EXECUTION COPY
FOURTH AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
G-III LEATHER FASHIONS, INC.,
THE LENDERS SIGNATORY HERETO
AND
FLEET BANK, N.A.
AS AGENT, COLLATERAL MONITORING AGENT
AND ISSUING BANK FOR SUCH LENDERS
AS OF MAY 31, 1997
TABLE OF CONTENTS
PAGE
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Article 1. Definitions...............................................................................3
Article 2. Revolving Credit Facility................................................................25
Section 2.1 Letters of Credit; Acceptances;
Loans; Steamship Guaranties;
Airway Releases......................................................25
Section 2.2 Applications for Letters of
Credit, Steamship Guaranties
and Airway Releases..................................................27
Section 2.3 Borrowing Notice and
Disbursement of Loans................................................29
Section 2.4 Notes................................................................30
Section 2.5 Interest.............................................................31
Section 2.6 Fees.................................................................32
Section 2.7 Payment of Loans and Acceptances;
Voluntary Changes in Commitments.....................................33
Section 2.8 Use of Proceeds of Loans.............................................34
Section 2.9 Computations.........................................................34
Section 2.10 Time and Method of Payments;
Statement of Account.................................................35
Section 2.11 Several Obligations..................................................36
Section 2.12 Guaranties...........................................................36
Section 2.13 Security.............................................................37
Section 2.14 Lending Offices......................................................40
Section 2.15 Obligations Absolute.................................................41
Section 2.16 Sharing of Payments
and Set-Off Among Lenders............................................41
Section 2.17 Additional Costs; Capital Requirements...............................42
Section 2.18 Additional L/C Provisions............................................44
Section 2.19 Pro Rata Treatment Among Lenders.....................................46
Section 2.20 Non-Receipt of Funds by the Agent....................................47
Section 2.21 Collections; Agent's Right to
Notify Account Debtors and
Endorse the Borrower's Name..........................................47
Section 2.22 Application of Payments and Collections..............................49
Section 2.23 Conversions of Loans.................................................50
Section 2.24 Limitation on Types of Loans.........................................50
Section 2.25 Illegality...........................................................51
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Section 2.26 Indemnification......................................................51
Article 3. Representations and Warranties...........................................................52
Section 3.1 Organization.........................................................52
Section 3.2 Power, Authority, Consents...........................................53
Section 3.3 No Violation of Law or Agreements....................................53
Section 3.4 Due Execution, Validity, Enforceability..............................54
Section 3.5 Properties, Priority of Liens........................................54
Section 3.6 Judgments, Actions, Proceedings......................................54
Section 3.7 No Default; Compliance With Laws.....................................55
Section 3.8 Burdensome Documents.................................................55
Section 3.9 Financial Statements;
Projections..........................................................55
Section 3.10 Tax Returns..........................................................56
Section 3.11 Intangible Assets....................................................56
Section 3.12 Regulation U and Regulation G........................................57
Section 3.13 Name Changes, Mergers,
Acquisitions; Location of Collateral.................................57
Section 3.14 Full Disclosure......................................................57
Section 3.15 Licenses and Approvals...............................................58
Section 3.16 Labor Disputes; Collective Bargaining
Agreements; Employee Grievances......................................58
Section 3.17 Condition of Assets..................................................58
Section 3.18 ERISA................................................................59
Section 3.19 Account Representations
and Warranties.......................................................60
Section 3.20 Borrowing Base Certificates..........................................60
Section 3.21 Accounts Receivable Aging Reports;
Key Item Reports.....................................................60
Section 3.22 Inventory Representations
and Warranties.......................................................60
Section 3.23 Forfeiture Proceeding................................................61
Section 3.24 Americans with Disabilities Act......................................61
Article 4. Conditions...............................................................................61
Section 4.1 Conditions to Closing................................................61
Section 4.2 Conditions to Subsequent
Loans and Issuance of L/Cs...........................................64
PAGE
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Article 5. Delivery of Financial Reports,
Documents and Other Information..........................................................65
Section 5.1 Annual Financial Statements..........................................65
Section 5.2 Semi-Annual Financial Statements;
Quarterly Financial Statements.......................................66
Section 5.3 Compliance Information...............................................66
Section 5.4 No Default Certificate...............................................66
Section 5.5 Rental Obligations;
Capitalized Lease Obligations........................................67
Section 5.6 Accountants' Reports.................................................67
Section 5.7 Copies of Documents..................................................67
Section 5.8 Notices of Defaults..................................................68
Section 5.9 ERISA Notices........................................................68
Section 5.10 Additional Information and Reports...................................68
Section 5.11 Confidentiality of Information.......................................70
Article 6. Affirmative Covenants....................................................................71
Section 6.1 Books and Records....................................................71
Section 6.2 Inspections and Field Examinations;
Annual Accounts Receivable...............................................................71
Section 6.3 Maintenance and Repairs..............................................71
Section 6.4 Continuance of Business..............................................71
Section 6.5 Copies of Corporate Documents........................................72
Section 6.6 Perform Obligations..................................................72
Section 6.7 Notice of Litigation.................................................72
Section 6.8 Insurance............................................................73
Section 6.9 Financial Covenants..................................................73
Section 6.10 Notice of Certain Events.............................................75
Section 6.11 Comply with ERISA....................................................76
Section 6.12 Environmental Compliance.............................................76
Section 6.13 Management Letter....................................................76
Section 6.14 Preparation of Strategic Plan Report.................................76
Section 6.15 Tax Refunds..........................................................76
Article 7. Negative Covenants.......................................................................77
Section 7.1 Indebtedness.........................................................77
Section 7.2 Liens................................................................77
Section 7.3 Guaranties...........................................................78
Section 7.4 Mergers; Acquisitions................................................79
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Section 7.5 Redemptions; Distributions...........................................79
Section 7.6 Stock Issuance.......................................................79
Section 7.7 Changes in Business..................................................79
Section 7.8 Prepayments..........................................................80
Section 7.9 Investments..........................................................80
Section 7.10 Fiscal Year..........................................................81
Section 7.11 ERISA Obligations....................................................81
Section 7.12 Amendments of Documents..............................................82
Section 7.13 Capital Expenditures.................................................82
Section 7.14 Capitalized Lease Obligations........................................82
Section 7.15 Management Fees......................................................83
Section 7.16 Transactions with Affiliates.........................................83
Section 7.17 Activities Leading to
Forfeiture Proceeding................................................84
Section 7.18 Rental Obligations...................................................84
Section 7.19 Retail Store.........................................................85
Section 7.20 License Agreements...................................................85
Article 8. Events of Default........................................................................85
Section 8.1 Payments.............................................................85
Section 8.2 Certain Covenants....................................................86
Section 8.3 Other Covenants......................................................86
Section 8.4 Other Defaults.......................................................86
Section 8.5 Representations and Warranties.......................................87
Section 8.6 Bankruptcy...........................................................87
Section 8.7 Judgments............................................................88
Section 8.8 ERISA................................................................88
Section 8.9 Ownership of Stock...................................................88
Section 8.10 Management...........................................................89
Section 8.11 Liens................................................................89
Section 8.12 Amount of Obligations................................................89
Section 8.13 Forfeiture Proceedings...............................................89
Section 8.14 Material Adverse Change..............................................89
Article 9. Agency Provisions........................................................................90
Section 9.1 Appointment, Powers and Immunities...................................90
Section 9.2 Reliance.............................................................90
Section 9.3 Events of Default....................................................91
Section 9.4 Rights as a Lender...................................................91
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Section 9.5 Indemnification......................................................91
Section 9.6 Non-Reliance.........................................................92
Section 9.7 Failure to Act.......................................................93
Section 9.8 Resignation or Removal...............................................93
Section 9.9 Sharing of Collateral and Payments...................................93
Section 9.10 Additional Provisions as to
the Collateral Monitoring Agent......................................94
Section 9.11 Execution of Fifth Amended
and Restated Loan Agreement..........................................96
Section 9.12 Termination of Xxxxxxxx Guaranty,
Xxxxxxxx Stock Pledge and Assignment
of Taxes.............................................................96
Article 10. Miscellaneous Provisions.................................................................96
Section 10.1 Fees and Expenses; Indemnity.........................................96
Section 10.2 Taxes................................................................97
Section 10.3 Payments.............................................................98
Section 10.4 Survival of Agreements and
Representations; Construction........................................99
Section 10.5 Lien on and Set-off of Deposits......................................99
Section 10.6 Modifications, Consents and
Waivers; Entire Agreement............................................99
Section 10.7 Remedies Cumulative.................................................100
Section 10.8 Further Assurances..................................................100
Section 10.9 Notices.............................................................101
Section 10.10 Counterparts........................................................103
Section 10.11 Severability........................................................103
Section 10.12 Binding Effect; No Assignment
or Delegation by Borrower...........................................103
Section 10.13 Assignments and Participation
by Lenders; Issuance of L/Cs
by Lender Affiliates................................................104
Section 10.14 GOVERNING LAW; CONSENT TO JURISDICTION;
WAIVER OF TRIAL BY JURY.............................................106
Section 10.15. Additional Agreements
by Borrower and Loan Parties........................................107
Section 10.16. Release by Borrower and Loan Parties................................107
EXHIBITS
--------
A. Form of Note
B. States of Incorporation and Qualification, and Capitalization and
Ownership of Stock, of Borrower and Subsidiaries
C. Consents, Waivers, Approvals; Violation of Agreements
D-1. Form of Available to Sell Report ($)
D-2. Form of Available to Sell Report (Units)
D-3. Form of Inventory Analysis Report
D-4. Form of Key Item Report
E. Permitted Security Interests, Liens and Encumbrances
F. Judgments, Actions, Proceedings
G. Defaults; Compliance with Laws, Regulations, Agreements
H. Burdensome Documents
I. Patents, Trademarks, Trade Names, Service Marks, Copyrights, and
Trade-Style Names
J. Name Changes, Mergers, Acquisitions; Location of Collateral
K. Labor Disputes; Collective Bargaining Agreements; Employee Grievances
L. Pension Plans
M. Permitted Indebtedness and Guaranties
N. Form of Assignment and Acceptance
O. Accounts and Inventory
P. Borrowing Base Certificate
Q. Form of Continuing Agreement for Issuance of Steamship Guaranties and Airway
Releases
R. Form of Fifth Amended and Restated Loan Agreement
SCHEDULE
7.9 Investments
FOURTH AMENDED AND RESTATED LOAN AGREEMENT
THIS AGREEMENT, made as of the 31st day of May, 1997, by and among:
G-III LEATHER FASHIONS, INC., a New York corporation (the "BORROWER");
The lenders that have executed the signature pages hereto
(individually, a "LENDER" and collectively, the "LENDERS"); and
FLEET BANK, N.A., a national banking association, individually
("FLEET") and as Agent for the Lenders (in such capacity, together with its
successors in such capacity, the "AGENT"), as Collateral Monitoring Agent for
the Lenders (in such capacity, together with its successors in such capacity,
the "COLLATERAL MONITORING AGENT"), and as Issuing Bank (in such capacity,
together with its successors in such capacity, the "ISSUING BANK");
W I T N E S S E T H:
WHEREAS,
(A) The Borrower, The Chase Manhattan Bank, N.A. ("Chase"), Chemical
Bank ("Chemical"), Fleet (Chase, Chemical and Fleet, collectively, the "BANKS")
and the Agent entered into a Loan Agreement dated October 29, 1992 (as amended
from time to time through July 29, 1994, the "ORIGINAL LOAN AGREEMENT");
(B) The Original Loan Agreement was amended and restated on July 29,
1994 (as amended from time to time through June 12, 1995, the "FIRST RESTATED
LOAN AGREEMENT");
(C) The First Restated Loan Agreement was further amended and restated
on June 12, 1995 (as amended from time to time through the date hereof, the
"SECOND RESTATED LOAN AGREEMENT");
(D) The Second Restated Loan Agreement was further amended and restated
on May 31, 1996 (as amended from time to time through the date hereof, the
"THIRD RESTATED LOAN AGREEMENT");
(E) Prior to the execution and delivery of the Third Restated Loan
Agreement, each of the Banks sold and transferred to The CIT Group/Commercial
Services, Inc. ("CIT"), pursuant to the terms and conditions of separate
Assignment and Acceptances, an undivided interest in an amount equal to 2.5% in
the case of Fleet, 100% in the case of Chase and 13.333% in the case of Chemical
of the rights and obligations of Fleet, Chase and Chemical under the Second
Restated Loan
Agreement, including, without limitation, its Commitments thereunder, the
Obligations owing to it and the Notes held by it;
(E) Pursuant to the Third Restated Loan Agreement, the Borrower is
indebted to the Banks in the aggregate principal amount of $3,114,784.16 in
respect of revolving loans made by the Banks and the Borrower and certain of its
affiliates are the account parties in respect of letters of credit and
acceptances issued by the Banks in the outstanding stated amount of
$20,609,422.39 (collectively, the "EXISTING LOAN AND L/C OBLIGATIONS");
(F) The Existing Loan and L/C Obligations and all other indebtedness,
liabilities and obligations of the Borrower to the Banks whether now existing or
hereafter arising, including, without limitation, those arising under the Third
Restated Loan Agreement (all such indebtedness, liabilities and obligations,
collectively, the "EXISTING OBLIGATIONS") are secured by certain guaranties and
liens on collateral, including, without limitation: (a) the personal property of
the Borrower pursuant to a security agreement between the Borrower and the Agent
for the ratable benefit of the Banks, (b) the guaranties of certain subsidiaries
and affiliates of the Borrower of the Existing Obligations, and (c) certain
personal property of such subsidiaries and affiliates pursuant to security
agreements by and between such subsidiaries and affiliates and the Agent, for
the benefit of the Banks, in each case, as provided for in the Third Restated
Loan Agreement;
(G) Xxxxxx Xxxxxxxx and Xxxx Xxxxxxxx (the "INDIVIDUAL GUARANTORS"),
stockholders in G-III Apparel Group, Ltd. (as further defined herein, the
"PARENT"), the owner of all of the issued and outstanding capital stock of the
Borrower, have personally guaranteed a portion of the Existing Obligations
pursuant to a Guaranty, dated May 18, 1994, as confirmed and amended by (i) an
Individual Guaranty Confirmation, dated as of July 29, 1994, between the
Individual Guarantors and the Agent, (ii) an Individual Guaranty Confirmation,
dated as of July 12, 1995, between the Individual Guarantors and the Agent and
(iii) an Individual Guaranty Confirmation and Amendment, dated as of May 31,
1996, between the Individual Guarantors and the Agent (as amended, the "XXXXXXXX
GUARANTY");
(H) Xxxxxx Xxxxxxxx has pledged his 250,000 shares of the capital stock
of the Parent (the "XXXXXXXX PLEDGED SHARES") to secure a portion of the
Existing Obligations pursuant to a Guarantor Pledge Agreement, dated June 12,
1995, as confirmed and amended by the Xxxxxxxx Pledge Confirmation and Amendment
dated as of May 31, 1996, between Xxxxxx Xxxxxxxx and the Agent (the "XXXXXXXX
STOCK PLEDGE");
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(I) The Parent has executed and delivered an IRS Form 2848 dated May
31, 1996 granting to the Agent for the benefit of the Lenders, inter alia, the
authority to receive and endorse tax refund checks (the "ASSIGNMENT OF TAX
REFUNDS");
(J) The Lenders have agreed to terminate each of the Xxxxxxxx Guaranty,
the Xxxxxxxx Stock Pledge and the Assignment of Tax Refunds and to return the
Xxxxxxxx Pledged Shares to Xxxxxx Xxxxxxxx;
(K) The Borrower desires that the Lenders extend the credit facility
provided for under the Third Restated Loan Agreement as amended hereby on the
terms and conditions contained herein;
(L) The Lenders have agreed to extend the credit facility, subject to
the agreements of the parties, all as hereinafter set forth; and
(M) In order to effect the amendment of the Third Restated Loan
Agreement, the Lenders, the Agent, the Collateral Monitoring Agent, the Issuing
Bank and the Borrower desire to amend and restate the Third Restated Loan
Agreement in its entirety as set forth herein;
NOW, THEREFORE, the parties hereto agree to amend and restate the Third
Restated Loan Agreement in its entirety as follows:
ARTICLE 1. DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
"ACCEPTANCE(S)" - time drafts which (a) are drawn by the
Borrower's vendors or suppliers under L/Cs which permit such drawings and are
presented to the Agent in accordance with the terms of the relevant Time Trade
L/Cs on or before the respective expiration dates of such Time Trade L/Cs, (b)
are accepted by a Lender in accordance with the terms of this Agreement and (c)
mature no later than the earlier of (i) 60 days after the date of issuance
thereof and (ii) the Commitment Termination Date.
"ACCOUNT" - accounts (including but not limited to accounts
receivable), revenues, income, fees and receipts whether now or hereafter
existing or now owned or hereafter acquired and wherever located, of every kind
and description, tangible or intangible, and all rights to receive the same,
whether in the form of contract rights or other rights, and the proceeds of such
rights, whether now owned or hereafter coming into existence, and all chattel
paper, instruments, general intangibles, credits, claims, demands and any other
obligations for the payment of money.
3
"ACCOUNT DEBTOR" or "ACCOUNT DEBTOR" - at any time, any Person
who is obligated to the Borrower under or on account of an Account.
"ACCOUNTS RECEIVABLE AGING REPORT" - a summary account
receivable trial balance showing accounts receivable of the Borrower as of the
last day of the preceding week (in the case of a weekly report) or month (in the
case of a monthly report) outstanding from the due date set forth in the invoice
in the following categories: future; current; 1-30 days; 31-60 days; 61-90 days;
and 90 days and over.
"ADDITIONAL COSTS" - as defined in subsection 2.17(b) hereof.
"ADMINISTRATIVE FEE" - as defined in subsection 2.6(i) hereof.
"ADVISORY FEE" - as defined in subsection 2.6(a) hereof.
"AFFILIATE" - as to any Person, any other Person that directly
or indirectly controls, or is under common control with, or is controlled by,
such Person. As used in this definition, "control" (including, with its
correlative meanings, "controlled by" and "under common control with") shall
mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise), provided
that, in any event: (i) any Person that owns directly or indirectly 5% (with
respect to any corporation other than the Parent) or 15% (with respect to the
Parent) or more of the securities having ordinary voting power for the election
of directors or other governing body of a corporation or 5% or more of the
partnership or other ownership interests of any other Person (other than as a
limited partner of such other Person) will be deemed to control such corporation
or other Person; and (ii) each shareholder, director and officer of the Borrower
shall be deemed to be an Affiliate of the Borrower.
"AGENT" - as defined in the heading of this Agreement.
"AIRWAY RELEASE(S)" - as defined in subsection 2.1(e) hereof.
"APPLICATION(S)" - as defined in subsection 2.2(a) hereof.
"ASSIGNMENT AND ACCEPTANCE" - an agreement in the form of
Exhibit N hereto.
"ASSIGNMENT OF LIFE INSURANCE" - as defined in Section
2.13(c)(i)(A) hereof.
4
"AVAILABILITY" - as of the date of any determination thereof,
the Borrowing Base less Outstanding Obligations; provided, however, that at no
time shall the sum of Availability and Outstanding Obligations exceed the
Commitment; and, provided, further, that in determining Availability in the
issuance or advance, as the case may be, of any of Standby L/Cs, Acceptances,
Loans, Steamship Guaranties or Airway Releases, the sum of Availability and
Direct Debt shall not exceed the Direct Debt Sublimit.
"BALIHIDES" - P.T. Balihides, an Indonesian limited liability
company.
"BET STUDIO LLC" - BET Studio LLC, a Delaware limited
liability company formed as a joint venture between the Borrower and Black
Entertainment Television, Inc.
"BORROWER ASSIGNMENT" - as defined in subsection 2.13(a)(ii)
hereof.
"BORROWER ASSIGNMENT CONFIRMATION" - as defined in subsection
2.13(a)(ii)(B) hereof.
"BORROWER SECURITY AGREEMENT" - as defined in Section
2.13(a)(i) hereof.
"BORROWER SECURITY INTEREST CONFIRMATION" - as defined in
subsection 2.13(a)(ii)(A) hereof.
"BORROWING BASE" - as of the date of any determination
thereof, an amount up to, but not in excess of, the sum of:
(i) Seventy-five (75%) percent of all Eligible Accounts;
plus
(ii) Fifty (50%) percent of all Eligible Inventory; plus
(iii) the applicable Overadvance.
The Borrowing Base shall be subject to reduction at any time and from time to
time because of the reduction by the Collateral Monitoring Agent, in the
exercise of its discretion, of (x) the advance rates expressed as a percentage
in clauses (i) and (ii) of this definition and (y) the percentage of Eligible
Accounts and/or Eligible Inventory included therein by the application of a
chargeback reserve, a reserve for credit balances in the ineligible column, a
"contra" reserve and such other appropriate reserves as the Collateral
Monitoring Agent shall establish in accordance with Section 9.10 hereof.
5
"BORROWING BASE CERTIFICATE" - a certificate executed by the
chief executive officer, president, chief operating officer or chief financial
officer of the Borrower substantially in the form annexed hereto as Exhibit P
containing the information set forth therein.
"BORROWING NOTICE" - as defined in Section 2.3 hereof.
"BUSINESS DAY" - any day other than Saturday, Sunday or any
other day on which commercial banks in New York City are authorized or required
to close under the laws of the State of New York.
"CAPITAL EXPENDITURES" - for any period, the aggregate amount
of all payments made during such period by any Person directly or indirectly for
the purpose of acquiring, constructing or maintaining fixed assets, real
property or equipment that, in accordance with generally accepted accounting
principles, would be added as a debit to the fixed asset account of such Person,
including, without limitation, all amounts paid or payable during such period
with respect to interest that are required to be capitalized in accordance with
generally accepted accounting principles.
"CAPITALIZED LEASE" - any lease, the obligations to pay rent
or other amounts under which constitute Capitalized Lease Obligations.
"CAPITALIZED LEASE OBLIGATIONS" - as to any Person, the
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) real and/or personal property which
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under generally accepted accounting principles
and, for purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with generally accepted
accounting principles.
"CASH" - as to any Person, such Person's cash and cash
equivalents, as defined in accordance with generally accepted accounting
principles consistently applied.
"CLOSING DATE" - the date of the consummation of the
transactions contemplated hereby.
"CODE" - the Internal Revenue Code of 1986, as it may be
amended from time to time, and the regulations thereunder.
"COLLATERAL" - as defined in the respective Security
Documents.
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"COLLATERAL FEES" - as defined in Section 2.6(g) hereof.
"COLLECTION ACCOUNT" - an account owned and maintained by the
Collateral Monitoring Agent for the ratable benefit of the Lenders.
"COMMITMENT" - (i) Fifty-two Million ($52,000,000) Dollars
during the period from the date hereof to and including October 30, 1997, (ii)
Forty Million ($40,000,000) Dollars during the period from October 31, 1997 to
and including May 30, 1998, (iii) Fifty-two Million ($52,000,000) Dollars
during the period from May 31, 1998 to and including October 30, 1998, and (iv)
Forty Million ($40,000,000) Dollars during the period from October 31, 1998 to
and including the Commitment Termination Date, in each case in the aggregate,
allocated among each of the Lenders, respectively, in the amount set forth
opposite such Lender's name on the signature pages hereof under the caption
"Commitment", as such amount is reduced in accordance with the terms hereof.
"COMMITMENT TERMINATION DATE" - May 31, 1999.
"COMPLIANCE CERTIFICATE" - a certificate executed by the chief
executive officer, president, chief operating officer or chief financial officer
of the Borrower to the effect that: (i) as of the effective date of the
certificate, no Default or Event of Default under this Agreement exists or would
exist after giving effect to the action intended to be taken by the Borrower as
described in such certificate, including, without limitation, that the covenants
set forth in Section 6.9 hereof would not be breached after giving effect to
such action, together with a calculation in reasonable detail, and in form and
substance satisfactory to the Agent and the Lenders, of such compliance, and
(ii) the representations and warranties contained in Article 3 hereof are true
and correct with the same effect as though such representations and warranties
were made on the date of such certificate, except for changes in the ordinary
course of business none of which, either singly or in the aggregate, have had a
material adverse effect on the business, operations or financial conditions of
the Borrower.
"CONSULTANT" - as defined in Section 6.14 hereof.
"CONTINUING AGREEMENT FOR ISSUANCE OF STEAMSHIP GUARANTIES AND
AIRWAY RELEASES" - agreement pursuant to which Steamship Guaranties and Airway
Releases are issued in the form attached hereto as Exhibit Q.
"CORPORATE GUARANTOR(S)" - as defined in subsection 2.13(b)
hereof.
"CREDIT PERIOD" - the period commencing on the date hereof and
ending on the Commitment Termination Date.
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"DEBT INSTRUMENT" - as defined in subsection 8.4(a) hereof.
"DEFAULT" - an event which with notice or lapse of time, or
both, would constitute an Event of Default.
"DEFINED CONTRIBUTION PLAN" - a plan which is not covered by
Title IV of ERISA or subject to the minimum funding standards of Section 412 of
the Code and which provides for an individual account for each participant and
for benefits based solely on the amount contributed to the participant's
account, and any income, expenses, gains and losses, and any forfeitures of
accounts of other participants which may be allocated to such participant's
account.
"DIRECT DEBT" - the aggregate principal and/or face (or
stated) amount, as applicable, of all outstanding Standby L/Cs, Acceptances,
Loans, Steamship Guaranties and Airway Releases.
"DIRECT DEBT SUBLIMIT" - (i) Forty Million ($40,000,000)
Dollars during the period from June 1, 1997 through and including November 14,
1997, (ii) Thirty Million ($30,000,000) Dollars during the period from November
15, 1997, through May 31, 1998, (iii) Forty Million ($40,000,000) Dollars during
the period from June 1, 1998 through and including November 14, 1998 and (iv)
Thirty Million ($30,000,000) Dollars during the period from November 15, 1998,
through the Commitment Termination Date; provided that, at the Lenders'
discretion, upon the request of the Borrower, the applicable Direct Debt
Sublimit may be increased by an amount of Two Million ($2,000,000) Dollars.
"DOLLAR(S)" and "$" - lawful money of the United States of
America.
"DRAWING FEE" - as defined in Section 2.6(c) hereof.
"EBITDA" - for any period, net income before interest and
provision for taxes and without giving effect to any extraordinary gains or
losses or gains or losses from sales of assets (other than from sales of
Inventory in the ordinary course of business), adjusted by adding thereto the
amount of all amortization and intangibles and depreciation that were otherwise
deducted in determining net income.
"ELIGIBLE ACCOUNT" - an Account which is created by the
Borrower in the ordinary course of business, is genuine and in all respects what
it purports to be, and which meets the following requirements:
(a) as of the date of computation of Eligible
Accounts, no such Account shall have been outstanding for more than the lesser
of 60 days from the
8
due date set forth in the invoice or 180 days from the date of the invoice
relating thereto;
(b) the Account shall have arisen from the bona fide
sale of goods or provision of services, which goods or services have been
provided to an Account Debtor on an absolute sale basis, are not shipped or
delivered or provided on a consignment, approval, xxxx and hold, or
sale-or-return basis, are not subject to any repurchase or return agreement or
arrangement (other than customary business agreements for the return of
defective or incorrectly shipped merchandise) and have not been returned or
rejected nor has the Account Debtor refused to accept or revoked acceptance of
such goods or services; and such sale of goods or provision of services has been
completed in accordance with the terms and provisions contained in any documents
related thereto;
(c) the Account is evidenced by one, if any, executed
original agreement, contract, sales confirmation or document and is not
evidenced by chattel paper or an instrument of any kind, or, if the Account is
evidenced by chattel paper or an instrument, the Borrower has delivered and
properly endorsed such chattel paper or instrument to the Agent;
(d) to the best of the Borrower's knowledge, no event
described in Section 8.6 hereof with respect to the Account Debtor has occurred,
the Agent and the Lenders, in the exercise of their reasonable judgment, deem
the Account Debtor to be creditworthy, and not more than 25% of the aggregate
unpaid amount of the Accounts due from the Account Debtor and Affiliates of such
Account Debtor shall have been outstanding for more than 60 days from the due
date set forth in the invoice relating thereto;
(e) the Account Debtor is located within the United
States, Canada or Mexico;
(f) if the Account Debtor is located in Mexico, it is
WalMart or Price Club and the Account in Mexico of such Account Debtor is in an
amount, in the aggregate, not in excess of $1,000,000;
(g) if the Account Debtor is Wilsons Leather, the
Account is in an amount, in the aggregate, not in excess of $2,500,000;
(h) if the Account Debtor is BET Studio LLC, the
Account is in an amount, in the aggregate, not in excess of $250,000;
(i) the Account is a valid, legally enforceable
obligation of the Account Debtor;
9
(j) the Account does not arise out of transactions
with an Affiliate other than Wilsons Leather (subject to subsection (g) of this
definition) or BET Studio LLC (subject to subsection (h) of this definition);
(k) the Account does not arise out of the provision
of trial services or delivery of samples or trial merchandise to customers or
Account Debtors;
(l) the Account does not arise out of the sale of
goods or provision of services to a customer or Account Debtor for or on account
of credits arising out of prior sales or services to such customer or Account
Debtor;
(m) the Borrower does not have any knowledge of any
disputes in excess of $10,000 with respect to the Account nor has anything come
to the attention of the Borrower which would lead the Borrower to believe that
more than $10,000 of any such Account is in dispute and the disputed amount is
excluded from the computation of Eligible Accounts;
(n) the amount of the face value of the Account is
not subject to any set-offs, counterclaims, retainages or holdbacks of any type
other than those set forth on the Borrowing Base Certificate which are
acceptable to the Agent and the Lenders and are excluded from the computation of
Eligible Accounts, is actually and absolutely owing to the Borrower and is not
contingent for any reason, and, except for discounts, credits or allowances
allowed by the Borrower in the ordinary course of its business for prompt
payment, all of which discounts, credits or allowances are reflected in the
calculation of and have been deducted from the face value of the invoice related
thereto and in the calculation of the Borrowing Base;
(o) the Account is not now, and the goods or services
giving rise to the Account were not at the time of the sale or provision
thereof, subject to any Lien, claim, encumbrance or security interest except
those of the Agent for the benefit of the Lenders and those expressly permitted
under this Agreement; and
(p) neither the United States of America, nor any
state, any subdivision, department, or agency of either thereof is the Account
Debtor, but only with respect to more than an aggregate of $200,000 in face
amount of Accounts.
Notwithstanding the foregoing, the Collateral Monitoring Agent and the Lenders
shall have the right, in the exercise of their reasonable discretion, to limit
the amount of Accounts from any Account Debtor or Affiliate of any Account
Debtor which shall be deemed to be "Eligible Accounts" hereunder.
10
"ELIGIBLE ASSIGNEE" - a commercial bank or other financial
institution organized under the laws of the United States of America or any
state and having a combined capital and surplus of at least $100,000,000.
"ELIGIBLE INVENTORY" - Inventory which: (i) constitutes
finished goods of the Borrower or Retail; (ii) is not slow moving, obsolete or
unsaleable; (iii) is currently useable or saleable in the ordinary course of the
Borrower's or Retail's business; (iv) is valued in accordance with generally
accepted accounting principles applied consistently with past practices of the
Borrower and Retail; (v) is located on the premises listed on the exhibits
attached to this Agreement or other locations permitted under the Borrower
Security Agreement or any security agreement set forth in Section 2.13, or is
Inventory in transit for sale in the ordinary course of business; (vi) is not
subject to any Lien or security interest whatsoever, except for the Liens and
security interests expressly permitted under the Borrower Security Agreement or
any security agreement set forth in Section 2.13, and is not on consignment;
(vii) does not include raw materials or work-in progress; (viii) is not now
stored or shall not at any time hereafter be stored with a bailee, warehouseman,
or similar party unless pursuant to a bailment or storage agreement to which the
Agent is a party; (ix) does not include Inventory styles (A) on which the
Borrower has taken a lower of cost or market markdown; or (B) of which the
Borrower has more than a one year supply on hand; (x) does not include Inventory
subject to a license agreement; (xi) does not include Inventory in retail
stores; and (xii) shall include finished goods Inventory consigned to the Agent
under the terms of the L/C used to acquire such Inventory; provided, however,
that the value of any such consigned Inventory shall be subject to a 13%
reduction as a reserve for duty and freight.
