, 1999, and (ii)
one-half of one percent (0.5%) of the Average Daily Loan Balance for
the one year period preceding the date of termination if the
termination occurs after June 30, 1999. No prepayment fee shall be
payable if the termination occurs on the last day of the Original Term
or any Renewal Term."
5.07 ACCOUNTS RECEIVABLE AND INVENTORY REPORTING. In addition to and
not in limitation of any other reporting requirements of Borrower under the Loan
Agreement, Borrower hereby agrees and acknowledges that Borrower is now required
(i) to report accounts receivable on a daily basis, (ii) to report inventory on
weekly basis, and (iii) to report ineligible accounts receivable and ineligible
inventory on a weekly basis, and that beginning on September 15, 1998, Borrower
will be required to report inventory on a daily basis.
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5.08 AMENDMENT TO SUBSECTION 9.1(J) (ii) OF THE LOAN AGREEMENT.
Effective as of June 30, 1998, Subsection 9.1(J)(ii) of the Loan Agreement is
hereby amended by deleting therefrom the phrase "forty-five (45)" and
substituting therefore the phrase "thirty (30)".
5.09 SUSPENSION OF COMPLIANCE WITH FINANCIAL COVENANT SET FORTH IN
SECTION 9.3 OF THE LOAN AGREEMENT. During the Forbearance, compliance with each
of the financial covenants set forth in Section 9.3 of the Loan Agreement is
hereby suspended. At the expiration of the Forbearance, the financial covenants
set forth in Section 9.3 of the Loan Agreement shall be reinstated.
5.10 FINANCIAL COVENANTS DURING FORBEARANCE PERIOD. During the
Forbearance, Borrower covenants that, unless otherwise consented to by Lenders
in writing, it shall:
(a) EBITDA. As of the end of each fiscal month of Borrower
ending closest to the dated indicated below, maintain EBITDA of not
less than the amount indicated below for the time period indicated
below:
Relevant Time Period Amount
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(i) One month period ending July 4, 1998 (i) ($1,000,000)
(ii) Two month period ending August 8, 1998 (ii) $0.00 (zero dollars)
(iii) Three month period ending September 5, 1998 (iii) $2,500,000
(iv) Four month period ending October 3, 1998 (iv) $7,527,000
(v) Five month period ending November 7, 1998 (v) $10,580,000
For the purposes of this Agreement, "EBITDA" shall mean for any fiscal
period of Borrower the sum of (A) Consolidated Adjusted Net Earnings from
Operations for such period, plus (B) Consolidated amortization expense and
Consolidated depreciation expense for such period (to the extent deducted in
calculating Consolidated Adjusted Net Earnings from Operations), plus (C)
Consolidated Interest Expense for such period (to the extent deducted in
calculating Consolidated Adjusted Net Earnings from Operations), plus (D)
Consolidated Tax Expense of Borrower for such period (to the extent deducted in
calculating Consolidated Adjusted Net Earnings from Operations).
(b) Minimum Daily Availability. At the end of each day during
the time period set forth below, maintain Availability of not less than
the amount indicated below during the time period indicated below:
Relevant Time Period Amount
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(i) June 30, 1998 through September 29, 1998 (i) $0.00
(ii) September 30, 1998 through October 31, 1998 (ii) $5,000,000
(iii) November 1, 1998 through November 15, 1998 (iii) $7,500,000
(iv) November 16, 1998 through November 30, 1998 (iv) $10,000,000
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For the purpose of this Agreement, "Availability" shall mean the amount
that Borrower is entitled to borrow from time to time as Revolving Credit Loans,
such amount being the difference derived when the sum of the principal amount of
the Revolving Credit Loans then outstanding (including any amounts which Agent
or any Lender may have paid for the account of Borrower pursuant to any of the
Loan Documents and which have not been reimbursed by Borrower) is subtracted
from the Borrowing Base.
