FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OF 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended July 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-18183
G-III APPAREL GROUP, LTD.
(Exact name of registrant as specified in its charter)
Delaware 41-1590959
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
345 West 37th Street, New York, New York 10018
(Address of Principal Executive Office) (Zip Code)
(212) 629-8830
(Registrant's telephone number, including area code)
--------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes XX No
-------- -------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of September 1, 1995.
Common Stock, $.01 par value per share: 6,459,381 shares.
Part I FINANCIAL INFORMATION Page No.
Item 1. Financial Statements *
Consolidated Balance Sheets -
January 31, 1995 and July 31, 1995 ................3
Consolidated Income Statements -
For the Three Months Ended
July 31, 1994 and 1995 ............................4
Consolidated Income Statements -
For the Six Months Ended
July 31, 1994 and 1995 ............................5
Consolidated Statements of Cash Flows -
For the Six Months Ended
July 31, 1994 and 1995 ............................6
Notes to Financial Statements ..........................7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations ...........................................8-9
Part II OTHER INFORMATION
Item 4. Submission of Matters To A Vote of Stockholders .......10
Item 6. Exhibits and Reports on Form 8-K
(a) Second Amended and Restated Loan Agreement, dated June 12, 1995
* The Balance Sheet at January 31, 1995 has been taken from the audited
financial statements at that date. All other financial statements are
unaudited.
- 2 -
G-III APPAREL GROUP, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
JANUARY 31, JULY 31,
ASSETS 1995 1995
(unaudited)
Current Assets:
Cash and Cash Equivalents $ 1,421 $ 2,720
Accounts Receivable - Net 13,414 27,099
Inventories - Net 25,532 32,481
Prepaid and Refundable Income Taxes 4,204 4,885
Prepaid Expense and Other Current Assets 466 1,267
------- -------
Total Current Assets 45,037 68,452
------- -------
Property, Plant and Equipment at Cost - Net 7,015 6,877
Deferred Income Taxes 1,717 1,717
Other Assets 803 809
------- -------
$54,572 $77,855
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes Payable $12,907 $34,250
Current Maturities of Capital Leases 573 573
Accounts Payable 3,947 7,053
Accrued Expenses 2,152 2,740
Accrued Nonrecurring Charges 2,856 2,693
------- -------
Total Current Liabilities 22,435 47,309
Obligations Under Capital Leases 1,479 1,204
Nonrecurring Charges - Long-Term 557 557
Stockholders' Equity:
Preferred stock, 1,000,000 shares authorized;
no shares issued and outstanding
Common Stock, $.01 par value: authorized,
20,000,000 shares; issued and outstanding,
6,459,381 shares on January 31, 1995 and on
July 31, 1995 65 65
Additional Paid-in capital 23,603 23,603
Retained Earnings 6,433 5,117
------- -------
30,101 28,785
------- -------
$54,572 $77,855
======= =======
See Accompanying Notes to Financial Statement.
-3-
G-III APPAREL GROUP, LTD. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(in thousands, except share and per share amounts)
THREE MONTHS ENDED
-------------------------
JULY 31,
1994 (000'S) 1995
---- ----
(unaudited)
Net Sales $ 44,848 $ 30,621
Commission Income 3,312 5,411
----------- -----------
Net Sales and Revenues 48,160 36,032
Cost of Goods Sold 39,622 26,417
----------- -----------
Gross Profit 8,538 9,615
Selling, General and
Administrative Expenses 6,332 5,502
----------- -----------
Operating Profit 2,206 4,113
Interest and Financing Charges, Net 1,062 991
----------- -----------
Income Before Taxes 1,144 3,122
Income Taxes 509 1,403
----------- -----------
Net Income $ 635 $ 1,719
=========== ===========
Income per common share:
Primary;
Net Income per common share $ .10 $ .27
=========== ===========
Weighted average number of
shares outstanding 6,471,462 6,459,381
=========== ===========
Fully Diluted;
Net Income per common share $ .10 $ .27
=========== ===========
Weighted average number of shares
outstanding 6,471,462 6,459,381
=========== ===========
See Accompanying Notes to Financial Statements.
-4-
G-III APPAREL GROUP, LTD. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(in thousands, except share and per share amounts)
SIX MONTHS ENDED
--------------------
JULY 31,
1994 (000'S) 1995
---- ----
(unaudited)
Net Sales $ 65,005 $ 39,462
Commission Income 3,312 5,845
----------- -----------
Net Sales and Revenues 68,317 45,307
Cost of Goods Sold 58,221 35,001
----------- -----------
Gross Profit 10,096 10,306
Selling, General and
Administrative Expenses 12,688 10,845
----------- -----------
Operating Loss (2,592) (539)
Interest and Financing Charges, Net 1,551 1,397
----------- -----------
Loss Before Taxes (4,143) (1,936)
Income Taxes (Benefit) (1,848) (620)
----------- -----------
Net Loss $ (2,295) $ (1,316)
=========== ===========
Loss per common share:
Primary;
Net Loss per common share $ (.35) $ (.20)
=========== ===========
Weighted average number of
shares outstanding 6,457,298 6,459,381
=========== ===========
Fully Diluted;
Net Loss per common share $ (.35) $ (.20)
=========== ===========
Weighted average number of shares
outstanding 6,457,298 6,459,381
=========== ===========
See Accompanying Notes to Financial Statements.
-5-
G-III APPAREL GROUP, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED
----------------
JULY 31,
--------
1994 1995
---- ----
(000's)
(unaudited)
Cash Flows from Operating Activities:
Net Loss $ (2,296) $ (1,316)
Adjustments to Reconcile Net Income:
Depreciation and Amortization 703 636
Changes in Operating Assets and Liabilities:
Accounts Receivable (21,108) (13,685)
Inventory (19,465) (6,949)
Prepaid and Refundable Income Taxes (2,107) (681)
Prepaid Expenses (57) (801)
Other Assets (22) (6)
Accounts Payable and Accrued Expenses 12,199 3,694
Accrued Nonrecurring Charge (163)
---------- ----------
(29,857) (17,955)
---------- ----------
Net Cash (Used in) Operating Activities (32,153) (19,271)
---------- ----------
Cash Flows for Investing Activities:
Capital Expenditures (354) (498)
Investment in Joint Venture (452)
---------- ----------
Net Cash (Used in) Investing Activities: (806) (498)
---------- ----------
Cash Flows from Financing Activities:
Borrowings under bankers' acceptances and notes 85,069 32,153
Repayments of bankers' acceptances and notes (52,350) (10,810)
Proceeds from capital lease obligations 1,150
Payment of capital lease obligations (192) (275)
---------- ----------
Net Cash Provided by Financing Activities 33,677 21,068
---------- ----------
Net Increase (Decrease) in Cash 718 1,299
Cash at Beginning Period 833 1,421
---------- ----------
Cash at End of Period $ 1,551 $ 2,720
========== ==========
Supplemental Disclosures of Cash Flow Information
Cash Paid During the Period for:
Interest $ 1,526 $ 1,222
Income Taxes $ 36 $ 2
See Accompanying Notes to Financial Statements.
-6 -
G-III APPAREL GROUP, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENT
Note 1 - General Discussion
The results for the three and six month periods ended July 31, 1995 are not
necessarily indicative of the results expected for the entire fiscal year. The
accompanying financial statements included herein are unaudited. In the opinion
of management, all adjustments (consisting of only normal recurring adjustments)
necessary for a fair presentation of the financial position, results of
operations and cash flows for the interim periods presented have been reflected.
The accompanying financial statements should be read in conjunction with the
financial statements and notes included in the Company's Form 10K filed with the
Securities and Exchange Commission for the year ended January 31, 1995.
Note 2 - Inventories
January 31, July 31,
Inventories consist of: 1995 1995
---- ----
Finished products...................... $ 23,107 $ 27,324
Work-in-process........................ 52 884
Raw materials.......................... 2,373 4,273
-------- -----
$ 25,532 $ 32,481
======== ======
Note 3 - Net Income (Loss) Per Common Share
Net Income (Loss) per common share is based on the weighted average number of
common shares and common share equivalents during each of the periods. Primary
and fully diluted earnings per share include the dilutive effect of unexercised
stock options.
Note 4 - Notes Payable
The Company has a loan agreement with three banks for $48,000,000 through
January 30, 1996 and $40,000,000 through May 31, 1996, of which $40,000,000
through January 30, 1996 and $32,000,000 through May 31, 1996 is available for
direct borrowings and the unused balance for letters of credit. All amounts
available for borrowings are subject to borrowing base formulas.
Note 5 - Nonrecurring Charges
As of the year ended January 31, 1995, the Company had a remaining reserve of
approximately $3.4 million related to a cost reduction program. The status of
the components of the provision at July 31, 1995 was:
Balance 1995 Balance
January 31, 1995 Activity July 31, 1995
---------------- -------- -------------
Disposal of Asian Facility $ 2,500 $ $ 2,500
Shut down of Domestic Facilities 579 (69) 510
Severance and related costs 334 (94) 240
------ ---- ---
$ 3,413 $ (163) $ 3,250
===== ===== =====
-7-
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
Net sales and revenues for the three months ended July 31, 1995 were $36.0
million compared to $48.2 million for the same period last year. For the six
months ended July 31, 1995, net sales and revenues were $45.3 million compared
to $68.3 million for the same period in the prior year. The decrease in net
sales during the three and six month periods was primarily due to the
recognition by the Company of only commission income on certain types of sales
where the Company's customers provide letters of credit which are transferred by
the Company directly to overseas manufacturers or where the Company's customer
provided letters of credit directly to overseas manufacturers. Prior to the
quarter ended July 31, 1994, the customer provided a letter of credit to the
Company and the Company opened a letter of credit to the manufacturer.
Accounting rules require the Company to recognize only commission income with
respect to transactions where the Company does not open a letter of credit. The
Company expects that it will increasingly utilize this type of transaction which
results in the Company reporting lower net sales and revenues.
The Company recognized $5.4 million and $5.8 million of commission income in the
three and six months ended July 31, 1995, respectively, compared to $3.3 million
in each of the comparable periods in the prior year. If the Company had
recognized the full amount of sales from this type of transaction, net sales and
revenues would have been $63.5 million and $75.3 million, respectively, for such
three and six month periods and, on a comparable basis, would have been $64.9
million and $85.2 million, respectively, for the same periods in the prior year.
The decrease in net sales and revenues in the six month period was primarily due
to lower net sales and revenues in the three months ended April 30, 1995. The
unusually warm fall season of 1994 left retailers in an overstocked position
adversely effecting sales during such period.