"EMPLOYEE BENEFIT PLAN" - any employee benefit plan within the
meaning of Section 3(3) of ERISA which (a) is maintained for employees of
Borrower or any of its ERISA Affiliates or (b) has at any time within the
preceding six (6) years been maintained for employees of any Loan Party or any
current or former ERISA Affiliate.
"ENVIRONMENTAL LAWS AND REGULATIONS" - all environmental,
health and safety laws, regulations, resolutions, and ordinances applicable to
the Borrower or any other Loan Party, or any of their respective assets or
properties, including, without limitation: (i) all regulations, resolutions,
ordinances, decrees, and other similar documents and instruments of all courts
and governmental authorities, bureaus and agencies, domestic and foreign,
whether issued by environmental regulatory agencies or otherwise, and (ii) all
laws, regulations, resolutions, ordinances and decrees relating to Environmental
Matters.
"ENVIRONMENTAL LIABILITY" - any liability under any applicable
law for any release of a hazardous substance caused by the seeping, spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or
11
disposing of hazardous wastes or other chemical substances, pollutants or
contaminants into the environment, and any liability for the costs of any
clean-up or other remedial action including, without limitation, costs arising
out of security fencing, alternative water supplies, temporary evacuation and
housing and other emergency assistance undertaken by any environmental
regulatory body having jurisdiction over the Borrower or any other Loan Party to
prevent or minimize any actual or threatened release by the Borrower or any
other Loan Party of any hazardous wastes or other chemical substances,
pollutants and contaminants into the environment that would endanger the public
health or the environment.
"ENVIRONMENTAL MATTER(S)" - a release of any toxic or
hazardous waste or other chemical substance, pollutant or contaminant into the
environment or the generation, treatment, storage or disposal of any toxic or
hazardous wastes or other chemical substances.
"ENVIRONMENTAL PROCEEDING" - any judgment, action, proceeding
or investigation pending before any court or governmental authority, bureau or
agency, including, without limitation, any environmental regulatory body, with
respect to or threatened against or affecting the Borrower or any other Loan
Party or relating to the assets or liabilities of any of them, including,
without limitation, in respect of any "facility" owned, leased or operated by
any of them under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, or under any state, local or municipal
statute, ordinance or regulation in respect thereof, in connection with any
release of any toxic or hazardous waste or other chemical substance, pollutant
or contaminant into the environment, or with the generation, storage or disposal
of any toxic or hazardous wastes or other chemical substances.
"ERISA" - the Employee Retirement Income Security Act of 1974,
as it may be amended from time to time, and the regulations promulgated
thereunder.
"ERISA AFFILIATE" - as applied to any Loan Party, any
corporation, person or trade or business which is a member of a group which is
under common control with any Loan Party, who together with any Loan Party, is
treated as a single employer within the meaning of Section 414(b) - (o) of the
Code and, if applicable, Section 4001(a)(14) and (b) of ERISA.
"EURODOLLAR BUSINESS DAY" - a day on which commercial banks
are open for business in London.
"EURODOLLAR LOANS" - Loans that bear interest at a rate based
upon the LIBOR Base Rate.
"EVENT(S) OF DEFAULT" - as defined in Article 8 hereof.
12
"EXAMINATION FEES" - as defined in Section 2.6(h) hereof.
"EXISTING ACCEPTANCES" - the aggregate amount of Acceptances
outstanding on the date hereof.
"EXISTING OBLIGATIONS" - as defined in the recitals hereof.
"EXISTING LOANS" - the aggregate amount of Loans made by the
Banks and outstanding on the date hereof.
"EXISTING LOAN AND L/C OBLIGATIONS" - as defined in the
recitals hereof.
"EXISTING STANDBY L/CS" - the aggregate face or stated maximum
drawable amount (and to the maximum amount when a range of amounts is specified)
of Standby L/Cs issued by the Agent outstanding on the date hereof.
"EXISTING STEAMSHIP GUARANTIES AND AIRWAY RELEASES" - the
aggregate face or stated amount of Steamship Guaranties and Airway Releases
issued by the Agent and outstanding on the date hereof.
"EXISTING TRADE L/CS" - the aggregate face or stated maximum
drawable amount (and to the maximum amount when a range of amounts is specified)
of Trade L/Cs issued by the Agent outstanding on the date hereof.
"FEDERAL FUNDS RATE" - for any day, the weighted average of
the rates on overnight federal funds transactions with member banks of the
Federal Reserve System arranged by federal funds brokers as published by the
Federal Reserve Bank of New York for such day, or if such day is not a Business
Day, for the next preceding Business Day (or, if such rate is not so published
for any such day, the average rate charged to the Agent on such day on such
transactions as reasonably determined by the Agent).
"FEE(S)" - as defined in subsection 2.6(j) hereof.
"FINANCIAL STATEMENTS" - the audited consolidated balance
sheet of the Parent and the Subsidiaries (including the Borrower) as at January
31, 1997, together with the related consolidated statement of income and
retained earnings and statement of cash flow for the fiscal year then ended.
"FIRST RESTATED LOAN AGREEMENT" - as defined in the recitals
hereof.
"FLEET" - as defined in the heading of this Agreement.
13
"FORFEITURE PROCEEDING" - any action, proceeding or
investigation affecting the Borrower, the Parent or any of its Subsidiaries or
Affiliates before any court, governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, or the receipt of notice by any
such party that any of them is a suspect in or a target of any governmental
inquiry or investigation, which may result in an indictment of any of them or
the seizure or forfeiture of any of their property.
"GLOBAL" - Global International Trading Company, a Korean
corporation.
"GOVERNMENTAL ACTS" - as defined in subsection 2.18(d) hereof.
"GUARANTOR SECURITY AGREEMENT" - as defined in subsection
2.13(b)(i) hereof.
"GUARANTOR SECURITY INTEREST CONFIRMATION" - as defined in
subsection 2.13(b)(ii)(A) hereof.
"GUARANTY CONFIRMATION" - as defined in subsection 2.12(b)
hereof.
"GUARANTOR(S)" - as defined in Section 2.12(a) hereof.
"GUARANTY(IES)" - as defined in Section 2.12(a) hereof.
"HANIL BANK" - P.T. Hanil Xxxxxx Bank.
"HANIL LETTER OF CREDIT" - the provision, as a portion of the
purchase price payable in connection with the acquisition of P.T. Hwagang Indawa
(now known as Balihides) by the Borrower, on behalf of P.T. Hwagang Indawa (now
known as Balihides), to Hanil Bank of a standby letter of credit expiring no
later than May 31, 1998 (or in the event that such letter of credit is extended
to May 31, 1999, expiring no later than May 31, 1999) in the amount of
$2,000,000 as security for the line of credit in the amount of $3,500,000 to be
provided by Hanil Bank to P.T. Hwagang Indawa (now known as Balihides).
"HOLDINGS" - Indawa Holding Corp., a Delaware corporation and
a wholly-owned Subsidiary of the Parent.
"HONG KONG" - G-III Hong Kong Ltd., a Hong Kong corporation.
"INDEBTEDNESS" - with respect to any Person, all: (i)
liabilities or obligations, direct and contingent, which in accordance with
generally accepted accounting principles would be included in determining total
liabilities as shown on
14
the liability side of a balance sheet of such Person at the date as of which
Indebtedness is to be determined, including, without limitation, contingent
liabilities that in accordance with such principles, would be set forth in a
specific Dollar amount on the liability side of such balance sheet, and
Capitalized Lease Obligations of such Person; (ii) liabilities or obligations of
others for which such Person is directly or indirectly liable, by way of
guaranty (whether by direct guaranty, suretyship, discount, endorsement,
take-or-pay agreement, agreement to purchase or advance or keep in funds or
other agreement having the effect of a guaranty) or otherwise; (iii) liabilities
or obligations secured by Liens on any assets of such Person, whether or not
such liabilities or obligations shall have been assumed by it; and (iv)
liabilities or obligations of such Person, direct or contingent, with respect to
letters of credit issued for the account of such Person and bankers acceptances
created for such Person.
"INTEREST PERIOD" - with respect to any Eurodollar Loan, each
period commencing on the date such Loan is made or converted from a Prime Rate
Loan or Loans, or with respect to Eurodollar Loans, the last day of the next
preceding Interest Period with respect to such Eurodollar Loan, and ending on
the same day in the first, second or third calendar month thereafter, as the
Borrower may select as provided in Section 2.3 hereof, except that each such
Interest Period that commences on the last Eurodollar Business 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 Eurodollar Business
Day of the appropriate subsequent calendar month; provided, however, that
notwithstanding the foregoing: (i) each Interest Period that would otherwise end
on a day that is not a Business Day shall end on the next succeeding Business
Day (or, in the case of an Interest Period for Eurodollar Loans, if such next
succeeding Eurodollar Business Day falls in the next succeeding calendar month,
on the next preceding Eurodollar Business Day); (ii) each borrowing of
Eurodollar Loans from the Lenders and each conversion of Prime Rate Loans into
Eurodollar Loans shall be in an amount not less than $1,550,000 in the
aggregate; (iii) any Interest Period for any type of Loan shall end no later
than the Commitment Termination Date; and (iv) notwithstanding clause (iii)
above, no Interest Period shall have a duration of less than one month or
greater than three months. In the event that the Borrower fails to select the
duration of any Interest Period for any Loan within the time period and
otherwise as provided in Section 2.3 hereof, such Loans will be automatically
converted into a Prime Rate Loan on the last day of the preceding Interest
Period for such Loan.
"INVENTORY" - inventory of any of the Loan Parties, including
finished products, goods in transit, returns and supplies, packaging materials
and all other items which contribute to the promotion or sale thereof and spare
parts (until affixed to the machinery or equipment to which they relate).
15
"INVESTMENT" - by any Person:
(a) the amount paid or committed to be paid, or the value of
property or services contributed or committed to be contributed, by such Person
for or in connection with the acquisition by such Person of any stock, bonds,
notes, debentures, partnership or other ownership interests or other securities
of any other Person; and
(b) the amount of any advance, loan or extension of credit by
such Person, to any other Person, or guaranty or other similar obligation of
such Person with respect to any Indebtedness of such other Person, and (without
duplication) any amount committed to be advanced, loaned, or extended by such
Person to any other Person, or any amount the payment of which is committed to
be assured by a guaranty or similar obligation by such Person for the benefit
of, such other Person.
"IRS" - Internal Revenue Service or any successor agency
performing the same functions.
"ISSUING BANK" - as defined in the heading of this Agreement.
"KEY ITEM REPORT" - is defined in subsection 5.10(c)(ii)
hereof.
"KOREAN L/C" - a stand-by letter of credit having a face
amount equal to not more than Five Hundred Thousand Dollars ($500,000) issued
pursuant to Section 2.1(b)(ii) hereof in favor of the Korean Exchange Bank to
support a Two Million Dollar ($2,000,000) trade letter of credit facility for
Global.
"KOSTROMA" - Kostroma Ltd., a Hong Kong corporation.
"LATEST BALANCE SHEET" - as defined in Section 3.9(a) hereof.
"L/C(S)" - Trade L/Cs and/or Standby L/Cs.
"LEASES" - leases and subleases (other than Capitalized
Leases), licenses for the use of real property, easements, grants, and other
attachment rights and similar instruments under which the Borrower has the right
to use real or personal property or rights of way.
"LENDER(S)" - as defined in the heading of this Agreement.
"LENDER'S COMMITMENT" - the amount set forth next to each
Lender's name on the signature pages hereto.
16
"LENDER'S SHARE" - with respect to any Lender, such Lender's
pro rata share determined at any time as its Lender's Commitment as a percentage
of the Commitment.
"LIBOR BASE RATE" - means with respect to any Eurodollar Loan
for any Interest Period therefor, the rate per annum (rounded upward, if
necessary to the nearest 1/32 of one percent) as determined on the basis of the
offered rates for deposits in Dollars, for a period of time comparable to such
Interest Period which appear on the Telerate page 3750 as of 11:00 a.m. London
time on the day that is two Eurodollar Business Days prior to the first day of
such Interest Period; provided, however, if the rate described above does not
appear on the Telerate System on any applicable interest determination date, the
LIBOR Base Rate for such Eurodollar Loan shall be the rate (rounded upwards as
described above, if necessary) for deposits in Dollars for a period
substantially equal to such Interest Period on the Reuters Page "LIBO" (or such
other page as may replace the LIBO Page on that service for the purpose of
displaying rates), as of 11:00 a.m. (London time), on the day that is two
Eurodollar Business Days prior to the first day of such Interest Period. If both
Telerate and Reuters system are unavailable, then the LIBOR Base Rate for such
Eurodollar Loan for such Interest Period shall be determined on the basis of the
offered rates for deposits in Dollars for a period of time comparable to such
Interest Period which are offered by four major banks in the London interbank
market at approximately 11:00 a.m. (London time), on the day that is two (2)
Eurodollar Business Days prior to the first day of such Interest Period as
selected by the Collateral Monitoring Agent. The principal London office of each
of the four major London banks will be requested to provide a quotation of its
Dollar deposit offer rate. If at least two such quotations are provided, the
LIBOR Base Rate for such Eurodollar Loan for such Interest Period shall be the
arithmetic mean of the quotations. If fewer than two quotations are provided as
requested, the LIBOR Base Rate for such Eurodollar Loan for such Interest Period
shall be determined on the basis of the rates quoted by major banks in New York
City at approximately 11:00 a.m. (New York City time) on the day that is two
Business Days prior to the first day of such Interest Period. In the event that
the Agent is unable to obtain any such quotation as provided above, it will be
deemed that the LIBOR Base Rate pursuant to a Eurodollar Loan cannot be
determined.
"LIBOR RATE" - for any Eurodollar Loan for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) determined by the Agent to be equal to the quotient of: (a) (x) the
LIBOR Base Rate for such Loan for such Interest Period; divided by (y) 1 minus
the Reserve Requirement for such Loan for such Interest Period.
"LIEN" - any mortgage, deed of trust, pledge, security
interest, encumbrance, lien or charge of any kind (including any agreement to
give any of the
17
foregoing), any conditional sale or other title retention agreement, any lease
in the nature of any of the foregoing, and the filing of or agreement to give
any financing statement under the Uniform Commercial Code of any jurisdiction.
"LOAN(S)" - as defined in subsection 2.1(d) hereof.
"LOAN DOCUMENTS" - this Agreement, the Notes, the Guaranties,
the Guaranty Confirmations, the Security Documents, the L/Cs, the Applications,
the Acceptances, and the Continuing Agreements for Issuance of Steamship
Guaranties and Airway Releases to which any Loan Party is a party and all other
agreements executed and delivered in connection herewith or therewith, including
all amendments, modifications and supplements of or to all such agreements.
"LOAN PARTY(IES)" - individually (or collectively in the case
of Loan Parties), the Borrower, the Parent, any Subsidiary, any Guarantor, and
any other Person (other than the Lenders and the Agent) which now or hereafter
executes and delivers to any Lender or the Agent any Loan Document.
"LOCKBOX" - as defined in Section 2.21(b) hereof.
"LOCKBOX AGREEMENT" - as defined in Section 2.21(b) hereof.
"MAJORITY LENDERS" - so long as the Lenders consist of three
Lenders or fewer, Lenders having 100% of the aggregate amounts of Commitments
and, at any time that the Lenders consist of four Lenders or more, Lenders
having at least 80% of the aggregate amount of Commitments; provided, however,
that the vote of 100% of the Lenders shall at all times be required for all
matters not specifically to be determined by Majority Lenders hereunder,
including, but not limited to, extension of the term, increase in Commitments,
change in interest rates, release of Collateral, any change to the definition of
Majority Lenders and the determination pursuant to Section 9.11 hereof that
certain asset based lending provisions set forth herein are no longer required.
"MANAGEMENT FEES" - for any period, all fees, emoluments or
similar compensation paid or incurred by any Person (other than any such fees,
emoluments or similar compensation, including, without limitation, usual and
customary director's fees payable by the Parent to its directors, paid to or
incurred and payable to the Borrower, the Parent or any of the Subsidiaries) in
respect of services rendered in connection with the management or supervision of
the management of such Person, other than salaries, bonuses and other
compensation paid to any full time executive employee in respect of such full
time employment.
"MONTHLY DATES" - the last Business Day of each calendar month.
18
"MULTIEMPLOYER PLAN" - a "multiemployer plan" as defined in
Section 4001(a)(3) or ERISA to which any Loan Party or any ERISA Affiliate is
making, or is accruing an obligation to make, contributions or has made, or been
obligated to make, contributions within the preceding six (6) years.
"NOTE(S)" - as defined in Section 2.4 hereof.
"OBLIGATIONS" - collectively, all of the Indebtedness,
liabilities and obligations of the Borrower to the Lenders, the Agent, the
Collateral Monitoring Agent and the Issuing Bank, whether now existing or
hereafter arising, whether or not currently contemplated, including, without
limitation, liabilities and obligations to repay Loans and Acceptances and pay
Fees, liabilities and obligations with respect to L/Cs, Steamship Guaranties and
Airway Releases, and all other Indebtedness, liabilities and obligations arising
under the Loan Documents.
"ORIGINAL LOAN AGREEMENT" - as defined in the recitals hereof.
"OUTSTANDING OBLIGATIONS" - the aggregate principal and/or
face (or stated) amount, as applicable, of all outstanding Obligations.
"OUTSTANDING L/CS" - the aggregate face or stated maximum
drawing amount (and to the maximum amount when a range of amounts is specified)
of all outstanding L/Cs.
"OVERADVANCE" - the amount set forth below for the period
indicated:
Period Amount
------ -------
May 1, 1997-May 31, 1997 $12,000,000
June 1, 1997-June 30, 1997 $20,250,000
July 1, 1997-July 31, 1997 $20,250,000
August 1, 1997-August 31, 1997 $21,500,000
September 1, 1997-September 30, 1997 $17,300,000
October 1, 1997-October 26, 1997 $17,300,000
October 27, 1997-October 31, 1997 $ 5,500,000
November 1, 1997-February 28, 1998 -0-
March 1, 1998-March 31, 1998 $ 1,000,000
April 1, 1998-April 30, 1998 $ 6,000,000
May 1, 1998-May 31, 1998 $15,300,000
and the periods and amounts from June 1, 1998 through and including the
Commitment Termination Date shall be as preliminarily determined by the Lenders
and the Borrower based on the Projections and the business plan for the fiscal
year ending
19
January 31, 1999 and the unaudited financial statements for the fiscal year
ending January 31, 1998, but in no event shall the periods be of different
durations or the amounts be less than the amounts for the periods corresponding
to the periods set forth above unless the Lenders determine (in their reasonable
discretion) that such periods and amounts warrant adjustment based upon such
Projections, business plan or unaudited financial statements, which preliminary
determination shall be made within 30 days of receipt by the Lenders of such
Projections, business plan and unaudited financial statements and such
preliminary determination shall become effective after receipt and satisfactory
review by the Lenders of the Financial Statements for the fiscal year ending
January 31, 1998; provided, however, that with respect to the Overadvance at all
times (x) the then applicable Overadvance amount and all subsequent Overadvance
amounts shall be reduced by (i) 50% of all tax refunds paid to the Borrower or
the Parent (or paid to the Collection Account, in accordance with the terms
hereof), (ii) the proceeds of the sale of any assets other than in the ordinary
course of business, and (iii) 50% of the proceeds of any sale-leaseback, all of
such reductions to be effective immediately upon the Borrower's receipt (or, if
applicable, the Collateral Monitoring Agent's receipt for the account of the
Borrower) of such refunds or proceeds; but there shall be no reduction to the
then applicable Overadvance amount in the case of any sale-leaseback of newly
acquired assets, provided that (A) the sale-leaseback transaction is closed
within 90 days of the acquisition of the assets and (B) both the acquisition and
the closing of the sale-leaseback are completed during the same fiscal year; and
(y) at any time when Outstanding Obligations have exceeded the Borrowing Base as
a result of (A) Accounts or Inventory believed to be Eligible Accounts or
Eligible Inventory, as the case may be, in fact being or becoming ineligible or
(B) the return of uncollected checks or other items applied to reduce Loans, the
Collateral Monitoring Agent shall have the discretion to continue to advance
Loans and to instruct the Issuing Bank to issue L/Cs, Acceptances, Steamship
Guaranties and Airway Releases, as the case may be, up to an amount which would
result in the relevant Overadvance amount specified above being exceeded by a
factor of 10% (it being understood that the Collateral Monitoring Agent shall
advise the Lenders of all such issuances and advances within 24 hours); and (z)
the applicable Overadvance amount shall be increased by the amount of (a) any
cash collateral held by the Collateral Monitoring Agent for the sole purpose of
securing such increases to the applicable Overadvance amount, and (b) any
amounts invested in U.S. government securities or money market mutual funds
backed by U.S. government securities maintained in an account with Fleet Bank,
N.A. by the Borrower or the Parent and pledged or assigned to the Agent for the
benefit of the Lenders by the Borrower or the Parent, as the case may be, as
collateral security for the Obligations pursuant to documentation satisfactory
to the Lenders.
"PARENT" - G-III Apparel Group, Ltd., a Delaware corporation
and the holder of 100% of the issued and outstanding capital stock of the
Borrower.
20
"PARENT SECURITY AGREEMENT" - as defined in subsection
2.13(c)(i)(B) hereof.
"PARENT SECURITY INTEREST CONFIRMATION" - as defined in
subsection 2.13(c)(ii)(A) hereof.
"PARENT STOCK PLEDGE CONFIRMATION" - as defined in subsection
2.13(c)(ii)(B) hereof.
"PAYMENT OFFICE" - the office of each Lender set forth on the
signature page hereof as the lending office of such Lender.
"PAYOR" - as defined in Section 2.20 hereof.
"PBGC" - Pension Benefit Guaranty Corporation or any successor
entity performing the same functions.
"PENSION PLAN" - at any time an employee pension benefit plan
that is covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code and is either: (i) maintained by the Borrower or
any ERISA Affiliate for employees of the Borrower, or by the Borrower for any
ERISA Affiliate, or (ii) maintained pursuant to a collective bargaining
agreement or any other arrangement under which more than one employer makes
contributions and to which the Borrower or any ERISA Affiliate is then making or
accruing an obligation to make contributions or has within the preceding five
plan years made contributions.
"PERMITTED LIENS" - as to any Person: (i) pledges or deposits
by such Person under workers' compensation laws, unemployment insurance laws,
social security laws, or similar legislation, or good faith deposits in
connection with bids, tenders, contracts (other than for the payment of
Indebtedness of such Person), or leases to which such Person is a party, or
deposits to secure public or statutory obligations of such Person or deposits or
pledges of Cash or United States Government Bonds to secure surety, appeal,
performance or other similar bonds to which such Person is a party, or deposits
as security for contested taxes or import duties or for the payment of rent;
(ii) Liens imposed by law, in the aggregate, in an amount not in excess of
$50,000, such as carriers', warehousemen's, materialmen's and mechanics' liens,
or Liens arising out of judgments or awards against such Person with respect to
which such Person at the time shall currently be prosecuting an appeal or
proceedings for review and for which appropriate reserves have been allocated;
(iii) Liens for taxes not yet subject to penalties for non-payment and Liens for
taxes the payment of which is being contested as permitted by Section 6.6 hereof
and for which appropriate reserves have been allocated; and (iv) minor survey
exceptions, minor encumbrances, easements or reservations of, or rights of,
others
21
for rights of way, highways and railroad crossings, sewers, electric lines,
telegraph and telephone lines and other similar purposes, or zoning or other
restrictions as to the use of real properties, or Liens incidental to the
conduct of the business of such Person or to the ownership of such Person's
property that were not incurred in connection with Indebtedness of such Person,
all of which Liens referred to in the preceding clause (iv) do not in the
aggregate materially detract from the value of the properties to which they
relate or materially impair their use in the operation of the business taken as
a whole of such Person, and as to all the foregoing only to the extent arising
and continuing in the ordinary course of business.
"PERSON" - an individual, a corporation, a partnership, a
limited liability company, a joint venture, a trust or unincorporated
organization, a joint stock company or other similar organization, a government
or any political subdivision thereof, a court, or any other legal entity,
whether acting in an individual, fiduciary or other capacity.
"POST-DEFAULT RATE" - in respect of any amount under this
Agreement not paid when due (whether at stated maturity, by acceleration or
otherwise), a rate per annum during the period commencing on the due date until
(but not including the date upon which) such Loans or other amounts, as
applicable, are paid in full equal to 2% above the interest rate provided for
herein.
"PRIME RATE" - the interest rate established from time to time
by Fleet as its prime rate. Notwithstanding the foregoing, the Borrower
acknowledges that Fleet may regularly make domestic commercial loans at rates of
interest less than the rate of interest referred to in the preceding sentence.
Each change in any interest rate provided for herein based upon the Prime Rate
resulting from a change in the Prime Rate shall take effect at the time of such
change in the Prime Rate.
"PRIME RATE LOANS" - Loans that bear interest at a rate based
upon the Prime Rate.
"PROJECTIONS" - the balance sheets, income statements and
statements of cash flow of the Borrower, prepared by the Borrower, as at, and
for the fiscal year ending January 31, 1998 and for the fiscal year ending
January 31, 1999.
"PURCHASE MONEY SECURITY INTEREST" - as defined in subsection
7.2(c) hereof.
"REFERENCE LENDER" - for purposes of determining the LIBOR
Base Rate, the non-United States office or offices or international banking
facility or facilities of Fleet as Fleet may from time to time select.
22
"REGULATION D" - Regulation D of the Board of Governors of the
Federal Reserve System, as the same may be amended or supplemented from time to
time.
"REGULATORY CHANGE" - as to any Lender, any change after the
date of this Agreement in United States federal, state or foreign laws or
regulations (including Regulation D and the laws or regulations that designate
any assessment rate relating to certificates of deposit or otherwise) or the
adoption or making after such date of any interpretations, directives or
requests applying to a class of banks, including such Lender, of or under any
United States federal, state 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.
"REQUIRED PAYMENT" - as defined in Section 2.20 hereof.
"RESERVE REQUIREMENT" - for any Eurodollar Loans for the
Interest Period for which interest is payable hereunder, the average maximum
rate at which reserves (including any marginal, supplemental or emergency
reserves) are required to be maintained during such period under Regulation D by
depository institutions in respect of "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 depository institutions by reason of any Regulatory Change against: (i)
any category of liabilities that includes deposits by references to which the
LIBOR Rate for Eurodollar Loans is to be determined as provided in the
definition of "LIBOR Base Rate" in this Article 1, or (ii) any category of
extensions of credit or other assets that include Eurodollar Loans.
"RETAIL" - G-III Retail Outlets Inc., a Delaware corporation.
"SECOND RESTATED LOAN AGREEMENT" - as defined in the recitals
hereof.
"SECURITY DOCUMENTS" - as defined in subsection 2.13(e)
hereof.
"SETTLEMENT PERIOD" - as defined in Section 2.3(b) hereof.
"SIENA" - Siena Leather Ltd., a New York corporation.
"SOURCES" - Global Apparel Sourcing, Ltd., a Delaware
corporation.
"STANDBY L/CS" - as defined in Section 2.1(b)(ii) hereof and
including the Existing Standby L/Cs which continue to be outstanding, all of
which shall provide for an expiration date no later than May 31, 1999.
"STANDBY L/C FEE" - as defined in Section 2.6(d) hereof.
23
"STEAMSHIP GUARANTIES" - as defined in Section 2.1(e) hereof.
"STOCK PLEDGE AGREEMENT" - as defined in Section
2.13(c)(i)(C).
"SUBSIDIARY" - with respect to any Person, any corporation,
limited liability company, partnership or joint venture whether now existing or
hereafter organized or acquired: (i) in the case of a corporation, of which a
majority of the securities having ordinary voting power for the election of
directors (other than securities having such power only by reason of the
happening of a contingency) are at the time owned by such Person and/or one or
more Subsidiaries of such Person, or (ii) in the case of a partnership, limited
liability company or joint venture in which such Person is a general partner,
member or joint venturer, as the case may be or of which a majority of the
partnership or other ownership interests are at the time owned by such Person
and/or one or more of its Subsidiaries; provided, however that for all purposes
of this Agreement, the term "Subsidiary" shall not include BET Studio LLC.
Unless the context otherwise requires, references in this Agreement to
"Subsidiary" or "Subsidiaries" shall be deemed to be references to a Subsidiary
or Subsidiaries of the Parent.
"TANGIBLE NET WORTH" - the sum of capital surplus, earned
surplus and capital stock, less intangibles and treasury stock, all as
determined in accordance with generally accepted accounting principles
consistently applied.
"TATABUANA" - P.T. Tatabuana Raya, an Indonesian limited
liability company.
"TERMINATION EVENT" - (a) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder; or (b) the
withdrawal of any Loan Party or any ERISA Affiliate from a Pension Plan during a
plan year in which it was a "substantial employer" as defined in Section
4001(a)(2) of ERISA or was deemed such under Section 4068(f) of ERISA; or (c)
the termination of a Pension Plan, the filing of a notice of intent to terminate
a Pension Plan or the treatment of a Pension Plan amendment as a termination
under Section 4041 of ERISA; or (d) the institution of proceedings to terminate
a Pension Plan by the PBGC; or (e) any other event or condition which would
constitute grounds under Section 4042(a) of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan; or (f) the partial or
complete withdrawal of any Loan Party or any ERISA Affiliate from a
Multiemployer Plan; or (g) the imposition of a Lien pursuant to Section 412 of
the IRC or Section 302 of ERISA; or (h) any event or condition which results in
the reorganization or insolvency of a Multiemployer Plan under Section 4241 or
Section 4245 of ERISA, respectively; or (i) any event or condition which results
in the termination of a Multiemployer Plan under Section 4041A of ERISA or the
institution
24
by the PBGC of proceedings to terminate a Multiemployer Plan under Section 4042
of ERISA.
"THIRD RESTATED LOAN AGREEMENT" - as defined in the recitals
hereof.
"TIME TRADE L/CS" - Trade L/Cs issued on time terms (which
shall be limited to 60 days past sight).
"TRADE L/CS" - sight and time letters of credit issued in
favor of beneficiaries specified by the Borrower in order to facilitate the
transportation or purchase of goods from foreign vendors by the Borrower in the
ordinary course of its business, which goods are consigned to the Issuing Bank
pursuant to the terms of the Application or otherwise, all of which (i) shall
have an expiration date of no later than August 31, 1999, (ii) shall be cash
collateralized on and after June 1, 1999 as provided in Section 2.2(f) hereof,
and (iii) shall include Existing Trade L/Cs.
"TRADEMARKS" - trademarks, trade names, service marks,
trademark applications, trademark registrations and rights with respect to the
foregoing.
"TRADEMARK SECURITY AGREEMENT" - as defined in Section
2.13(d)(i) hereof.
"TRADEMARK SECURITY INTEREST CONFIRMATION" - as defined in
Section 2.13(d)(ii)(A).
"TRANSACTIONAL FEES" - as defined in Section 2.6(e) hereof.
"UNPAID DRAWINGS" - as defined in Section 2.2 hereof.
"UNUSED COMMITMENT" - as at any date, for each Lender, the
difference, if any, between: (a) the amount of such Lender's Commitment as in
effect on such date, minus (b) the sum of the then outstanding principal amount
of all Loans made by such Lender and such Lender's pro rata share of all
Outstanding L/Cs and outstanding Acceptances, Airway Releases and Steamship
Guarantees at such time.