ARTICLE VI
CONDITIONS PRECEDENT
6.01 CONDITIONS TO EFFECTIVENESS. Notwithstanding anything herein to
the contrary, the effectiveness of this Agreement is subject to the satisfaction
of the following conditions precedent, unless specifically waived in writing by
Lenders and Agent:
(a) Lenders shall have received each of the following, each of
which shall be in form and substance satisfactory to Lenders, in their
sole discretion:
(i) this Agreement, duly executed by Borrower,
together with the Consent, Ratification and Release duly
executed by Brazos Sportswear, Inc.;
(ii) (a) the Fourth Amended and Restated Revolving
Credit Note, in the form of Annex I attached hereto, duly
executed by Borrower, in favor of Fleet, and (b) the Fourth
Amended and Restated Revolving Credit Note, in the form of
Annex II attached hereto, duly executed by Borrower, in favor
of Boston;
(iii) the written opinion of Xxxxxx & Xxxxxx, L.L.P.,
counsel to Borrower, regarding Borrower, the execution of this
Agreement, the other Loan Documents executed in connection
herewith, and the other transactions contemplated hereby, to
be in form and substance satisfactory to Lenders, in their
sole discretion;
(iv) a closing certificate signed by the chief
executive officer of Borrower, dated as of the date of this
Agreement, stating that (A) the representations and warranties
set forth in Section 8 of the Loan Agreement, as amended by
this Agreement, are true and correct as of such date, other
than for such representations and warranties which relate to a
specific date, (B) other than for the Existing Default,
Borrower is on such date in compliance with all the terms and
provisions set forth in the Loan Agreement, as amended by this
Agreement, and (C) on such date, other than for the Existing
Default, no Default or Event of Default has occurred or is
continuing, except for such Defaults or Events of Default as
have been specifically disclosed in writing by Borrower to
Agent;
(v) a company general certificate, certified by the
Secretary or Assistant Secretary of the Borrower,
acknowledging (A) that as to Brazos, the managers of Brazos
have met and have adopted, approved, consented to and ratified
resolutions which authorize the execution, delivery and
performance by Brazos of this Agreement and all other Loan
Documents to which Brazos is or is to be a party, and that as
to Morning Sun, the Board of Directors of Morning Sun has met
and adopted, approved, consented to and ratified resolutions
which authorize the execution, delivery and performance by
Morning Sun of this Agreement and all other Loan Documents to
which Morning Sun is or is to
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be a party and (B) the names of the officers of the Borrower
authorized to sign this Agreement and each of the other Loan
Documents to which the Borrower is or is to be a party
hereunder (including the certificates contemplated herein)
together with specimen signatures of such officers; and
(vi) such additional documents, instruments and
information as Lenders or their legal counsel may request.
(b) Other than for the Existing Default, No Default or Event
of Default shall have occurred and be continuing, unless such Default
or Event of Default has been specifically disclosed in writing by
Borrower to Agents.
(c) The representations and warranties contained herein and in
the Loan Agreement and the other Loan Documents, as each is amended
hereby, shall be true and correct as of the date hereof, as if made on
the date hereof, other than for such representations and warranties
which relate to a specific date.
(d) All limited liability company and corporate proceedings
taken in connection with the transactions contemplated by this
Agreement and all documents, instruments and other legal matters
incident thereto shall be satisfactory to Lenders and Agent and their
legal counsel.
In addition, the effectiveness of the Forbearance shall be subject to the
satisfaction of the conditions set forth in Section 6.02(a) through 6.02(c),
inclusive.
6.02 CONDITIONS TO CONTINUATION OF FORBEARANCE. In addition to and not
in limitation of any other provision of this Agreement, unless each of the
following conditions are and continue to be fully satisfied in a manner
satisfactory to Agent, at Agent's option, the Forbearance shall terminate (each
condition being separate and independent of each other condition, such that the
satisfaction of any one or more, or the waiver of satisfaction by Agent or
Lenders of any one or more, or the waiver of satisfaction by Agent or Lenders of
any one or more, shall not affect the absolute obligation of Borrower to satisfy
each separate condition):
(a) No Event of Default or Default (other than the Existing
Default) shall have occurred and be continuing.
(b) The representations and warranties contained in this
Agreement shall be true and correct.
(c) Borrower shall not be in default under any of the
provisions of this Agreement.
6.03 FAILURE OF CONDITION. The failure of any condition in this
Agreement to be satisfied shall constitute an Event of Default under the Loan
Agreement and a default under this Agreement, and upon such occurrence Agent
shall be entitled to terminate the Forbearance and each of Agent and Lenders
shall be entitled to exercise any and all of its rights and remedies available
under any of the Loan Documents.