Gross profit was $9.6 million for the three months ended July 31, 1995, compared
to $8.5 million in the same period last year. Gross profit as a percentage of
net sales and revenues was 26.7% for the three months ended July 31, 1995,
compared to 17.6% for the same period last year. For the six month period ended
July 31, 1995, gross profit was $10.3 million, or 22.7% of net sales and
revenues, compared to $10.1 million, or 14.8% of net sales and revenues, for the
same period last year. While the change in the use of certain letters of credit
to transact sales did not impact gross profit dollars, it did affect gross
profit as a percentage of net sales and revenues since net sales and revenues
recognized from such transactions were lower. Had the Company recognized the
full amount of such sales, gross profit for the three and six months ended July
31, 1995 would have been 15.1% and 13.7%, respectively, of net sales and
revenues, compared to 13.1% and 11.9%, respectively, for the same periods last
year. The increase in the gross profit percentage was a result of improved
margins in a majority of product lines as well as cost reductions resulting from
closure of the Company's domestic manufacturing facilities.
Selling, general and administrative expenses of $5.5 million for the three
months ended July 31, 1995 were approximately $800,000 less than in the same
period last year. As a percentage of net sales and revenues, selling, general
and administrative expenses were 15.3% in this period compared to 13.1% last
year. For the six month period, selling general and administrative expenses were
$10.8 million, or 23.8% of net sales and revenues, compared to $12.7 million, or
18.6% of net sales and revenues, for the same period last year. The increase as
a percentage of net sales and revenues was the result of lower reported net
sales and revenues as described above. The lower selling, general and
administrative expenses were the result of the implementation of a cost
reduction program which began in the second half of the prior fiscal year. The
Company is continuing to monitor and reduce expense levels and expects selling,
general and administrative expenses to continue to decrease for the reminder of
the year, compared to last year, as a result of this program.
-8-
Interest expense of $991,000 was $71,000 lower in the quarter ended July 31,
1995, compared to interest expense of $1,062,000 in the same period last year.
For the six months ended July 31, 1995, interest expense was $1,397,000, a
decrease of $154,000 from the prior year. The decrease is attributable to lower
borrowing levels as a result of the Company maintaining lower levels of
inventory, which more than offset higher interest rates and other financing
costs.
Income taxes of $1.4 million reflect an effective tax rate of 44.9%. for the
three months ended July 31, 1995, compared to income taxes of $509,000 which
reflect an effective tax rate of 44.5%, in the comparable period in the prior
year. For the six months ended July 31, 1995, income tax benefit of $620,000
reflects an effective tax rate of 32.0%, compared to an income tax benefit of
$1.8 million, or 44.6% in the same period last year. The decreased effective tax
rate for the six months results from a lower provision for current year income
taxes (40%), resulting from the state and local tax loss carry forward from the
prior year, offset in part by additional federal taxes of $157,000, due to an
income tax audit for certain prior periods through January 31, 1993.
As a result of the foregoing, for the three month period ended July 31, 1995,
the Company had net income of $1.7 million, or $.27 per share, compared to a net
income of $635,000, or $.10 per share, for the comparable period in the prior
year. For the six month period ended July 31, 1995, the Company had a net loss
of $1.3 million, or $.20 per share, compared to a net loss of $2.3 million, or
$.35 per share, for the same period in the prior year.
Liquidity and Capital Resources
The Company has a loan agreement, which expires May 31, 1996, providing for a
collateralized working capital line of credit for a maximum amount of $48
million through January 30, 1996 (reduced to $40 million commencing January 31,
1996), of which a maximum of $40 million (reduced to $32 million commencing
January 31, 1996) is available for direct borrowings and the unused balance for
letters of credit. All amounts available for borrowings are subject to borrowing
base formulas and overadvances specified in the agreement.
Direct borrowings bear interest at the agent's prime rate (8.75% as of September
1, 1995) plus 2%. All borrowings are collateralized by the assets of the
Company. The loan agreement requires the Company, among other covenants, to
maintain certain earnings and tangible net worth levels, and prohibits the
payments of cash dividends. As of July 31, 1995, there was $31.6 million of
borrowings outstanding and approximately $10.7 million of contingent liability
under open letters of credit. The amount borrowed under the line of credit
varies based on the Company's seasonal requirements. The current loan agreement
reduced the maximum credit line available to the Company compared to the prior
year. The Company is planning to carry lower levels of inventory in the current
fiscal year compared to the prior year and, as a result, believes that this
facility will be sufficient to meet its working capital needs. Inventories as of
July 31, 1995 were $32.5 million compared to $57.8 million as of July 31, 1994.
The Company's majority-owned Indonesian subsidiary has a line of credit with a
bank for approximately $3.5 million which is supported by a $2.0 million
stand-by letter of credit issued under the Company's loan agreement. As of July
31, 1995, the borrowing by the Indonesian subsidiary under its line of credit
approximated $2.7 million.
-9-
Item 4. Submission of Matters to a Vote of Stockholders
(a) The Company's Annual Meeting of Stockholders was held on June 22,
1995 (the 'Annual Meeting').
(b) The following matters were voted upon and approved by the Company's
stockholders at the Annual Meeting:
(i) The election of nine directors to serve for the ensuring year.
The following nominees were elected as directors of the Company (with the
Company's stockholders having voted as set forth below):
================================================================================
Withheld
Nominee Votes For Authority to Vote
--------------------------------------------------------------------------------
Morris Goldfarb 5,958,656 99,084
--------------------------------------------------------------------------------
Aron Goldfarb 5,957,656 100,084
--------------------------------------------------------------------------------
Lyle Berman 5,958,156 99,584
--------------------------------------------------------------------------------
Thomas J. Brosig 5,958,556 99,184
--------------------------------------------------------------------------------
Alan Feller 5,959,256 98,484
--------------------------------------------------------------------------------
Carl Katz 5,958,156 99,584
--------------------------------------------------------------------------------
Willem van Bokhorst 5,959,156 98,584
--------------------------------------------------------------------------------
Sigmund Weiss 5,959,156 98,584
--------------------------------------------------------------------------------
George J. Winchell 5,959,156 98,584
================================================================================
(ii) The ratification of the appointment of Grant Thornton LLP as
the Company's independent certified public accountants for the fiscal year
ending January 31, 1996. The Company's stockholders voted as follows: FOR:
6,007,465
AGAINST: 45,740 ABSTENTIONS: 4,535 BROKER NON-VOTES: 0
-10-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
G-III APPAREL GROUP, LTD.
(Registrant)
Date: September 13, 1995 By: /s/ MORRIS GOLDFARB
---------------------------------
Morris Goldfarb
President and Chief
Executive Officer
Date: September 13, 1995 By: /s/ ALAN FELLER
---------------------------------
Alan Feller
Chief Financial Officer,
Treasurer, and Secretary
STATEMENT OF DIFFERENCES
The section symbol shall be expressed as .................... 'ss'
EXHIBIT INDEX
-------------
Sequential
Page
Number
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Exhibit 10 Second Amended and Restated Loan Agreement
Exhibit 27 Financial Data Schedule
SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
G-III LEATHER FASHIONS, INC.
THE BANKS SIGNATORY HERETO
AND
NATWEST BANK N.A.
AS AGENT, COLLATERAL MONITORING AGENT
AND ISSUING BANK FOR SUCH BANKS
JUNE 12, 1995
TABLE OF CONTENTS
PAGE
----
Article 1. Definitions................................................. 2
Article 2. Revolving Credit Facility................................... 21
Section 2.1 Letters of Credit; Acceptances;
Loans; Steamship Guaranties;
Airway Releases........................................... 21
Section 2.2 Applications for Letters of
Credit, Steamship Guaranties
and Airway Releases.. .................................... 23
Section 2.3 Borrowing Notice and
Disbursement of Loans..................................... 25
Section 2.4 Notes....................................................... 26
Section 2.5 Interest.................................................... 26
Section 2.6 Fees........................................................ 27
Section 2.7 Payment of Loans and Acceptances;
Voluntary Changes in Commitment;
Mandatory Prepayments.................................... 28
Section 2.8 Use of Proceeds of Loans.................................... 29
Section 2.9 Computations................................................ 29
Section 2.10 Time and Method of Payments;
Statement of Account..................................... 30
Section 2.11 Several Obligations......................................... 31
Section 2.12 Guaranties.................................................. 31
Section 2.13 Security.................................................... 32
Section 2.14 Lending Offices............................................. 36
Section 2.15 Obligations Absolute........................................ 36
Section 2.16 Sharing of Payments
and Set-Off Among Banks................................... 37
Section 2.17 Capital Requirements........................................ 37
Section 2.18 Additional L/C Provisions................................... 38
Section 2.19 Pro Rata Treatment Among Banks.............................. 40
Section 2.20 Non-Receipt of Funds by the Agent........................... 40
Section 2.21 Collections; Agent's Right to
Notify Account Debtors and
Endorse the Borrower's Name.............................. 41
Section 2.22 Application of Payments and Collections..................... 42
Article 3. Representations and Warranties.............................. 43
Section 3.1 Organization................................................ 43
Section 3.2 Power, Authority, Consents.................................. 44
Section 3.3 No Violation of Law or Agreements........................... 45
Section 3.4 Due Execution, Validity, Enforceability..................... 45
Section 3.5 Properties, Priority of Liens............................... 46
Section 3.6 Judgments, Actions, Proceedings............................. 46
Section 3.7 No Default; Compliance With Laws............................ 46
-i-
PAGE
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Section 3.8 Burdensome Documents........................................ 47
Section 3.9 Financial Statements;
Projections............................................... 47
Section 3.10 Tax Returns................................................. 48
Section 3.11 Intangible Assets........................................... 48
Section 3.12 Regulation U................................................ 48
Section 3.13 Name Changes, Mergers,
Acquisitions; Location of Collateral...................... 49
Section 3.14 Full Disclosure............................................. 49
Section 3.15 Licenses and Approvals...................................... 49
Section 3.16 Labor Disputes; Collective Bargaining
Agreements; Employee Grievances........................... 50
Section 3.17 Condition of Assets......................................... 50
Section 3.18 ERISA....................................................... 50
Section 3.19 Account Representations
and Warranties............................................ 52
Section 3.20 Borrowing Base Certificates................................. 52
Section 3.21 Accounts Receivable Aging Reports;
Key Item Reports.......................................... 52
Section 3.22 Inventory Representations
and Warranties............................................ 52
Section 3.23 Forfeiture Proceeding....................................... 53
Section 3.24 Americans with Disabilities Act............................. 53
Article 4. Conditions.................................................. 53
Section 4.1 Conditions to Closing....................................... 53
Section 4.2 Conditions to Subsequent
Loans and Issuance of L/Cs................................ 56
Section 4.3 Post-Closing Obligations.................................... 56
Article 5. Delivery of Financial Reports,
Documents and Other Information........................... 57
Section 5.1 Annual Financial Statements................................. 57
Section 5.2 Semi-Annual Financial Statements;
Quarterly Financial Statements............................ 58
Section 5.3 Compliance Information...................................... 59
Section 5.4 No Default Certificate...................................... 59
Section 5.5 Rental Obligations; Capitalized
Lease Obligations......................................... 59
Section 5.6 Accountants' Reports........................................ 59
Section 5.7 Copies of Documents......................................... 60
Section 5.8 Notices of Defaults......................................... 60
Section 5.9 ERISA Notices............................................... 60
Section 5.10 Additional Information and Reports ......................... 61
Section 5.11 Confidentiality of Information.............................. 62
-ii-
PAGE
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Article 6. Affirmative Covenants....................................... 63
Section 6.1 Books and Records........................................... 63