"UNUSED COMMITMENT FEE" - as defined in subsection 2.6(b)
hereof.
"WEE BEEZ" - Wee Beez International Limited, a Hong Kong
corporation.
"WILSONS LEATHER" - Wilsons The Leather Experts Inc., a
Minnesota corporation.
25
Any accounting terms used in this Agreement that are not specifically defined
herein shall have the meanings customarily given to them in accordance with
generally accepted accounting principles as in effect on the date of this
Agreement, except that references in Article 5 to such principles shall be
deemed to refer to such principles as in effect on the date of the financial
statements delivered pursuant thereto.
ARTICLE 2. REVOLVING CREDIT FACILITY.
SECTION 2.1 LETTERS OF CREDIT; ACCEPTANCES;
LOANS; STEAMSHIP GUARANTIES;
AIRWAY RELEASES.
(a) During the Credit Period and upon the Borrower's
application therefor as hereinafter provided, the Issuing Bank shall, subject to
the terms and conditions of this Agreement, for the Lenders pro rata according
to their respective commitments, issue Trade L/Cs, Standby L/Cs, Acceptances,
Airway Releases and Steamship Guaranties for the account of the Borrower. During
the Credit Period and upon the Borrower's application therefor as hereinafter
provided, the Collateral Monitoring Agent shall, subject to the terms and
conditions of this Agreement, for the Lenders pro rata according to their
respective shares of the Commitment, advance Loans to or for the account of the
Borrower.
(b)(i) During the Credit Period, the Borrower may
apply to the Issuing Bank for the issuance by the Issuing Bank on behalf of the
Lenders of one or more Trade L/Cs for the account of the Borrower; provided,
however, that (i) the amount of any Trade L/C to be issued shall not exceed the
Availability, (ii) the aggregate amount of all Time Trade L/Cs and Acceptances
outstanding at any one time shall not exceed $3,000,000 and (iii) no Trade L/Cs
shall expire on a date later than August 31, 1999 and shall be collateralized on
and after June 1, 1999 as provided in Section 2.2(f) hereof.
(ii) During the Credit Period, the Borrower may apply
to the Issuing Bank for the issuance by the Issuing Bank on behalf of the
Lenders of one or more standby letters of credit for the account of the Borrower
(each a "STANDBY L/C" and, collectively, the "STANDBY L/CS"); provided, however,
that (i) the amount of any Standby L/C to be issued shall not exceed the
Availability, (ii) the sum of the amount of Standby L/Cs outstanding at any one
time and the aggregate amount of drawings under Standby L/Cs during the Credit
Period shall not exceed $3,000,000, (iii) in the case of Standby L/Cs issued in
order to facilitate the transportation or purchase of goods from a foreign
vendor, the goods are consigned to the Issuing Bank pursuant to the terms of the
applicable Application or otherwise, and (iv) no Standby L/Cs shall expire on a
date later than May 31, 1999.
26
(c) During the Credit Period, the Borrower may apply
to the Issuing Bank for the issuance by the Issuing Bank on behalf of the
Lenders of one or more Acceptances; provided, however, that (i) the aggregate
amount of all Time Trade L/Cs and Acceptances outstanding at any one time shall
not exceed $3,000,000, and (ii) all Acceptances shall be issued only in
connection with the presentation of drafts under outstanding Time Trade L/Cs
issued in accordance with the terms of this Agreement.
(d) During the Credit Period, the Borrower may apply
to the Collateral Monitoring Agent for the advance by the Collateral Monitoring
Agent on behalf of the Lenders of a loan or loans (each a "LOAN" and,
collectively, the "LOANS"), and subject to the terms of this Agreement, during
the Credit Period, the Borrower may borrow, prepay, repay (provided that
prepayment or repayment of Eurodollar Loans shall be subject to the provisions
of Section 2.26 hereof) and reborrow by means of Prime Rate Loans or Eurodollar
Loans, and during such period and thereafter until the date of payment in full
of all of the Loans, the Borrower may convert Loans of one type into Loans of
another type as provided in Section 2.23 hereof; provided, however, that the
amount of any Loan to be advanced shall not exceed the Availability.
(e) During the Credit Period, the Borrower may apply
to the Issuing Bank for the issuance by the Issuing Bank on behalf of the
Lenders of one or more steamship guaranties (each a "STEAMSHIP GUARANTY" and,
collectively, the "STEAMSHIP GUARANTIES") or airway releases (each an "AIRWAY
RELEASE" and, collectively, "AIRWAY RELEASES"); provided, however, that any
amount of any Steamship Guaranty or Airway Release to be issued shall not exceed
the Availability.
(f) The parties acknowledge that as of the date
hereof: (i) the Existing Loans are in the amount of $3,114,784.16 and that such
Existing Loans are hereby extended and renewed and shall constitute "Loans"
hereunder in such amount, subject to the terms and conditions of this Agreement;
(ii) Existing Trade L/Cs are in the amount of $18,529,032.89 and shall
constitute "Trade L/Cs" hereunder in such amount, subject to the terms and
conditions of this Agreement; (iii) Existing Acceptances are in the amount of
$0.00 and shall constitute "Acceptances" hereunder in such amount, subject to
the terms and conditions of this Agreement; (iv) Existing Standby L/Cs are in
the amount of $2,080,389.50 and shall constitute "Standby L/Cs" hereunder in
such amount, subject to the terms and conditions of this Agreement; and (v)
Existing Steamship Guaranties and Airway Releases are in the amount of $0.00 and
shall constitute "Steamship Guaranties" and "Airway Releases" hereunder, as the
case may be, in such amount subject to the terms and conditions of this
Agreement.
27
(g) As of the date hereof, the Lenders have adjusted
the outstanding principal amount of the Obligations owing to each Lender so that
each Lender holds no more than its Lender's Share of the Obligations after
giving effect to this Agreement.
SECTION 2.2 APPLICATIONS FOR LETTERS OF
CREDIT, STEAMSHIP GUARANTIES
AND AIRWAY RELEASES.
(a) Subject to the provisions of Section 2.1(b)
hereof, upon the execution and delivery or electronic transmission by the
Borrower simultaneously to the Issuing Bank and the Collateral Monitoring Agent
of the Issuing Bank's standard form of application for letter of credit
(individually, an "APPLICATION", and collectively, the "APPLICATIONS") and upon
payment by the Borrower of the applicable fees provided for in Section 2.6
hereof and receipt of instructions from the Collateral Monitoring Agent as to
Availability, the Issuing Bank shall, subject to the terms and conditions of
this Agreement, in a timely manner in accordance with its standard operating
procedures, issue an L/C for the account of the Borrower. In the event of any
conflict, discrepancy or any omission of terms provided herein between the terms
established by the Issuing Bank in its Application or otherwise and this Loan
Agreement, the terms provided herein shall prevail.
(b) Subject to the provisions of Section 2.1(e)
hereof, upon the execution and delivery or electronic transmission by the
Borrower simultaneously to the Issuing Bank and the Collateral Monitoring Agent
of an application therefor, the Issuing Bank shall, subject to the terms and
conditions of this Agreement and receipt of instructions from the Collateral
Monitoring Agent as to Availability, in a timely manner in accordance with its
standard operating procedures, issue Steamship Guaranties or Airway Releases.
Any such Steamship Guaranties or Airway Releases shall be subject to the terms
of the Continuing Agreement for Issuance of Steamship Guaranties and Airway
Releases.
(c) The Borrower shall reimburse the Issuing Bank in
immediately available funds at the Issuing Bank's Payment Office on the same day
as demand therefor is made by the Issuing Bank for any payment made by the
Issuing Bank under an L/C (all such amounts so paid until paid, are hereinafter
referred to as "UNPAID DRAWINGS").
(d) The Borrower hereby irrevocably instructs the
Collateral Monitoring Agent to advance to the Issuing Bank from any account of
the Borrower with the Collateral Monitoring Agent and, to the extent sufficient
Availability exists to advance Loans, to pay any Unpaid Drawings. In the event
that at any time there are not sufficient funds in any account of the Borrower
with the Collateral Monitoring
28
Agent to pay any Unpaid Drawing or sufficient Availability for payment of such
Unpaid Drawing, the Collateral Monitoring Agent shall nevertheless advance funds
to pay such Unpaid Drawings and any funds advanced by the Agent in payment
thereof shall be treated as Loans, but shall be due and payable immediately and
shall bear interest which shall accrue from the date such funds were advanced
until paid in full at the Post-Default Rate.
(e) The Borrower's obligations under this Section 2.2
to reimburse the Issuing Bank with respect to Unpaid Drawings (including
interest thereon) shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to payment
which the Borrower may have or have had against the Issuing Bank, including
(without limitation, but subject nonetheless to the provisions of Section 2.18
hereof) any defense based on the failure of any drawing under the L/C to conform
to the terms of such L/C or any non-application or misapplication by the
beneficiary of the L/C of the proceeds of such drawing.
(f) If, notwithstanding the other provisions of this
Section 2.2, on the Commitment Termination Date there are any L/Cs, Steamship
Guaranties or Airway Releases which either (x) have not expired or been
terminated with the consent of the Borrower and the respective beneficiaries
thereof or (y) have expired by their terms within the 30-day period prior to the
Commitment Termination Date and the Collateral Monitoring Agent has not yet been
able to determine whether conforming drafts have been presented on a timely
basis, then this Agreement (including, without limitation, this Section 2.2 and
Section 2.18 hereof) and the respective rights, obligations and covenants of the
Borrower, the Agent, the Collateral Monitoring Agent, the Issuing Bank and the
Lenders under this Agreement and the other Loan Documents shall remain in full
force and effect until the date on which the last of the L/Cs, Steamship
Guaranties or Airway Releases expires or is terminated (with the consent of the
Borrower and the beneficiaries thereof) and all payments made by the Issuing
Bank under the L/Cs, the Acceptances, the Steamship Guaranties and Airway
Releases are reimbursed in full by the Borrower, except that the Commitment
shall terminate on the Commitment Termination Date and none of the Lenders, the
Issuing Bank or the Agent shall have any obligation after the Commitment
Termination Date to make Loans or to issue L/Cs, Acceptances, Steamship
Guaranties or Airway Releases hereunder. In addition, the Borrower shall, for
the period beginning on the day after the Commitment Termination Date and ending
on the date which is the later of (x) the last outstanding L/C, Steamship
Guaranty or Airway Release expires or is terminated and (y) the 30th day
following the expiration of any L/C, Steamship Guaranty or Airway Release which
expired during the 30-day period prior to the Commitment Termination Date, with
respect to any such Indebtedness of the Borrower, provide the Issuing Bank with
(1) collateral in the form of Cash in an amount equal to 103% of the full amount
of any such L/C,
29
Steamship Guaranty or Airway Release or (2) a letter of indemnification with
respect to, or a letter of credit issued to secure payment of, each such L/C,
Steamship Guaranty or Airway Release from a financial institution acceptable to
the Lenders and the Agent. Upon compliance with the provisions of the foregoing
sentence, the Borrower shall, notwithstanding anything herein to the contrary,
be relieved of all other obligations under this Agreement or the Loan Documents.
SECTION 2.3 BORROWING NOTICE AND
DISBURSEMENT OF LOANS.
(a) The Borrower shall give the Collateral Monitoring
Agent written notice of each borrowing and conversion of each Loan and of the
duration of each Interest Period applicable to each Eurodollar Loan (in each
case, a "BORROWING NOTICE"). Each Borrowing Notice shall be irrevocable and
shall be effective on the date of the related borrowing, if received by the
Agent not later than 12 noon, New York City time, on the date that is:
(i) In the case of each notice of borrowing of, or
conversion into, Prime Rate Loans, on the date of the Borrowing Notice, subject
to subsection 2.9(c); and
(ii) In the case of each notice of borrowing of, or
conversion into, Eurodollar Loans, and in the case of any Eurodollar Loan the
Interest Period of which is maturing and is intended to be continued as a
Eurodollar Loan, three (3) Eurodollar Business Days prior to the date of the
related borrowing or conversion or the first day of such Interest Period.
Each such notice of borrowing or conversion shall specify the amount (subject to
Section 2.1 hereof) and type of Loans to be borrowed or converted (and, in the
case of a conversion, the type of Loans to result from such conversion), the
date of borrowing or conversion (which shall be: (x) a Business Day in the case
of each borrowing of Prime Rate Loans, and (y) a Eurodollar Business Day in the
case of each borrowing of Eurodollar Loans and each conversion of or into a
Eurodollar Loan). Each such notice of the duration of an Interest Period shall
specify the Loans to which such Interest Period is to relate. The Collateral
Monitoring Agent shall notify the Lenders of the content of each such Borrowing
Notice promptly after its receipt thereof.
(b) The Collateral Monitoring Agent shall render to
each Lender promptly after the end of each week in the case of Prime Rate Loans,
on the date of funding in the case of Eurodollar Loans, or after such shorter
period as the Agent may determine (such week, date of funding or shorter period
being hereinafter referred to
30
as a "SETTLEMENT PERIOD"), a summary statement of the Outstanding Obligations
and each Lender's Share thereof for such period. If, as of the end of any
Settlement Period, any Lender's Share of Loans is more than such Lender's Share
for the previous Settlement Period, then such Lender shall transfer to the
Collateral Monitoring Agent good funds for the amount of the increase (A) on the
same Business Day that notice is given by the Collateral Monitoring Agent to the
Lender if such notice is given prior to 12:00 p.m. and (B) no later than 12:00
p.m. on the following Business Day if notice is given by the Collateral
Monitoring Agent to the Lender after 12:00 p.m.; and, on the other hand, if any
Lender's Share of Loans as of the end of any Settlement Period is less than such
Lender's Share of Loans for the previous Settlement Period, then the Collateral
Monitoring Agent shall transfer to such Lender good funds for the amount of the
decrease (A) on the same Business Day if the Collateral Monitoring Agent's
calculations with respect to such Settlement Period are completed before 12:00
p.m. and (B) on the next Business Day if the Collateral Monitoring Agent's
calculations with respect to such Settlement Period are completed after 12:00
p.m. Unless the receiving party gives at least five Business Days prior written
notice to the contrary, all funds remitted by the Collateral Monitoring Agent to
any Lender hereunder, and all funds remitted by any Lender to the Collateral
Monitoring Agent hereunder, shall be sent by wire transfer to such party's
respective account as set forth on the signature pages hereof. The Collateral
Monitoring Agent agrees to xxxx its books and records each Settlement Period to
show each Lender's Share of the Outstanding Obligations. The failure of any
Lender to make a timely payment hereunder shall have no effect on such Lender's
liability for such payment, it being understood that each Lender shall assume
the risk to the extent of its Lender's Share of each Loan made or L/C,
Acceptance, Steamship Guaranty or Airway Release issued as and when made or
issued, as the case may be.
SECTION 2.4 NOTES.
(a) The Loans made by each Lender shall be evidenced
by a single promissory note of the Borrower in substantially the form of Exhibit
A hereto payable to such Lender (each, a "NOTE" and collectively, the "NOTES").
Each Note shall be dated the date of this Agreement, shall be payable to the
order of each Lender on a date not later than the Commitment Termination Date in
a principal amount equal to such Lender's Commitment as originally in effect,
and shall otherwise be duly completed. The Notes shall be payable as provided in
Section 2.7 hereof.
(b) Upon receipt of an affidavit of an officer of the
Collateral Monitoring Agent as to the loss, theft, destruction or mutilation of
any Note or any other Security Document which is not of public record, and, in
the case of any such loss, theft, destruction or mutilation, upon surrender and
cancellation of such Note or other Security Document, Borrower will issue, in
lieu thereof, a replacement Note
31
or other Security Document in the same principal amount thereof and otherwise of
like tenor.
SECTION 2.5 INTEREST.
(a) The Borrower shall pay to the Collateral
Monitoring Agent, for the ratable benefit of the Lenders, interest on the daily
balances of the Loans outstanding during the preceding month for the period
commencing on the date of each such Loan until such Loan shall be paid in full,
at the following rates per annum:
(i) For a Prime Rate Loan, a rate equal
to the Prime Rate; and
(ii) For a Eurodollar Loan, a rate equal
to two and one-half (2 1/2%) percent per annum in excess of the LIBOR Rate.
(b) Notwithstanding the foregoing, the Borrower shall
pay interest on any Loan or any installment thereof, and on any other amount
payable by the Borrower hereunder (to the extent permitted by law) that shall
not be paid in full when due (whether at stated maturity, by acceleration or
otherwise) for the period commencing on the due date thereof until the same is
paid in full at the Post-Default Rate.
(c) Except as provided in the next sentence, accrued
interest on each Loan shall be payable: (i) not later than monthly on the
Monthly Dates and (ii) in the case of any Eurodollar Loan, upon the payment
thereof or the conversion thereof into a Prime Rate Loan (but only on the
principal so paid or converted). Interest that is payable at the Post-Default
Rate shall be payable from time to time on demand of the Collateral Monitoring
Agent.
(d) Anything in this Agreement or any of the Notes to
the contrary notwithstanding, the obligation of the Borrower to make payments of
interest shall be subject to the limitation that payments of interest shall not
be required to be made to any Lender to the extent that such Lender's receipt
thereof would not be permissible under the law or laws applicable to such Lender
limiting rates of interest that may be charged or collected by such Lender. Any
such payments of interest that are not made as a result of the limitation
referred to in the preceding sentence shall be made by the Borrower to such
Lender on the earliest interest payment date or dates on which the receipt
thereof would be permissible under the laws applicable to such Lender limiting
rates of interest that may be charged or collected by such Lender. Such deferred
interest shall not bear interest.
32
SECTION 2.6 FEES.
(a) The Borrower shall pay to the Agent, for the
ratable benefit of the Lenders, a non-refundable advisory fee fully earned upon
the execution and delivery of this Agreement (the "ADVISORY FEE") in the amount
of $200,000 payable as follows:
(i) $100,000 payable on the Closing Date; and
(ii) $100,000 payable on the earlier to occur of (x)
May 31, 1998; and (y) the refinancing by the Borrower of the Obligations.
(b) The Borrower shall pay to the Agent, for the
account of each Lender, an unused commitment fee (the "UNUSED COMMITMENT FEE")
on the daily average amount of such Lender's Unused Commitment, for the period
from the date hereof to and including the Commitment Termination Date at the
rate of one-quarter of one (1/4%) percent per annum on the portion of the Unused
Commitment of such Lender; provided the amount of the Unused Commitment Fee
shall not exceed $50,000 during the term of this Agreement; provided further
that no Unused Commitment Fee shall be assessed for the periods from January 1,
1998 through and including April 30, 1998 and January 1, 1999 through and
including April 30, 1999. The accrued Unused Commitment Fee shall be calculated
every third Monthly Date commencing on July 31, 1997 and such amount shall be
payable quarterly in arrears on every third Monthly Date commencing on August
31, 1997 and on the Commitment Termination Date.
(c) Upon each drawing under an L/C, the Borrower
shall pay to the Issuing Bank, for the ratable benefit of the Lenders, a drawing
fee (the "DRAWING FEE") computed at the rate of one eighth of one (1/8%) percent
per annum of the face amount of such drawing, but in no event shall the Drawing
Fee be less than $70.00.
(d) Upon the execution and delivery by the Borrower
of an Application for a Standby L/C, the Borrower shall pay to the Issuing Bank,
for the ratable benefit of the Lenders, an issuance fee (the "STANDBY L/C FEE")
computed at the rate of one and one half of one (1 1/2%) percent per annum on
the face amount of the requested Standby L/C payable quarterly in advance on the
applicable Monthly Dates.
(e) Upon the execution and delivery by the Borrower
of an Application for any L/C, Steamship Guarantee or Airway Release (or upon
any modification, amendment, cancellation or extension thereof), the Borrower
shall pay directly to the Issuing Bank for its own account, all issuance,
processing and
33
associated transactional charges (the "TRANSACTIONAL FEES") imposed by the
Issuing Bank in connection with any L/C, Steamship Guarantee or Airway Release.
(f) Upon the execution and delivery of an Acceptance,
the Borrower shall pay to the Issuing Bank, for the ratable benefit of the
Lenders, a fee (the "ACCEPTANCE FEE") for such Acceptance equal to the discount
rate of the Agent plus two and three-quarters (2.75%) percent per annum of the
principal amount of such Acceptance for the term thereof payable monthly in
advance on the applicable Monthly Dates.
(g) The Borrower shall pay to the Collateral
Monitoring Agent for its own account a fee of $35,000 per annum, a pro rata
portion of which shall be payable monthly in advance on the first Business Day
of each calendar month (with the first such payment to be made on June 1, 1997)
(the "COLLATERAL FEES").
(h) The Borrower shall pay to the Lenders within ten
days following demand therefor, reimbursement for the fees and expenses of the
Collateral Monitoring Agent's and any Lender's field examiners which accompany
the Collateral Monitoring Agent on inspections and field examinations (pursuant
to Section 6.2 or 9.10(b) of this Agreement or otherwise), such fees and
expenses to be calculated at such Lender's standard per diem rates (the
"EXAMINATION FEES").
(i) The Borrower shall pay to the Agent for its sole
account an administrative fee (the "ADMINISTRATIVE FEE") in accordance with the
terms of a separate agreement between the Agent and the Borrower.
(j) The Advisory Fee, the Unused Commitment Fee, the
Drawing Fee, the Standby L/C Fee, the Transactional Fees, the Acceptance Fee,
the Collateral Fees, the Examination Fees and the Administrative Fee are
hereinafter sometimes referred to individually as a "FEE" and collectively as
the "FEES".
SECTION 2.7 PAYMENT OF LOANS AND ACCEPTANCES;
VOLUNTARY CHANGES IN COMMITMENT;
MANDATORY PREPAYMENTS.
(a) All outstanding Loans and Acceptances shall be
paid in full not later than the Commitment Termination Date.
(b) The Borrower shall be entitled to terminate or
reduce either or both of the Commitment and the Direct Debt Sublimit provided
that the Borrower shall give one (1) day's prior written notice of such
termination or reduction to the Lenders and that any partial reduction of the
Commitment or the Direct Debt Sublimit shall be in an aggregate amount equal to
$100,000 or an integral multiple thereof.
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Any such termination or reduction shall be permanent and irrevocable. Each
partial reduction of either the Commitment or the Direct Debt Sublimit shall be
applied pro rata to reduce each Lender's Share of the Commitment and the Direct
Debt Sublimit.
(c) Notwithstanding any other provisions of this
Agreement, in the event that on any day the Obligations shall exceed the
Borrowing Base (including but not limited to the circumstances in which the
Collateral Monitoring Agent has exercised its discretion to continue to make
Loans and to instruct the Issuing Bank that Availability exists for the issuance
of L/Cs, Acceptances, Steamship Guaranties and Airway Releases, as provided in
the definition of "Overadvance" in Article 1 of this Agreement), the Borrower
shall immediately upon the Collateral Monitoring Agent's request repay the Loans
and/or prepay Acceptances in an amount sufficient to reduce the sum of the
aggregate principal amount of the Obligations to an amount not greater than the
Borrowing Base on that date and shall not be permitted to request the Collateral
Monitoring Agent to make any Loans or make application to the Issuing Bank to
issue Trade L/Cs, Standby L/Cs, Steamship Guaranties or Airway Releases until
such payment or repayment is made.
SECTION 2.8 USE OF PROCEEDS OF LOANS.
The proceeds of the Loans hereunder may be used by
the Borrower solely for the following:
(a) first to refinance existing indebtedness of the
Borrower under the Third Restated Loan Agreement, in an aggregate principal
amount of $23,724,206.55;
(b) second to pay all fees and expenses of the Agent
and the Lenders associated with the preparation, execution and delivery of this
Agreement; and
(c) third to provide working capital for the
Borrower.
SECTION 2.9 COMPUTATIONS.
(a) Interest on all Loans and each Fee shall be
computed on the basis of a year of 360 days and actual days elapsed (including
the first day but excluding the last) occurring in the period for which payable.
(b) (i) For the purpose of computing interest and
calculating Availability hereunder, all payments consisting of cash or wire
transfers in immediately available funds shall be deemed received by the
Collateral Monitoring Agent: (A) on the same Business Day that such payments are
deposited in the
35
Collection Account in the event such deposit is made on or prior to 1:00 p.m.;
and (B) one Business Day following deposit thereof in the Collection Account in
the event such deposit is made after 1:00 p.m.; provided, however, that the
foregoing references to 1:00 p.m. shall be changed to 12:00 p.m. if the date of
such deposit is the last Business Day of the calendar month or the Business Day
before a holiday;
(ii) For the purpose of calculating Availability
hereunder, all checks, drafts, or similar non-cash items of payment by or for
the account of the Borrower shall be deemed received by the Collateral
Monitoring Agent (A) on the same Business Day that the deposit of such payment
is made in the Collection Account in the event such deposit is made prior to
1:00 p.m.; and (B) one Business Day following deposit thereof in the Collection
Account in the event such deposit is made after 1:00 p.m.; and
(iii) For the purpose of computing interest and Fees,
all checks, drafts, or similar non-cash items of payment by or for the account
of the Borrower shall be deemed received by the Collateral Monitoring Agent two
(2) Business Days after deposit of such payment in the Collection Account;
provided, however, that, for purposes other than computing interest and Fees and
calculating Availability, no check, drafts, or other instruments received by the
Collateral Monitoring Agent shall constitute payment to the Collateral
Monitoring Agent unless and until such item of payment has actually been
collected by the Collateral Monitoring Agent and such collection has been
credited to the Collection Account.
(c) On the basis of the daily Borrowing Base
Certificate delivered by the Borrower to the Collateral Monitoring Agent
pursuant to subsection 5.10(a) hereof, the Collateral Monitoring Agent will
determine on a daily basis the Availability and the Borrower's compliance with
the terms of this Agreement, including but not limited to the provisions of
Section 2.7 hereof.
SECTION 2.10 TIME AND METHOD OF PAYMENTS;
STATEMENT OF ACCOUNT.
(a) All payments of principal, interest, Fees and
other amounts (including indemnities) payable by the Borrower hereunder shall be
made in Dollars, in immediately available funds, to the Collateral Monitoring
Agent at its Payment Office not later than 12 noon, New York City time, on the
date on which such payment shall become due. With respect to all such payments,
the Collateral Monitoring Agent shall (i) advance funds in payment and treat
such advance of funds as a Loan or (ii) in the event that there is not
sufficient Availability, debit the amount of any such payment to any ordinary
deposit account of the Borrower with the
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Collateral Monitoring Agent. In the event that there is neither sufficient
Availability or amounts in the deposit accounts of the Borrower with the
Collateral Monitoring Agent, the Borrower shall make the payment directly at the
Collateral Monitoring Agent's Payment Office as provided above. Additional
provisions relating to payments are set forth in Section 10.3 hereof.
(b) The Collateral Monitoring Agent shall provide the
Borrower with a statement of account on a monthly basis, and each statement of
account that is delivered by the Collateral Monitoring Agent to the Borrower
that relates to the Obligations shall be deemed correct in the absence of
manifest error and shall constitute an account stated between the Borrower and
the Collateral Monitoring Agent unless thereafter waived in writing by the
Collateral Monitoring Agent or unless, within 30 days after the Borrower's
receipt of such statement, the Borrower delivers to the Collateral Monitoring
Agent, by registered or certified mail, written objection thereto specifying the
error or errors, if any, contained in any such statement; provided, however,
that any failure by the Collateral Monitoring Agent to provide the Borrower with
a statement of account shall not affect the Obligations of the Borrower
hereunder or under any Note.
SECTION 2.11 SEVERAL OBLIGATIONS.
No Lender shall be responsible for the failure of the
other Lenders to make Loans to be made by such other Lenders.
SECTION 2.12 GUARANTIES.
(a) The Parent, Siena, Hong Kong, Global, Sources,
Holdings, Retail, Tatabuana, Balihides, Wee Beez and Kostroma (hereinafter
referred to individually as a "GUARANTOR" and collectively as the "GUARANTORS")
have heretofore executed guaranties (each of the foregoing, as amended,
hereinafter referred to individually as a "GUARANTY" and collectively as the
"GUARANTIES") pursuant to the Original Loan Agreement, the First Restated Loan
Agreement, the Second Restated Loan Agreement and, in the case of Balihides, Wee
Beez and Kostroma, the Third Restated Loan Agreement, guaranteeing, without
limitation, the due payment and performance of the Obligations to the Lenders,
the Collateral Monitoring Agent, the Issuing Bank and the Agent.
(b) Each of the Guarantors shall, simultaneously with
the execution and delivery of this Agreement, acknowledge and confirm that
"Guaranteed Obligations" as used and defined in the Guaranties (or any other
term used therein to describe or refer to the Indebtedness, liabilities and
obligations of the Borrower and each Guarantor to the Lenders and the Agent),
includes, without limitation, all of the Obligations, by the execution and
delivery to the Agent of a guaranty confirmation
37
and amendment satisfactory to the Agent (hereinafter referred to individually as
a "GUARANTY CONFIRMATION" and collectively as the "GUARANTY CONFIRMATIONS").
SECTION 2.13 SECURITY.
(a) (i) The Borrower has heretofore granted to the
Agent, for the ratable benefit of the Lenders, a Lien on all of the Borrower's
personal property, including, but not limited to, Accounts and Inventory,
whether then owned or thereafter acquired, tangible and intangible, by the
execution and delivery of a Security Agreement dated October 29, 1992, as
amended by an Amendment Letter dated February 1, 1994, a Borrower Security
Interest Confirmation and Amendment dated June 12, 1995 and a Borrower Security
Interest Confirmation and Amendment dated as of May 31, 1996 (as amended, the
"BORROWER SECURITY AGREEMENT");
(ii) The Borrower has heretofore assigned to the
Agent, for the ratable benefit of the Lenders, all of its rights to any
distributions from BET Studio LLC by the execution and delivery of an Assignment
dated as of April 23, 1997 (the "BORROWER ASSIGNMENT");
(iii) In order to secure the due payment and
performance by the Borrower of all of the Obligations, the Borrower shall,
simultaneously with the execution and delivery of this Agreement:
(A) Acknowledge and confirm to the
Agent that the term "Obligations" as used and defined in the Borrower Security
Agreement (or any other term used therein to describe or refer to the
Indebtedness, liabilities and obligations of the Borrower to the Lenders, the
Collateral Monitoring Agent, the Issuing Bank and the Agent) includes, without
limitation, the Obligations as defined herein by the execution and delivery to
the Agent of a security interest confirmation in form and substance satisfactory
to the Agent (hereinafter referred to as the "BORROWER SECURITY INTEREST
CONFIRMATION");
(B) Acknowledge and confirm to the
Agent that the term "Obligations" as used an defined in the Borrower Assignment
(or any other term used therein to describe or refer to the Indebtedness,
liabilities and obligations of the Borrower to the Lenders, the Collateral
Monitoring Agent, the Issuing Bank and the Agent) includes, without limitation,
the Obligations as defined herein by the execution and delivery to the Agent of
an assignment confirmation in form and substance satisfactory to the Agent
(hereinafter referred to as the "BORROWER ASSIGNMENT CONFIRMATION"); and
(C) Execute and deliver, or cause to
be executed and delivered, to the Agent such other agreements, documents and
instruments as
38
the Agent may reasonably require in order to effect the purposes of the Borrower
Security Agreement and the Borrower Assignment (as acknowledged and confirmed by
the Borrower Security Interest Confirmation and the Borrower Assignment
Confirmation, respectively), this Section 2.13 and this Agreement.