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ARTICLE VII
NO WAIVER
7.01 Nothing contained herein shall be construed as a waiver by Agent
or any Lender of any covenant or provision of the Loan Agreement, the other Loan
Documents, this Agreement, or of any other contract or instrument between
Borrower and Agent and/or Lenders, and Agent's and/or any Lender's failure at
any time or times hereafter to require strict performance by Borrower of any
provision thereof shall not waive, affect or diminish any right of Agent and
Lenders to thereafter demand strict compliance therewith. Each of Agent and
Lenders hereby reserves all rights granted under the Loan Agreement, the other
Loan Documents, this Agreement and any other contract or instrument between
Borrower and Agent and/or Lenders. This Agreement is not to be construed as a
cure or forgiveness of the Existing Default.
ARTICLE VIII
RATIFICATIONS, REPRESENTATIONS AND WARRANTIES
8.01 RATIFICATIONS. The terms and provisions set forth in this
Agreement shall modify and supersede all inconsistent terms and provisions set
forth in the Loan Agreement and the other Loan Documents, and except as
expressly modified and superseded by this Agreement, the terms and provisions of
the Loan Agreement and the other Loan Documents are ratified and confirmed and
shall continue in full force and effect. Borrower and Agent and Lenders agree
that the Loan Agreement and the other Loan Documents, as amended hereby, shall
continue to be legal, valid, binding and enforceable in accordance with their
respective terms.
8.02 REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants to Agent and Lenders (a) the execution, delivery and performance of
this Agreement and any and all other Loan Documents executed and/or delivered in
connection herewith have been authorized by all requisite limited liability
company or corporate action on the part of Borrower and will not violate the
Articles of Incorporation or Bylaws of Morning Sun or the Certificate of
Formation or regulations of Brazos; (b) the representations and warranties
contained in the Loan Agreement, as amended hereby, and any other Loan Document
are true and correct on and as of the date hereof and on and as of the date of
execution hereof as though made on and as of each such date; (c) other than the
Existing Default, no Event of Default or Default under the Loan Agreement has
occurred and is continuing, unless such Event of Default or Default has been
specifically waived in writing by Lenders; and (d) other than the Existing
Defaults Borrower is in full compliance with all covenants and agreements
contained in the Loan Agreement and the other Loan Documents, as amended hereby.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made in the Loan Agreement or any other Loan Document, including,
without limitation, any document furnished in connection with this Agreement,
shall survive the execution and delivery of this Agreement and the other Loan
Documents, and no investigation by Agent or Lenders or any closing shall affect
the representations and warranties or the right of Agent and Lenders to rely
upon them.
9.02 REFERENCE TO LOAN AGREEMENT. Each of the Loan Documents, including
the Loan Agreement and any and all other agreements, documents or instruments
now or hereafter executed and delivered pursuant to the terms hereof or pursuant
to the terms of the Loan Agreement, as amended
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hereby, are hereby amended so that any reference in such Loan Documents to the
Loan Agreement shall mean a reference to the Loan Agreement, as amended hereby.
9.03 EXPENSES OF AGENT AND LENDERS. As provided in the Loan Agreement,
Borrower agrees to pay on demand all costs and expenses incurred by Agent and
Lenders in connection with the preparation, negotiation and execution of this
Agreement and the other Loan Documents executed pursuant hereto and any and all
amendments, modifications, and supplements thereto, including, without
limitation, the costs and fees of Agent's and each Lender's legal counsel, and
all costs and expenses incurred by Agent and Lenders in connection with the
enforcement or preservation of any rights under the Loan Agreement, as amended
hereby, or any other Loan Documents, including, without limitation, the costs
and fees of Agent's legal counsel and each Lender's legal counsel.
9.04 SEVERABILITY. Any provision of this Agreement held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
9.05 SUCCESSORS AND ASSIGNS. This Agreement is binding upon and shall
inure to the benefit of Agent, Lenders and Borrower and their respective
successors and assigns, except Borrower may not assign or transfer any of its
rights or obligations hereunder without the prior written consent of Agent and
Lenders.
9.06 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.
9.07 EFFECT OF WAIVER. No consent or waiver, express or implied, by
Agent or Lenders to or for any breach of or deviation from any covenant or
condition by Borrower shall be deemed a consent to or waiver of any other breach
of the same or any other covenant, condition or duty.
9.08 HEADINGS. The headings, captions, and arrangements used in this
Agreement are for convenience only and shall not affect the interpretation of
this Agreement.