Section 6.2 Inspections and Field Examinations;
Annual Accounts Receivable............................... 63
Section 6.3 Maintenance and Repairs..................................... 64
Section 6.4 Continuance of Business..................................... 64
Section 6.5 Copies of Corporate Documents............................... 64
Section 6.6 Perform Obligations......................................... 64
Section 6.7 Notice of Litigation........................................ 65
Section 6.8 Insurance................................................... 65
Section 6.9 Financial Covenants......................................... 65
Section 6.10 Notice of Certain Events.................................... 66
Section 6.11 Comply with ERISA........................................... 67
Section 6.12 Environmental Compliance.................................... 67
Section 6.13 Management Letter........................................... 67
Section 6.14 Engagement of Consultant.................................... 67
Section 6.15 Tax Refunds................................................. 68
Article 7. Negative Covenants.......................................... 68
Section 7.1 Indebtedness................................................ 68
Section 7.2 Liens....................................................... 69
Section 7.3 Guaranties.................................................. 69
Section 7.4 Mergers, Acquisitions; Liquidations......................... 70
Section 7.5 Redemptions; Distributions.................................. 70
Section 7.6 Stock Issuance.............................................. 71
Section 7.7 Changes in Business......................................... 71
Section 7.8 Prepayments................................................. 71
Section 7.9 Investments................................................. 71
Section 7.10 Fiscal Year................................................. 72
Section 7.11 ERISA Obligations........................................... 72
Section 7.12 Amendments of Documents..................................... 73
Section 7.13 Capital Expenditures........................................ 73
Section 7.14 Capitalized Lease Obligations............................... 73
Section 7.15 Management Fees............................................. 73
Section 7.16 Transactions with Affiliates................................ 73
Section 7.17 Activities Leading to Forfeiture
Proceeding............................................... 74
Section 7.18 Rental Obligations.......................................... 74
Section 7.19 Retail Store................................................ 74
Section 7.20 License Agreements.......................................... 75
Article 8. Events of Default........................................... 75
Section 8.1 Payments.................................................... 75
Section 8.2 Certain Covenants........................................... 75
Section 8.3 Other Covenants............................................. 75
-iii-
PAGE
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Section 8.4 Other Defaults.............................................. 76
Section 8.5 Representations and Warranties.............................. 76
Section 8.6 Bankruptcy.................................................. 77
Section 8.7 Judgments................................................... 77
Section 8.8 ERISA....................................................... 78
Section 8.9 Ownership of Stock.......................................... 78
Section 8.10 Management.................................................. 78
Section 8.11 Liens....................................................... 79
Section 8.12 Amount of Obligations....................................... 79
Section 8.13 Forfeiture Proceedings...................................... 79
Section 8.14 Material Adverse Change..................................... 79
Article 9. Agency Provisions........................................... 79
Section 9.1 Appointment, Powers and Immunities.......................... 79
Section 9.2 Reliance.................................................... 80
Section 9.3 Events of Default........................................... 80
Section 9.4 Rights as a Bank............................................ 81
Section 9.5 Indemnification............................................. 81
Section 9.6 Non-Reliance................................................ 82
Section 9.7 Failure to Act.............................................. 82
Section 9.8 Resignation or Removal...................................... 82
Section 9.9 Sharing of Collateral and Payments.......................... 83
Section 9.10 Additional Provisions as to the
Collateral Monitoring Agent............................... 84
Article 10. Miscellaneous Provisions.................................... 85
Section 10.1 Fees and Expenses; Indemnity................................ 85
Section 10.2 Taxes....................................................... 87
Section 10.3 Payments.................................................... 87
Section 10.4 Survival of Agreements and
Representations; Construction............................. 88
Section 10.5 Lien on and Set-off of Deposits............................. 88
Section 10.6 Modifications, Consents and
Waivers; Entire Agreement................................. 89
Section 10.7 Remedies Cumulative......................................... 89
Section 10.8 Further Assurances.......................................... 90
Section 10.9 Notices..................................................... 90
Section 10.10 Counterparts................................................ 92
Section 10.11 Severability................................................ 92
Section 10.12 Binding Effect; No Assignment
or Delegation by Borrower................................. 93
Section 10.13 Assignments and Participation by
Banks; Issuance of L/Cs by
Bank Affiliates........................................... 93
-iv-
PAGE
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Section 10.14 GOVERNING LAW; CONSENT TO JURISDICTION;
WAIVER OF TRIAL BY JURY................................... 96
Section 10.15. Waiver of Existing Events of Defaults....................... 96
Section 10.16. Additional Agreements by Borrower
and Loan Parties. ................... .................... 97
Section 10.17. Release by Borrower and Loan Parties........................ 97
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EXHIBITS
A. Form of Fourth Substituted 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
SCHEDULE
1 Existing Events of Default
7.9 Investments
-vi-
SECOND AMENDED AND RESTATED LOAN AGREEMENT
------------------------------------------
THIS AGREEMENT, made as of the 12th day of June, 1995, by and among:
G-III LEATHER FASHIONS, INC., a New York corporation (the 'Borrower');
The Banks that have executed the signature pages hereto (individually,
a 'Bank' and collectively, the 'Banks'); and
NATWEST BANK N.A. (formerly known as National Westminster Bank USA), a
national banking association, as Agent for the Banks (in such capacity, together
with its successors in such capacity, the 'Agent'), as Collateral Monitoring
Agent for the Banks (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:
--------------------
(A) The Borrower is indebted to the Banks in the aggregate principal
amount of NINETEEN MILLION NINE HUNDRED THOUSAND AND 00/100 ($19,900,000.00)
DOLLARS 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
$15,385,300.00 (collectively, the 'Existing Loan and L/C Obligations') pursuant
to the Amended and Restated Loan Agreement, dated July 29, 1994, by and among
the Borrower, the Banks and the Agent, as amended by Letter Amendment dated as
of December 15, 1994, Letter Amendment dated as of February 2, 1995, Letter
Amendment dated March 24, 1995, Agreement as to Open Trade Letters of Credit,
dated March 30, 1995, Letter Agreement dated May 30, 1995, Letter Agreement
dated June 5, 1995 and Letter Agreement dated June 9, 1995 (as so amended, the
'Existing Loan Agreement');
(B) 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
Existing Loan Agreement (all such indebtedness, liabilities and obligations,
collectively, the 'Existing Bank 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
-1-
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 Bank 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 Existing Loan Agreement;
(C) Morris Goldfarb and Aron Goldfarb, stockholders in G-III Apparel
Group, Ltd., the owner of all of the issued and outstanding capital stock of the
Borrower, have personally guaranteed a portion of the Existing Bank Obligations;
(D) As of the date hereof, the Borrower is not in compliance with
certain of the terms, conditions and covenants of the Existing Loan Agreement
and certain Events of Default exist thereunder;
(E) The Borrower desires that the Banks (i) waive the existing Events
of Default under the Existing Loan Agreement, which Events of Default are set
forth on Schedule 1 attached hereto (the 'Existing Events of Default'); and (ii)
extend the credit facility provided for under the Existing Loan Agreement as
amended hereby on the terms and conditions contained herein;
(F) The Banks have agreed to waive the existing Events of Default and
extend the credit facility, subject to the amendment of the terms and conditions
relating to the aforementioned collateral and subject to the other agreements of
the parties, all as hereinafter set forth; and
(G) In order to effect the amendment of the Existing Loan Agreement,
the Banks, the Agent, the Collateral Monitoring Agent, the Issuing Bank and the
Borrower desire to amend and restate the Existing Loan Agreement in its entirety
as set forth herein;
NOW, THEREFORE, the parties hereto agree to amend and restate the
Existing 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 Bank 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.
-2-
'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.
'Account Debtor' or 'account debtor' - at any time, any Person
who is obligated to the Borrower, Retail or Manufacturing under or on account of
an Account.
'Accounts Receivable Aging Report' - a summary account
receivable trial balance showing accounts receivable of the Borrower and each
Guarantor (other than Tatabuana) 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.
'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.
'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.
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'Assignment of Life Insurance' - as defined in Section
2.13(c)(i)(A) hereof.
'Assignment of Tax Refunds' - as defined in Section
2.13(d)(ii)(C) hereof.
'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.
'Bank's Commitment' - the amount set forth next to each Bank's
name on the signature pages hereto.
'Bank's Share' - with respect to any Bank, such Bank's pro
rata share determined at any time as its Bank's Commitment as a percentage of
the Commitment.
'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) Eighty percent of all Eligible Accounts; plus
(ii) Fifty 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 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.
'Borrowing Base Certificate' - a certificate executed by the
president or chief financial officer of the Borrower substantially in the form
annexed hereto as Exhibit P containing the information set forth therein.
-4-
'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.
'Collateral Fees' - as defined in Section 2.6(f) hereof.
'Collection Account' - an account owned and maintained by the
Collateral Monitoring Agent for the ratable benefit of the Banks.
'Commitment' - (i) Forty-Eight Million ($48,000,000) Dollars
during the period from the date hereof to and including
-5-
January 30, 1996, and (ii) $40,000,000 during the period from January 31, 1996
to and including May 31, 1996, in each case in the aggregate, allocated among
each of the Banks, respectively, in the amount set forth opposite such Bank'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, 1996.
'Compliance Certificate' - a certificate executed by the
president 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
Banks, 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 Guarantors' - as defined in Section 2.12 hereof.
'Credit Period' - the period commencing on the date hereof and
ending on the Commitment Termination Date.
'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
-6-
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 or Airway Releases.
'Direct Debt Sublimit' - (i) $40,000,000 during the period
from the date hereof through and including January 30, 1996, and (ii)
$32,000,000 during the period from January 31, 1996, through the Commitment
Termination Date.
'Dollars' and '$' - lawful money of the United States of
America.
'Drawing Fee' - as defined in Section 2.6(b) 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, Manufacturing or Retail 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 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, bill 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
-7-
any kind, or, if the Account is evidenced by chattel paper or an instrument, the
Borrower, Siena, Manufacturing or Retail, as the case may be, has delivered and
properly endorsed such chattel paper or instrument to the Agent;
(d) to the best of the Borrower's, Manufacturing's or
Retail's knowledge, as the case may be, no event described in Section 8.6 hereof
with respect to the Account Debtor has occurred, the Agent and the Banks, 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) the Account is a valid, legally enforceable
obligation of the Account Debtor;
(h) the Account does not arise out of transactions
with an Affiliate;
(i) the Account does not arise out of the provision
of trial services or delivery of samples or trial merchandise to customers or
Account Debtors;
(j) 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;
(k) 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;
(l) 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 Banks 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
-8-
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;
(m) 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 Banks and those expressly permitted
under this Agreement; and
(n) 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 Banks
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.