(b) (i) Each of the Parent, Siena, Holdings, Retail
and Sources (hereinafter referred to individually as a "CORPORATE GUARANTOR" and
collectively as the "CORPORATE GUARANTORS") has heretofore granted to the Agent,
for the ratable benefit of the Lenders, a Lien on all of such Corporate
Guarantor's personal property, including, but not limited to, Accounts and
Inventory, whether then owned or thereafter acquired, tangible and intangible,
by the execution and delivery of a Security Agreement, each as amended by a
Security Interest Confirmation and Amendment dated June 12, 1995 and by a
Security Interest Confirmation and Amendment dated as of May 31, 1996 (each, as
amended, a "GUARANTOR SECURITY AGREEMENT" and collectively, the "GUARANTOR
SECURITY AGREEMENTS"); and
(ii) In order to secure the due payment and
performance by the Borrower of all of the Obligations, each of the Corporate
Guarantors shall, simultaneously with the execution and delivery of this
Agreement:
(A) Acknowledge and confirm that the
term "Obligations" as used and defined in its Guarantor Security Agreement (or
any other term used therein to describe or refer to the Indebtedness,
liabilities and obligations of the Borrower and such Guarantor to the Lenders,
the Collateral Monitoring Agent, the Issuing Bank and the Agent) includes,
without limitation, in each case, the Obligations as defined herein, in each
case by the execution and delivery to the Agent of a security interest
confirmation and amendment in form and substance satisfactory to the Agent
(hereinafter referred to as a "GUARANTOR SECURITY INTEREST CONFIRMATION" and
collectively, the "GUARANTOR SECURITY INTEREST CONFIRMATIONS"); and
(B) Execute and deliver, or cause to
be executed and delivered, to the Agent such other agreements, documents and
instruments as the Agent may reasonably require in order to effect the purposes
of its Guarantor Security Agreement (as acknowledged and confirmed by its
Guarantor Security Interest Confirmation), this Section 2.13 and this Agreement.
(c) (i) The Parent has heretofore:
(A) Granted to the Agent, for the
ratable benefit of the Lenders, a lien on, and assigned to the Agent, for the
ratable benefit of the Lenders, all of its right, title and interest in,
to and under all of the insurance policies on the life of Xxxxxx Xxxxxxxx
required to be maintained by the Parent pursuant to
39
Section 6.8(c) hereof by the execution and delivery to the Agent of a collateral
assignment of life insurance dated May 24, 1995 (the "ASSIGNMENT OF LIFE
INSURANCE");
(B) Granted to the Agent for the
ratable benefit of the Lenders, a Lien on all of its personal property,
including, but not limited to Accounts and Inventory, whether then owned or
thereafter acquired, tangible and intangible, by the execution and delivery of a
Security Agreement dated as of January 31, 1994, as amended by a Parent Security
Interest Confirmation and Amendment dated June 12, 1995 and by a Parent Security
Interest Confirmation and Amendment dated as of May 31, 1996 (as amended, the
"PARENT SECURITY AGREEMENT"); and
(C) Pledged to the Agent, for the
ratable benefit of the Lenders, all of the stock of all Subsidiaries and
Affiliates, including, but not limited to, the stock of the Borrower, by the
execution and delivery of a Stock Pledge Agreement dated June 12, 1995, as
amended by a Stock Pledge Confirmation and Amendment dated as of May, 31, 1996
(as amended, the "STOCK PLEDGE AGREEMENT"); and
(ii) In order to secure the due payment and
performance by the Borrower of all of the Obligations, the Parent shall,
simultaneously with the execution and delivery of this Agreement:
(A) Acknowledge and confirm to the
Agent that the term "Obligations" as used and defined in the Parent Security
Agreement (or any other term used therein to describe or refer to the
Indebtedness, liability and obligations of the Borrower and the Parent to the
Lenders, the Collateral Monitoring Agent, the Issuing Bank and the Agent),
includes without limitation, in each case, the Obligations as defined herein, by
the execution and delivery to the Agent of a security interest confirmation and
amendment in form and substance satisfactory to the Agent (hereinafter referred
to as the "PARENT SECURITY INTEREST CONFIRMATION");
(B) Acknowledge and confirm to the
Agent that the term "Obligations" as used and defined in the Stock Pledge
Agreement (or any other term used therein to describe or refer to the
Indebtedness, liability and obligations of the Borrower and the Parent to the
Lenders, the Collateral Monitoring Agent, the Issuing Bank and the Agent),
includes without limitation, the Obligations as defined herein, by the execution
and delivery to the Agent of a stock pledge confirmation and amendment in form
and substance satisfactory to the Agent (hereinafter referred to as the "PARENT
STOCK PLEDGE CONFIRMATION");
(C) Execute and deliver, or cause to
be executed and delivered to the Agent such other documents and instruments as
the Agent may
40
reasonably require in order to effect the purposes of the Parent Security
Agreement (as acknowledged and confirmed by the Parent Security Interest
Confirmation), the Assignment of Life Insurance, the Stock Pledge Agreement (as
acknowledged and confirmed by the Parent Stock Pledge Confirmation), this
Section 2.13 and this Agreement.
(d) (i) The Borrower, the Parent and Siena have
heretofore simultaneously with the execution and delivery of the Original Loan
Agreement and the First Restated Loan Agreement granted to the Agent for the
ratable benefit of the Lenders a Lien on all of their respective Trademarks
whether then owned or thereafter acquired, by the execution and delivery to the
Agent of a Trademark Security Agreement dated October 29, 1992, a New Trademark
Security Agreement dated July 29, 1994, as amended by a Trademark Security
Interest Confirmation and Amendment dated June 12, 1995 and as amended by a
Trademark Security Interest Confirmation and Amendment dated as of May 31, 1996
(collectively, as amended, the "TRADEMARK SECURITY AGREEMENT");
(ii) In order to secure the due payment and
performance by the Borrower of all of the Obligations, the Borrower, the Parent
and Siena shall, simultaneously with the execution and delivery of this
Agreement:
(A) Acknowledge and confirm to the
Agent that the term "Obligations" as used and defined in the Trademark Security
Agreement (or any other terms used therein to describe or refer to the
Indebtedness of the Borrower, the Parent, and Siena to the Lenders, the
Collateral Monitoring Agent, the Issuing Bank and the Agent), includes, without
limitation, in each case, the Obligations as defined herein, by the execution
and delivery to the Agent of a trademark security interest confirmation and
amendment in form and substance satisfactory to the Agent (hereinafter referred
to as the "TRADEMARK SECURITY INTEREST CONFIRMATION"); and
(B) Execute and deliver, or cause to
be executed and delivered to the Agent such other documents and instruments as
the Agent may reasonably require in order to effect the purposes of the
Trademark Security Agreement (as acknowledged and confirmed by the Trademark
Security Interest Confirmation), this Section 2.13 and this Agreement.
(e) The Borrower Security Agreement, the Borrower
Security Interest Confirmation, the Borrower Assignment, the Borrower Assignment
Confirmation, the Guarantor Security Agreements, the Guarantor Security Interest
Confirmations, the Assignment of Life Insurance, the Parent Security Agreement,
the Parent Security Interest Confirmation, the Trademark Security Agreement, the
Trademark Security Interest Confirmation, the Stock Pledge Agreement, the Parent
41
Stock Pledge Confirmation and the aforesaid agreements, instruments and
documents are hereinafter sometimes referred to collectively as the "SECURITY
DOCUMENTS".
SECTION 2.14 LENDING OFFICES.
The Loans of each type made by each Lender shall be
made at such Lender's lending office for Loans of such type as set forth on the
signature page hereto of such Lender.
SECTION 2.15 OBLIGATIONS ABSOLUTE.
The obligations of the Borrower under this Agreement
and the Loan Documents shall be absolute, unconditional and irrevocable, and
shall be performed strictly in accordance with the terms of this Agreement,
under all circumstances whatsoever, including, without limitation, the following
circumstances:
(i) the L/Cs, the Notes, the Loan Agreement, the
other Loan Documents or any other agreements, instruments or documents relating
thereto proving to be forged, fraudulent, invalid, unenforceable or insufficient
in any respect;
(ii) any amendment or waiver of or any consent to
the departure from all or any of the Security Documents;
(iii) the existence of any claim, setoff, defense
or other rights which the Borrower may have at any time against any beneficiary
or any transferee of any beneficiary (or any Persons or entities for whom any
beneficiary or any such transferee may be acting), any Lender or any other
Person, whether in connection with this Agreement, the L/Cs, the Security
Documents, the other Loan Documents or any unrelated transaction;
(iv) any demand presented under the L/Cs (or any
endorsement thereon) proving to be forged, fraudulent, invalid, unenforceable or
insufficient in any respect or any statement therein being inaccurate in any
respect whatsoever;
(v) payment by the Issuing Bank under any L/C
against preparation of a demand which does not comply with the terms of such
L/C, including, without limitation, the circumstances referred to in clause (iv)
above or the failure of any document to bear adequate reference to such L/C;
(vi) the use to which the L/Cs may be put or any
acts or omissions of the Borrower or beneficiaries in connection therewith; and
42
(vii) any other circumstances or happening
whatsoever, whether or not similar to any of the foregoing, provided that such
circumstances or happening shall not have constituted gross negligence or
willful misconduct of the Agent or any Lender.
SECTION 2.16 SHARING OF PAYMENTS
AND SET-OFF AMONG LENDERS.
(a) The Borrower hereby agrees that, in addition to
(and without limitation of) any right of set-off, banker's lien or counterclaim
a Lender may otherwise have, each Lender shall be entitled, at its option, to
offset balances held by it at any of its offices against any principal of or
interest on any of the Obligations hereunder, or any Fee payable under this
Agreement, that is not paid when due (regardless of whether such balances are
then due to the Borrower), in which case it shall promptly notify the Borrower
thereof, provided that its failure to give such notice shall not affect the
validity thereof. Nothing contained herein shall require any Lender to exercise
any such right or shall affect the right of any Lender to exercise and retain
the benefits of exercising, any such right with respect to any other
indebtedness or obligation of the Borrower.
(b) Each Lender:
(i) if it shall effect payment of any principal of
or interest on any Obligations held by it under this Agreement through the
exercise of any rights provided for in subsection (a) above, or
(ii) upon or following any acceleration by the
Agent and the Lenders of the Obligations, shall promptly purchase from the other
Lenders a participation in the Obligations held by the other Lenders in such
amounts, and make such other adjustments from time to time as shall be
equitable, so that all the Lenders shall share the benefit of such payment and
the Obligations pro rata in accordance with their respective Commitments. To
such end all the Lenders shall make appropriate adjustments among themselves (by
the resale of a participation sold or otherwise) if any payment received must be
restored or any acceleration is rescinded by the Majority Lenders. The Borrower
agrees that any Lender so purchasing a participation in the Obligations held by
the other Lenders may exercise all rights of set-off, banker's lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender were a direct holder of Obligations in the amount of such
participation. The failure of any Lender to purchase participations as provided
hereunder shall not affect the validity of the set-off as between such Lender
and the Borrower.
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SECTION 2.17 ADDITIONAL COSTS; CAPITAL REQUIREMENTS.
(a) In the event that any existing or future law or
regulation, guideline or interpretation thereof, by any court or administrative
or governmental authority charged with the administration thereof, or compliance
by any Lender with any request or directive (whether or not having the force of
law) of any such authority shall impose, modify or deem applicable or result in
the application of, any capital maintenance, capital ratio or similar
requirement against loan commitments made by any Lender hereunder, and the
result of any event referred to above is to impose upon any Lender or increase
any capital requirement applicable as a result of the making or maintenance of,
such Lender's Commitment or the obligation of the Borrower hereunder with
respect to such Commitment (which imposition of capital requirements may be
determined by each Lender's reasonable allocation of the aggregate of such
capital increases or impositions), then, upon demand made by such Lender as
promptly as practicable after it obtains knowledge that such law, regulation,
guideline, interpretation, request or directive exists and determines to make
such demand, the Borrower shall immediately pay to such Lender from time to time
as specified by such Lender additional commitment fees or interest or other
amounts which shall be sufficient to compensate such Lender for such imposition
of or increase in capital requirements together with interest on each such
amount from the fifth day after the date of demand therefor until payment in
full thereof at the Post-Default Rate. A certificate setting forth in reasonable
detail the amount necessary to compensate such Lender as a result of an
imposition of or increase in capital requirements submitted by such Lender to
the Borrower shall be conclusive, absent manifest error, as to the amount
thereof. For purposes of this Section 2.17, all references to any "Lender" shall
be deemed to include any participant in such Lender's Commitment.
(b) In the event that any Regulatory Change shall:
(i) change the basis of taxation of any amounts payable to any Lender under this
Agreement or the Notes in respect of any Loans including, without limitation,
Eurodollar Loans or in respect of L/Cs (other than taxes imposed on the overall
net income of such Lender for any such Loans by the United States of America or
the jurisdiction in which such Lender has its principal office); or (ii) impose
or modify any reserve, Federal Deposit Insurance Corporation premium or
assessment, special deposit or similar requirements relating to any extensions
of credit, letters of credit or guarantees issued by or participations thereof
of or other assets of, or any deposits with or other liabilities of, such Lender
(in respect of any of such Loans or any deposits referred to in the definition
of "LIBOR Base Rate" in Article 1 hereof or in respect of L/Cs); or (iii) impose
any other conditions affecting this Agreement in respect of Loans, including,
without limitation, Eurodollar Loans or L/Cs (or any of such extensions of
credit, assets, deposits or liabilities relating thereto); and the result of any
event referred to in clause (i), (ii) or (iii) above shall be to increase such
Lender's costs of making or
44
maintaining, participating in or acquiring any Loans, including, without
limitation, Eurodollar Loans, or L/Cs or its Commitment, or to reduce any amount
receivable by such Lender hereunder in respect of any of the foregoing (such
increases in costs and reductions in amounts receivable are hereinafter referred
to as "ADDITIONAL COSTS"), in each case, only to the extent that such Additional
Costs are not included in the LIBOR Base Rate applicable to such Eurodollar
Loans, then, (i) such Lender shall promptly notify the Borrower in writing of
such Regulatory Change and (ii) upon demand made by such Lender as promptly as
practicable after it obtains knowledge that such a Regulatory Change exists and
determines to make such demand (a copy of which demand shall be delivered to the
Agent), the Borrower shall pay to such Lender from time to time as specified by
such Lender in a certificate setting forth in reasonable detail the basis of the
computation of such amount, additional commitment fees or other amounts which
shall be sufficient to compensate such Lender for such increased cost or
reduction in amounts receivable by such Lender from the date of such change,
together with interest on each such amount from the date demanded until payment
in full thereof at the Post-Default Rate. All references to any "Lender" shall
be deemed to include any participant in such Lender's Commitment.
(c) Without limiting the effect of the foregoing
provisions of this Section 2.17, in the event that, by reason of any Regulatory
Change, any Lender 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 such Lender 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 such Lender
which includes Eurodollar Loans, or (ii) becomes subject to restrictions on the
amount of such a category of liabilities or assets that it may hold, then, if
such Lender so elects by notice to the Borrower (with a copy to the Agent), the
obligation of such Lender to make, 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 (and all Loans of such type then outstanding shall
be converted into Prime Rate Loans or into Eurodollar Loans of another duration,
as the case may be, in accordance with Section 2.23 hereof). If at any time
after such Lender gives notice under this Section 2.17(c) such Lender determines
that such Regulatory Change is no longer in effect, such Lender shall promptly
give notice of that determination, in writing, to the Borrower and the Agent,
and the Agent shall promptly transmit the notice to each other Lender. At such
time as such Regulatory Change is no longer in effect (whether or not such
notice has been given), the Borrower's right to request, and such Lender's
obligation, if any, to make and convert such Loans shall be restored.
(d) Determinations by any Lender for purposes of this
Section 2.17 of the effect of any Regulatory Change on its costs of making or
maintaining
45
Loans or L/Cs or on amounts receivable by it in respect of Loans or L/Cs, and of
the additional amounts required to compensate such Lender in respect of any
Additional Costs, shall be set forth in writing in reasonable detail and shall
be conclusive, absent manifest error.
SECTION 2.18 ADDITIONAL L/C PROVISIONS.
(a) Without limiting the generality of Section 2.17
hereof, if:
(i) any change in any law or regulation or in the
interpretation thereof by any court or administrative or governmental authority
charged or claiming to be charged with the administration thereof shall (1)
impose, modify or deem applicable any reserve, special deposit, capital
maintenance, deposit insurance premium or assessment, or similar requirement
against letters of credit issued by or assets held by, or deposits with or for
the account of, any Lender, (2) impose on any Lender any other condition
regarding this Agreement or the L/Cs, or (3) subject any Lender to any tax,
charge, fee, deduction or withholding of any kind whatsoever other than changes
in the rate of tax on the over-all net income of such Lender; and
(ii) the result of any such event shall be to
increase the cost to any Lender of the issuance or maintenance of the L/Cs, or
reduce the amount of principal, interest, or any fee or compensation receivable
by any Lender in respect of the L/Cs or this Agreement;
then, upon demand of any Lender, the Borrower shall pay to the Lenders, from
time to time as specified by each of the Lenders, respectively, all additional
amounts which are necessary to compensate such Lender for such increased cost or
reduction incurred by that Lender. All payments of compensation for such
increased cost or reduction shall be accompanied by interest thereon from the
date such increased cost or reduction is incurred by any Lender until payment in
full thereof at the rate provided in Section 2.5(a) hereof and, in the event of
non-payment by the Borrower following demand, thereafter at the Post-Default
Rate. A certificate as to such increased cost incurred by any Lender showing the
manner of calculation thereof shall be submitted by such Lender to the Borrower
and shall be conclusive (absent manifest error) as to the amount thereof. In the
event of any inconsistency between the terms of this Section 2.18 and Section
2.17, the provisions of Section 2.17 shall govern.
(b) No Lender shall be responsible: (i) for the
validity or insufficiency of any instrument transferring or assigning or
purporting to transfer or assign the L/Cs or the rights or benefits thereunder
or proceeds thereof in whole or in part, which may prove to be invalid or
ineffective for any reason; (ii) for errors,
46
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable telegraph, telex or otherwise, whether or not they be in cipher;
(iii) for any loss or delay in the transmission or otherwise of any document or
draft required in order to make a draw under the L/Cs or of proceeds thereof; or
(iv) for any consequence arising from causes beyond the control of any Lender.
None of the above shall affect, impair, or prevent the vesting of any Lender's
rights or powers hereunder.
(c) In furtherance and extension and not in
limitation of the specific provisions hereinabove set forth, any action taken or
omitted by any Lender, under or in connection with the L/Cs or the related
drafts or document(s), if taken or omitted in good faith, shall be binding upon
the Borrower and shall not put any Lender under any resulting liability to the
Borrower.
(d) The Borrower shall at all times protect,
indemnify and save harmless each Lender from and against any and all claims,
actions, suits and other legal proceedings, and from and against any and all
loss, claims, demands, liabilities, damages, costs, charges, counsel fees and
other expenses which any Lender may, at any time, sustain or incur by reason of
or in consequence of or arising out of the issuance of the L/Cs; it being the
intention of the parties that this Agreement shall be construed and applied to
protect and indemnify any Lender against any and all risk involved in the
issuance of the L/Cs, all of which risks are hereby assumed by the Borrower,
including, without limitation, any and all risks of the acts or omissions,
whether rightful or wrongful, of any present or future de jure or de facto
government or governmental authority (all such acts and omissions, herein called
the "GOVERNMENTAL ACTS"); provided, however, that the Borrower shall not be
required to indemnify any Lender for any claims, damages, losses, liabilities,
costs or expenses to the extent, but only to the extent, caused by the willful
misconduct or gross negligence of any Lender in not honoring any demand for
payment under any L/C (after the presentation to it by the beneficiary of
drawing documents strictly complying with the terms and conditions of such L/C)
except if as a result of any Governmental Act or any other cause beyond the
control of any Lender. Notwithstanding any other provision contained in this
Agreement, the obligations of the Borrower under this Section 2.18 shall survive
the termination of this Agreement.
SECTION 2.19 PRO RATA TREATMENT AMONG LENDERS.
(a) Except as otherwise provided herein: (i) each
Loan advanced by the Collateral Monitoring Agent hereunder, each other advance
made by the Collateral Monitoring Agent, the Issuing Bank or the Agent hereunder
(including but not limited to advances to protect or preserve Collateral), and
each payment of any Fee (other than Transactional Fees, Collateral Fees, the
Administrative Fee and
47
Examination Fees) by the Borrower shall be made by or to the Collateral
Monitoring Agent, the Issuing Bank or the Agent, as the case may be, for the
account of the Lenders according to the respective Lender's Share, (ii) each
conversion of Loans of a particular type under Section 2.23 hereof (other than
conversions provided for by Section 2.25 hereof) will be made pro rata among the
Lenders holding Loans of such type according to the respective principal amounts
of such Loans held by such Lenders, and (iii) each payment of principal of or
interest on Loans in each case will be made by or to the Collateral Monitoring
Agent, the Issuing Bank or the Agent, as the case may be, for the account of the
Lenders.
(b) On a monthly basis, after the Collateral
Monitoring Agent's receipt of monthly interest charges pursuant to Section 2.10
of this Agreement, and provided a Lender shall have made all payments to the
Collateral Monitoring Agent required to be made hereunder, the Collateral
Monitoring Agent shall pay to such Lender an amount equivalent to such Lender's
Share of such interest and any Fees received during the prior month.
SECTION 2.20 NON-RECEIPT OF FUNDS BY THE AGENT.
Unless the Collateral Monitoring Agent shall have been
notified by a Lender or the Borrower (the "PAYOR") prior to the date notified on
which such Lender is to make payment to the Collateral Monitoring Agent of the
proceeds of a Loan to be made by it hereunder or the Borrower is to make a
payment to the Collateral Monitoring Agent for the account of one or more of the
Lenders, as the case may be (such payment being herein called the "REQUIRED
PAYMENT"), which notice shall be effective upon receipt, that the Payor does not
intend to make the Required Payment to the Collateral Monitoring Agent, the
Collateral Monitoring Agent may assume that the Required Payment has been made
and may, in reliance upon such assumption (but shall not be required to), make
the amount thereof available to the intended recipient on such date and, if the
Payor has not in fact made the Required Payment to the Collateral Monitoring
Agent, the recipient of such payment shall, on demand, repay to the Collateral
Monitoring Agent the amount made available to it together with interest thereon
in respect of each day during the period commencing on the date such amount was
so made available by the Collateral Monitoring Agent until the date the
Collateral Monitoring Agent recovers such amount at a rate per annum equal to
the Federal Funds Rate for such day (when the recipient is a Lender) or equal to
the rate of interest applicable to such Loan (when the recipient is the
Borrower).
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SECTION 2.21 COLLECTIONS; AGENT'S RIGHT TO
NOTIFY ACCOUNT DEBTORS AND
ENDORSE THE BORROWER'S NAME.
(a) The Borrower and all other Loan Parties will
immediately upon receipt of all checks, drafts, cash or other remittances (i) in
payment of any of its accounts, contract rights or general intangibles
constituting part of the Collateral, or (ii) in payment of any Collateral sold,
transferred, leased or otherwise disposed of, as permitted under Section 7.7
hereof, or (iii) in payment of, or on account of its Accounts, contracts,
contract rights, notes, drafts, acceptances, general intangibles, choses in
action and all other forms of obligations relating to any of the Collateral so
sold, transferred, or leased or otherwise disposed of, deliver any such items to
the Collateral Monitoring Agent at the Payment Office or to the Collection
Account accompanied by a remittance report in form supplied or approved by the
Collateral Monitoring Agent, such items to be delivered to the Collateral
Monitoring Agent in the same form received, endorsed or otherwise assigned by
the Borrower where necessary to permit collection of such items and, regardless
of the form of such endorsement, the Borrower hereby waives presentment, demand,
notice of dishonor, protest, notice of protest and all other notices with
respect thereto.
(b) The Borrower and all other Loan Parties shall
direct all Account Debtors to make all payments due from them to the Borrower
upon the Accounts directly to the Collateral Monitoring Agent, the Collection
Account or to a Lockbox (each, a "LOCKBOX") designated by the Collateral
Monitoring Agent and maintained by the Collateral Monitoring Agent pursuant to
one or more lockbox agreements in form and substance satisfactory to the Agent
(each, a "LOCKBOX AGREEMENT"), which agreements shall be executed and delivered
by the Borrower at the request of the Collateral Monitoring Agent.
(c) In the event that, notwithstanding the provisions
of subsections (a) and (b) of this Section 2.21, as applicable, the Borrower (or
any of its affiliates, officers, employees, agent, or those Persons acting for
or in concert with the Borrower) shall receive any monies, checks, notes,
drafts, or any other payment relating to any Collateral or as proceeds of any
Collateral, the Borrower shall receive such monies, checks, notes, drafts and
other payments as agent for the Collateral Monitoring Agent and shall hold, or
shall cause such Affiliate or Person to hold, all such items of payment in trust
as trustee of an express trust for the Collateral Monitoring Agent and as
property of the Collateral Monitoring Agent, separate and apart from the funds
of the Borrower and such Affiliate and the Borrower (and all of its Affiliates,
officers, employees, agents and other Persons acting for or in concert with the
Borrower) shall: (i) on the first Business Day following receipt thereof,
deposit such items of payment, or cause such items of payment to be deposited,
in kind, in the Collection Account; and (ii) in addition to all reports required
in Article 5
49
hereof, if, as, and when requested by the Collateral Monitoring Agent, forward
to the Collateral Monitoring Agent, on a daily basis, copies of all items of
payment and of all deposit slips related thereto, together with a collection
report in form and substance satisfactory to the Collateral Monitoring Agent.
(d) The Borrower hereby authorizes the Collateral
Monitoring Agent at all times: (i) to open the Borrower's mail directed to the
Lockbox and, following an Event of Default, all other mail; (ii) to collect, and
to verify by mail, telephone, telegraph or otherwise, any and all amounts due to
the Borrower from Account Debtors; and (iii) to notify any or all Account
Debtors that the Accounts have been assigned to the Agent and that the
Collateral Monitoring Agent has a security interest therein. The Borrower hereby
agrees that any such notice, in the Collateral Monitoring Agent's sole
discretion, may be sent on the Borrower's stationery, in which event, if
required by the Collateral Monitoring Agent (and all Persons designated by the
Collateral Monitoring Agent for that purpose) as the Borrower's true and lawful
attorney (and agent-in-fact) to endorse the Borrower's name on any checks,
notes, drafts, or any other form of payment relating to Collateral or proceeds
of Collateral that come in to the Collateral Monitoring Agent's possession or
under the Collateral Monitoring Agent's control.
(e) Notwithstanding Subsection (d) above or any other
provision of this Agreement, nothing contained in this Section 2.21, this
Agreement or any other Loan Document shall be deemed to limit or otherwise
restrict the Collateral Monitoring Agent's normal verification procedures.
SECTION 2.22 APPLICATION OF PAYMENTS AND COLLECTIONS.
(a) All amounts received by the Collateral Monitoring
Agent for the account of the Borrower pursuant to Section 2.21 or otherwise
shall, on each Business Day, be
(i) applied to Fees which are at such time due
and unpaid; then
(ii) applied to amounts payable pursuant to
Section 2.26; then
(iii) applied pro rata among the Lenders to
reduce the amount of any outstanding Loans; then
(iv) applied to prepay, in the case of
liquidation only, with any applicable prepayment or "breakage" fee, all
Acceptances;
50
(v) held by the Collateral Monitoring Agent as
collateral to secure any outstanding L/Cs, Acceptances (other than in the case
of a liquidation), Steamship Guaranties and Airway Releases; then
(vi) only if all Loans have been repaid, all
Acceptances prepaid (in the case of a liquidation) and all L/Cs, Acceptances
(other than in the case of a liquidation), Steamship Guaranties and Airway
Releases are fully secured by amounts held by the Collateral Monitoring Agent
pursuant to clause (iii) above, credited to the Borrower's demand deposit
account maintained with the Agent.
(b) Notwithstanding anything else in this Section
2.22 or in this Agreement to the contrary, the Borrower irrevocably waives the
right to direct the application of any and all payments and collections at any
time or times hereafter received by the Collateral Monitoring Agent from or on
behalf of the Borrower. The Borrower irrevocably agrees that the Collateral
Monitoring Agent shall have the continuing exclusive right to apply and reapply
any and all such payments and collections received at any time or times
hereafter by the Collateral Monitoring Agent or its agents against the
Obligations in such manner as the Collateral Monitoring Agent may deem
advisable, notwithstanding any entry by the Collateral Monitoring Agent upon any
of its books and records.
(c) Except as set forth in Sections 2.17 and 2.24
hereof, all payments and repayments made shall be applied first to the Prime
Rate Loans, and shall be applied to Eurodollar Loans only to the extent any such
payment exceeds the principal amount of Prime Rate Loans outstanding at the time
of such payment.
SECTION 2.23 CONVERSIONS OF LOANS.
The Borrower shall have the right to convert Loans of
one type into Loans of another type from time to time, provided that: (i) the
Borrower shall give the Collateral Monitoring Agent notice of each such
conversion as provided in Section 2.3 hereof; (ii) Eurodollar Loans may be
converted only on the last day of an Interest Period for such Loans; and (iii)
except as required by Section 2.17 hereof, no Prime Rate Loan may be converted
into a Eurodollar Loan if on the proposed date of conversion a Default or an
Event of Default exists. The Collateral Monitoring Agent shall use its best
efforts to notify the Borrower of the effectiveness of such conversion, and the
new interest rate to which the converted Loans are subject, as soon as
practicable after the conversion; provided, however, that any failure to give
such notice shall not affect the Borrower's obligations, or the Collateral
Monitoring Agent's or the Lenders' rights and remedies, hereunder in any way
whatsoever.
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SECTION 2.24 LIMITATION ON TYPES OF LOANS.
Anything herein to the contrary notwithstanding, if,
on or prior to the determination of an interest rate for any Eurodollar Loans
for any Interest Period therefor, the Majority Lenders determine (which
determination shall be conclusive):
(a) by reason of any event affecting the money
markets in the United States of America or the Eurodollar interbank market,
quotations of interest rates for the relevant deposits are not being provided in
the relevant amounts or for the relevant maturities for purposes of determining
the rate of interest for such Loans under this Agreement; or
(b) the rates of interest referred to in the
definition of "LIBOR Base Rate" in Article 1 hereof upon the basis of which the
rate of interest on any Eurodollar Loans for such period is determined, do not
accurately reflect the cost to the Lenders of making or maintaining such Loans
for such period, then the Collateral Monitoring Agent shall give the Borrower
and each Lender prompt notice thereof (and shall thereafter give the Borrower
and each Lender prompt notice of the cessation, if any, of such condition), and
so long as such condition remains in effect, the Lenders shall be under no
obligation to make Loans of such type or to convert Prime Rate Loans into
Eurodollar Loans and the Borrower shall, on the last day(s) of the then current
Interest Period(s) for the outstanding Eurodollar Loans either prepay such Loans
in accordance with Section 2.7 hereof or convert such Eurodollar Loans into
Prime Rate Loans in accordance with Section 2.21 hereof. If at any time after
the Collateral Monitoring Agent gives notice under this Section 2.24 the
Majority Lenders determines that such condition no longer exists, they shall
give prompt notice of that determination, in writing, to the Borrower. At such
time as such condition no longer exists (whether or not such notice has been
given), the Borrower's right to request, and the Lender's obligations, if any,
to make Eurodollar Loans (and to convert Prime Rate Loans into Eurodollar Loans)
shall be restored.
SECTION 2.25 ILLEGALITY.