9.09 APPLICABLE LAW. THIS AGREEMENT AND ALL OTHER LOAN DOCUMENTS
EXECUTED PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE
IN AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS.
9.10 FINAL AGREEMENT. THE LOAN DOCUMENTS, AS AMENDED HEREBY, REPRESENT
THE ENTIRE EXPRESSION OF THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF
IN THE DATE THIS AGREEMENT IS EXECUTED. THE LOAN DOCUMENTS, AS AMENDED HEREBY,
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES, THERE ARE NOT UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES. NO MODIFICATION, RESCISSION, WAIVER, RELEASE OR AMENDMENT OF ANY
PROVISION OF THIS AGREEMENT SHALL BE MADE, EXCEPT BY A WRITTEN AGREEMENT SIGNED
BY BORROWER AND LENDER.
9.11 RELEASE. BORROWER HEREBY ACKNOWLEDGES THAT IT HAS NO DEFENSE,
COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR
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NATURE WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF
ITS LIABILITY TO REPAY THE "OBLIGATIONS" OR TO SEEK AFFIRMATIVE RELIEF OR
DAMAGES OF ANY KIND OR NATURE FROM AGENT OR ANY LENDER. BORROWER HEREBY
VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES AGENT AND EACH LENDER,
ITS RESPECTIVE PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL
POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES,
AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED,
SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT LAW OR IN EQUITY
ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AGREEMENT IS
EXECUTED, WHICH THE BORROWER MAY NOW OR HEREAFTER HAVE AGAINST AGENT, ANY
LENDER, ITS RESPECTIVE PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS,
IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT,
VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND ARISING FROM ANY "LOANS",
INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING,
COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE
APPLICABLE, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE LOAN AGREEMENT OR
OTHER AGREEMENTS, AND NEGOTIATION FOR AND EXECUTION OF THIS AGREEMENT.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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Executed this 30th day of June, 1998, but effective for all purposes as
provided in Section 2.01 hereof.
BRAZOS SPORTSWEAR, L.L.C.
By: ______________________________________
Name: ______________________________________
Title: ______________________________________
MORNING SUN, INC.
By: ______________________________________
Name: ______________________________________
Title: ______________________________________
FLEET CAPITAL CORPORATION,
as Agent
By: ______________________________________
Name: ______________________________________
Title: ______________________________________
FLEET CAPITAL CORPORATION,
in its individual capacity
By: ______________________________________
Name: ______________________________________
Title: ______________________________________
BANKBOSTON, NA
By: ______________________________________
Name: ______________________________________
Title: ______________________________________
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CONSENT, RATIFICATION AND RELEASE
The undersigned hereby consents to the terms of the within and
foregoing Forbearance Agreement and Second Amendment to Third Amended and
Restated Loan and Security Agreement ("Amendment"), confirms and ratifies the
terms of its guaranty agreement, and acknowledges that its guaranty agreement is
in full force and effect on the date executed, that it has no defense,
counterclaim, set-off or any other claim to diminish its liability under such
document, that its consent is not required to the effectiveness of the within
and foregoing document, and that no consent by it is required for the
effectiveness of any future amendment, modification, forbearance or other action
with respect to the Loans, the Collateral, or any Loan Documents. THE
UNDERSIGNED HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES
AGENT AND EACH LENDER, AND EACH OF ITS RESPECTIVE PREDECESSORS, AGENTS,
EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS,
CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR
UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED,
CONTINGENT, OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART
ON OR BEFORE THE DATE THIS AMENDMENT IS EXECUTED, WHICH THE UNDERSIGNED MAY NOW
OR HEREAFTER HAVE AGAINST AGENT AND EACH LENDER, AND EACH OF ITS RESPECTIVE
PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND
IRRESPECTIVE OR WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION
OF LAW OR REGULATIONS, OR OTHERWISE AND ARISING FROM ANY "LOANS," INCLUDING,
WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING
OR RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE
EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE LOAN AGREEMENT, AS AMENDED HEREBY,
OR OTHER LOAN DOCUMENTS, AND NEGOTIATION FOR AND EXECUTION OF THIS AMENDMENT.
BRAZOS SPORTSWEAR, INC.,
a Delaware corporation
By: ______________________________________
Name: ______________________________________
Title: ______________________________________
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