'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, Manufacturing or Retail; (ii) is not slow
moving, obsolete or unsaleable; (iii) is currently useable or saleable in the
ordinary course of the Borrower's, Manufacturing's or Retail's business; (iv) is
valued in accordance with generally accepted accounting principles applied
consistently with past practices of the Borrower, Siena, Manufacturing and
Retail; (v) is located on the premises listed on the schedules attached to this
Agreement or other locations permitted under the Borrower Security Agreement or
any security agreement set forth in Section 2.14, 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 2.14, 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 the disposition
of which is restricted under an applicable license agreement; (xi) does not
-9-
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 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
-10-
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.
'Event(s) of Default' - as defined in Article 8 hereof.
'Examination Fees' - as defined in Section 2.6(g) hereof.
'Existing Acceptances' - the aggregate amount of Acceptances
outstanding on the date hereof.
'Existing Bank Obligations' - as defined in the second recital
paragraph hereof.
'Existing Events of Default' - as defined in the fifth recital
paragraph hereof.
'Existing Loan Agreement' - as defined in the first recital
paragraph hereof.
'Existing Loans' - the aggregate amount of Loans made by the
Banks and outstanding on the date 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 Banks 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 Banks 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
-11-
amounts is specified) of Trade L/Cs issued by the Banks 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(h) hereof.
'Financial Statements' - the audited consolidated balance
sheet of the Parent and the Subsidiaries (including the Borrower) as at January
31, 1995, together with the related consolidated statement of income and
retained earnings and statement of cash flow for the fiscal year then ended.
'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.
'Fourth Substituted Note(s)' - as defined in Section 2.4
hereof.
'Global' - Global International Trading Company, a Korean
corporation.
'Goldfarb Pledge Agreement' - as defined in Section
2.13(e)(i).
'Governmental Acts' - as defined in subsection 2.18(d) 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 Tamara Bank.
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'Hanil Letter of Credit' - the provision, as a portion of the
purchase price payable in connection with the Indawa Acquisition, by the
Borrower, on behalf of Indawa, to Hanil Bank of a standby letter of credit
expiring no later than May 31, 1996 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
Indawa.
'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 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.
'Individual Guarantor(s)' - as defined in Section 2.12.
'Inventory' - inventory of any of the Loan Parties (other than
the Individual Guarantors), 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).
'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
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(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' - NatWest Bank N.A., Chemical Bank and The
Chase Manhattan Bank, N.A., as the case may be; provided, however, subsequent to
the Letter Agreement, dated March 24, 1995, only NatWest Bank N.A. has acted as
Issuing Bank; and provided, further, that from and after the date of this
Agreement only NatWest Bank N.A. shall act as Issuing Bank.
'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)(iii) hereof in favor of the Korean Exchange Bank to
support a Two Million Dollar ($2,000,000) trade letter of credit facility for
Global.
'Latest Balance Sheet' - as defined in Section 3.9(a) hereof.
'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.
'L/C(s)' - Trade L/Cs and/or Standby L/Cs.
'Lien' - any mortgage, deed of trust, pledge, security
interest, encumbrance, lien or charge of any kind (including any agreement to
give any of the 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
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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' - the Borrower, the Parent, any Subsidiary, any
Guarantor, and any other Person (other than the Banks and the Agent) which now
or hereafter executes and delivers to any Bank 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 Banks' - so long as the Banks consist of three Banks
or fewer, Banks having 100% of the aggregate amounts of Commitments and, at any
time that the Banks consist of four Banks or more, Banks having at least 80% of
the aggregate amount of Commitments; provided, however, that the vote of 100% of
the Banks shall at all times be required for all matters not specifically to be
determined by Majority Banks hereunder, including, but not limited to, extension
of the term, increase in Commitments, change in interest rates, release of
Collateral and any change to the definition of Majority Banks.
'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.
'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.
'NatWest' - NatWest Bank N.A., in its individual capacity as a
Bank hereunder.
'New Assignment of Life Insurance' - as defined in Section
2.13(c)(ii)(B) hereof.
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'Note(s)' - the Fourth Substituted Note(s).
'Obligations' - collectively, all of the Indebtedness,
liabilities and obligations of the Borrower (and with respect to Trade L/Cs, and
Hong Kong) to the Banks, 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.
'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
------ ------
April 1, 1995-April 30, 1995 $17,400,000
May 1, 1995-May 31, 1995 23,000,000
June 1, 1995-July 23, 1995 24,600,000
July 24, 1995-July 30, 1995 20,600,000
July 31, 1995-Aug. 23, 1995 16,600,000
August 24, 1995-August 30, 1995 13,700,000
August 31, 1995-September 29, 1995 10,900,000
September 30-October 30, 1995 9,000,000
October 31, 1995-November 30, 1995 2,900,000
December 1, 1995-January 31, 1996 -0-
February 1, 1996-February 29, 1996 1,650,000
March 1, 1996-March 31, 1996 8,100,000
April 1, 1996-April 30, 1996 7,100,000
May 1, 1996-May 31, 1996 16,200,000
provided, however, that 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; and provided,
further, that, at any time when Outstanding Obligations have exceeded the
Borrowing Base as a
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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 Banks of all such issuances and advances within 24 hours).
'Parent' - G-III Apparel Group, Ltd., a Delaware corporation
and the holder of 100% of the issued and outstanding capital stock of the
Borrower.
'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.
'Payment Office' - the office of each Bank set forth on the
signature page hereof as the lending office of such Bank.
'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
-17-
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 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
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 NatWest as its prime rate. Notwithstanding the foregoing, the Borrower
acknowledges that NatWest 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.
'Projections' - the balance sheets, income statements and
statements of cash flow of the Borrower as at, and for the fiscal year ending
January 31, 1996 and for the four month period ending May 31, 1996.
'Purchase Money Security Interest' - as defined in subsection
7.2(c) hereof.
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'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 Bank, 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 Bank, 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.
'Retail' - G-III Retail Outlets Inc., a Delaware corporation.
'Security Documents' - as defined in subsection 2.13(f)
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, 1996.
'Standby L/C Fee' - as defined in Section 2.6(c) hereof.
'Steamship Guaranties' - as defined in Section 2.1(e) hereof.
'Stock Pledge Agreement' - as defined in Section
2.13(c)(ii)(D).
'Subsidiary' - with respect to any Person, any corporation,
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
-19-
Person, or (ii) in the case of a partnership or joint venture in which such
Person is a general partner or joint venturer 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. 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.
'Tax Powers' - as defined in Section 2.13(c)(ii)(C) hereof.
'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 by the PBGC of proceedings to terminate a Multiemployer Plan under
Section 4042 of ERISA.
'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 or Hong Kong, respectively, in
order to facilitate the transportation or purchase of goods from foreign vendors
by the Borrower or Hong Kong, as the case may be, in the ordinary course of
their respective businesses, which goods are consigned to the Issuing Bank
pursuant to the terms of the Application or otherwise, all of which (i) shall
have an
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expiration date of no later than August 31, 1996, (ii) shall be collateralized
on and after June 1, 1996 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(d) hereof.
'Unpaid Drawings' - as defined in Section 2.2 hereof.
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 Banks 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 and, in
the case of Trade L/Cs only, also for the account of Hong Kong. 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 Banks 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
Banks of one or more Trade L/Cs for the account of the Borrower or for the
account of Hong Kong; 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
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and Acceptances outstanding at any one time shall not exceed $3,000,000, (iii)
the amount of all Trade L/Cs for the account of Hong Kong outstanding at any one
time shall not exceed $2,000,000, and (iv) no Trade L/Cs shall expire on a date
later than August 31, 1996 and shall be collateralized on and after June 1, 1996
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 Banks
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 amount of Standby L/Cs outstanding at any one time 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, 1996.
(c) During the Credit Period, the Borrower may apply
to the Issuing Bank for the issuance by the Issuing Bank on behalf of the Banks
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 Banks of a loan or loans, and may repay and reborrow such
loans (each a 'Loan' and, collectively, the 'Loans'); 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 Banks
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 $19,900,000.00 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 $13,009,758.00 and shall
constitute 'Trade
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L/Cs' hereunder in such amount, subject to the terms and conditions of this
Agreement; (iii) Existing Acceptances are in the amount of $295,152.00 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
$2,080,390.00 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- 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.
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 or Hong Kong, as the case may be, 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 or Hong Kong,
as the case may be, 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 or Hong Kong, as the
case may be. 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 proceeds, 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 or Hong Kong, as the case may be,
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').
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(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 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
Banks 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 Banks, 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 Commitment Termination Date and ending on the date
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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 or Hong Kong, 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, 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 Banks 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 of a 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.
(b) The Collateral Monitoring Agent shall render to
each Bank promptly after the end of each week, or such shorter period as the
Agent may determine (such week or shorter period being hereinafter referred to
as a 'Settlement Period'), a summary statement of the Outstanding Obligations
and each Bank's Share thereof for such period. If, as of the end of any
Settlement Period, any Bank's Share of Loans is more than such Bank's Share for
the previous Settlement Period, then such Bank 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 Bank
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 Bank after 12:00 p.m.; and, on the other hand, if any Bank's Share of
Loans as of the end of any Settlement Period is less than such Bank's Share of
Loans for the previous Settlement Period, then the Collateral Monitoring Agent
shall transfer to such Bank 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 Bank hereunder, and all
funds remitted by
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any Bank 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 mark its books and records
each Settlement Period to show each Bank's Share of the Outstanding Obligations.
The failure of any Bank to make a timely payment hereunder shall have no effect
on such Bank's liability for such payment, it being understood that each Bank
shall assume the risk to the extent of its Bank'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.
The Loans made by each Bank shall be evidenced by a
single promissory note of the Borrower in substantially the form of Exhibit A
hereto payable to such Bank (each, a 'Fourth Substituted Note' and collectively,
the 'Fourth Substituted Notes'). Each Note shall be dated the date of this
Agreement, shall be payable to the order of each Bank on a date not later than
the Commitment Termination Date in a principal amount equal to such Bank's
Commitment as originally in effect, and shall otherwise be duly completed. The
Notes shall be payable as provided in Section 2.7 hereof.
Section 2.5 Interest.
(a) The Borrower shall pay to the Collateral
Monitoring Agent, for the ratable benefit of the Banks, 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 a rate equal to two (2%) percent per annum in excess of the Prime 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 not later than monthly on the Monthly
Dates. 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 Bank
-26-
to the extent that such Bank's receipt thereof would not be permissible under
the law or laws applicable to such Bank limiting rates of interest that may be
charged or collected by such Bank. 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 Bank on the earliest interest payment date or
dates on which the receipt thereof would be permissible under the laws
applicable to such Bank limiting rates of interest that may be charged or
collected by such Bank. Such deferred interest shall not bear interest.