Notwithstanding any other provision in this
Agreement, in the event that it becomes unlawful for any Lender to: (i) honor
its obligation to make Eurodollar Loans hereunder, or (ii) maintain Eurodollar
Loans hereunder, then such Lender shall promptly notify the Borrower thereof
(with a copy to the Collateral Monitoring Agent), describing such illegality in
reasonable detail (and shall thereafter promptly notify the Borrower and the
Collateral Monitoring Agent of the cessation, if any, of such illegality), and
thereupon the Lenders obligation to make Eurodollar Loans and to convert other
types of Loans into Eurodollar Loans hereunder shall be
52
suspended until such time as the Lenders may again make and maintain Eurodollar
Loans and the Lenders outstanding Eurodollar Loans shall be converted into Prime
Rate Loans in accordance with Section 2.23 hereof. If at any time after such
Lender gives notice under this Section 2.25 such Lender determines that it may
again make and maintain Eurodollar Loans, such Lender shall promptly give notice
of that determination, in writing, to the Borrower and the Agent, and the Agent
shall promptly transmit the notice to each other Lender. At such time as such
Lender may again make and maintain Eurodollar Loans (whether or not such notice
has been given), the Borrower's right to request, and the Lender's obligations,
if any, to make and to convert such Loans shall be restored.
SECTION 2.26 INDEMNIFICATION.
The Borrower shall pay to the Collateral Monitoring
Agent for the account of each Lender, upon the request of such Lender through
the Collateral Monitoring Agent, such amount or amounts as shall compensate such
Lender for any loss (including loss of profit), cost or expense incurred by
such Lender (as reasonably determined by such Lender) as a result of:
(a) any payment or prepayment or conversion of a
Eurodollar Loan held by such Lender on a date other than the last day of an
Interest Period for such Eurodollar Loan; or
(b) any failure by the Borrower to borrow a
Eurodollar Loan held by such Lender on the date for such borrowing specified in
the relevant Borrowing Notice under Section 2.3 hereof, such compensation to
include, without limitation, an amount equal to: (i) any loss or expense
suffered by such Lender during the period from the date of receipt of such early
payment or prepayment or the date of such conversion to the last day of such
Interest Period if the rate of interest obtainable by such Lender upon the
redeployment of an amount of funds equal to such Lender's pro rata share of such
payment, prepayment or conversion or failure to borrow or convert is less than
the rate of interest applicable to such Eurodollar Loan for such Interest
Period, or (ii) any loss or expense suffered by such Lender in liquidating
Eurodollar deposits prior to maturity that correspond to such Lender's pro rata
share of such payment, prepayment, conversion, failure to borrow or failure to
convert. The determination by each such Lender of the amount of any such loss or
expense, when set forth in a written notice to the Borrower, containing such
Lender's calculation thereof in reasonable detail, shall be presumed correct, in
the absence of manifest error.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES.
53
Each of the Borrower and the other Loan Parties hereby
represents and warrants to the Lenders, the Collateral Monitoring Agent, the
Issuing Bank and the Agent that:
SECTION 3.1 ORGANIZATION.
(a) Each of the Borrower, the Parent, each Subsidiary
and each other Loan Party is duly organized and validly existing under the laws
of its state or country of organization and has the power to own its assets and
to transact the business in which it is presently engaged and in which it
proposes to be engaged. Exhibit B hereto accurately and completely lists, as to
each of the Borrower, the Parent, each Subsidiary and each other Loan Party: (i)
the state of incorporation or organization of each such entity, and the type of
legal entity that each of them is, (ii) as to each of them that is a
corporation, the classes and number of authorized and outstanding shares of
capital stock of each such corporation, and, except with respect to the Parent,
the owners of such outstanding shares of capital stock, (iii) as to each of them
that is a legal entity other than a corporation (but not a natural person), the
type and amount of equity interests authorized and outstanding of each such
entity, and, except with respect to the Parent, the owners of such equity
interests, and (iv) the business in which each of such entities is engaged. All
of the foregoing shares or other equity interests that are issued and
outstanding have been duly and validly issued and are fully paid and
non-assessable, and are owned by the Persons referred to on Exhibit B, free and
clear of any Lien except as otherwise provided for herein. Except as set forth
on Exhibit B, there are no outstanding warrants, options, contracts or
commitments of any kind entitling any Person to purchase or otherwise acquire
any shares of capital stock or other equity interests of the Borrower or any
Subsidiary or any other Loan Party other than the Parent nor are there
outstanding any securities that are convertible into or exchangeable for any
shares of capital stock or other equity interests of the Borrower, any
Subsidiary or any other Loan Party other than the Parent. Except as set forth on
Exhibit B, neither the Borrower, the Parent, any Subsidiary nor any other Loan
Party has any Subsidiary.
(b) Each of the Borrower, the Parent, each Subsidiary
and each other Loan Party is in good standing in its state of organization and
in each state in which it is qualified to do business. There are no
jurisdictions other than as set forth on Exhibit B hereto in which the character
of the properties owned or proposed to be owned by the Borrower, the Parent, any
Subsidiary or any other Loan Party or in which the transaction of the business
of the Borrower, the Parent, any Subsidiary or any other Loan Party as now
conducted requires the Borrower, the Parent, any Subsidiary or any other Loan
Party to qualify to do business and as to which failure so to qualify could have
a material adverse effect on the business, operations,
54
financial condition or properties of the Borrower, the Parent, any Subsidiary
and any other Loan Party taken as a whole.
SECTION 3.2 POWER, AUTHORITY, CONSENTS.
The Borrower and each other Loan Party has the power
to execute, deliver and perform the Loan Documents to be executed by it. The
Borrower has the power to borrow hereunder and has taken all necessary corporate
action to authorize the borrowing hereunder on the terms and conditions of this
Agreement. The Borrower and each other Loan Party has taken all necessary
action, corporate or otherwise, to authorize the execution, delivery and
performance of the Loan Documents to be executed by it. No consent or approval
of any Person (including, without limitation, any stockholder of any corporate
Loan Party or any partner in any partnership Loan Party), no consent or approval
of any landlord or mortgagee, no waiver of any Lien or right of distraint or
other similar right and no consent, license, certificate of need, approval,
authorization or declaration of any governmental authority, bureau or agency, is
or will be required in connection with the execution, delivery or performance by
the Borrower or any other Loan Party, or the validity, enforcement or priority,
of the Loan Documents or any Lien created and granted there under, except as set
forth on Exhibit C hereto, each of which either has been duly and validly
obtained on or prior to the date hereof and is now in full force and effect, or
is designated on Exhibit C as waived by the Majority Lenders.
SECTION 3.3 NO VIOLATION OF LAW OR AGREEMENTS.
The execution and delivery by the Borrower and each
other Loan Party of each Loan Document to which it is a party and performance by
it hereunder and thereunder, will not violate any provision of law and will not,
except as set forth on Exhibit C hereto, conflict with or result in a breach of
any order, writ, injunction, ordinance, resolution, decree, or other similar
document or instrument of any court or governmental authority, bureau or agency,
domestic or foreign, or any certificate of incorporation or by-laws of the
Borrower or any other corporate Loan Party or partnership agreement or other
organizational document or instrument of any Loan Party that is not a
corporation, or create (with or without the giving of notice or lapse of time,
or both) a default under or breach of any agreement, bond, note or indenture to
which the Borrower or any other Loan Party is a party, or by which any of them
is bound or any of their respective properties or assets is affected (which
default or breach would have a material adverse effect on the business,
financial conditions or operations of the Borrower, the Parent and the
Subsidiaries taken as a whole), or result in the imposition of any Lien of any
nature whatsoever upon any of the properties or assets owned by or used in
connection with the business of the Borrower or any other Loan Party, except for
the Liens created and granted pursuant to the Security Documents.
55
SECTION 3.4 DUE EXECUTION, VALIDITY, ENFORCEABILITY.
This Agreement and each other Loan Document to which
any Loan Party is a party has been duly executed and delivered by the Loan Party
that is a party thereto and each constitutes the valid and legally binding
obligation of the Borrower or such other Loan Party that is a party thereto,
enforceable in accordance with its terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
other similar laws, now or hereafter in effect, relating to or affecting the
enforcement of creditors' rights generally and except that the remedy of
specific performance and other equitable remedies are subject to judicial
discretion; provided, however, that such laws shall not materially interfere
with the practical realization of the benefits of the Security Documents or the
Liens created thereby, except for: (i) possible delay, (ii) situations that may
arise under Chapters 11 and 7 of the Bankruptcy Code and applicable state
bankruptcy laws, and (iii) equitable orders of the Bankruptcy Court.
SECTION 3.5 PROPERTIES, PRIORITY OF LIENS.
All of the properties and assets owned by the
Borrower and each other Loan Party that is executing a Security Document 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 as permitted
by Section 7.2 hereof. The Liens that, simultaneously with the execution and
delivery of this Agreement and the consummation of the initial closing
hereunder, 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 as permitted by Section 7.2
hereof.
SECTION 3.6 JUDGMENTS, ACTIONS, PROCEEDINGS.
Except as set forth on Exhibit F hereto, there are no
outstanding judgments, actions or proceedings, including, without limitation,
any Environmental Proceeding, pending before any court or governmental
authority, bureau or agency, with respect to or, to the best of the Borrower's
knowledge, threatened against or affecting the Borrower or any other Loan Party,
involving, in the case of any court proceeding or threatened court proceeding, a
claim in excess of $100,000, nor, to the best of the Borrower's knowledge, is
there any reasonable basis for the institution of any such action or proceeding
that is probable of assertion, nor are there any such actions or proceedings in
which the Borrower or any other Loan Party is a plaintiff or complainant.
56
SECTION 3.7 NO DEFAULT; COMPLIANCE WITH LAWS.
Except as set forth on Exhibit G hereto, neither the
Borrower, the Parent, any Subsidiary nor any other Loan Party is in default
under any agreement, ordinance, resolution, decree, bond, note, indenture, order
or judgment to which it is a party or by which it is bound, or any other
agreement or other instrument by which any of the properties or assets owned by
it or used in the conduct of its business is affected, which default could have
a material adverse effect on the business, operations, financial condition or
properties of the Borrower, the Parent, any Subsidiary and any other Loan Party,
taken as a whole, or on the ability of the Borrower or any other Loan Party to
perform its obligations under the Loan Documents to which it is a party. The
Borrower, the Parent, and each Subsidiary has complied and is in compliance in
all respects with all applicable laws, ordinances and regulations, resolutions,
ordinances, decrees and other similar documents and instruments of all courts
and governmental authorities, bureaus and agencies, domestic and foreign,
including, without limitation, all applicable Environmental Laws and
Regulations, non-compliance with which could have a material adverse effect on
the business, operations, financial condition or properties of the Borrower, the
Parent, and any Subsidiary, taken as a whole, or on the ability of the Borrower,
the Parent or any Subsidiary to perform its obligations under the Loan Documents
to which it is a party.
SECTION 3.8 BURDENSOME DOCUMENTS.
Except as set forth on Exhibit H hereto, neither the
Borrower nor any of the other Loan Parties is a party to or bound by, nor are
any of the properties or assets owned by the Borrower or any other Loan Party
used in the conduct of their respective businesses affected by, any agreement,
ordinance, resolution, decree, bond, note, indenture, order or judgment,
including, without limitation, any of the foregoing relating to any
Environmental Matter, that materially and adversely effects their respective
businesses, assets or conditions, financial or otherwise.
SECTION 3.9 FINANCIAL STATEMENTS;
PROJECTIONS.
(a) Each of the Financial Statements is materially
accurate and complete and presents fairly the financial position of the Borrower
and the consolidated and consolidating financial position of the Parent and the
Subsidiaries, as applicable, and each other entity to which it relates, as at
its date, and has been prepared in accordance with generally accepted accounting
principles. Neither the Borrower, the Parent, any of the Subsidiaries, nor any
other entity to which any of the Financial Statements relates, has any material
obligation, liability or commitment, direct or contingent (including, without
limitation, any Environmental Liability), that
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is not reflected in the Financial Statements. There has been no material adverse
change in the financial position or operations of the Borrower, the Parent or
any of its Subsidiaries or any other entity to which any of the Financial
Statements relates, taken as a whole, since the date of the latest balance sheet
included in the Financial Statements (the "LATEST BALANCE SHEET"). The
Borrower's fiscal year is the twelve-month period ending on January 31 in each
year.
(b) The Projections for the fiscal year ending
January 31, 1998 have been prepared, and the Projections for the fiscal year
ending January 31, 1999 will be prepared, on the basis of the assumptions
accompanying them and reflect as of the date thereof the Borrower's good faith
projections, after reasonable analysis, of the matters set forth therein, based
on such assumptions; provided, however, that the Lenders and the Agent
acknowledge that projections as to future events are not statements of fact and
that actual results during the period or periods covered by such Projections may
differ from the projected results.
SECTION 3.10 TAX RETURNS.
Each of the Borrower, the Parent and the Subsidiaries
has filed all federal, state and local tax returns required to be filed by it
and has not failed to pay any taxes, or interest and penalties relating thereto,
on or before the due dates thereof including any extensions thereof. Except to
the extent that reserves therefor are reflected in the Financial Statements: (i)
there are no material federal, state or local tax liabilities of the Borrower,
the Parent or any Subsidiary due or to become due for any tax year ended on or
prior to the date of the Latest Balance Sheet relating to such entity, whether
incurred in respect of or measured by the income of such entity, that are not
properly reflected in the Latest Balance Sheet relating to such entity, and (ii)
there are no material claims pending or, to the knowledge of the Borrower,
proposed or threatened against any of the Borrower, the Parent or any Subsidiary
for past federal, state or local taxes, except those, if any, as to which proper
reserves are reflected in the Financial Statements.
SECTION 3.11 INTANGIBLE ASSETS.
Each of the Borrower, the Parent, and the
Subsidiaries possesses all patents, trademarks, service marks, trade names,
copyrights and trade-style names, and rights with respect to the foregoing,
necessary to conduct its business as now conducted without any known conflict
with the patents, trademarks, service marks, trade names, copyrights,
trade-style names and rights with respect to the foregoing, of any other Person,
and each of such patents, trademarks, service marks, trade names, copyrights,
trade-style names and rights with respect thereto, together with any pending
applications therefor, are listed on Exhibit I hereto. Exhibit I sets
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forth all patents, trademarks, service marks, trade names, copyrights and
trade-style names owned and used by the Borrower, the Parent and the
Subsidiaries.
SECTION 3.12 REGULATION U AND REGULATION G.
No part of the proceeds received by the Borrower from
the Loans will be used directly or indirectly for: (a) any purpose other than as
set forth in Section 2.8 hereof, or (b) the purpose of purchasing or carrying,
or for payment in full or in part of Indebtedness that was incurred for the
purposes of purchasing or carrying, any "margin stock", as such term is defined
in 'SS' 221.3 of Regulation U of the Board of Governors of the Federal Reserve
System, 12 C.F.R., Chapter II, Part 221 and in Section 207.2(i) of Regulation G
of the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II,
Part 207.
SECTION 3.13 NAME CHANGES, MERGERS,
ACQUISITIONS; LOCATION OF COLLATERAL.
(a) Except as set forth on Exhibit J hereto, neither
the Borrower nor any other Loan Party that is granting Liens on its assets
pursuant to any Security Document has within the six (6) year period immediately
preceding the date of this Agreement changed its name, been the surviving
entity of a merger or consolidation, or acquired all or substantially all of the
assets of any Person.
(b) Neither the Borrower nor any other Loan Party
that is granting liens on its assets pursuant to any Security Document has
granted liens (other than statutory liens) to any person other than the Lenders
on Collateral constituting personal property which Collateral has, at any time
during the four-month period immediately preceding the date hereof, been located
anywhere other than at its location on the date hereof.
SECTION 3.14 FULL DISCLOSURE.
None of the Financial Statements, the Projections,
nor any certificate, opinion, or any other statement made or furnished in
writing to the Agent or any Lender by or on behalf of the Borrower, the Parent,
any of the Subsidiaries or any other Loan Party in connection with this
Agreement or the transactions contemplated herein, contains any untrue statement
of a material fact, or omits to state a material fact necessary in order to make
the statements contained therein or herein not misleading, as of the date such
statement was made. There is no fact known to the Borrower or the Parent that
has, or would in the now foreseeable future have, a material adverse effect on
the business, prospects or condition, financial or otherwise, of the Borrower,
the Parent, any of the Subsidiaries and any other Loan Party, taken as a whole,
which fact has not been set forth herein, in the Financial
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Statements, the Projections, or any certificate or other written statement so
made or furnished to the Agent or the Lenders other than any statement with
respect to matters affecting the economy as a whole or set forth in the Parent's
filings with the Securities and Exchange Commission.
SECTION 3.15 LICENSES AND APPROVALS.
The Borrower, the Parent and each of the Subsidiaries
has all necessary licenses, permits and governmental authorizations, the absence
of which would have a material adverse effect on the business, financial
condition or operations of the Borrower, the Parent and the Subsidiaries, taken
as a whole, including, without limitation, licenses, permits and authorizations
relating to Environmental Matters, to own and operate its properties and to
carry on its business as now conducted.
SECTION 3.16 LABOR DISPUTES; COLLECTIVE BARGAINING
AGREEMENTS; EMPLOYEE GRIEVANCES.
(a) All collective bargaining agreements or other
labor contracts covering the Borrower, the Parent or any Subsidiary are set
forth on Exhibit K hereto; (b) except as set forth on Exhibit K, no such
collective bargaining agreement or other labor contract will expire during the
term of this Agreement; (c) to the best of the Borrower's knowledge, also set
forth on Exhibit K are those locations where a union or other labor organization
is seeking to organize, or to be recognized as bargaining representative for, a
bargaining unit of employees of the Borrower, the Parent or any Subsidiary; (d)
to the best of the Borrower's knowledge, there is no pending or threatened
strike, work stoppage, material unfair labor practice claim or charge,
arbitration or other material labor dispute against or affecting the Borrower,
the Parent or any Subsidiary or their representative employees; (e) there has
not been, during the five (5) year period prior to the date hereof, a strike,
work stoppage, material unfair labor practice claim or charge, arbitration or
other material labor dispute against or affecting the Borrower, the Parent or
any Subsidiary or any of their representative employees, and (f) there are no
actions, suits, charges, demands, claims, counterclaims or proceedings pending
or, to the best of the Borrower's knowledge, threatened against the Borrower,
the Parent or any of the Subsidiaries, by or on behalf of, or with, its
employees, other than employee grievances arising in the ordinary course of
business that are not, in the aggregate, material.
SECTION 3.17 CONDITION OF ASSETS.
All of the assets and properties of the Borrower, the
Parent and the Subsidiaries, that are reasonably necessary for the operation of
its business, are
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in good working condition, ordinary wear and tear excepted, and are able to
serve the function for which they are currently being used.
SECTION 3.18 ERISA.
(a) Except as described in Exhibit L annexed hereto,
neither the Borrower nor the Parent has, and neither of them has ever had, any
Pension Plan in connection with which there could arise a direct or contingent
liability of the Borrower to the PBGC, the Department of Labor or the IRS.
Except as described in Exhibit L annexed hereto, neither the Parent nor the
Borrower is a participating employer in: (i) any Pension Plan under which more
than one employer makes contributions as described in Sections 4063 and 4064 of
ERISA, or (ii) a multiemployer plan as defined in Section 4001(a)(3) of ERISA.
With respect to any Multiemployer Plan, both the Borrower and the Parent have
paid or accrued all contributions pursuant to the terms of the applicable
collective bargaining agreement required to be paid or accrued by it; neither
the Borrower nor the Parent has had a complete withdrawal under Section 4203 of
ERISA or partial withdrawal under Section 4205 of ERISA; and neither the
Borrower nor the Parent had any mass withdrawal liability.
(b) Neither the Borrower nor the Parent has any
contingent liability with respect to any post-retirement benefit under any
Employee Benefit Plan, other than liability for health plan continuation
coverage under Code Section 4980 B.
(c) Each Employee Benefit Plan complies, in both form
and operation, in all material respects, with its terms, ERISA and the Code
including, without limitation, Code Section 4980 B and to the best of the
Borrower's knowledge, no condition exists or event has occurred with respect to
any plan which would result in the incurrence by Borrower and Parent of any
material liability, fine, or penalty. Each Employee Benefit Plan and related
trust agreement is legally valid and binding and in full force and effect to the
extent not heretofore terminated. To the best of the Borrower's knowledge, no
Employee Benefit Plan is being audited or investigated by any government agency
or subject to any pending or threatened claim or suit. Neither the Borrower nor
the Parent has engaged in any transaction which would subject it to liability
under Section 4212(c) of ERISA.
(d) Neither the Parent nor the Borrower nor any
fiduciary of any Employee Benefit Plan has engaged in any prohibited transaction
under Section 406 of ERISA which would have a material adverse effect on the
business, operations or condition, financial or otherwise, of the Borrower or
the Parent. The execution, delivery and carrying out of the terms of any
agreement that is related to this transaction will not constitute a prohibited
transaction under such Section.
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(e) There are no agreements which will provide
payments to any officer, employer, shareholder or highly compensated individual
which will be "parachute payments" under Section 280G of the Code that are
nondeductible to any Loan Party and which will be subject to the tax under
Section 4999 of the Code for which any Loan Party would have a material
withholding liability.
(f) All references to the Borrower and the Parent in
this Section 3.18 or in any other Section of this Agreement relating to ERISA,
shall be deemed to refer to the Borrower, the Parent and all other entities
which are considered ERISA Affiliates.
SECTION 3.19 ACCOUNT REPRESENTATIONS
AND WARRANTIES.
Except as specifically disclosed on Exhibit O annexed
hereto, with respect to all present and future Eligible Accounts included in the
determination of the Borrowing Base:
(a) Each Account included in each such Borrowing Base
satisfies the definition of Eligible Accounts.
(b) No such Account has been assigned or pledged to
any other Person.
(c) To the best of the Borrower's knowledge, there
are no facts, events, or occurrences that in any way impair the validity or
enforcement of any such Account of the Borrower or tend to reduce the amount
payable thereunder from the amount of the invoice value shown on any schedule of
accounts or on any contracts, invoices, and statements delivered to the Agent
with respect thereto.
SECTION 3.20 BORROWING BASE CERTIFICATES.
The information set forth in each Borrowing Base
Certificate is or will be on the date delivered true, complete and correct, and
each Account included in each such Borrowing Base satisfies or will satisfy on
the date of the applicable Borrowing Base Certificate the requirements for
Eligible Accounts set forth in this Agreement, including without limitation the
definitions applicable thereto.
SECTION 3.21 ACCOUNTS RECEIVABLE AGING REPORTS;
KEY ITEM REPORTS.
The information set forth in each Accounts Receivable
Aging Report and Key Item Report is or will be on the date thereof true,
complete and
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correct with respect to the subject matter thereof.
SECTION 3.22 INVENTORY REPRESENTATIONS
AND WARRANTIES.
Except as specifically disclosed on Exhibit O annexed
hereto, with respect to all present and future Eligible Inventory included in
the determination of the Borrowing Base:
(a) All Inventory is located on the premises
listed on the schedules attached to the Borrower Security Agreement or is
Eligible Inventory in transit for sale in the ordinary course of business;
(b) No Inventory is subject to any Lien or
security interest whatsoever, except for the Liens and security interests of the
Agent and the Lenders and those Liens or security interests set forth in Section
7.2 hereof; and
(c) Except as specified in the Borrower
Security Agreement or otherwise permitted by this Agreement, no Eligible
Inventory is now stored or shall at any time hereafter be stored with a bailee,
warehouseman, or similar party.
SECTION 3.23 FORFEITURE PROCEEDING.
Neither the Borrower nor any of its Subsidiaries or
Affiliates is engaged in or proposes to be engaged in the conduct of any
business or activity which could result in a Forfeiture Proceeding and no
Forfeiture Proceeding against any of them is pending or threatened.
SECTION 3.24 AMERICANS WITH DISABILITIES ACT.
The Borrower, the Parent and its Subsidiaries are in
compliance with all applicable provisions of the Americans with Disabilities Act
(42 U.S.C. 'SS' 12101-12213) and the regulations issued thereunder.
ARTICLE 4. CONDITIONS.
SECTION 4.1 CONDITIONS TO CLOSING.
The obligation of the Collateral Monitoring Agent to
make Loans, and the obligation of the Issuing Bank to issue or amend Trade L/Cs,
Standby L/Cs, Acceptances, Steamship Guaranties and Airway Releases hereunder,
in each case for the account of the Lenders, shall be subject to the fulfillment
(to the satisfaction of
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the Agent, the Collateral Monitoring Agent, the Issuing Bank and the Lenders) of
the following condi tions precedent:
(a) The Borrower shall have executed and delivered to
each Lender its Note;
(b) The Borrower shall have executed and delivered to
the Agent an Application with respect to each L/C, if any, requested by it;
(c) The Borrower shall have executed and delivered to
the Agent the Borrower Security Interest Confirmation;
(d) The Borrower shall have executed and delivered to
the Agent the Borrower Assignment Confirmation;
(e) Each of the Guarantors shall have executed and
delivered to the Agent its Guaranty Confirmation;
(f) Each Corporate Guarantor shall have executed and
delivered to the Agent its Guarantor Security Interest Confirmation;
(g) Each Corporate Guarantor and each of the Borrower
and the Parent shall have delivered such UCC Financing Statements or Amendments
as the Agent may require to effect the granting of the Liens provided for in
this Agreement.
(h) The Parent shall have executed and delivered to
the Agent: (i) the Parent Security Interest Confirmation and (ii) the Parent
Stock Pledge Confirmation;
(i) The Borrower, the Parent and Siena shall have
executed and delivered to the Agent their Trademark Security Interest
Confirmation;
(j) The Borrower shall have delivered to the Agent
the Lock Box Agreement;
(k) The Borrower shall have delivered to the Agent
the Continuing Agreement for Issuance of Steamship Guaranty and Airway Releases;
(l) The Borrower shall have delivered evidence of
insurance coverage on the Inventory and as otherwise required by the terms
hereof, with endorsements showing the Agent as co-insured and loss payee, for
the ratable benefit of the Lenders, and an undertaking by the insurance company
or companies to give the Agent not less than 30 days notice of any proposed
cancellation or non-renewal;
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(m) The Borrower shall have delivered to the Agent
evidence of (i) insurance policies on the life of Xxxxxx Xxxxxxxx required to be
maintained by the Parent pursuant to Section 6.8(c) hereof and (ii) payment of
the premium in connection with such insurance policies covering the period
through May 31, 1998.
(n) Fulbright & Xxxxxxxx L.L.P., counsel to the
Borrower, the Parent, Siena, Retail, Holdings and Sources shall have delivered
their opinion to, and in form and substance satisfactory to, the Agent and the
Lenders;
(o) The Agent shall have received true and complete
copies of the Financial Statements and the Projections for the fiscal year
ending January 31, 1998, each certified as such in a certificate executed by the
president, chief operating officer or chief financial officer of the Borrower;
(p) The Agent shall have received copies of the
following:
(i) All of the consents, approvals and
waivers referred to on Exhibit C hereto (except only those which, as stated on
Exhibit C, shall not be delivered) including, without limitation, all landlord
waivers of distraint or similar instruments of waiver or subordination with
respect to all leased locations where Collateral is located;
(ii) A certificate of the Secretary of each
of the Borrower, the Parent and Siena certifying that since October 29, 1992
there have been no amendments, modifications or supplements to the certificates
of incorporation of each of the Borrower, the Parent and Siena;
(iii) A certificate of the Secretary of each
of the Borrower, the Parent and Siena certifying that since October 29, 1992
there have been no amendments, modifications or supplements to the by-laws of
each of the Borrower, the Parent and Siena other than an amendment to the
Parent's by-laws in April of 1997;
(iv) The certificates of incorporation,
certified by the Secretary of State of their respective states of incorporation,
of each of Retail, Sources and Holdings and comparable documents for Hong Kong,
Global, Tatabuana, Balihides, Wee Beez and Kostroma from each of their
respective jurisdictions of organization and all amendments thereto;
(v) The by-laws of each of Retail, Sources
and Holdings and comparable documents for Hong Kong, Global, Tatabuana,
Balihides, Wee Beez and Kostroma, certified by their respective secretaries;
65
(vi) All corporate action taken by the
Borrower, the Parent, and the Subsidiaries to authorize the execution, delivery
and performance of each of the Loan Documents to which it is a party and the
transactions contemplated thereby, certified by their respective secretaries;
(vii) Good standing certificates as of dates
not more than 20 days prior to the date of the closing, with respect to each of
the Borrower, the Parent, Siena, Holdings, Sources and Retail, from the
Secretary of State of their respective states of incorporation and each state in
which each of them is qualified to do business;
(viii) A certificate of the Secretary of
each of Hong Kong, Wee Beez, Global, Tatabuana, Balihides and Kostroma
certifying that each is in good standing in its respective jurisdiction of
organization; and
(ix) An incumbency certificate (with
specimen signatures) with respect to the Borrower, the Parent and the
Subsidiaries.
(q) (i) The Borrower shall have complied and
shall then be in compliance with all of the terms, covenants and conditions of
this Agreement;
(ii) After giving effect to the execution
and delivery of this Agreement, there shall exist no Default or Event of Default
hereunder; and
(iii) The representations and warranties
contained in Article 3 hereof shall be true and correct on the date hereof;
and the Agent shall have received a Compliance Certificate dated the date hereof
certifying, inter alia, that the conditions set forth in this subsection 4.1(q)
are satisfied on such date; and
(r) All legal matters incident to the
initial closing shall be satisfactory to counsel to the Agent and the Lenders.
SECTION 4.2 CONDITIONS TO SUBSEQUENT
LOANS AND ISSUANCE OF L/Cs.
The obligation of the Collateral Monitoring Agent to
make any Loan and the obligation of the Issuing Bank to issue or amend a Trade
L/C, Standby L/C, Acceptance, Steamship Guaranty or Airway Release, in each case
for the account of the Lenders, subsequent to the date hereof shall be subject
to the fulfillment (to the reasonable satisfaction of the Collateral Monitoring
Agent, the Issuing Bank, the Agent and the Lenders) of the following conditions
precedent:
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(a) The Collateral Monitoring Agent shall have
received a Borrowing Base Certificate of current date; and
(b) All legal matters incident to such transaction
shall be reasonably satisfactory to counsel for, the Collateral Monitoring
Agent, the Issuing Bank, the Agent and the Lenders;
provided, however, that the Borrower hereby acknowledges to the Collateral
Monitoring Agent, the Issuing Bank, the Agent and each of the Lenders that the
delivery by it of each Borrowing Notice and/or Application shall be deemed to be
a certification, representation and warranty by the Borrower as of the date
thereof of the truth of those statements which would be included in a Compliance
Certificate dated such date.
ARTICLE 5. DELIVERY OF FINANCIAL REPORTS,
DOCUMENTS AND OTHER INFORMATION.
While the Commitments are outstanding, and so long as the
Borrower is indebted to any Lender, the Agent, the Collateral Monitoring Agent
or the Issuing Bank and until payment in full of the Loans and Acceptances and
the termination or expiration of all the L/Cs, Steamship Guaranties and Airway
Releases, and full and complete performance of all of its other obligations
arising hereunder, the Borrower shall deliver to the Collateral Monitoring Agent
and each Lender the following, subject to the provisions of Section 5.11 hereof:
SECTION 5.1 ANNUAL FINANCIAL STATEMENTS.
(a) Annually, as soon as available, but in any event
within 90 days after the last day of each of its fiscal years, a consolidated
and consolidating balance sheet of the Parent and the Subsidiaries (including
the Borrower) as at such last day of the fiscal year, and consolidated and
consolidating statements of income and retained earnings and consolidated
statements of cash flow of the Parent and the Subsidiaries (including the
Borrower), for such fiscal year, each prepared in accordance with generally
accepted accounting principles consistently applied, in reasonable detail, and,
as to the consolidated statements of the Parent, certified without qualification
by Xxxxx Xxxxxxxx L.L.P. or another firm of independent certified public
accountants reasonably satisfactory to the Agent and the Lenders, and certified,
as to the consolidating statements, by the chief executive officer, president,
chief operating officer or the chief financial officer of the Parent, as fairly
presenting the financial position and the results of operations of the Parent
and the Subsidiaries (including the Borrower) as at and for the year ending on
its date and as having been prepared in accordance with generally accepted
accounting principles.