Section 2.6 Fees.
(a) The Borrower shall pay to the Agent, for the
ratable benefit of the Banks, a non-refundable advisory fee (the 'Advisory Fee')
in the amount of $500,000 payable as follows:
(i) $125,000 paid upon execution of the
Letter Agreement, dated April 27, 1995, among the Borrower and the Banks; and
(ii) $125,000 payable not later than
December 31, 1995; and
(iii) $250,000 payable not later than
February 29, 1996; provided, however, that this portion of the Advisory Fee will
be waived if (x) at all times during the period commencing with the date of this
Agreement and ending on February 29, 1996 (A) the Borrower has been in
compliance with the financial covenants described in subsections 6.9(c) and
6.9(d) below and (B) Outstanding Obligations have not exceeded the Borrowing
Base, and (y) all Loans and Acceptances (but not Standby Letters of Credit) are
paid in full on at least five consecutive Business Days during the period
commencing on January 1, 1996 and ending on February 29, 1996; provided,
however, that if Acceptances are outstanding during the months of January and
February 1996, the Borrower will nevertheless be deemed to have satisfied the
requirement in clause (y) above if the Collateral Monitoring Agent is holding
for the account of the Borrower during such consecutive five Business Day period
excess Cash in an amount which would be sufficient to prepay such outstanding
Acceptances.
(b) Upon each drawing under an L/C, the Borrower or
Hong Kong, as the case may be, shall pay to the Issuing Bank, for the ratable
benefit of the Banks, a drawing fee (the 'Drawing Fee') computed at the rate of
five-sixteenths of one (5/16%) percent per annum of the face amount of such
drawing, but in no event shall the Drawing Fee be less than $70.00.
(c) 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 Banks, an issuance fee
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(the 'Standby L/C Fee') computed at the rate of three (3%) percent per annum on
the face amount of the requested Standby L/C payable quarterly in advance on the
applicable Monthly Dates.
(d) Upon the execution and delivery by the Borrower
of an Application for any L/C, Steamship Guarantee or Airway Release, the
Borrower shall pay directly to the Issuing Bank for its own account, all
issuance and associated transactional charges (the 'Transactional Fees') imposed
by the Issuing Bank in connection with any L/C, Steamship Guarantee or Airway
Release.
(e) Upon the execution and delivery of an Acceptance,
the Borrower shall pay to the Issuing Bank, for the ratable benefit of the
Banks, a fee (the 'Acceptance Fee') for such Acceptance equal to the discount
rate of the Agent plus four (4%) percent per annum of the principal amount of
such Acceptance for the term thereof payable monthly in advance on the
applicable Monthly Dates.
(f) The Borrower shall pay to the Collateral
Monitoring Agent for its own account the following fees monthly in advance on
the first Business Day of each calendar month (with the first such payment to be
made on June 1, 1995):
(i) monitoring fee - $5,000.00;
(ii) collateral management fee - $1,500.00;
and
(iii) inventory examination fee - $1,300.00
(collectively, the 'Collateral Fees').
(g) The Borrower shall pay to the Banks within ten
days following demand therefor, reimbursement for the fees and expenses of any
Bank's field examiners which accompany the Collateral Monitoring Agent on
inspections and field examinations (pursuant to Section 6.2 of this Agreement or
otherwise), such fees and expenses to be calculated at such Bank's standard per
diem rates (the 'Examination Fees').
(h) The Advisory Fee, the Drawing Fee, the Standby
L/C Fee, the Transactional Fees, the Acceptance Fee, the Collateral Fees and the
Examination Fees 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.
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(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 day's prior written notice of such termination
or reduction to the Banks 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. 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 Bank'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 Existing Loan Agreement, in an aggregate principal amount of
$37,090,212.00;
(b) second to pay all fees and expenses of the Agent
and the Banks associated with providing the Revolving Credit Facility; 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.
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(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 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 three 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
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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 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 thirty 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 Bank shall be responsible for the failure of the
other Banks to make Loans to be made by such other Banks.
Section 2.12 Guaranties.
(a) The Parent, Siena, Hong Kong, Global, Sources,
Holdings, Retail and Tatabuana (the 'Corporate Guarantors') and Morris Goldfarb
and Aron Goldfarb (the 'Individual Guarantors' and, collectively with the
Corporate Guarantors, hereinafter referred to individually as a 'Guarantor' and
collectively as the 'Guarantors') have heretofore executed (or, in the case of
Tatabuana only, simultaneously herewith is executing) guaranties (each of the
foregoing hereinafter referred to individually as a 'Guaranty' and collectively
as the 'Guaranties') pursuant to the Existing Loan Agreement (and, in the case
of Tatabuana only, pursuant to this Agreement) guaranteeing, without limitation,
the due payment and performance of the Obligations to the Banks, the Collateral
Monitoring Agent, the Issuing Bank and the Agent; provided, however, in the case
of the Individual Guarantors only, the amount to be paid by such Individual
Guarantors, in the aggregate, shall not exceed the sum of Two Million Five
Hundred Thousand Dollars ($2,500,000) (it being understood that the pledge and
obligations
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of Morris Goldfarb under the Goldfarb Pledge Agreement are not subject to such
limitation, but are limited to the assets pledged thereunder).
(b) Each of the Guarantors (other than Tatabuana)
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 described or refer to the
Indebtedness, liabilities and obligations of the Borrower, Hong Kong and each
Guarantor to the Banks and the Agent), includes, without limitation, all of the
Obligations, by the execution and delivery to the Agent of a guaranty
confirmation 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
simultaneously with the execution and delivery of the Existing Loan Agreement,
granted to the Agent, for the ratable benefit of the Banks, 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 (as amended, the 'Borrower
Security Agreement');
(ii) 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 Banks, 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'); 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 the Borrower Security Agreement (as acknowledged and confirmed by the
Borrower Security Interest Confirmation), this Section 2.13 and this Agreement.
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(b) (i) Each of the Corporate Guarantors (other
than Global, Hong Kong and Tatabuana) has heretofore granted to the Agent, for
the ratable benefit of the Banks, a Lien on all of such Corporate Guarantor's
Accounts and Inventory (and, in the case of Retail, all of its personal
property) whether then owned or thereafter acquired, tangible and intangible, by
the execution and delivery of a Security Agreement (each, 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 Banks, the
Collateral Monitoring Agent, the Issuing Bank and the Agent) includes, without
limitation, in each case, the Obligations as defined herein, and will amend the
terms of the Guarantor Security Agreement to provide for a Lien on all of such
Corporate Guarantor's personal property, 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');
(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 Banks, a lien on, and assigned to the Agent, for the
ratable benefit of the Banks, all of its right, title and interest in, to and
under all of the insurance policies on the life of Morris Goldfarb required to
be maintained by the Parent pursuant to Section 6.8 (c) hereof by the execution
and delivery to the Agent of a collateral assignment of life insurance dated
October 29, 1992 (the 'Assignment of Life Insurance'); and
(B) Granted to the Agent for the
ratable benefit of the Banks, a Lien on all of its personal property, whether
then owned or thereafter acquired, tangible and intangible,
-33-
by the execution and delivery of a Security Agreement dated as of January 31,
1994 (the 'Parent Security 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
Banks, 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) Execute and deliver a new
Assignment of Life Insurance (the 'New Assignment of Life Insurance') granting
to the Agent for the ratable benefit of the Bank's a Lien on all Key Man Life
Insurance proceeds under the policy maintained pursuant to the requirements of
Section 6.8(c) hereof;
(C) Execute and deliver IRS Forms
2848 and 234 (the 'Tax Powers') granting to the Agent for the benefit of the
Banks, inter alia, the authority to receive and endorse tax refund checks;
(D) Execute and deliver a stock
pledge agreement (the 'Stock Pledge Agreement') of all stock of all Subsidiaries
and Affiliates (other than Tatabuana and Qingdao G-III Garments Production Co.
Ltd., the Borrower's Chinese Affiliate, and their Subsidiaries and Affiliates),
including but not limited to the stock of the Borrower, granting to the Agent
for the ratable benefit of the Banks a Lien on all such stock; and
(E) 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
Parent Security Agreement (as acknowledged and confirmed by the Second Parent
Security Interest Confirmation), the New Assignment of Life Insurance, the
Assignment of Tax Refunds, the Stock Pledge Agreement, 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 Existing Loan
Agreement granted to the Agent for the ratable benefit of the Banks a Lien on
all of their respective Trademarks whether then owned or thereafter acquired, by
the execution and
-34-
delivery to the Agent of a Trademark Security Agreement dated October 29, 1992
and a New Trademark Security Agreement dated July 29, 1994 (collectively, 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 Banks, 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) (i) Morris Goldfarb, either prior to or
simultaneously with the execution and delivery of this Agreement, has executed
and delivered to the Agent, for the ratable benefit of the Banks, a pledge of
250,000 shares of the stock of the Parent (the 'Goldfarb Pledge Agreement') in
order to secure the due payment and performance by the Borrower of all the
Obligations;
(ii) Morris Goldfarb shall also 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 the Goldfarb Pledge Agreement.
(f) The Borrower Security Agreement, the Borrower
Security Interest Confirmation, the Guarantor Security Agreements, the Guarantor
Security Interest Confirmation, the New Assignment of Life Insurance, the Parent
Security Agreement, the Parent Security Interest Confirmation, the Trademark
Security Agreement, the Trademark Security Interest Confirmation, the Assignment
of Tax Refunds, the Stock Pledge Agreement, the Goldfarb Pledge Agreement, and
the aforesaid agreements, instruments and documents are hereinafter sometimes
referred to collectively as the 'Security Documents'.
-35-
Section 2.14 Lending Offices.
The Loans made by each Bank shall be made at such
Bank's lending office as set forth on the signature page hereto of such Bank.
Section 2.15 Obligations Absolute.
The obligations of the Borrower and Hong Kong 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 or Hong Kong 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
Bank 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 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, Hong Kong or beneficiaries in
connection therewith; and
(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 Bank.
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Section 2.16 Sharing of Payments and Set-Off Among Banks.
(a) The Borrower hereby agrees that, in addition to
(and without limitation of) any right of set-off, banker's lien or counterclaim
a Bank may otherwise have, each Bank 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 Bank to exercise any such
right or shall affect the right of any Bank to exercise and retain the benefits
of exercising, any such right with respect to any other indebtedness or
obligation of the Borrower.
(b) Each Bank:
(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 Banks of the Obligations, shall promptly purchase from the other
Banks a participation in the Obligations held by the other Banks in such
amounts, and make such other adjustments from time to time as shall be
equitable, so that all the Banks shall share the benefit of such payment and the
Obligations pro rata in accordance with their respective Commitments. To such
end all the Banks 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 Banks. The Borrower
agrees that any Bank so purchasing a participation in the Obligations held by
the other Banks may exercise all rights of set-off, banker's lien, counterclaim
or similar rights with respect to such participation as fully as if such Bank
were a direct holder of Obligations in the amount of such participation. The
failure of any Bank to purchase participations as provided hereunder shall not
affect the validity of the set-off as between such Bank and the Borrower.
Section 2.17 Capital Requirements.
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 Bank with any request
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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 Bank hereunder, and the result of any event referred to
above is to impose upon any Bank or increase any capital requirement applicable
as a result of the making or maintenance of, such Bank's Commitment or the
obligation of the Borrower hereunder with respect to such Commitment (which
imposition of capital requirements may be determined by each Bank's reasonable
allocation of the aggregate of such capital increases or impositions), then,
upon demand made by such Bank 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 Bank from time to time as specified by such Bank
additional commitment fees or interest or other amounts which shall be
sufficient to compensate such Bank 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 Bank as a result of an imposition of or increase in capital
requirements submitted by such Bank 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 'Bank' shall be deemed to include any participant in such
Bank's Commitment.
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 Bank, (2) impose on any Bank any other condition
regarding this Agreement or the L/Cs, or (3) subject any Bank 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 Bank; and
(ii) the result of any such event shall be to
increase the cost to any Bank of the issuance or maintenance of the L/Cs, or
reduce the amount of principal, interest, or any fee or compensation receivable
by any Bank in respect of the L/Cs or this Agreement;
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then, upon demand of any Bank, the Borrower shall pay to the Banks, from time to
time as specified by each of the Banks, respectively, all additional amounts
which are necessary to compensate such Bank for such increased cost or reduction
incurred by that Bank. 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 Bank 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 Bank showing the manner of calculation
thereof shall be submitted by such Bank 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 Bank 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, 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 Bank. None of the above shall affect,
impair, or prevent the vesting of any Bank'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 Bank, 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 Bank under any resulting liability to the
Borrower.
(d) The Borrower shall at all times protect,
indemnify and save harmless each Bank 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 Bank 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 Bank 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
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Acts'); provided, however, that the Borrower shall not be required to indemnify
any Bank 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 Bank 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 Bank.
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 Banks.
(a) Except as otherwise provided herein: (i) each
Loan advanced by the Collateral Monitoring Agent hereunder, (ii) 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), (iii) each payment of any Fee (other than Transactional Fees,
Collateral Fees and Examination Fees) by the Borrower, and (iv) 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 Banks according to the respective Bank's Share.
(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 Bank shall have made all payments to the
Collateral Monitoring Agent required to be made hereunder, the Collateral
Monitoring Agent shall pay to such Bank an amount equivalent to such Bank'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 Bank or the Borrower (the 'Payor') prior to the date notified
on which such Bank 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
Banks, 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,
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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 Bank) or equal to the rate of interest applicable to such
Loan (when the recipient is the Borrower).
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,
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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 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 pro rata among the Banks to
reduce the amount of any outstanding Loans; then
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(ii) applied to prepay, in the case of
liquidation only, with any applicable prepayment or 'breakage' fee, all
Acceptances;
(iii) 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
(iv) 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.
Article 3. Representations and Warranties.
Each of the Borrower and the other Loan Parties
(other than the Individual Guarantors) hereby represents and warrants to the
Banks, 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
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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, 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
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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 thereunder, 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 Banks.
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 affect 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.
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
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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.
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
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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 affects 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 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 have been 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 Banks 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.
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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. The Parent's consolidated
federal income tax return for the year ended July 31, 1990, is presently being
audited by the IRS.
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 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.
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.
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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-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 Banks 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 Bank 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 Statements, the
Projections, or any certificate or other written statement so made or furnished
to the Agent or the Banks other than any statement with respect to matters
affecting the economy as a whole.
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 affect 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.
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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 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
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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.
(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.
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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 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;
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(b) No Inventory is subject to any Lien or
security interest whatsoever, except for the Liens and security interests of the
Agent and the Banks 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 Banks, shall be subject to the fulfillment
(to the satisfaction of the Agent, the Collateral Monitoring Agent, the Issuing
Bank and the Banks) of the following conditions precedent:
(a) The Borrower shall have executed and delivered to
each Bank its Fourth Substituted Note;
(b) The Borrower shall have executed and delivered 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) Each of the Guarantors shall have executed and
delivered to the Agent its Guaranty Confirmation;
(e) Each Corporate Guarantor (except for Hong Kong,
Global and Tatabuana) shall have executed and delivered to the Agent its
Guarantor Security Interest Confirmation;
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(f) Each Corporate Guarantor 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.
(g) Tatabuana shall have delivered its Guaranty;
(h) The Parent shall have executed and delivered to
the Agent: (i) the Parent Security Interest Confirmation, (ii) the New
Assignment of Life Insurance, (iii) the Assignment of Tax Refunds, and (iv) the
Stock Pledge Agreement and the stock certificates, stock powers and proxies
required by the terms thereof;
(i) The Borrower, the Parent and Siena shall have
executed and delivered to the Agent their Trademark Security Interest
Confirmation;
(j) Morris Goldfarb shall have executed and delivered
the Goldfarb Pledge Agreement;
(k) The Borrower shall have delivered the Lock Box
Agreement;
(l) The Borrower shall have delivered the Continuing
Agreement for Issuance of Steamship Guaranty and Airway Releases;
(m) The Borrower or the Parent shall have delivered
the original Policy of Key Man Life Insurance required by the terms of Section
6.8(c) hereof;
(n) 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 Banks, 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;
(o) Each of:
(i) Fulbright & Jaworski L.L.P., counsel to the
Borrower, the Parent, Siena, Manufacturing, Retail, Holdings, Sources and the
Individual Guarantors; and
(ii) Robertson Double, counsel to Hong Kong; and
(iii) Daesung Accounting Firm, counsel to Global;
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shall have delivered their opinion to, and in form and substance satisfactory
to, the Agent and the Banks;
(p) The Agent shall have received true and complete
copies of the Financial Statements and the Projections, each certified as such
in a certificate executed by the president, vice president, or chief financial
officer of the Borrower;
(q) 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 the Subsidiaries certifying that since October 29,
1992 or the date of delivery of the respective certificates of incorporation to
the Agent there have been no amendments, modifications or supplements to the
certificates of incorporation of each of the Borrower, the Parent and the
Subsidiaries;
(iii) A certificate of the Secretary of each of
the Borrower, the Parent and the Subsidiaries certifying that since October 29,
1992 or the date of delivery of the respective by-laws to the Agent there have
been no amendments, modifications or supplements to the by-laws of each of the
Borrower, the Parent and the Subsidiaries;
(iv) 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;
(v) Good standing certificates as of dates not
more than twenty days prior to the date of the closing, with respect to each of
Holdings, Sources, Retail and Manufacturing, from the Secretary of State of
their respective states of incorporation and each state in which each of them is
qualified to do business; and
(vi) An incumbency certificate (with specimen
signatures) with respect to the Borrower, the Parent and the Subsidiaries;
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(r) (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(r)
are satisfied on such date; and
(s) All legal matters incident to the initial closing
shall be satisfactory to counsel to the Agent and the Banks.
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 Banks, 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 Banks) of the following conditions
precedent:
(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 Banks;
provided, however, that the Borrower hereby acknowledges to the Collateral
Monitoring Agent, the Issuing Bank, the Agent and each of the Banks 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.
Section 4.3 Post-Closing Obligations.
(a) Within 45 days following the date of this
Agreement the Borrower and the Parent shall deliver the following with respect
to Tatabuana:
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(i) Copies of all organizational documents;
(ii) evidence of good standing reasonably
satisfactory to the Agent; and
(iii) an opinion of counsel to Tatabuana in form
and substance satisfactory to the Agent and the Banks, opining as to (among
other things) the Guaranty delivered by Tatabuana having been duly authorized
and delivered and enforceable in accordance with its terms.
(b) Within 10 days following the date of this
Agreement the Borrower and the Parent shall deliver to the Banks a letter
specifying in reasonable detail the existing defaults with respect to the
Indebtedness owing to the IDA and JDA (as defined on Exhibit C).
(c) Within 60 days following the date of this
Agreement the Borrower and the Parent shall deliver to the Agent a stock
certificate for Global and the Agent is hereby authorized to enter the number of
shares, certificate number and other appropriate information with respect to
such stock certificate on the schedule to the Stock Pledge Agreement and to
possess such certificate on behalf of the Banks as collateral security for the
timely payment of the Obligations.
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 Bank, 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 Bank 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 ninety 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
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 Grant, Thornton or another firm of
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independent certified public accountants reasonably satisfactory to the Agent
and the Banks, and certified, as to the consolidating statements, by 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.
(b) Annually, at the same time that the statements
referred to in paragraph (a) of this Section 5.1 are delivered, personal
financial statements of the Individual Guarantors as of the most recent calendar
year-end, certified as true and correct by each Individual Guarantor as to his
own statement.
Section 5.2 Semi-Annual Financial Statements; Quarterly
Financial Statements.
(a) As soon as available, but in any event within
forty-five days after the end of the Parent's semi-annual fiscal periods, a
consolidating balance sheet of the Parent and the Subsidiaries (including the
Borrower) as of the last day of such semi-annual period and consolidating
statements of income and retained earnings and statements of cash flow, for such
semi-annual period, 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 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 applicable, as at its date and for such semi-annual period 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
forty-five days after the end of the Parent's first three 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 and a
statement of income and retained earnings and consolidating and consolidated
statements of income and retained earnings and statements of cash flow, for such
quarter, 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 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 as having
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been prepared in accordance with generally accepted accounting principles
consistently applied (subject to year-end audit adjustments).
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 Bank 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 president or chief financial officer of the Borrower and the
Parent, respectively, to the effect that no default hereunder and that no
default 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 president 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 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.
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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 Banks; (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 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 Bank.
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
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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
To the Collateral Monitoring Agent only, unless
requested by any Bank 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), (c)(iii) and (e) below, which
Borrower shall at all times deliver to each Bank),
(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;
(v) a Gross Margin Report in form satisfactory
to the Collateral Monitoring Agent and the Banks; and
(vi) an accounts payable aging report in form
satisfactory to the Collateral Monitoring Agent and the Banks.
(c) Monthly, delivered not more than fifteen days
after the end of each calendar month;
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(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-3;
(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 only
may be delivered not more than 22 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) 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;
each of which shall be certified as true and correct by the president or the
chief financial officer of the Borrower or the Parent, as the case may be.
(d) By no later than January 31, 1996, financial
projections for the Parent's ensuing fiscal year.
(e) As and when issued, copies of all reports
prepared by the Consultant within ten days after receipt.
Section 5.11 Confidentiality of Information.
The Agent, the Collateral Monitoring Agent, the
Issuing Bank and the Banks 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 Banks 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 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)
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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 Banks 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 Banks, 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 Banks 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 Banks
(in the case of the Banks, 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 Banks 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 Banks'
investment in the then Outstanding Obligations.