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(b) Annually, within 120 days after the last day of
each of its fiscal years, management prepared divisional income statements in
reasonable detail for the preceding fiscal year.
SECTION 5.2 SEMI-ANNUAL FINANCIAL STATEMENTS;
QUARTERLY FINANCIAL STATEMENTS.
(a) As soon as available, but in any event within 45
days after the end of the Parent's first three (3) fiscal quarterly periods, a
consolidating and consolidated balance sheet of the Parent and the Subsidiaries
(including the Borrower) as of the last day of such quarter, a statement of
income and retained earnings and consolidating and consolidated statements of
income and retained earnings of the Parent and the Subsidiaries (including the
Borrower) as of the last day of such quarter and for the fiscal year to date,
and consolidated statements of cash flow, and on a comparative basis figures for
the corresponding period of the immediately preceding fiscal year, all in
reasonable detail, each such statement (i) to provide a specific certification
with respect to compliance with the financial covenants set forth in Section 6.9
of this Agreement and (ii) to be certified in a certificate of the president,
chief operating officer or chief financial officer of the Parent as accurately
presenting the financial position and the results of operations of the Parent
and the Subsidiaries (including the Borrower), as at its date and for such
quarter and for the fiscal year to date and as having been prepared in
accordance with generally accepted accounting principles consistently applied
(subject to year-end audit adjustments).
(b) As soon as available, but in any event within 60
days after the end of the Parent's first three (3) fiscal quarterly periods, a
management prepared divisional income statement for such quarter and for the
fiscal year to date and on a comparative basis figures for the corresponding
period of the immediately preceding fiscal year, all in reasonable detail.
SECTION 5.3 COMPLIANCE INFORMATION.
Promptly after a written request therefor, such other
financial data or information evidencing compliance with the requirements of
this Agreement, the Notes and the other Loan Documents, as any Lender may
reasonably request from time to time.
SECTION 5.4 NO DEFAULT CERTIFICATE.
At the same time as it delivers the financial
statements required under the provisions of Section 5.1 and 5.2 hereof, a
certificate of the chief executive officer, president, chief operating officer
or chief financial officer of the Borrower and the Parent, respectively, to the
effect that no Default hereunder and that no default
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under any other material agreement to which the Borrower, the Parent or any of
the Subsidiaries is a party or by which it is bound, or by which, to the best
knowledge of the Borrower, the Parent or any Subsidiary, any of its properties
or assets, taken as a whole, may be materially affected, and no event which,
with the giving of notice or the lapse of time, or both, would constitute such
an Event of Default or default, exists, or, if such cannot be so certified,
specifying in reasonable detail the exceptions, if any, to such statement. Such
certificate shall be accompanied by a detailed calculation indicating compliance
with the covenants contained in Sections 6.9, 7.13 and 7.14 hereof.
SECTION 5.5 RENTAL OBLIGATIONS;
CAPITALIZED LEASE OBLIGATIONS.
Within 15 days after the end of each of the Parent's
fiscal quarters, a certificate of the chief executive officer, president, chief
operating officer or chief financial officer of the Parent setting forth the
dollar amount of expenditures made by the Borrower, the Parent and its
Subsidiaries in respect of rental obligations and Capitalized Lease Obligations
for the fiscal period ending on such date and a calculation indicating that the
Borrower, the Parent and its Subsidiaries are in compliance with the provisions
of Sections 7.14 and 7.18 hereof.
SECTION 5.6 ACCOUNTANTS' REPORTS.
Promptly upon receipt thereof, copies of all other
reports or correspondence submitted to the Borrower or the Parent by its
independent accountants in connection with any annual or interim audit or review
of the books of the Borrower or the Parent made by such accountants, including,
without limitation, accountant's management letters.
SECTION 5.7 COPIES OF DOCUMENTS.
Promptly upon their becoming available, copies of
any: (i) financial statements, projections, non-routine reports, notices (other
than routine correspondence), requests for waivers and proxy statements, in each
case, delivered by the Borrower, the Parent or any of the Subsidiaries to any
lending institution other than the Lenders; (ii) correspondence or notices
received by the Borrower or the Parent from any federal, state or local
governmental authority that regulates the operations of the Borrower, the Parent
or any of its Subsidiaries, relating to an actual or threatened change or
development that would be materially adverse to the Borrower, the Parent or any
Subsidiary, taken as a whole; (iii) registration statements and any amendments
and supplements thereto, and any regular and periodic reports, if any, filed by
the Borrower or the Parent or any of its Subsidiaries with any securities
exchange or with the Securities and Exchange Commission or any
69
governmental authority succeeding to any or all of the functions of the said
Commission; (iv) letters of comment or correspondence sent to the Borrower or
the Parent or any of the Subsidiaries by any such securities exchange or such
Commission in relation to the Borrower or the Parent or any of the Subsidiaries
and its affairs; (v) written reports submitted by the Borrower or the Parent or
any of the Subsidiaries by its independent accountants in connection with any
annual or interim audit of the books of the Borrower or the Parent or the
Subsidiaries made by such accountants; (vi) proxy statements, notices and other
correspondence delivered by the Parent to its shareholders; (vii) any appraisals
received by the Borrower or the Parent or any of the Subsidiaries with respect
to the properties or assets of the Borrower or the Parent or the Subsidiaries;
and (viii) any other information reasonably requested by the Agent or any
Lender.
SECTION 5.8 NOTICES OF DEFAULTS.
Promptly, notice of the occurrence of any Default or
Event of Default, any event that after any necessary notice and/or cure period
may become a Default or Event of Default under Section 8.4(b) or any event that
would constitute or cause a material adverse change in the condition, financial
or otherwise, or the operations of the Borrower or the Parent or any of the
Subsidiaries, including, without limitation, a default or a cancellation under
any lease of property where inventory is stored.
SECTION 5.9 ERISA NOTICES.
(a) Concurrently with such filing, a copy of each
Form 5500 that is filed with respect to each Pension Plan with the IRS; and
(b) Promptly, upon their becoming available, copies
of: (i) all correspondence with the PBGC, the Secretary of Labor or any
representative of the IRS with respect to any Pension Plan, relating to an
actual or threatened change or development that would be materially adverse to
the Borrower or the Parent or any Subsidiary; (ii) copies of all actuarial
valuations received by the Borrower or the Parent with respect to any Pension
Plan; and (iii) copies of any notices of Plan termination filed by any Pension
Plan Administrator (as those terms are used in ERISA) with the PBGC and of any
notices from the PBGC to the Borrower or the Parent with respect to the intent
of the PBGC to institute involuntary termination proceedings; and
(c) Promptly upon receipt by the Borrower or the
Parent of any correspondence from a Multiemployer Plan with respect to
withdrawal liability.
SECTION 5.10 ADDITIONAL INFORMATION AND REPORTS.
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To the Collateral Monitoring Agent only, unless
requested by any Lender with respect to a specific delivery or deliveries and
then only for such specific delivery or deliveries so requested (except in the
case of the reports identified in clauses (c)(ii), (iii) and (v) and (e) below,
which Borrower shall at all times deliver to each Lender),
(a) Daily, a Borrowing Base Certificate in the form
attached hereto as Exhibit P, with ineligible Accounts and ineligible Inventory
in Item 6 of such Borrowing Base Certificate being recalculated on a weekly
basis only at the time the reports identified in paragraph (b) below are
delivered.
(b) Weekly, with respect to each week ending Friday
delivered by Wednesday of the following week:
(i) an Accounts Receivable Aging Report;
(ii) an Available to Sell Report designated
in Dollars in the form attached hereto as Exhibit D-1;
(iii) an Available to Sell Report designated
in units of Inventory in the form attached hereto as Exhibit D-2;
(iv) an Inventory Analysis Report on LDP
Cost vs LCM Cost in the form attached hereto as Exhibit D-3; and
(v) a divisional status report detailing by
division: (A) open customer orders detailed by "this year versus last year" and
"TLC/FLC versus warehouse"; and (B) inventory detailed as to inventory on hand
and in transit.
(c) Monthly, delivered not more than 25 days (except
as otherwise provided below) after the end of each calendar month:
(i) all the reports identified in clauses
(b)(i) through (b)(iv) above, prepared on a monthly basis as to the preceding
calendar month;
(ii) a key item report ("KEY ITEM REPORT"),
as of the last day of the immediately preceding month with respect to the
Borrower and each Guarantor in the form attached hereto as Exhibit D-4;
provided, however, that such statement may be delivered not more than 30 days
after the end of each calendar month; provided further that such statement shall
not be required during the months of February and March;
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(iii) a statement with respect to compliance
with the financial covenants set forth in Section 6.9 of this Agreement (other
than the covenant in subsection 6.9(a)); provided, however, that such statement
may be delivered not more than 30 days after the end of each calendar month;
(iv) a reconciliation between the general
ledger and the Accounts Receivable Aging Report and the month-end Borrowing Base
Certificate; and
(v) the report on the accounts receivable
delivered to CIT pursuant to the Amended and Restated Accounts Receivable
Purchase Agreement dated November 8, 1995 between the Borrower and CIT;
(vi) a Gross Margin Report in form
satisfactory to the Collateral Monitoring Agent and the Lenders; and
(vii) an accounts payable aging report in
form satisfactory to the Collateral Monitoring Agent;
each of which shall be certified as true and correct by the chief executive
officer, president, chief operating officer or the chief financial officer of
the Borrower or the Parent, as the case may be.
(d) Promptly after a request by the Agent, such other
information regarding the business, affairs and condition of the Borrower, the
Parent and the Subsidiaries as the Agent may from time to time reasonably
request.
(e) By no later than January 31, 1998, (i)
Projections for the fiscal year ending January 31, 1999 and (ii) a business plan
for the fiscal year ending January 31, 1999.
SECTION 5.11 CONFIDENTIALITY OF INFORMATION.
The Agent, the Collateral Monitoring Agent, the
Issuing Bank and the Lenders acknowledge that any information provided to any of
them pursuant to this Article 5 which is marked "confidential" shall be
delivered to the recipient with the understanding that, subject to the
provisions of Section 10.13(e) hereof, the recipient will hold all such
information with respect to the Parent confidential and that the Parent, as a
company whose shares are publicly traded, is relying on such understanding in
delivering that information; provided, however, that, notwithstanding the
foregoing, each of the Agent, the Collateral Monitoring Agent, the Issuing Bank
and the Lenders may disclose or disseminate such information to: (a) its
directors, officers, employees, agents, attorneys, accountants and other
professional advisors who would ordinarily have access to such information in
the normal course of the
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performance of their duties or services with the understanding that each of such
individuals will use its best efforts to hold all such information confidential;
and (b) such third parties as it may, in its discretion, deem reasonably
necessary or desirable in connection with or in response to (i) compliance with
any law, ordinance or governmental order, regulation, rule, policy, subpoena,
investigation or request, or (ii) any order, decree, judgment, subpoena, notice
of discovery or similar ruling or pleading issued, filed, served or purported on
its face to be issued, filed or served (x) by or under authority of any court,
tribunal, arbitration board of any governmental agency, commission, authority,
board or similar entity, or (y) in connection with any proceeding, case or
matter pending (or on its face purported to be pending) before any court,
tribunal, arbitration board or any governmental agency, commission, authority,
board or similar entity. The Agent, the Collateral Monitoring Agent, the Issuing
Bank and the Lenders shall have no continuing obligations with respect to
confidentiality of information following an Event of Default.
ARTICLE 6. AFFIRMATIVE COVENANTS.
While the Commitments are outstanding and, so long as
the Borrower is indebted to the Lenders, the Agent, the Collateral Monitoring
Agent or the Issuing Bank and until payment in full of the Loans and Acceptances
and the termination or expiration of all L/Cs, Steamship Guaranties and Airway
Releases, and full and complete performance of all of its other obligations
arising hereunder, the Borrower and the Parent shall and the Parent shall cause
each Subsidiary to:
SECTION 6.1 BOOKS AND RECORDS.
Keep proper books of record and account in a manner
reasonably satisfactory to the Agent and the Lenders in which full, true and
correct entries shall be made of all dealings or transactions in relation to its
business and activities.
SECTION 6.2 INSPECTIONS AND FIELD EXAMINATIONS;
ANNUAL ACCOUNTS RECEIVABLE.
Permit the Collateral Monitoring Agent and the
Lenders (in the case of the Lenders, only when accompanying the Collateral
Monitoring Agent) to make or cause to be made, inspections and field
examinations of any books, records and papers of the Borrower, the Parent and
each of the Subsidiaries and to make extracts therefrom and copies thereof, or
to make inspections and examinations of any properties and facilities of the
Borrower, the Parent and the Subsidiaries, on reasonable notice, at all such
reasonable times and as often as the Agent and the Lenders may reasonably
require, in order to assure that each the Borrower and the Parent is and will be
in compliance with its obligations under the Loan Documents or to evaluate the
Lenders' investment in the then Outstanding Obligations.
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SECTION 6.3 MAINTENANCE AND REPAIRS.
Maintain in good repair, working order and condition,
subject to normal wear and tear, all material properties and assets from time to
time owned by it and used in or necessary for the operation of its business, and
make all reasonable repairs, replacements, additions and improvements thereto.
SECTION 6.4 CONTINUANCE OF BUSINESS.
(a) Do, or cause to be done at its expense, all
things reasonably necessary to preserve and keep in full force and effect its
corporate existence and all permits, rights and privileges necessary for the
proper conduct of its business, except where the failure to keep any of the
foregoing in effect will not have a material adverse effect on the business of
the Borrower, and continue generally to engage in the same line of business and
comply in all material respects with all applicable laws, regulations and
orders.
(b) Do, or cause to be done at its expense, all
things reasonably necessary to preserve and maintain all patents, trademarks,
service marks, trade names, copyrights and trade-style names which are of
material value to the operation of its business.
SECTION 6.5 COPIES OF CORPORATE DOCUMENTS.
Subject to the prohibitions set forth in Section 7.12
hereof, promptly deliver to the Agent and each Lender copies of any amendments
or modifications to the Borrower's, the Parent's and any Subsidiary's
certificate of incorporation and by-laws, certified with respect to the
certificate of incorporation by the Secretary of State of its state of
incorporation and, with respect to the by-laws, by the secretary or assistant
secretary of such corporation.
SECTION 6.6 PERFORM OBLIGATIONS.
Pay and discharge all of its obligations and
liabilities, including, without limitation, all taxes, assessments and
governmental charges upon its income and properties when due, unless and to the
extent only that such obligations, liabilities, taxes, assessments and
governmental charges shall be contested in good faith and by appropriate
proceedings and that, to the extent required by generally accepted accounting
principles then in effect, proper and adequate book reserves relating thereto
are established by the Borrower, or, as the case may be, by the Parent or the
appropriate Subsidiary, and then only to the extent that a bond is filed in
cases where the filing of a bond is necessary to avoid the creation of a Lien
against any of its properties.
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SECTION 6.7 NOTICE OF LITIGATION.
Promptly notify the Agent and the Lenders in writing
of any litigation, legal proceeding or dispute, other than disputes in the
ordinary course of business or, whether or not in the ordinary course of
business, involving amounts in excess of One Hundred Thousand ($100,000)
Dollars, affecting the Borrower, the Parent or any Subsidiary whether or not
fully covered by insurance, and regardless of the subject matter thereof
(excluding, however, any actions relating to workers' compensation claims or
negligence claims relating to use of motor vehicles, if fully covered by
insurance, subject to deductibles).
SECTION 6.8 INSURANCE.
(a) (i) Maintain with responsible insurance companies
acceptable to the Agent such insurance on such of its properties, in such
amounts and against such risks as is customarily maintained by similar
businesses similarly situated, naming the Agent as loss payee for the ratable
benefit of the Lenders; (ii) file with the Agent upon its request a detailed
list of the insurance then in effect, stating the names of the insurance
companies, the amounts and rates of the insurance, the dates of the expiration
thereof and the properties and risks covered thereby; (iii) within 10 days after
notice in writing from the Agent, obtain such additional insurance as the Agent
may reasonably request; and (iv) provide for endorsements or certifications (1)
scheduling the coverage under such insurance, (2) identifying the Agent as "loss
payee" for the ratable benefit of the Lenders, and (3) specifying that such
insurance shall be non-cancellable unless not less than 30 days' notice is given
to the Agent;
(b) Carry all insurance available through the PBGC or
any private insurance companies covering its obligations to the PBGC; and
(c) (i) Maintain with one or more responsible
insurance companies acceptable to the Agent and the Lenders, term life insurance
on the life of Xxxxxx Xxxxxxxx, in the amount of not less than $20,000,000
naming the Agent for the ratable benefit of the Lenders as assignee of such
insurance and (ii) file with the Agent upon its request a detailed list of the
insurance on the life of Xxxxxx Xxxxxxxx, then in effect, stating the names of
the insurance companies, the amounts and rates of insurance and the expiration
dates thereof.
SECTION 6.9 FINANCIAL COVENANTS.
(a) Have or maintain, with respect to the Parent on a
consolidated basis (excluding BET Studio LLC), EBITDA on a cumulative basis from
the first day of each fiscal year through the date set forth below at not less
than, or,
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in the case of a loss, not more than, the respective amounts set forth below
opposite each such last day of the fiscal quarter:
Date EBITDA
---- -------
April 30, 1997 ($5,500,000)
July 31, 1997 ($4,000,000)
October 31, 1997 $8,000,000
January 31, 1998 $6,300,000
April 30, 1998 ($7,000,000)
and the periods and respective amounts from May 1, 1998 through and including
the Commitment Termination Date shall be preliminarily determined by the Lenders
and the Borrower based on the Projections and the business plan for the fiscal
year ending January 31, 1999 and the unaudited financial statements for the
fiscal year ending January 31, 1998, but in no event shall the periods be of
different durations or the amounts be less than (if such amount is negative) or
greater than (if such amount is positive) the amounts for the periods
corresponding to the periods set forth above unless the Lenders determine (in
their reasonable discretion) that such periods and amounts warrant adjustment
based on the financial condition of the Borrower as set forth in such
Projections, business plan or unaudited financial statements, which preliminary
determination shall be made within 30 days of receipt by the Lenders of such
Projections, business plan and unaudited financial statements, and such
determination shall become effective after receipt and satisfactory review by
the Lenders of the Financial Statements for the fiscal year ending January 31,
1998.
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(b) (1) Have or maintain, with respect to the Parent
on a consolidated basis (excluding BET Studio LLC), Tangible Net Worth at all
times during the periods set forth below at not less than the respective amounts
set forth opposite each such period:
Minimum Tangible
Date Net Worth
---- -----------------
February 28, 1997-May 31, 1997 $27,500,000
(2) Have or maintain, with respect to the Parent
on a consolidated basis (excluding BET Studio LLC), Tangible Net Worth as of the
dates set forth below at not less than the respective amounts set forth opposite
each such date:
Minimum Tangible
Date Net Worth
---- -----------------
July 31, 1997 $29,200,000
October 31, 1997 $35,200,000
January 31, 1998 $33,950,000
April 30, 1998 $30,000,000
and the periods and respective amounts from May 1, 1998 through and including
the Commitment Termination Date shall be determined in the sole discretion of
the Lenders within 30 days of receipt by the Lenders of the Projections and the
business plan for the fiscal year ending January 31, 1999 and the unaudited
financial statements for the fiscal year ending January 31, 1998, and such
determination shall become effective after receipt and satisfactory review by
the Lenders of the Financial Statements for the fiscal year ending January 31,
1998.
(c) Have no Loans and Acceptances Outstanding for 60
consecutive days during the periods from December 1, 1997, through April 30,
1998, and December 1, 1998 through April 30, 1999; provided, however, that if
Acceptances are outstanding during the months of December 1997 through April
1998 and/or December 1998 through April 1999, the Borrower will nevertheless be
deemed to have satisfied such requirement if the Collateral Monitoring Agent is
holding for the account of the Borrower during such consecutive 60 Business Day
period excess cash in an amount which would be sufficient to repay such
outstanding Acceptances.
(d) Maintain Loans, Standby L/Cs, Acceptances,
Steamship Guaranties and Airway Releases Outstanding at an amount not to exceed
75% of
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Eligible Accounts Receivable for 60 consecutive days during the periods from
November 1, 1997 through April 30, 1998 and November 1, 1998 through April 30,
1999.
SECTION 6.10 NOTICE OF CERTAIN EVENTS.
(a) Promptly notify the Agent in writing of the
occurrence of any Reportable Event, as defined in Section 4043 of ERISA, with
respect to a Pension Plan maintained by the Borrower or an ERISA Affiliate, if a
notice of such Reportable Event is required under ERISA to be delivered to the
PBGC within 30 days after the occurrence thereof, together with a description of
such Reportable Event and a statement of the action the Borrower or the Parent,
as the case may be, intends to take with respect thereto, together with a copy
of the notice thereof given to the PBGC.
(b) Promptly notify the Agent in writing of the
receipt by the Borrower or the Parent of an assessment of withdrawal liability
in connection with a complete or partial withdrawal with respect to any
Multiemployer Plan and the statement of the action that the Loan Party or ERISA
Affiliate intends to take with respect thereto.
(c) Promptly notify the Agent in writing if the
Borrower or the Parent or any other Loan Party receives: (i) any notice of any
violation or administrative or judicial complaint or order having been filed or
about to be filed against the Borrower or the Parent or such other Loan Party
alleging violations of any Environmental Law and Regulation, or (ii) any notice
from any governmental body or any other Person alleging that the Borrower or the
Parent or such other Loan Party is or may be subject to any Environmental
Liability; and promptly upon receipt thereof, provide the Agent with a copy of
such notice together with a statement of the action the Borrower or the Parent
or such other Loan Party intends to take with respect thereto.
SECTION 6.11 COMPLY WITH ERISA.
Comply with all applicable provisions of ERISA now or
hereafter in effect unless the failure to so comply will not have a material
effect on the business of the Borrower or any ERISA Affiliate.
SECTION 6.12 ENVIRONMENTAL COMPLIANCE.
Operate all property owned or leased by it such that
no obligation, including a clean-up obligation, shall arise under any
Environmental Law and Regulation, which obligation would constitute a Lien on
any property of the Borrower
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or the Parent or any other Loan Party; provided, however, that in the event that
any such claim is made or any such obligation arises, the Borrower, the Parent
or such other Loan Party shall, at its own cost and expense, immediately satisfy
such claim or obligation.
SECTION 6.13 MANAGEMENT LETTER.
If the Borrower, the Parent or any Subsidiary
receives a management letter with respect to the Borrower, the Parent or any
Subsidiary prepared by Xxxxx Xxxxxxxx L.L.P. or another firm of independent
certified public accountants, provide a copy of such management letter to the
Lenders within five (5) days following receipt.
SECTION 6.14 PREPARATION OF STRATEGIC PLAN REPORT.
The Borrower shall prepare and submit to the Lenders
on or before each of September 1, 1997 and September 1, 1998, a written report
with respect to (a) the status of the implementation of the recommendations made
by the Xxxx Xxxxx Consulting Group, Co. (the "CONSULTANT") in the strategic
plan, dated September 1996 prepared by the Consultant for the Borrower, and (b)
any modifications made to such strategic plan.
SECTION 6.15 TAX REFUNDS.
Instruct, or otherwise arrange with, the IRS, state
tax authorities and other relevant authorities for all tax refunds payable to
the Parent, the Borrower or any Subsidiaries to be paid as a cash refund, rather
than as applied as a credit against their current or future tax liabilities. The
Parent, the Borrower and all Subsidiaries will apply for all available tax
refunds within 60 days following the date hereof and will thereafter diligently
prosecute such applications to conclusion.
ARTICLE 7. NEGATIVE COVENANTS.
So long as the Borrower is indebted to the Lenders or the
Agent, and until payment in full of the Loans and Acceptances and the
termination or expiration of all the L/Cs, and Steamship Guaranties and Airway
Releases, and full and complete performance of all of its other obligations
arising hereunder, the Borrower shall not and the Parent shall not and shall not
permit any of its Subsidiaries to do, agree to do, or permit to be done, any of
the following:
SECTION 7.1 INDEBTEDNESS.
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Create, incur, permit to exist or have outstanding
any Indebtedness, except:
(a) Indebtedness of the Borrower to the Lenders, the
Agent, the Collateral Monitoring Agent and the Issuing Bank and other
Obligations under this Agreement;
(b) Taxes, assessments and governmental charges,
non-interest bearing accounts payable and accrued liabilities, in any case not
more than 90 days past due from the original due date thereof, and non-interest
bearing deferred liabilities other than for borrowed money (e.g., deferred
compensation and deferred taxes), in each case incurred and continuing in the
ordinary course of business;
(c) Indebtedness secured by the security interests
referred to in subsection 7.2(c) hereof and Capitalized Lease Obligations, in
each case incurred only if, after giving effect thereto, the limit on Capital
Expenditures set forth in Section 7.13 hereof would not be breached;
(d) Indebtedness of the Borrower to the Lenders with
respect to the Korean L/C and the Hanil L/C; and
(e) As set forth on Exhibit M hereto which shall
include, without limitation, with respect to each such item of Indebtedness, its
terms, maturity, conditions, the collateral security therefor and the use of the
proceeds thereof.
SECTION 7.2 LIENS.
Create, or assume or permit to exist, any Lien on any
of the properties or assets of the Borrower or the Parent or any of its
Subsidiaries, whether now owned or hereafter acquired, except:
(a) Those created and granted by the Security
Documents;
(b) Permitted Liens;
(c) Purchase money mortgages or security interests,
conditional sale arrangements and other similar security interests, on motor
vehicles and equipment acquired by the Borrower or the Parent or any Subsidiary
(hereinafter referred to indi vidually as a "PURCHASE MONEY SECURITY INTEREST")
with the proceeds of the Indebtedness referred to in subsection 7.1(c) hereof;
provided, however, that:
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(i) The transaction in which any Purchase Money
Security Interest is proposed to be created is not then prohibited by this
Agreement;
(ii) Any Purchase Money Security Interest shall
attach only to the property or asset acquired in such transaction and shall not
extend to or cover any other assets or properties of the Borrower, the Parent,
or, as the case may be, any Subsidiary; and
(iii) The Indebtedness secured or covered by any
Purchase Money Security Interest shall not exceed the lesser of the cost or fair
market value of the property or asset acquired and shall not be renewed,
extended or prepaid from the proceeds of any borrowing by the Borrower, the
Parent or any Subsidiary;
(d) The interests of the lessor under any Capitalized
Lease permitted hereunder; and
(e) As set forth on Exhibit E hereto.
SECTION 7.3 GUARANTIES.
Except as set forth on Exhibit M hereto, assume,
endorse, be or become liable for, or guarantee, the obligations of any Person,
except by the endorsement of negotiable instruments for deposit or collection in
the ordinary course of business; provided, however, that the Parent may guaranty
(i) the obligations of Siena and the Borrower in respect of trade accounts
payable, rental obligations and Capitalized Lease Obligations permitted to be
incurred in accordance with the provisions of Sections 7.1(b), 7.18 and 7.14,
respectively and (ii) up to $500,000 in the aggregate of the obligations of Hong
Kong and Global permitted to be incurred in accordance with the terms of this
Agreement. For the purposes hereof, the term "guarantee" shall include any
agreement, whether such agreement is on a contingency or otherwise, to purchase,
repurchase or otherwise acquire Indebtedness of any other Person, or to
purchase, sell or lease, as lessee or lessor, property or services, in any such
case primarily for the purpose of enabling another person to make payment of
Indebtedness, or to make any payment (whether as an advance, capital
contribution, purchase of an equity interest or otherwise) to assure a minimum
equity, asset base, working capital or other balance sheet or financial
condition, in connection with the Indebtedness of another Person, or to supply
funds to or in any manner invest in another Person in connection with such
Person's Indebtedness.
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SECTION 7.4 MERGERS; ACQUISITIONS.
(a) Merge or consolidate with any Person (whether or
not the Borrower or the Parent or any Subsidiary is the surviving entity), or
acquire all or substantially all of the assets or any of the capital stock of
any Person; or
(b) Create any new Subsidiary or Affiliate.
SECTION 7.5 REDEMPTIONS; DISTRIBUTIONS.
(a) Except in connection with existing stock option
plans of the Parent, purchase, redeem, retire or otherwise acquire, directly or
indirectly, or make any sinking fund payments with respect to, any shares of any
class of stock of the Borrower, the Parent or any Subsidiary now or hereafter
outstanding or set apart any sum for any such purpose; or
(b) Declare or pay any dividends or make any
distribution of any kind on the Borrower's or the Parent's outstanding stock, or
set aside any sum for any such purpose, except that the Borrower or the Parent
may declare or pay any dividend payable solely in shares of its respective
common stock; provided, however, that if any such issuance would result in the
issuance of fractional shares, the Borrower or the Parent, as the case may be,
may pay dividends in cash in the amount of such fractional shares to the holders
thereof in lieu of issuing fractional shares to such holders provided that the
amount of such cash dividends in the aggregate shall not exceed $10,000.
SECTION 7.6 STOCK ISSUANCE.
Issue any additional shares or any right or option to
acquire any shares, or any security convertible into any shares, of the capital
stock of the Borrower or any Subsidiary, except in connection with stock
dividends as permitted under subsection 7.5(b) hereof.
SECTION 7.7 CHANGES IN BUSINESS.
Make any material change in the business conducted by
the Borrower, the Parent or its Subsidiaries, as the case may be, or in the
nature of its operation, or liquidate or dissolve the Borrower, the Parent or
its Subsidiaries (or suffer any liquidation or dissolution), or convey, sell,
lease, assign, transfer or otherwise dispose of any of its property, assets or
business except in the ordinary course of business and for a fair consideration
or dispose of any shares of stock (except by the Parent) or any Indebted ness,
whether now owned or hereafter
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acquired, or discount, sell, pledge, hypothecate or otherwise dispose of
accounts receivable.
SECTION 7.8 PREPAYMENTS.
Make any voluntary or optional prepayment of any
Indebtedness (other than Indebtedness hereunder to the Lenders) for borrowed
money incurred or permitted to exist under the terms of this Agreement.
SECTION 7.9 INVESTMENTS.
Except as otherwise permitted under this Agreement,
make, or suffer to exist, any Investment in any Person, including, without
limitation, any Subsidiary, any joint venture or any shareholder, director,
officer or employee of the Borrower, the Parent or any of the Subsidiaries,
except:
(a) Investments in:
(i) obligations issued or guaranteed by the United
States of America;
(ii) certificates of deposit, bankers acceptances
and other "money market instruments" issued by any bank or trust company
organized under the laws of the United States of America or any State thereof
and having capital and surplus in an aggregate amount of not less than
$100,000,000;
(iii) open market commercial paper bearing the
highest credit rating issued by Standard & Poor's Corporation or by another
nationally recognized credit rating agency;
(iv) repurchase agreements entered into with any
bank or trust company organized under the laws of the United States of America
or any State thereof and having capital and surplus in an aggregate amount of
not less than $100,000,000 relating to United States of America government
obligations; and
(v) shares of "money market funds", each having net
assets of not less than $100,000,000;
in each case maturing or being due or payable in full not more than 180 days
after the Borrower's, the Parent's or any Subsidiary's acquisition thereof;
(b) Investments in the form of loans to employees of
the Borrower, the Parent or any Subsidiary, provided that the outstanding
principal
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amount of all such loans to any one employee shall at no time exceed $100,000
and that the aggregate outstanding principal amount of all such loans shall at
no time exceed $200,000;
(c) Investments by (i) the Borrower or the Parent in
any Subsidiary and by the Parent or any Subsidiary in the Borrower as in effect
on the date hereof and as set forth on Schedule 7.9 and (ii) an advance or
advances to Holdings which shall not exceed $500,000 in the aggregate and which
shall in each case be evidenced by a note repayable no later than May 31, 1999;
(d) Investments in BET Studio LLC; provided that the
amount of Investments pursuant to this subsection (d) shall not exceed in the
aggregate $2,000,000;
(e) Investments in no more than one (1) retail store
from the date hereof through May 31, 1998 and three (3) retail stores in the
aggregate from the date hereof through the Commitment Termination Date, which
Investments shall not exceed $175,000 individually and $500,000 in the
aggregate; and
(f) Other Investments in any factories, ventures or
retail stores as in effect on the date hereof as set forth on Schedule 7.9
hereof.