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Section 6.3 Maintenance and Repairs.
Maintain in good repair, working order and condi-
tion, 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 Bank 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 Banks 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 Banks; (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 ten 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 Banks, 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 Banks, term life insurance
on the life of Morris Goldfarb, in the amount of not less than $20,000,000
naming the Agent for the ratable benefit of the Banks as assignee of such
insurance and (ii) file with the Agent upon its request a detailed list of the
insurance on the life of Morris Goldfarb, 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, EBITDA on a cumulative basis from the first day of each
fiscal year through the date set forth below at not less than, or, in the case
of a loss, not more than, the
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respective amounts set forth below opposite each such last day of the fiscal
quarter:
Date EBITDA
---- ------
April 30, 1995 ($4,800,000)
July 31, 1995 ($1,100,000)
October 31, 1995 $6,250,000
January 31, 1996 $5,000,000
April 30, 1996 ($4,200,000)
(b) Have or maintain, with respect to the Parent on a
consolidated basis, Tangible Net Worth at all times during the periods set forth
below at not less than the respective amounts set forth opposite each such date:
Minimum Tangible
Date Net Worth
---- -----------------
April 30, 1995-July 30, 1995 $26,000,000
July 31, 1995-October 30, 1995 $27,500,000
October 31, 1995-January 30, 1996 $31,000,000
January 31, 1996-April 29, 1996 $30,000,000
April 30, 1996-May 31, 1996 $27,000,000
(c) Reduce Loans and Acceptances Outstanding to an
amount equal to or less than $5,000,000 for thirty consecutive days during the
period from December 1, 1995, through February 28, 1996.
(d) Maintain Loans, Standby L/Cs, Acceptances,
Steamship Guaranties and Airway Releases Outstanding at an amount not to exceed
80% of Eligible Accounts Receivable for 60 consecutive days during the period
from November 1, 1995 through February 28, 1996.
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
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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 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 Grant Thornton or another firm of independent certified
public accountants, provide a copy of such management letter to the Banks within
five days following receipt.
Section 6.14 Engagement of Consultant.
Engage the Carl Marks Consulting Group, Co. (the
'Consultant') to monitor the implementation of (i) the recommendations set forth
in the Consultant's report, dated January 1995, and (ii) the Borrower's proposed
implementation schedule previously submitted to the Banks (it being understood
and agreed that the Borrower does not intend to implement all of the
recommendations made in the Consultant's report). The Borrower
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will provide to the Banks copies of all retainer agreements between the Borrower
and the Consultant promptly following the execution thereof.
Section 6.15 Tax Refunds.
Instruct, or otherwise arrange with, the Internal
Revenue Service, 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 Banks 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.
Create, incur, permit to exist or have outstanding
any Indebtedness, except:
(a) Indebtedness of the Borrower and Hong Kong to the
Banks, 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 Banks with
respect to the Korean L/C and the Hanil L/C; and
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(e) As set forth on Exhibit L 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 individually as a 'Purchase Money Security Interest')
with the proceeds of the Indebtedness referred to in subsection 7.1(c) hereof;
provided, however, that:
(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 Capi-
talized 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,
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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.
Section 7.4 Mergers, Acquisitions; Liquidations.
(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.
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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 Indebtedness,
whether now owned or hereafter 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 Banks) 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 accep-
tances 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;
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(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 amount of all such loans to any one employee shall at no time exceed
$50,000 and that the aggregate outstanding principal amount of all such loans
shall at no time exceed $100,000;
(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 Exhibit D-1 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 January 31,
1996; and
(d) 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
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(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 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 in an amount in excess of $800,000 (net of reimbursements by
landlords up to $250,000) in the aggregate for the Parent, Borrower and the
Subsidiaries, during the period commencing on the date hereof and ending on May
31, 1996.
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 $200,000 for expenditures in respect of Capitalized Lease
Obligations with respect to all Leases entered into during the period from the
date of this Agreement through January 31, 1996, and (b) aggregate annual
payments of $80,000 for expenditures in respect of Capitalized Lease Obligations
with respect to all Leases entered into during the period from February 1, 1996
through May 31, 1996, provided, however, that the amounts permitted in (a) and
(b) 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 Manage-
ment 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
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assets to an Affiliate; (c) merge into or consolidate with or purchase or
acquire assets from an Affiliate; (d) enter into any other transaction 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 advantageous 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
$150,000; provided, however, that such limitation 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.
Open any additional retail stores during the period
from the date hereof through May 31, 1996; provided, however, that the Borrower
may open seasonal, outlet-type stores so long as (i) not more than six such
stores are open at any time, (ii) the occupancy of each such store shall not
exceed five 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.
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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
Banks 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:
Section 8.1 Payments.
Failure by the Borrower to (i) make any payment or
mandatory prepayment 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, or (iv)
make any required payment under Section 2.7, 2.17, 2.18 and 10.1 of this
Agreement; 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 or he 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
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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
(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 Banks
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
Banks 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
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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 sixty
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
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 sixty 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 sixty 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 thirty days or more; or
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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 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.
Morris and/or Aron Goldfarb (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.
Morris Goldfarb 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
Banks) 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 Banks, in their sole
discretion, shall have become and shall have commenced to perform the duties of
chief executive officer of the Borrower within thirty (30) 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 Morris Goldfarb in this Section
8.10; or
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Section 8.11 Liens.
Any of the Liens created and granted to the Agent for
the ratable benefit of the Banks 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 Bank written notice of the commencement of
any Forfeiture Proceeding as provided in Section 5.11 or any Bank 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 Bank 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 Bank. None of the Collateral Monitoring Agent,
the Issuing Bank or the Agent shall be responsible to the Banks 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
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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 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
Banks, and such instructions of the Majority Banks and any action taken or
failure to act pursuant thereto shall be binding on all of the Banks.
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 Bank 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 Banks. The Agent shall
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(subject to Section 9.7 hereof) take such action with respect to such Default as
shall be directed by the Majority Banks.
Section 9.4 Rights as a Bank.
Each of the Collateral Monitoring Agent, the Issuing
Bank and the Agent in its capacity as a Bank hereunder, shall have the same
rights and powers hereunder as any other Bank and may exercise the same as
though it were not acting as an agent hereunder, and the term 'Bank' or 'Banks'
shall, unless the context otherwise 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 Bank) 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 Banks hereunder, and may accept fees and other consideration from
the Borrower or its Affiliates, for services in connection with this Agreement,
the Security Documents or any of the other Loan Documents or otherwise without
having to account for the same to the Banks.
Section 9.5 Indemnification.
The Banks 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, unless a
default has occurred and is continuing, normal administrative costs and expenses
incident to the performance of their agency duties hereunder or under the
Security Documents) or the enforcement of any of the terms hereof or of the
Security Documents, or of any such other documents, provided that no Bank shall
be liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the party to be indemnified.
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Section 9.6 Non-Reliance.
Each Bank agrees that it has, independently and
without reliance on the Collateral Monitoring Agent, the Issuing Bank or the
Agent or any other Bank, 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
Bank, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own analysis and decisions in taking or not
taking action under this Agreement, 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 books of the Borrower. Except for
notices, reports and other documents and information expressly required to be
furnished to the Banks 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 Bank 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 Banks 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 Banks and the Borrower and (ii) may be
removed at any time with or without cause by the Majority Banks. Upon any such
resignation or removal, the Majority Banks shall have the right to appoint a
successor. If no successor Collateral Monitoring Agent, Issuing
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Bank or Agent shall have been so appointed by the Majority Banks and shall have
accepted such appointment within 30 days after the retiring party's giving of
notice of resignation or the Majority Banks' 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 Banks, after consultation with the Borrower,
appoint a successor which shall be one of the Banks. 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.
Section 9.9 Sharing of Collateral and Payments.
Upon or following any acceleration by the Agent and
the Banks of the Obligations, and following the purchase by each Bank of its
proportional share of the Obligations pursuant to subsection 2.16(b) hereof, in
the event that any Bank 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 Bank in respect of the
aggregate amount of the corresponding Obligation held by such Bank, then the
Bank so receiving such greater proportionate payment or such greater
proportionate amount of Collateral, shall purchase for cash from the other Bank
or Banks such portion of each such other Bank's or Banks' Loan, or shall provide
the other Banks with the benefits of any such Collateral, or the proceeds
thereof, as shall be necessary to cause such Bank receiving the proportionate
overpayment to share the excess payment or benefits of such Collateral or
proceeds ratably with each Bank. For the purposes of this Section, payments on
Obligations received by each Bank and receipt of Collateral by each Bank shall
be in the same proportion as the proportion of: (A) the Obligations owing to
such Bank in respect of the Obligations held by such Bank to (B) the Obligations
owing to all of the Banks 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 Bank that received
the proportionate overpayment, such purchase of Obligations or payment of
benefits, as the case may be, shall be
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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 Banks, monthly on or before the 20th day of the following month,
reports as to:
(i) a summary of projected Availability vs
actual Availability;
(ii) an accounts receivable aging analysis;
(iii) an accounts receivable concentration
summary;
(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 Banks 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 such
field examinations at least once during each fiscal quarter during the term of
this Agreement. Upon reasonable advance request of the Collateral Monitoring
Agent, the Banks shall have the right to examine at the Collateral Monitoring
Agent's offices, or to request copies (prepared at the requesting Bank'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 Banks 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 Banks 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
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objections by the Majority Banks 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 Banks at least 24 hours notice that the Agent intends to establish such
additional reserves and (y) the Collateral Monitoring Agent has not been
notified of objections by the Majority Banks 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; or
(iii) waive any violation or default under this
Agreement, the Security Documents, the Loan Documents or otherwise on behalf of
the Banks.
Article 10. Miscellaneous Provisions.
Section 10.1 Fees and Expenses; Indemnity.
The Borrower will promptly pay all costs of the
Collateral Monitoring Agent, the Issuing Bank, the Agent and each of the Banks
in preparing the Loan Documents and all costs and expenses of the Collateral
Monitoring Agent and the Banks 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
assignments, 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
Banks 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
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documents, the preservation of all rights of the Banks 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 Banks 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 Banks with respect to the amending and
restating of the Existing 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 Bank 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 Bank 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 Bank)
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 by any
Bank 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 Banks 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.
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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 Banks 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 Bank or any other holder of a Note, or
issuer of an L/C, Acceptance, Steamship Guarantee or Airway Release, such Bank,
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 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,
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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 Bank 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 Bank payable
by such Bank 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 Bank holding such Note shall
mark 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 Banks a Lien on any and all deposits or other sums at any time credited
by or due from the Agent or any Bank 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 Bank, the Collateral Monitoring Agent, the
Issuing Bank or the 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 Bank 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.