SECTION 7.10 FISCAL YEAR.
Change its fiscal year.
SECTION 7.11 ERISA OBLIGATIONS.
(a) Be or become obligated (after a final
determination) to the PBGC in excess of $50,000 other than in respect of annual
premium payments;
(b) Be or become obligated (after a final
determination) to the IRS in excess of $50,000 with respect to excise or other
penalty taxes provided for in Section 4975 of the Code;
(c) Incur a complete withdrawal or partial withdrawal
with respect to any Multiemployer Plan if such withdrawal would result in a
material adverse change in the business, operations or condition, financial or
otherwise, of the Borrower, the Parent or its Subsidiaries; or
(d) Fail to make any contribution or payment to any
Multiemployer Plan which the Borrower or the Parent is required to make under
any agreement relating to such Multiemployer Plan, or any law pertaining thereto
if such
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failure would result in a material adverse change in the business, operations or
condition, financial or otherwise, of the Borrower, the Parent or its
Subsidiaries.
SECTION 7.12 AMENDMENTS OF DOCUMENTS.
Modify, amend, supplement or terminate, or agree to
modify, amend, supplement or terminate, its certificate of incorporation or
by-laws.
SECTION 7.13 CAPITAL EXPENDITURES.
Make or be or become obligated to make Capital
Expenditures for the Parent, Borrower and the Subsidiaries, in an amount in
excess of (a) $1,200,000 in the aggregate during the period commencing on
February 1, 1997 and ending on January 31, 1998; (b) an aggregate amount during
the period commencing on February 1, 1998 and ending on January 31, 1999 as
preliminarily determined by the Lenders and the Borrower based on the
Projections and the business plan for the fiscal year ending January 31, 1999
and the unaudited financial statements for the fiscal year ending January 31,
1998, but in no event less than $1,200,000 unless the Lenders determine (in
their reasonable discretion) that such amount warrants adjustment based on the
financial condition of the Borrower as set forth in such Projections, business
plan or unaudited financial statements, which determination shall be made within
30 days of receipt by the Lenders of such Projections, business plan and
unaudited financial statements, and such determination shall become effective
after receipt and satisfactory review by the Lenders of the Financial Statements
for the fiscal year ending January 31, 1998; and (c) an aggregate amount during
the period commencing on February 1, 1999 and ending on May 31, 1999 as
preliminarily determined by the Lenders and the Borrower based on the
Projections and the business plan for the fiscal year ending January 31, 1999
and the unaudited financial statements for the fiscal year ending January 31,
1998, but in no event less than $400,000 unless the Lenders determine (in their
reasonable discretion) that such amount warrants adjustment based on the
financial condition of the Borrower as set forth in such Projections, business
plan or unaudited financial statements, which determination shall be made within
30 days of receipt by the Lenders of such Projections, business plan and
unaudited financial statements, and such determination shall become effective
after receipt and satisfactory review by the Lenders of the Financial Statements
for the fiscal year ending January 31, 1998.
SECTION 7.14 CAPITALIZED LEASE OBLIGATIONS.
Become obligated to make expenditures in respect of
Capitalized Lease Obligations in excess of the amount outstanding on the date
hereof with respect to Capitalized Lease Obligations plus (a) aggregate annual
payments of $400,000 for expenditures in respect of Capitalized Lease
Obligations with respect
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to all Leases entered into during the period from February 1, 1997
through January 31, 1998, and (b) aggregate annual payments for expenditures in
respect of Capitalized Lease Obligations with respect to all Leases entered into
during the period from February 1, 1998 through January 31, 1999 as
preliminarily determined by the Lenders and the Borrower based on the
Projections and the business plan for the fiscal year ending January 31, 1999
and the unaudited financial statements for the fiscal year ending January 31,
1998, but in no event less than $400,000 unless the Lenders determine (in their
reasonable discretion) that such amount warrants adjustment based on the
financial condition of the Borrower as set forth in such Projections, business
plan or unaudited financial statements, which determination shall be made within
30 days of receipt by the Lenders of such Projections, business plan and
unaudited financial statements, and such determination shall become effective
after receipt and satisfactory review by the Lenders of the Financial Statements
for the fiscal year ending January 31, 1998; and (c) aggregate annual payments
for expenditures in respect of Capitalized Lease Obligations with respect to all
Leases entered into during the period from February 1, 1999 through May 31, 1999
as preliminarily determined by the Lenders and the Borrower based on the
Projections and the business plan for the fiscal year ending January 31, 1999
and the unaudited financial statements for the fiscal year ending January 31,
1998, but in no event less than $133,333 unless the Lenders determine (in their
reasonable discretion) that such amount warrants adjustment based on the
financial condition of the Borrower as set forth in such Projections, business
plan or unaudited financial statements, which determination shall be made within
30 days of receipt by the Lenders of such Projections, business plan and
unaudited financial statements, and such determination shall become effective
after receipt and satisfactory review by the Lenders of the Financial Statements
for the fiscal year ending January 31, 1998, provided, however, that the amounts
permitted in (a), (b) and (c) above shall apply only to Leases relating to
Capital Expenditures permitted under Section 7.13.
SECTION 7.15 MANAGEMENT FEES.
Pay, or be or become obligated to pay, any Management
Fees to any Person, or any interest on any deferred obligation therefor,
including, without limitation, to any shareholder, director, officer or
employee of the Borrower other than in usual and customary amounts with respect
to the services rendered or management supervision provided.
SECTION 7.16 TRANSACTIONS WITH AFFILIATES.
Except as expressly permitted by this Agreement,
directly or indirectly: (a) make any Investment in an Affiliate; (b) transfer,
sell, lease, assign or otherwise dispose of any assets to an Affiliate; (c)
merge into or consolidate with or purchase or acquire assets from an Affiliate;
(d) enter into any other transaction
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directly or indirectly with or for the benefit of any Affiliate (including,
without limitation, guarantees and assumptions of obligations of an Affiliate);
or (e) enter into any agreement providing for above-market prices for goods or
services to or from an Affiliate; provided, however, that: (i) payments on
Investments expressly permitted by Section 7.9 hereof may be made, (ii) any
Affiliate who is a natural person may serve as an employee or director of the
Borrower or any Subsidiary and receive reasonable compensation for his services
in such capacity, and (iii) the Borrower, the Parent or any Subsidiary may enter
into any transaction with an Affiliate providing for the leasing of property,
the rendering or receipt of services or the purchase or sale of product,
inventory and other assets in the ordinary course of business if the monetary or
business consideration arising therefrom would be substantially as advan tageous
to the Borrower, the Parent or a Subsidiary as the monetary or business
consideration that it would obtain in a comparable arm's length transaction with
a Person not an Affiliate.
SECTION 7.17 ACTIVITIES LEADING TO
FORFEITURE PROCEEDING.
Neither the Borrower nor any of its Subsidiaries or
Affiliates shall engage in or propose to be engaged in the conduct of any
business or activity which could result in a Forfeiture Proceeding.
SECTION 7.18 RENTAL OBLIGATIONS.
Enter into any Lease (other than Capitalized Leases
that are governed by Section 7.14 hereof), other than Leases which require the
Borrower, the Parent or any Subsidiary to pay in the aggregate not in excess of
(a) $400,000 during the period from February 1, 1997 through January 31, 1998;
(b) an amount during the period from February 1, 1998 through January 31, 1999
as preliminarily determined by the Lenders and the Borrower based on the
Projections and the business plan for the fiscal year ending January 31, 1999
and the unaudited financial statements for the fiscal year ending January 31,
1998, but in no event less than $400,000 unless the Lenders determine (in their
reasonable discretion) that such amount warrants adjustment based on the
financial condition of the Borrower as set forth in such Projections, business
plan or unaudited financial statements, which determination shall be made within
30 days of receipt by the Lenders of such Projections, business plan and
unaudited financial statements, and such determination shall become effective
after receipt and satisfactory review by the Lenders of the Financial Statements
for the fiscal year ending January 31, 1998; and (c) an amount during the period
from February 1, 1999 through May 31, 1999 as preliminarily determined by the
Lenders and the Borrower based on the Projections and the business plan for the
fiscal year ending January 31, 1999 and the unaudited financial statements for
the fiscal year ending January 31, 1998, but in no event less than
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$133,333 unless the Lenders determine (in their reasonable discretion) that such
amount warrants adjustment based on the financial condition of the Borrower as
set forth in such Projections, business plan or unaudited financial statements,
which determination shall be made within 30 days of receipt by the Lenders of
such Projections, business plan and unaudited financial statements, and such
determination shall become effective after receipt and satisfactory review by
the Lenders of the Financial Statements for the fiscal year ending January 31,
1998; provided, however, that such limitations shall not apply to the portion of
any lease payment due which is determined as a percentage of the revenues of the
applicable retail store of the Borrower, the Parent or any Subsidiary.
SECTION 7.19 RETAIL STORE.
Except as expressly permitted by Section 7.9(e), open
any additional retail stores during the period from the date hereof through the
Commitment Termination Date; provided, however, that in addition to the retail
stores expressly permitted by Section 7.9(e), the Borrower may open seasonal,
outlet-type stores so long as (i) not more than four (4) such stores are open at
any time, (ii) the occupancy of each such store shall not exceed five (5)
months, (iii) the Borrower shall not make any capital expenditures in connection
with such stores, and (iv) rent payable to the lessors of such stores shall be
determined on a "percentage of sales" basis only (i.e., no fixed minimum rent)
and the Borrower shall not guarantee to the lessor any minimum sales.
SECTION 7.20 LICENSE AGREEMENTS.
Enter into any licensing agreement which would
prohibit or limit the Agent's exercise of rights to liquidate Collateral.
ARTICLE 8. EVENTS OF DEFAULT.
If any one or more of the following events ("EVENTS
OF DEFAULT") shall occur and be continuing, the Commitments shall terminate and
the entire unpaid balance of the principal of and interest on the Notes
outstanding and all other Obligations and Indebtedness of the Borrower to the
Lenders and the Agent arising hereunder and under the other Loan Documents,
shall immediately become due and payable upon written notice to that effect
given to the Borrower by the Agent (except that in the case of the occurrence of
any Event of Default described in Section 8.6 no such notice shall be required),
without presentment or demand for payment, notice of non-payment, protest or
further notice or demand of any kind, all of which are expressly waived by the
Borrower:
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SECTION 8.1 PAYMENTS.
Failure by the Borrower to (i) make any payment or
mandatory prepay ment of principal or interest upon any Note when due, (ii) make
any payment of any Fee when due, (iii) make any payment arising under any
Application, L/C, Acceptance, Steamship Guarantee or Airway Release, (iv) make
any required payment under Section 2.7 of this Agreement, or (v) make any
required payment under Section 2.17, 2.18 and 10.1 of this Agreement and, with
respect to clause (v) only, such failure shall continue unremedied for a period
of 10 days in the case of Section 2.17 and 2.18 and three (3) days in the case
of Section 10.1, in each case after receipt by Borrower of a demand therefor; or
SECTION 8.2 CERTAIN COVENANTS.
Failure to perform or observe any of the agreements
of the Borrower, the Parent or any Subsidiary contained in Section 6.9 or
Article 7 hereof; or
SECTION 8.3 OTHER COVENANTS.
(a) Failure by the Borrower to perform or observe any
other term, condition or covenant of this Agreement or of any of the other Loan
Documents to which it is a party, which shall remain unremedied for a period of
15 days after the earlier of (i) when the Borrower becomes aware of such failure
and (ii) notice thereof shall have been given to the Borrower by the Agent; or
(b) Failure by any Loan Party other than the Borrower
to perform or observe any term, condition or covenant of any of the Loan
Documents to which it is a party, which shall remain unremedied for a period of
15 days after the earlier of (i) when such Loan Party becomes aware of such
failure and (ii) notice thereof shall have been given to the Borrower by the
Agent; or
SECTION 8.4 OTHER DEFAULTS.
(a) Other than the defaults set forth on Exhibit G
hereto, failure to perform or observe any term, condition or covenant of any
bond, note, debenture, loan agreement, indenture, guaranty, trust agreement,
mortgage or similar instrument to which the Borrower, the Parent or any
Subsidiary is a party or by which it is bound, or by which any of its properties
or assets may be affected (a "DEBT INSTRUMENT"), so that, as a result of any
such failure to perform, the Indebtedness included therein or secured or covered
thereby may be declared due and payable prior to the date on which such
Indebtedness would otherwise become due and payable; or
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(b) Any event or condition referred to in any Debt
Instrument shall occur or fail to occur, so that, as a result thereof, the
Indebtedness included therein or secured or covered thereby may be declared due
and payable prior to the date on which such Indebtedness would otherwise become
due and payable; or
(c) Failure to pay any Indebtedness for borrowed
money due at final maturity or pursuant to demand under any Debt Instrument;
provided, however, that if any creditor or beneficiary under any bond, note,
debenture, loan agreement, indenture, guaranty, trust agreement, mortgage or
similar instrument shall assert a default (including, without limitation, those
set forth on Exhibit G hereto) and shall either (i) declare due and payable the
Indebtedness evidenced or secured thereby or (ii) shall commence the exercise of
remedies on the basis of such default, such declaration or exercise shall
constitute an Event of Default hereunder, upon the happening of which the
Lenders may take action notwithstanding Section 10.15 hereof; and provided,
further, that the provisions of this Section 8.4 shall not be applicable to any
Debt Instrument that on the date this Section 8.4 would otherwise be applicable
thereto, relates to or evidences Indebtedness in a principal amount of less than
$50,000; or
SECTION 8.5 REPRESENTATIONS AND WARRANTIES.
Any representation or warranty made in writing to the
Lenders or the Agent in any of the Loan Documents or in connection with the
making of the Loans or the issuance of any L/Cs, Acceptances, Steamship
Guaranties or Airway Releases, or any certificate, statement or report made or
delivered in compliance with this Agreement, shall have been false or misleading
in any material respect when made or delivered or deemed made or deemed
delivered; or
SECTION 8.6 BANKRUPTCY.
(a) The Borrower, the Parent or any Subsidiary shall
make an assignment for the benefit of creditors, file a petition in bankruptcy,
be adjudicated insolvent, petition or apply to any tribunal for the appointment
of a receiver, custodian, or any trustee for it or him or a substantial part of
its or his assets, or 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 the
Borrower, the Parent or any Subsidiary shall take any corporate action to
authorize any of the foregoing actions; or there shall have been filed any such
petition or application, or any such proceeding shall have been commenced
against it or him, that remains unstayed or undismissed for a period of 60 days
or more; or any order for relief shall be entered in any such proceeding; or the
Borrower, the Parent or any Subsidiary by any act or omission shall
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indicate its or his consent to, approval of or acquiescence in any such
petition, application or proceeding or the appointment of a custodian, receiver
or any trustee for it or him or any substantial part of any of its or his
properties, or shall suffer any custodianship, receivership or trusteeship to
continue unstayed or undischarged for a period of 60 days or more; or
(b) The Borrower, the Parent or any Subsidiary shall
generally not pay its or his debts as such debts become due; or
(c) The Borrower, the Parent or any Subsidiary shall
have concealed, removed, or permitted to be concealed or removed, any part of
its or his property, with intent to hinder, delay or defraud its or his
creditors or any of them or made or suffered a transfer of any of its or his
property that may be fraudulent under any bankruptcy, fraudulent conveyance or
similar law; or shall have made any transfer of its or his property to or for
the benefit of a creditor at a time when other creditors similarly situated have
not been paid; or shall have suffered or permitted, while insolvent, any
creditor to obtain a Lien upon any of its or his property through legal
proceedings or distraint that is not stayed or vacated within 60 days from the
date thereof; or
SECTION 8.7 JUDGMENTS.
Any judgment against the Borrower, the Parent or any
Subsidiary or any attachment, levy or execution against any of its properties
for any amount in excess of $200,000 in respect of any judgment after deducting
from such judgment the amount of any insurance proceeds payable to the judgment
debtor with respect thereto, shall remain unpaid, unstayed on appeal,
undischarged, unbonded or undismissed for a period of 30 days or more; or
SECTION 8.8 ERISA.
(a) The institution by the PBGC of proceedings for
the involuntary termination of any Pension Plan by reason of, or that could
result in, an "accumulated funding deficiency" under Section 412 of the Code
which would have a material adverse effect on the business, operations or
condition, financial or otherwise, of the Borrower, the Parent or its
Subsidiaries; or
(b) Failure by the Borrower or the Parent to make
required contributions, in accordance with the applicable provisions of ERISA,
to each of the Employee Benefit Plans or Plans hereafter established or assumed
by it including any Plan which is a Multiemployer Plan, if such failure would
result in the imposition of a Lien, which would have a material adverse effect
on the business, financial condition or properties of the Borrower, the Parent
and its Subsidiaries, on the assets
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of the Borrower or the Parent or an ERISA Affiliate or would otherwise have a
material adverse effect on the business, financial condition or properties of
the Borrower, the Parent and the Subsidiaries, taken as a whole; or
SECTION 8.9 OWNERSHIP OF STOCK.
Xxxxxx and/or Xxxx Xxxxxxxx (or, in the event of the
death of either of them, his estate, legal representative or heirs) shall at any
time own, beneficially and of record, less than 33 1/3% in the aggregate of all
of the issued and outstanding shares of capital stock of the Parent having
ordinary voting rights for the election of directors; or
SECTION 8.10 MANAGEMENT.
Xxxxxx Xxxxxxxx shall cease for any reason
whatsoever, including, without limitation, death or disability (as such
disability shall be determined in the sole and absolute judgment of the Majority
Lenders) to be and continuously perform the duties of chief executive officer of
the Borrower or, if such cessation shall occur as a result of the death or such
disability, no successor satisfactory to the Agent and the Lenders, in their
sole discretion, shall have become and shall have commenced to perform the
duties of chief executive officer of the Borrower within 90 days after such
cessation; provided, however, that if any satisfactory successor or interim
management shall have been so elected and shall have commenced performance of
such duties within such period, the name of such successor or successors shall
be deemed to have been inserted in place of Xxxxxx Xxxxxxxx in this Section
8.10; or
SECTION 8.11 LIENS.
Any of the Liens created and granted to the Agent for
the ratable benefit of the Lenders under the Security Documents shall fail to be
valid, first, perfected Liens, subject to no prior or equal Lien, except as
permitted by Section 7.2 hereof; or
SECTION 8.12 AMOUNT OF OBLIGATIONS.
On the last day of any month, the Obligations exceed
the Borrowing Base whether or not such excess is repaid pursuant to subsection
2.7(c) hereof at any time; or
SECTION 8.13 FORFEITURE PROCEEDINGS.
Any Forfeiture Proceeding shall have been commenced
or the Borrower shall have given any Lender written notice of the commencement
of any
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Forfeiture Proceeding as provided in Section 5.11 or any Lender has a good faith
basis to believe that a Forfeiture Proceeding has been threatened or commenced.
SECTION 8.14 MATERIAL ADVERSE CHANGE.
There shall have occurred a material adverse change
in the financial condition or business prospects of the Borrower, the Parent and
the Subsidiaries, taken as a whole, since the date of this Agreement.
ARTICLE 9. AGENCY PROVISIONS.
SECTION 9.1 APPOINTMENT, POWERS AND IMMUNITIES.
Each Lender hereby irrevocably appoints and
authorizes each of the Collateral Monitoring Agent, the Issuing Bank and the
Agent to act as its agent hereunder, under the Security Documents and the other
Loan Documents with such powers as are specifically delegated to such parties,
respectively, by the terms of this Agreement, the Security Documents and the
other Loan Documents together with such other powers as are reasonably
incidental thereto. Each of the Collateral Monitoring Agent, the Issuing Bank
and the Agent shall have no duties or responsibilities except those expressly
set forth in this Agreement, the Security Documents and the other Loan Documents
and shall be a trustee for any Lender. None of the Collateral Monitoring Agent,
the Issuing Bank or the Agent shall be responsible to the Lenders for any
recitals, statements, representations or warranties contained in this Agreement,
the Security Documents, or the other Loan Documents, in any Application,
certificate or other document referred to or provided for in, or received by any
of them under, this Agreement, the Security Documents or the other Loan
Documents, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, the Security Documents or the
other Loan Documents or any other document referred to or provided for herein or
therein or for the collectibility of the Loans or for the validity,
effectiveness or value of any interest or security covered by the Security
Documents or for the value of any Collateral or for the validity or
effectiveness of any assignment, mortgage, pledge, security agreement, financing
statement, document or instrument, or for the filing, recording, re-filing,
continuing or re-recording of any thereof or for any failure by the Borrower or
any of the other Loan Parties to perform any of its obligations hereunder or
under the other Loan Documents. Each of the Collateral Monitoring Agent, the
Issuing Bank and the Agent may employ agents and attorneys-in-fact and shall not
be answerable, 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. None of the Collateral Monitoring Agent,
the Issuing Bank or the Agent nor any of their directors, officers, employees or
agents shall be liable or responsible for any action taken or omitted to be
taken by it or them hereunder, under
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the Security Documents or the other Loan Documents or in connection herewith or
therewith, except for its or their own gross negligence or willful misconduct.
SECTION 9.2 RELIANCE.
Each of the Collateral Monitoring Agent, the Issuing
Bank and the Agent shall be entitled to rely upon any certification, notice or
other communication (including any thereof by telephone, telex, telegram or
cable) 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 them. As
to any matters not expressly provided for by this Agreement, the Security
Documents or the other Loan Documents, each of the Collateral Monitoring Agent,
the Issuing Bank or the Agent shall in all cases be fully protected in acting,
or in refraining from acting, hereunder, under the Security Documents or the
other Loan Documents in accordance with instructions signed by the Majority
Lenders, and such instructions of the Majority Lenders and any action taken or
failure to act pursuant thereto shall be binding on all of the Lenders.
SECTION 9.3 EVENTS OF DEFAULT.
Neither the Collateral Monitoring Agent or the Agent
shall be deemed to have knowledge of the occurrence of a Default unless the such
party has received notice from a Lender or the Borrower specifying such Default
and stating that such notice is a "Notice of Default". In the event that either
the Agent or the Collateral Monitoring Agent receives such a notice of the
occurrence of a Default, the Agent or the Collateral Monitoring shall promptly
give notice thereof to the Lenders. The Agent shall (subject to Section 9.7
hereof) take such action with respect to such Default as shall be directed by
the Majority Lenders.
SECTION 9.4 RIGHTS AS A LENDER.
Each of the Collateral Monitoring Agent, the Issuing
Bank and the Agent in its capacity as a Lender hereunder, shall have the same
rights and powers hereunder as any other Lender and may exercise the same as
though it were not acting as an agent hereunder, and the term "Lender" or
"Lenders" shall, unless the context other wise indicates, include each of the
Collateral Monitoring Agent, the Issuing Bank and the Agent in its individual
capacity. Each of the Collateral Monitoring Agent, the Issuing Bank and Agent
and their Affiliates may (without having to account therefor to any Lender)
accept deposits from, lend money to and generally engage in any kind of banking,
trust or other business with the Borrower or its Affiliates, as if it were not
acting as an agent of the Lenders hereunder, and may accept fees from the
Borrower or its Affiliates, for services in connection with this
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Agreement, the Security Documents or any of the other Loan Documents or
otherwise without having to account for the same to the Lenders; provided,
however, that each of the Collateral Monitoring Agent, Issuing Bank and the
Agent will not accept more than its Lender's Share of any fee paid by the
Borrower to the Lenders or to the Agent for the account of the Lenders in
connection with this Agreement.
SECTION 9.5 INDEMNIFICATION.
The Lenders shall indemnify each of the Collateral
Monitoring Agent, the Issuing Bank and the Agent (to the extent not reimbursed
by the Borrower under Sections 10.1 and 10.2 hereof), ratably in accordance with
their respective Commitments, for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever that may be imposed on, incurred by or
asserted against any of the Collateral Monitoring Agent, the Issuing Bank or the
Agent in any way relating to or arising out of this Agreement, the Security
Documents or any of the other Loan Documents or any other documents contemplated
by or referred to herein or therein or the transactions contemplated by or
referred to herein or therein or the transactions contemplated hereby and
thereby (including, without limitation, the costs and expenses that the Borrower
is obligated to pay under Sections 10.1 and 10.2 hereof, but excluding normal
administrative costs and expenses incident to the performance of their agency
duties hereunder or under the Security Documents unless a default by the
Borrower with respect to the payment thereof has occurred and is continuing) or
the enforcement of any of the terms hereof or of the Security Documents, or of
any such other documents, provided that no Lender shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the party to be indemnified.
SECTION 9.6 NON-RELIANCE.
Each Lender agrees that it has, independently and
without reliance on the Collateral Monitoring Agent, the Issuing Bank or the
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own credit analysis of the Borrower and decision to
enter into this Agreement and that it will, independently and without reliance
upon the Collateral Monitoring Agent, the Issuing Bank or the Agent or any other
Lender, 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, the Security Documents or the other Loan
Documents. None of the Collateral Monitoring Agent, the Issuing Bank or the
Agent shall be required to keep itself informed as to the performance or
observance by the Borrower of this Agreement, the Security Documents or the
other Loan Documents or any other document referred to or provided for herein or
therein or to inspect the properties or
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books of the Borrower. Except for notices, reports and other documents and
information expressly required to be furnished to the Lenders by the Collateral
Monitoring Agent, the Issuing Bank or the Agent hereunder or under the Security
Documents, or the other Loan Documents, none of the Collateral Monitoring Agent,
the Issuing Bank or the Agent shall have any duty or responsibility to provide
any Lender with any credit or other information concerning the affairs,
financial condition or business of the Borrower, that may come into the
possession of the Collateral Monitoring Agent, the Issuing Bank or the Agent or
any of its Affiliates.
SECTION 9.7 FAILURE TO ACT.
Except for action expressly required of the
Collateral Monitoring Agent, the Issuing Bank or the Agent hereunder, or under
the Security Documents, each of the Collateral Monitoring Agent, the Issuing
Bank or the Agent shall in all cases be fully justified in failing or refusing
to act hereunder or thereunder unless it shall be indemnified to its
satisfaction by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking or continuing to take any such action.
SECTION 9.8 RESIGNATION OR REMOVAL.
Subject to the appointment and acceptance of a
successor as provided below, each of the Collateral Monitoring Agent, the
Issuing Bank or the Agent (i) may resign at any time by giving not less than 10
days' prior written notice thereof to the Lenders and the Borrower and (ii) may
be removed at any time with or without cause by the Majority Lenders. Upon any
such resignation or removal, the Majority Lenders shall have the right to
appoint a successor. If no successor Collateral Monitoring Agent, Issuing Bank
or Agent shall have been so appointed by the Majority Lenders and shall have
accepted such appointment within 30 days after the retiring party's giving of
notice of resignation or the Majority Lenders' removal of the retiring party,
then the retiring Collateral Monitoring Agent, the Issuing Bank or Agent, as the
case may be, may, on behalf of the Lenders, after consultation with the
Borrower, appoint a successor which shall be one of the Lenders. Upon the
acceptance of any appointment as successor hereunder or under the Security
Documents, such successor Collateral Monitoring Agent, Issuing Bank or Agent, as
the case may be, shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring party, and the retiring
party shall be discharged from its duties and obligations hereunder and under
the Security Documents. After any retiring party's resignation or removal
hereunder as Collateral Monitoring Agent, Issuing Bank or Agent, as the case may
be, the provisions of this Article 9 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 Collateral Monitoring Agent, the Issuing Bank or Agent hereunder.
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SECTION 9.9 SHARING OF COLLATERAL AND PAYMENTS.
Upon or following any acceleration by the Agent and
the Lenders of the Obligations, and following the purchase by each Lender of its
proportional share of the Obligations pursuant to subsection 2.16(b) hereof, in
the event that any Lender shall obtain payment in respect of any such
Obligation, or interest thereon, or receive any Collateral or proceeds thereof
with respect to any such Obligation, whether voluntarily or involuntarily, and
whether through the exercise of a right of banker's lien, set-off or
counterclaim against the Borrower or any other Loan Party or otherwise, in a
greater proportion than any such payment obtained by any other Lender in respect
of the aggregate amount of the corresponding Obligation held by such Lender,
then the Lender so receiving such greater proportionate payment or such greater
proportionate amount of Collateral, shall purchase for cash from the other
Lender or Lenders such portion of each such other Lender's or Lenders' Loan, or
shall provide the other Lenders with the benefits of any such Collateral, or the
proceeds thereof, as shall be necessary to cause such Lender receiving the
proportionate overpayment to share the excess payment or benefits of such
Collateral or proceeds ratably with each Lender. For the purposes of this
Section, payments on Obligations received by each Lender and receipt of
Collateral by each Lender shall be in the same proportion as the proportion of:
(A) the Obligations owing to such Lender in respect of the Obligations held by
such Lender to (B) the Obligations owing to all of the Lenders in respect of all
of the Obligations; provided, however, that, with respect to the foregoing, if
all or any portion of such excess payment or benefits is thereafter recovered
from the Lender that received the proportionate overpayment, such purchase of
Obligations or payment of benefits, as the case may be, shall be rescinded, and
the purchase price and benefits returned, to the extent of such recovery, but
without interest.
SECTION 9.10 ADDITIONAL PROVISIONS AS TO
THE COLLATERAL MONITORING AGENT.
(a) The Collateral Monitoring Agent shall prepare and
submit to the Lenders, monthly on or before the 20th day of the following month,
reports as to:
(i) a summary of projected Availability vs actual
Availability (including a calculation of the Borrowing Base amount);
(ii) an accounts receivable aging analysis;
(iii) an accounts receivable concentration summary;
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(iv) ineligible calculations for both Accounts and
Inventory; and
(v) accounts receivable statistics (including
sales, turnover and dilution) on both a monthly and cumulative basis.
(b) Whenever the Collateral Monitoring Agent conducts
a field examination, the Collateral Monitoring Agent will deliver to the Lenders
a report prepared by the Collateral Monitoring Agent as to the results of such
field examination as promptly as possible, but in any event no later than 30
days following the Collateral Monitoring Agent's receipt of the field
examination reports. The Collateral Monitoring Agent agrees to conduct, at the
Borrower's expense: (i) at least three (3) field examinations of the Borrower's
Accounts per annum during the term of this Agreement, and (ii) at the Collateral
Monitoring Agent's discretion, field examinations of the Borrower's Inventory,
provided that the Collateral Monitoring Agent shall conduct at least three (3)
such examinations of Inventory per annum during the term of this Agreement. Upon
reasonable advance request of the Collateral Monitoring Agent, the Lenders shall
have the right to examine at the Collateral Monitoring Agent's offices, or to
request copies (prepared at the requesting Lender's cost) of, all field reports,
resulting correspondence with the Borrower and other work product relating to
such field examination. The Collateral Monitoring Agent agrees to respond to,
and to refer to the Borrower when appropriate and then to respond to, reasonable
inquiries made by the Lenders arising with respect to field examinations or
reports.
(c) The Collateral Monitoring Agent may include
Inventory labeled as "Season X" in Eligible Inventory if the Borrower
establishes to the satisfaction of the Collateral Monitoring Agent that existing
orders for such Inventory exceed such Inventory currently on hand; provided,
however, that prior to including such Inventory in Eligible Inventory (x) the
Collateral Monitoring Agent has given the Lenders at least 24 hours notice that
the Agent intends to include such Inventory in Eligible Inventory, and (y) the
Collateral Monitoring Agent has not been notified of objections by the Majority
Lenders to the inclusion of such Inventory in Eligible Inventory within the
24-hour period following the giving of such notice.
(d) Without limiting the generality of any other
provision hereof, the Collateral Monitoring Agent shall specifically not have
authority to:
(i) increase or decrease the percentages of
Eligible Accounts or Eligible Inventory to be included in the Borrowing Base,
other than by adjustment of the reserves provided for in the definition of
"Borrowing Base"; provided, however, that the Collateral Monitoring Agent may
establish additional reserves if (x) the Collateral Monitoring Agent has given
the Lenders at least 24 hours notice that the Agent intends to establish such
additional reserves and (y) the
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Collateral Monitoring Agent has not been notified of objections by the Majority
Lenders to the establishing of such additional reserves within the 24-hour
period following the giving of such notice; and provided, further, that once an
additional reserve has been established the Collateral Monitoring Agent may
adjust that reserve in its discretion.
(ii) release Collateral;
(iii) waive any violation or default under this
Agreement, the Security Documents, the Loan Documents or otherwise on behalf of
the Lenders; or
(iv) modify the amount of any Fees or interest
payable pursuant to this Loan Agreement.
SECTION 9.11 EXECUTION OF FIFTH AMENDED
AND RESTATED LOAN AGREEMENT.
Upon receipt and review by the Lenders of the
Borrower's audited financial statements for the fiscal year ending January 31,
1998 and the Projections for the fiscal year ending January 31, 1999, if the
Lenders determine, in their sole and absolute discretion, that certain of the
asset based lending provisions set forth herein are no longer required, the
parties hereto shall execute and deliver the Fifth Amended and Restated Loan
Agreement in substantially the form of Exhibit R hereto and in accordance with
the terms thereof.
SECTION 9.12 TERMINATION OF XXXXXXXX GUARANTY,
XXXXXXXX STOCK PLEDGE AND ASSIGNMENT
OF TAXES.
Each of the Lenders, the Agent and the Collateral
Monitoring Agent agrees that on or prior to the Closing Date it will execute
such terminations and releases as the Borrower and the Individual Guarantors
reasonably request to evidence the termination of the Xxxxxxxx Guaranty, the
Xxxxxxxx Stock Pledge and the Assignment of Taxes and take such further action
that is reasonably necessary to effect such terminations, including, without
limitation, returning the Xxxxxxxx Pledged Shares to Xxxxxx Xxxxxxxx.
ARTICLE 10. MISCELLANEOUS PROVISIONS.
SECTION 10.1 FEES AND EXPENSES; INDEMNITY.
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The Borrower will promptly pay all costs of the
Collateral Monitoring Agent, the Issuing Bank, the Agent and each of the Lenders
in preparing the Loan Documents and all costs and expenses of the Collateral
Monitoring Agent and the Lenders of the issuance of the Notes, L/Cs,
Applications, Acceptances, Steamship Guaranties and Airway Releases and of the
Borrower's and the other Loan Parties' performance of and compliance with all
agreements and conditions contained herein on its part to be performed or
complied with (including, without limitation, all costs of filing or recording
any assign ments, mortgages, financing statements and other documents except any
such costs incurred in connection with an assignment or participation pursuant
to Section 10.13 hereof), and the reasonable fees and expenses and disbursements
of counsel to the Collateral Monitoring Agent the Issuing Bank, the Agent and
the Lenders in connection with the preparation, execution and delivery,
administration, interpretation and enforcement of this Agreement, the other Loan
Documents, the L/Cs, Applications, Acceptances, Steamship Guaranties and Airway
Releases and all other agreements, instruments and documents relating to this
transaction, the consummation of the transactions contemplated by all such
documents, the preservation of all rights of the Lenders and the Collateral
Monitoring Agent, the Issuing Bank, and the Agent the negotiation, preparation,
execution and delivery of any amendment, modification or supplement of or to, or
any consent or waiver under, any such document (or any such instrument that is
proposed but not executed and delivered) and with any claim or action
threatened, made or brought against any of the Lenders or the Collateral
Monitoring Agent, the Issuing Bank and the Agent arising out of or relating to
any extent to this Agreement, the other Loan Documents or the transactions
contemplated hereby or thereby and including, without limitation, the allocated
costs of internal counsel to the Lenders with respect to the amending and
restating of the Third Restated Loan Agreement. In addition, the Borrower will
promptly pay all costs and expenses (including, without limitation, reasonable
fees, costs and disbursements of counsel) suffered or incurred by each Lender in
connection with its enforcement of this Agreement, the Loan Documents and the
Notes held by it, the L/Cs, Applications, Acceptances, Steamship Guaranties and
Airway Releases or any other sum due to it under this Agreement or any of the
other Loan Documents or any of its other rights hereunder or thereunder. In
addition to the foregoing, the Borrower shall indemnify each Lender and the
Collateral Monitoring Agent, the Issuing Bank and the Agent and each of their
respective directors, officers, employees, attorneys, agents and Affiliates
against, and hold each of them harmless from, any loss, liabilities, damages,
claims, costs and expenses (including reasonable attorneys' fees and
disbursements, including cost allocated by in-house counsel to any Lender)
suffered or incurred by any of them arising out of, resulting from or in any
manner connected with, the execution, delivery and performance of each of the
Loan Documents, the Loans and any and all transactions related to or consummated
in connection with the Loans, L/Cs, Applications, Acceptances, Steamship
Guaranties and Airway Releases, including, without limitation, losses,
liabilities, damages, claims, costs and expenses suffered or incurred
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by any Lender or the Collateral Monitoring Agent, the Issuing Bank and the Agent
or any of their respective directors, officers, employees, attorneys, agents or
Affiliates arising out of or related to any Environmental Matter, Environmental
Liability or Environmental Proceeding, or in investigating, preparing for,
defending against, or providing evidence, producing documents or taking any
other action in respect of any commenced or threatened litigation,
administrative proceeding or investigation under any federal securities law or
any other statute of any jurisdiction, or any regulation, or at common law or
otherwise. The indemnity set forth herein shall be in addition to any other
obligations or liabilities of the Borrower to the Agent and the Lenders
hereunder or at common law or otherwise. The provisions of this Section 10.1
shall survive the payment of the Notes, L/Cs, Acceptances, Steamship Guaranties
and Airway Releases and the termination of this Agreement.
SECTION 10.2 TAXES.
If, under any law in effect on the date of the
closing of any Loan hereunder, or under any retroactive provision of any law
subsequently enacted, it shall be determined that any Federal, state or local
tax is payable in respect of the issuance of any Note, L/C, Acceptance,
Steamship Guarantee and Airway Release, or in connection with the filing or
recording of any assignments, mortgages, financing statements, or other
documents (whether measured by the amount of Indebtedness secured or otherwise)
as contemplated by this Agreement, then the Borrower will pay any such tax and
all interest and penalties, if any, and will indemnify the Lenders and the
Collateral Monitoring Agent, the Issuing Bank and the Agent against and save
each of them harmless from any loss or damage resulting from or arising out of
the nonpayment or delay in payment of any such tax. If any such tax or taxes
shall be assessed or levied against any Lender or any other holder of a Note, or
issuer of an L/C, Acceptance, Steamship Guarantee or Airway Release, such
Lender, or such other holder or issuer, as the case may be, may notify the
Borrower and make immediate payment thereof, together with interest or penalties
in connection therewith, and shall thereupon be entitled to and shall receive
immediate reimbursement therefor from the Borrower. Notwithstanding any other
provision contained in this Agreement, the covenants and agreements of the
Borrower in this Section 10.2 shall survive payment of the Notes, L/Cs,
Acceptances, Steamship Guaranties and Airway Releases and the termination of
this Agreement.
SECTION 10.3 PAYMENTS.
As set forth in Article 2 hereof, all payments by the
Borrower on account of principal, interest, Fees and other charges (including
any indemnities) shall be made to the Collateral Monitoring Agent at its Payment
Office, in lawful money of the United States of America in immediately available
funds, by wire transfer or otherwise, not later than 1:00 P.M. New York City
time on the date such payment
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is due. Any such payment made on such date but after such time shall, if the
amount paid bears interest, be deemed to have been made on, and interest shall
continue to accrue and be payable thereon until, the next succeeding Business
Day. If any payment of principal or interest becomes due on a day other than a
Business Day, such payment may be made on the next succeeding Business Day and
such extension shall be included in computing interest in connection with such
payment. All payments hereunder and under the Notes, L/Cs, Acceptances,
Steamship Guaranties and Airway Releases shall be made without set-off or
counterclaim and in such amounts as may be necessary in order that all such
payments shall not be less than the amounts otherwise specified to be paid under
this Agreement and the Notes, L/Cs, Acceptances, Steamship Guaranties and Airway
Releases (after withholding for or on account of: (i) any present or future
taxes, levies, imposts, duties or other similar charges of whatever nature
imposed by any government or any political subdivision or taxing authority
thereof, other than any tax (except those referred to in clause (ii) below) on
or measured by the net income of the Lender to which any such payment is due
pursuant to applicable federal, state and local income tax laws, and (ii)
deduction of amounts equal to the taxes on or measured by the net income of such
Lender payable by such Lender with respect to the amount by which the payments
required to be made under this sentence exceed the amounts otherwise specified
to be paid in this Agreement and the Notes, L/Cs, Acceptances, Steamship
Guaranties and Airway Releases). Upon payment in full of any Note, the Lender
holding such Note shall xxxx the Note "Paid" and return it to the Borrower.
SECTION 10.4 SURVIVAL OF AGREEMENTS AND
REPRESENTATIONS; CONSTRUCTION.
All agreements, representations and warranties made
herein shall survive the delivery of this Agreement, the Notes and any other
instruments evidencing Obligations. The headings used in this Agreement and the
table of contents are for convenience only and shall not be deemed to constitute
a part hereof. All uses herein of the masculine gender or of singular or plural
terms shall be deemed to include uses of the feminine or neuter gender, or
plural or singular terms, as the context may require.
SECTION 10.5 LIEN ON AND SET-OFF OF DEPOSITS.
As security for the due payment and performance of
all the Obligations, the Borrower hereby grants to Agent for the ratable benefit
of the Lenders a Lien on any and all deposits or other sums at any time credited
by or due from the Agent or any Lender to the Borrower, whether in regular or
special depository accounts or otherwise, and any and all monies, securities and
other property of the Borrower, and the proceeds thereof, now or hereafter held
or received by or in transit to any Lender, the Collateral Monitoring Agent, the
Issuing Bank or the
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Agent from or for the Borrower, whether for safekeeping, custody, pledge,
transmission, collection or otherwise, and any such deposits, sums, monies,
securities and other property, may at any time after the occurrence and during
the continuance of any Event of Default be set-off, appropriated and applied by
any Lender or the Agent against any of the Obligations, whether or not any of
such Obligations is then due or is secured by any collateral, or, if it is so
secured, whether or not the collateral held by the Agent is considered to be
adequate, all as set forth in and pursuant to Section 2.17 hereof.
SECTION 10.6 MODIFICATIONS, CONSENTS AND
WAIVERS; ENTIRE AGREEMENT.
No modification, amendment or waiver of or with
respect to any provision of this Agreement, any Notes, the Security Documents,
or any of the other Loan Documents and all other agreements, instruments and
documents delivered pursuant hereto or thereto, nor consent to any departure by
the Borrower from any of the terms or conditions thereof, shall in any event be
effective unless it shall be in writing and signed by the Agent and each Lender
and the Borrower except that: (i) any modification or amend ment of, or waiver
or consent with respect to, Article 4 may be signed only by the Agent and the
Majority Lenders and the Borrower (provided, however, that the consummation of a
transaction by a Lender shall be deemed, with respect to such Loan only, to have
the effect of the execution by such Lender of a waiver of, or consent to a
departure from, any term or provision of Article 4 that has not been satisfied
as of the date of the consummation of such transaction); and (ii) any
modification or amendment of, or waiver or consent with respect to, Articles 1,
5, 6, 7, 8 and 10 (other than this Section 10.6) may be signed only by the Agent
and the Majority Lenders and the Borrower. Any such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
consent to or demand on the Borrower in any case shall, of itself, entitle it to
any other or further notice or demand in similar or other circumstances. This
Agreement and the other Loan Documents embody the entire agreement and
understanding among the Lenders, the Collateral Monitoring Agent, the Issuing
Bank, the Agent and the Borrower and supersede all prior agreements and
understandings relating to the subject matter hereof.
SECTION 10.7 REMEDIES CUMULATIVE.
Each and every right granted to the Collateral
Monitoring Agent, the Issuing Bank, the Agent and the Lenders hereunder or under
any other document delivered hereunder or in connection herewith, or allowed it
by law or equity, shall be cumulative and may be exercised from time to time. No
failure on the part of the Collateral Monitoring Agent, the Issuing Bank, the
Agent or any Lender or the holder of any Note or the issuer of any L/C,
Acceptance, Steamship Guarantee or Airway Release to exercise, and no delay in
exercising, any right shall operate as a waiver
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thereof, nor shall any single or partial exercise of any right preclude any
other or future exercise thereof or the exercise of any other right. The due
payment and performance of the Obligations shall be without regard to any
counterclaim, right of offset or any other claim whatsoever that the Borrower
may have against any Lender, the Collateral Monitoring Agent, the Issuing Bank
or the Agent and without regard to any other obligation of any nature whatsoever
that any Lender, the Collateral Monitoring Agent, the Issuing Bank or the Agent
may have to the Borrower, and no such counterclaim or offset shall be asserted
by the Borrower in any action, suit or proceeding instituted by any Lender, the
Collateral Monitoring Agent, the Issuing Bank or the Agent for payment or
performance of the Obligations.
SECTION 10.8 FURTHER ASSURANCES.
At any time and from time to time, upon the request
of the Agent, the Borrower shall execute, deliver and acknowledge or cause to be
executed, delivered and acknowledged, such further documents and instruments and
do such other acts and things as the Agent may reasonably request in order to
fully effect the purposes of this Agreement, the other Loan Documents and any
other agreements, instruments and documents delivered pursuant hereto or in
connection with the Loans, including, without limitation, the execution and
delivery to the Agent of mortgages in form and substance reasonably satisfactory
to the Agent and the Lenders covering all real property or interests therein
acquired by the Borrower, and all leases of real property entered into by the
Borrower as tenant or lessee, after the date of this Agreement, promptly after
such acquisition or the entering into of any such lease.
SECTION 10.9 NOTICES.
All notices, requests, reports and other
communications pursuant to this Agreement shall be in writing, either by letter
(delivered by hand or commercial messenger service or sent by certified mail,
return receipt requested, except for routine reports delivered in compliance
with Article 5 hereof which may be sent by ordinary first-class mail) or
telegram or telecopy, addressed as follows:
(a) If to the Borrower or any other Loan Party:
G-III Leather Fashions, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Chief Financial Officer
Telecopier No.: (000) 000-0000
with a copy to:
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Fulbright & Xxxxxxxx L.L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxx, Esq.
Telecopier No.: (000) 000-0000
(b) If to any Lender:
To its address set forth below its
name on the signature pages hereof,
with a copy to the Agent; and
(c) If to the Collateral Monitoring Agent:
Fleet Bank, N.A., as Agent
00 Xxxxxxxx Xxxx
Xxxxx Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xx. Xxxxxx Xxxxxxxxx,
Vice President
Telecopier No.: (000) 000-0000
with a copy (other than in the case of
Borrowing Notices and reports and other
documents delivered in compliance with
Article 5 hereof) to:
Winston & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx
Telecopier No.: (000) 000-0000
(d) If to the Issuing Bank:
Fleet Bank, N.A., as Agent
00 Xxxxxxxx Xxxx
Xxxxx Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xx. Xxxxxx Xxxxxxxxx,
Vice President
Telecopier No.: (000) 000-0000
with a copy (other than in the case of
Borrowing Notices and reports and other
documents delivered in compliance with
Article 5 hereof) to:
000
Xxxxxxx & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx
Telecopier No.: (000) 000-0000
(e) If to the Agent:
Fleet Bank, N.A., as Agent
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxxx Xxxxxxx,
Vice President
Telecopier No.: (000) 000-0000
with a copy (other than in the case of
Borrowing Notices and reports and other
documents delivered in compliance with
Article 5 hereof) to:
Winston & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx
Telecopier No.: (000) 000-0000
Any notice, request or communication hereunder shall be deemed to have been
given on the day on which it is telecopied to such party at the telecopier
number specified above or delivered by hand or such commercial messenger service
to such party at its address specified above, or, if sent by mail, on the third
Business Day after the day deposited in the mail, postage prepaid, or in the
case of telegraphic notice, when delivered to the telegraph company, addressed
as aforesaid. Any party may change the person, address or telecopier number to
whom or which notices are to be given hereunder, by notice duly given hereunder;
provided, however, that any such notice shall be deemed to have been given
hereunder only when actually received by the party to which it is addressed.
SECTION 10.10 COUNTERPARTS.
This Agreement may be signed in any number of
counterparts with the same effect as if the signatures thereto and hereto were
upon the same instrument.
SECTION 10.11 SEVERABILITY.
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The provisions of this Agreement are severable, and
if any clause or provision hereof shall be held invalid or unenforceable in
whole or in part in any jurisdiction, then such invalidity or unenforceability
shall affect only such clause or provision, or part thereof, in such
jurisdiction and shall not in any manner affect such clause or provision in any
other jurisdiction, or any other clause or provision in this Agreement in any
jurisdiction. Each of the covenants, agreements and conditions contained in this
Agreement is independent and compliance by the Borrower with any of them shall
not excuse non-compliance by the Borrower with any other. All covenants
hereunder shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitations of, another
covenant shall not avoid the occurrence of a Default or an Event of Default if
such action is taken or condition exists.
SECTION 10.12 BINDING EFFECT; NO ASSIGNMENT
OR DELEGATION BY BORROWER.
This Agreement shall be binding upon and inure to the
benefit of the Borrower and its successors and to the benefit of the Lenders,
the Collateral Monitoring Agent, the Issuing Bank and the Agent and their
respective successors and assigns. The rights and obligations of the Borrower
under this Agreement shall not be assigned or delegated without the prior
written consent of the Agent, the Collateral Monitoring Agent, the Issuing Bank
and the Lenders, and any purported assignment or delegation without such consent
shall be void.
SECTION 10.13 ASSIGNMENTS AND PARTICIPATION
BY LENDERS; ISSUANCE OF L/CS
BY LENDER AFFILIATES.
(a) Each Lender may assign to one or more banks or
other entities all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment,
the Loans owing to it or the other Obligations or L/Cs issued by it, amounts
outstanding in respect of outstanding Obligations, and the Note or Notes held by
it); provided, however, that: (i) each such assignment shall be of a constant,
and not a varying, percentage of all of the assigning Lender's rights and
obligations under this Agreement, (ii) the amount of the Commitment of the
assigning Lender being assigned pursuant to each such assignment (determined as
of the date of the Assignment and Acceptance with respect to such assignment)
shall in no event be less than $5,000,000 (unless such lesser amount is equal to
the then outstanding Commitment) and shall be an integral multiple of
$2,500,000, and (iii) each such assignment shall be to an Eligible Assignee.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which effective date
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shall be at least 5 Business Days after the execution thereof: (x) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder, and (y) the
Lender assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto).
(b) By executing and delivering an Assignment and
Acceptance, the Lender assignor thereunder and the assignee thereunder confirm
to and agree with each other and the other parties hereto as follows: (i) other
than as provided in such Assignment and Acceptance, such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrower or the performance or observance by the Borrower of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of such financial statements and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (iv) such
assignee will, independently and without reliance upon the Agent, such assigning
Lender or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) such assignee confirms
that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement as are delegated to the Agent by the terms hereof, together
with such powers as are reasonably incidental thereto; and (vii) such assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(c) Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an assignee representing that it is an
Eligible Assignee, together with any Note, Application or other instrument
evidencing an Obligation subject to such assignment, the Agent shall: (i) accept
such Assignment and Acceptance, and (ii) give prompt notice thereof to the
Borrower. Within five Business Days after its receipt of such notice, the
Borrower, at its own expense, shall execute
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and deliver to the Agent in exchange for the surrendered Note, Application or
other instrument evidencing an Obligation a new such instrument to the order of
such Eligible Assignee in an amount equal to the Commitment assumed by it
pursuant to such Assignment and Acceptance and, if the assigning Lender has
retained a Lender's Commitment hereunder, a new such instrument to the order of
the assigning Lender in an amount equal to the Lender's Commitment retained by
it hereunder. Such new instrument shall be in an aggregate principal amount
equal to the aggregate principal amount of such surrendered instrument, shall be
dated the effective date of such Assignment and Acceptance and shall otherwise
be in substantially the form of Exhibit N hereto.
(d) (i) Each Lender may sell participations to one or
more banks or other entities in all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Lender's Commitment, the Loans owing to it, amounts outstanding in respect of
outstanding Obligations, and the Note held by it; and
(ii) Fleet may arrange for the issuance of L/Cs
which it is obligated to issue hereunder by an Affiliate of such Lender;
provided, however, that: (x) such Lender's obligations under this Agreement
(including, without limitation, its Lender's Commitment hereunder) shall remain
unchanged, (y) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (z) such Lender shall remain the
holder of any such Note and the issuer of the L/C or other Direct Obligation
(whenever issued) for all purposes of this Agreement, and the Borrower, the
Agent and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement.
(e) Any Lender may, in connection with any assignment
or participation or proposed assignment or participation pursuant to this
Section 10.13, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to such Lender
by or on behalf of the Borrower; provided that, prior to any such disclosure,
the assignee or participant or proposed assignee or participant shall agree to
preserve the confidentiality of any confidential information relating to the
Borrower received by it from such Lender.
(f) In addition to the assignments and participations
permitted under subsections (a) through (d) hereof, any Lender may assign and
pledge all or any portion of its Loans and Note to (i) any Affiliate of such
Lender or (ii) any Federal Reserve Bank as collateral security pursuant to
Regulation A of the Board of Governors of the Federal Reserve System and any
Operating Circular issued by such
109
Federal Reserve Bank. Any such assignment shall not release the assigning Lender
from its obligations hereunder.
SECTION 10.14 GOVERNING LAW; CONSENT TO JURIS-
DICTION; WAIVER OF TRIAL BY JURY.
(a) THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND ALL
OTHER DOCUMENTS AND INSTRUMENTS EXECUTED AND DELIVERED IN CONNECTION HEREWITH
AND THEREWITH, SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS RULES PERTAINING
TO CONFLICTS OF LAWS.
(b) THE BORROWER IRREVOCABLY CONSENTS THAT ANY LEGAL
ACTION OR PROCEEDING AGAINST IT UNDER, ARISING OUT OF OR IN ANY MANNER RELATING
TO THIS AGREEMENT, AND EACH OTHER LOAN DOCUMENT MAY BE BROUGHT IN ANY COURT OF
THE STATE OF NEW YORK, COUNTY OF NEW YORK, OR IN THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK. THE BORROWER BY THE EXECUTION AND
DELIVERY OF THIS AGREEMENT, EXPRESSLY AND IRREVOCABLY ASSENTS AND SUBMITS TO THE
PERSONAL JURISDICTION OF ANY OF SUCH COURTS IN ANY SUCH ACTION OR PROCEEDING.
THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF ANY COMPLAINT,
SUMMONS, NOTICE OR OTHER PROCESS RELATING TO ANY SUCH ACTION OR PROCEEDING BY
DELIVERY THEREOF TO IT BY HAND OR BY MAIL IN THE MANNER PROVIDED FOR IN SECTION
10.9 HEREOF. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES ANY CLAIM OR
DEFENSE IN ANY SUCH ACTION OR PROCEEDING BASED ON ANY ALLEGED LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS OR ANY SIMILAR BASIS. THE
BORROWER SHALL NOT BE ENTITLED IN ANY SUCH ACTION OR PROCEEDING TO ASSERT ANY
DEFENSE GIVEN OR ALLOWED UNDER THE LAWS OF ANY STATE OTHER THAN THE STATE OF NEW
YORK UNLESS SUCH DEFENSE IS ALSO GIVEN OR ALLOWED BY THE LAWS OF THE STATE OF
NEW YORK. NOTHING IN THIS SECTION 10.14 SHALL AFFECT OR IMPAIR IN ANY MANNER OR
TO ANY EXTENT THE RIGHT OF ANY LENDER TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST ANY OF THE BORROWER IN ANY JURISDICTION OR TO SERVE PROCESS IN
ANY MANNER PERMITTED BY LAW.
(c) THE BORROWER, THE LENDERS, THE COLLATERAL
MONITORING AGENT, THE ISSUING BANK AND THE AGENT WAIVES TRIAL BY JURY IN ANY
LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF,
THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS, OR ANY INSTRUMENT OR DOCUMENT
DELIVERED PURSUANT TO
110
THIS AGREEMENT, OR THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR
ENFORCEMENT THEREOF.
SECTION 10.15. ADDITIONAL AGREEMENTS
BY BORROWER AND LOAN PARTIES.
Each of the Borrower and the Loan Parties agrees that
in the event that the Borrower or any Loan Party is the subject of any
insolvency, bankruptcy, receivership, dissolution, reorganization or similar
proceeding, federal or state, voluntary or involuntary, under any present or
future law or act, the Collateral Monitoring Agent, the Issuing Bank, the Agent
and the Lenders shall be entitled to the automatic and absolute lifting of any
automatic stay as to the enforcement of their rights and remedies under this
Agreement and the Security Documents, including specifically, but not limited to
the stay imposed by Section 362 of the United States Bankruptcy Code, as
amended, and each of the Borrower and the Loan Parties hereby consents to the
immediate lifting of any such automatic stay, and will not contest any motion by
the Collateral Monitoring Agent, the Issuing Bank, the Agent or the Lenders to
lift such stay.
SECTION 10.16. RELEASE BY BORROWER AND LOAN PARTIES.
Each of the Borrower and the Loan Parties agrees that
the Borrower and the Loan Parties on behalf of themselves and their respective
Subsidiaries, Affiliates, successors and assigns hereby release and forever
discharge the Collateral Monitoring Agent, the Issuing Bank, the Agent and the
Lenders, their respective parents, subsidiaries and affiliates, and the
officers, directors, employees, agents and attorneys of each of them from any
and all liability, actions, claims, causes of action, suits, debts, damages,
executions and demands whatsoever, in law or in equity which the Borrower or the
Loan Parties or any of their respective Subsidiaries, Affiliates, successors or
assigns might have, arising out of, based upon, in connection with or otherwise
relating to any matter whatsoever, including without limitation, the
Obligations, from the beginning of time to the date hereof.
[SIGNATURE PAGES FOLLOW]
111
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed as of the date first above written.
G-III LEATHER FASHIONS, INC.
By:______________________________
Title
Agreed:
G-III HONG KONG LTD.
By:______________________________
Title
Agreed as to Articles 2, 3, 4, 6, 7 and 10:
G-III APPAREL GROUP, LTD.
By:______________________________
Title
Agreed as to Article 2, 4 and 10:
SIENA LEATHER LTD.
By:_______________________________
Title
GLOBAL INTERNATIONAL TRADING
COMPANY
By:_______________________________
Title
[SIGNATURES CONTINUED ON NEXT PAGE]
INDAWA HOLDING CORP.
By:_______________________________
Title
GLOBAL APPAREL SOURCING, LTD.
By:________________________________
Title
G-III RETAIL OUTLETS INC.
By:________________________________
Title
P.T. TATABUANA RAYA
By:________________________________
Title
P.T. BALIHIDES
By:________________________________
Title
WEE BEEZ INTERNATIONAL LIMITED
By:________________________________
Title
KOSTROMA LTD.
By:________________________________
Title
[SIGNATURES CONTINUED ON NEXT PAGE]
FLEET BANK, N.A.,
AS COLLATERAL MONITORING AGENT
BY:__________________________
TITLE
Lending Office:
00 Xxxxxxxx Xxxx
Xxxxx Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx Xxxxxxxxx,
Vice President
Address for Notices:
Fleet Bank, N.A.
00 Xxxxxxxx Xxxx
Xxxxx Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx Xxxxxxxxx,
Vice President
Telex:
Answer-Back Code:
Telecopier: (000) 000-0000
Wire Transfer Instructions:
---------------------------
---------------------------
---------------------------
FLEET BANK, N.A.,
AS AGENT
BY:__________________________
Vice President TITLE
Lending Office:
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx,
Vice President
Address for Notices:
Fleet Bank, N.A.
1185 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx,
Vice President
Telex:
Answer-Back Code:
Telecopier: (000) 000-0000
Wire Transfer Instructions:
---------------------------
---------------------------
---------------------------
FLEET BANK, N.A.,
AS ISSUING BANK
BY:__________________________
TITLE
Lending Office:
00 Xxxxxxxx Xxxx
Xxxxx Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx Xxxxxxxxx,
Vice President
Address for Notices:
Fleet Bank, N.A.
00 Xxxxxxxx Xxxx
Xxxxx Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx Xxxxxxxxx,
Vice President
Telex:
Answer-Back Code:
Telecopier: (000) 000-0000
Wire Transfer Instructions:
---------------------------
---------------------------
---------------------------
COMMITMENT:
-----------
$20,000,000.00 FLEET BANK, N.A.,
AS A LENDER
(as a percentage:
38.46%)
BY:____________________________
Vice President TITLE
Lending Office for Prime Rate Loans
and Eurodollar Loans:
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx,
Vice President
Address for Notices:
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx,
Vice President
Telex No.: 232369
Answer-Back Code: NBNA UR
Telecopier: (000) 000-0000
Wire Transfer Instructions:
---------------------------
---------------------------
---------------------------
COMMITMENT:
-----------
$17,000,000.00 THE CHASE MANHATTAN BANK
(as a percentage:
32.69%)
BY:__________________________
TITLE
Lending Office for Prime Rate Loans
and Eurodollar Loans:
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx,
Vice President
Address for Notices:
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx,
Vice President
Telex No.: 175666
Answer-Back Code: CBC.UT
Telecopier: (000) 000-0000
Wire Transfer Instructions:
---------------------------
---------------------------
---------------------------
COMMITMENT:
-----------
$15,000,000.00 THE CIT GROUP/COMMERCIAL
SERVICES, INC.
(as a percentage:
28.85%)
BY:____________________________
TITLE
Lending Office for Prime Rate Loans
and Eurodollar Loans:
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx,
Assistant Vice President
Address for Notices:
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx,
Assistant Vice President
Telex No.:
Answer-Back Code:
Telecopier: (000) 000-0000
Wire Transfer Instructions:
---------------------------
---------------------------
---------------------------
EXHIBITS AND SCHEDULES
EXHIBITS
--------
A. Form of Note
B. States of Incorporation and Qualification, and Capitalization and Ownership of
Stock, of Borrower and Subsidiaries
C. Consents, Waivers, Approvals; Violation of Agreements
D-1 Form of Available to Sell Report ($)
D-2 Form of Available to Sell Report (Units)
D-3 Form of Inventory Analysis Report
D-4 Form of Key Item Report
E. Permitted Security Interests, Liens and Encumbrances
F. Judgments, Actions, Proceedings
G. Defaults; Compliance with Laws, Regulations, Agreements
H. Burdensome Documents
I. Patents, Trademarks, Trade Names, Service Marks, Copyrights
J. Name Changes, Mergers, Acquisitions; Location of Collateral
K. Labor Disputes; Collective Bargaining Agreements; Employee Grievances
L. Pension Plans
M. Permitted Indebtedness and Guaranties
N. Form of Assignment and Acceptance
O. Accounts and Inventory
P. Borrowing Base Certificate
Q. Form of Continuing Agreement for Issuance of Steamship Guaranties and Airway
Releases
R. Form of Fifth Amended and Restated Loan Agreement
SCHEDULE
7.9 Investments