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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 Bank
and the Borrower except that: (i) any modification or amendment of, or waiver or
consent with respect to, Article 4 may be signed only by the Agent and the
Majority Banks and the Borrower (provided, however, that the consummation of a
transaction by a Bank shall be deemed, with respect to such Loan only, to have
the effect of the execution by such Bank 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 Banks 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 Banks, 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 Banks 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 Bank 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 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 Bank, the
Collateral Monitoring Agent, the Issuing Bank or the Agent and without regard to
any other obligation of any nature whatsoever that any Bank, 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
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action, suit or proceeding instituted by any Bank, 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 Banks 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.
345 West 37th Street
New York, NY 10018
Attention: Chief Financial Officer
Telecopier No.: (212) 967-1487
with a copy to:
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
Attention: Sheldon Nussbaum, Esq.
Telecopier No.: (212) 752-5958
-90-
(b) If to any Bank:
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:
NatWest Bank N.A., as Agent
51 Cragwood Road
South Plainfield, New Jersey 07080
Attention: Mr. Murray Markowitz,
Vice President
Telecopier No.: (908) 226-6102
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 & Strawn
175 Water Street
New York, New York 10038
Attention: John C. Phelan
Telecopier No.: (212) 952-1474
(d) If to the Issuing Bank:
NatWest Bank N.A., as Agent
51 Cragwood Road
South Plainfield, New Jersey 07080
Attention: Mr. Murray Markowitz,
Vice President
Telecopier No.: (908) 226-6102
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 & Strawn
175 Water Street
New York, New York 10038
Attention: John C. Phelan
Telecopier No.: (212) 952-1474
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(e) If to the Agent:
NatWest Bank N.A., as Agent
51 Cragwood Road
South Plainfield, New Jersey 07080
Attention: Mr. Murray Markowitz,
Vice President
Telecopier No.: (908) 226-6102
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 & Strawn
175 Water Street
New York, New York 10038
Attention: John C. Phelan
Telecopier No.: (212) 952-1474
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.
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
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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 Banks, 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 Banks,
and any purported assignment or delegation without such consent shall be void.
Section 10.13 Assignments and Participation by Banks; Issuance
of L/Cs by Bank Affiliates.
(a) Each Bank 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 Bank's rights and
obligations under this Agreement, (ii) the amount of the Commitment of the
assigning Bank 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 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 Bank hereunder, and (y) the Bank 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
-93-
portion of an assigning Bank's rights and obligations under this Agreement, such
Bank shall cease to be a party hereto).
(b) By executing and delivering an Assignment and
Acceptance, the Bank 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 Bank 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 Bank 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
Bank or any other Bank 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 Bank.
(c) Upon its receipt of an Assignment and Acceptance
executed by an assigning Bank 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 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 Bank has retained a Bank's Commitment
hereunder, a new such instrument to the order of the assigning Bank in an amount
equal to the Bank's Commitment retained by it hereunder. Such new instrument
shall be in an aggregate principal
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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 A hereto.
(d) (i) Each Bank 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
Bank's Commitment, the Loans owing to it, amounts outstanding in respect of
outstanding Obligations, and the Note held by it; and
(ii) NatWest may arrange for the issuance of L/Cs
which it is obligated to issue hereunder by an Affiliate of such Bank;
provided, however, that: (x) such Bank's obligations under this Agreement
(including, without limitation, its Bank's Commitment hereunder) shall remain
unchanged, (y) such Bank shall remain solely responsible to the other parties
hereto for the performance of such obligations, (z) such Bank 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 Banks shall continue to deal solely and directly with such
Bank in connection with such Bank's rights and obligations under this Agreement.
(e) Any Bank 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 Bank 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 Bank.
(f) In addition to the assignments and participations
permitted under subsections (a) through (d) hereof, any Bank may assign and
pledge all or any portion of its Loans and Note to (i) any Affiliate of such
Bank 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 Federal Reserve Bank. Any such assignment
shall not release the assigning Bank from its obligations hereunder.
-95-
Section 10.14 GOVERNING LAW; CONSENT TO JURISDICTION; 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) EACH OF THE BORROWER AND HONG KONG 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. EACH OF THE
BORROWER, AND HONG KONG, 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. EACH OF THE BORROWER, AND
HONG KONG 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. EACH OF THE BORROWER, AND HONG KONG 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. EACH OF THE BORROWER, AND HONG KONG 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
BANK TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY OF THE
BORROWER, OR HONG KONG IN ANY JURISDICTION OR TO SERVE PROCESS IN ANY MANNER
PERMITTED BY LAW.
(c) EACH OF THE BORROWER, HONG KONG, THE BANKS, 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 THIS AGREEMENT, OR THE VALIDITY, PROTECTION,
INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF.
Section 10.15. Waiver of Existing Events of Defaults.
The Agent and the Banks hereby waive the Existing
Events of Default as of the date hereof.
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Section 10.16. 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 Banks 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 Banks to
lift such stay.
Section 10.17. 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
Banks, 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.
-97-
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed on 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
INDAWA HOLDING CORP.
By:_______________________________
Title
[SIGNATURES CONTINUED ON NEXT PAGE]
GLOBAL APPAREL SOURCING, LTD.
By:________________________________
Title
G-III RETAIL OUTLETS INC.
By:________________________________
Title
P.T. TATABUANA RAYA
By:_________________________________
Title
Agreed as to Section 2.13(e), 2.13(f),
4.1(d), 4.1(j), 10.16 and 10.17
(solely as such Sections relate to the
Individual Guarantors):
-----------------------------------
Morris Goldfarb, by Alan Feller,
his attorney-in-fact
-----------------------------------
Aron Goldfarb
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
NATWEST BANK N.A.,
as Collateral Monitoring Agent
By:_________________________________
Title
Lending Office:
51 Cragwood Road
South Plainfield, New Jersey 07080
Attention: Murray Markowitz,
Vice President
Address for Notices:
NatWest Bank N.A.
51 Cragwood Road
South Plainfield, New Jersey 07080
Attention: Murray Markowitz,
Vice President
Telex:
Answer-Back Code:
Telecopier: (908) 226-6102
Wire Transfer Instructions:
---------------------------
---------------------------
---------------------------
NATWEST BANK N.A.,
as Agent
By:_________________________________
Title
Lending Office:
51 Cragwood Road
South Plainfield, New Jersey 07080
Attention: Murray Markowitz,
Vice President
Address for Notices:
NatWest Bank N.A.
51 Cragwood Road
South Plainfield, New Jersey 07080
Attention: Murray Markowitz,
Vice President
Telex:
Answer-Back Code:
Telecopier: (908) 226-6102
Wire Transfer Instructions:
---------------------------
---------------------------
---------------------------
NATWEST BANK N.A.,
as Issuing Bank
By:_________________________________
Title
Lending Office:
51 Cragwood Road
South Plainfield, New Jersey 07080
Attention: Murray Markowitz,
Vice President
Address for Notices:
NatWest Bank N.A.
51 Cragwood Road
South Plainfield, New Jersey 07080
Attention: Murray Markowitz,
Vice President
Telex:
Answer-Back Code:
Telecopier: (908) 226-6102
Wire Transfer Instructions:
---------------------------
---------------------------
---------------------------
Commitment:
----------
$18,461,538.46 NATWEST BANK N.A.,
as a Bank
(as a percentage:
38.461538462%)
By:_________________________________
Title
Lending Office:
1133 Avenue of the Americas
New York, New York 10036
Attention: Thomas M. Fasano,
Vice President
Address for Notices:
1133 Avenue of the Americas
New York, New York 10036
Attention: Thomas M. Fasano,
Vice President
Telex No.: 232369
Answer-Back Code: NBNA UR
Telecopier: (212) 290-1704
Wire Transfer Instructions:
---------------------------
---------------------------
---------------------------
Commitment:
----------
$18,461,538.46 CHEMICAL BANK
(as a percentage:
38.461538462%)
By:_________________________________
Title
Lending Office:
111 West 40th Street
New York, New York 10018
Attention: Kristina Kohl,
Vice President
Address for Notices:
111 West 40th Street
New York, New York 10018
Attention: Kristina Kohl,
Vice President
Telex No.: 175666
Answer-Back Code: CBC.UT
Telecopier: (212) 403-5112
Wire Transfer Instructions:
---------------------------
---------------------------
---------------------------
Commitment:
----------
$11,076,923.08 THE CHASE MANHATTAN BANK, N.A.
(as a percentage:
23.076923076%)
By:_________________________________
Title
Lending Office:
Textile & Apparel Division
1411 Broadway - 5th Floor
New York, New York 10018
Attention: Roberta Weissenberg
Address for Notices:
Textile & Apparel Division
1411 Broadway - 5th Floor
New York, New York 10018
Attention: Roberta Weissenberg
Telex No.: 62910CMBUW
Answer-Back Code:
Telecopier: (212) 768-9514
Wire Transfer Instructions:
---------------------------
---------------------------
---------------------------
EXHIBITS AND SCHEDULES
EXHIBITS
A. Form of Fourth Substituted Note
B. States of Incorporation and Qualification, and Capitalization
and Ownership of Stock, of Borrower and Subsidiaries
C. Consents, Waivers, Approvals; Violation of Agreements
D-1 Form of Available to Sell Report ($)
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
SCHEDULE
1 Existing Events of Default
7.9 Investments
EXHIBIT A
TO SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
G-III LEATHER FASHIONS, INC.,
THE BANKS SIGNATORY HERETO
AND
NATWEST BANK N.A.,
AS AGENT, COLLATERAL MONITORING AGENT AND ISSUING BANK
FORM OF FOURTH SUBSTITUTED NOTE
$____________________ New York, New York
June __, 1995
FOR VALUE RECEIVED, the undersigned G-III LEATHER
FASHIONS, INC., a New York corporation (the 'Borrower'), hereby promises to pay
to the order of (the 'Bank') on May 31, 1996 or on such earlier
date as is provided for in the Second Amended and Restated Loan Agreement (as
such Loan Agreement may be amended, modified or supplemented, the 'Loan
Agreement') dated the date hereof between the Borrower, the banks signatory
thereto and NatWest Bank N.A., as Collateral Monitoring Agent, Issuing Bank and
Agent (in its capacity as Collateral Monitoring Agent, together with its
successors and assigns, the 'Collateral Monitoring Agent'), the lesser of (i)
the principal sum of ($ ) Dollars, or (ii) the portion of the aggregate
unpaid principal amount of the Loans (as defined in the Loan Agreement) made by
the Bank to the Borrower pursuant to the Loan Agreement, and to pay interest on
the unpaid principal amount of each Loan from the date thereof at the rates per
annum and for the periods set forth in or established by the Loan Agreement and
calculated as provided therein.
All indebtedness outstanding under this Note shall bear interest
(computed in the same manner as interest on this Note prior to maturity) after
maturity, whether at stated maturity, by acceleration or otherwise, at the
Post-Default Rate (as defined in the Loan Agreement), and all such interest
shall be payable on demand.
Anything herein 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 the Bank to the extent
that the Bank's receipt thereof would not be permissible under the law or laws
applicable to the Bank limiting rates of interest which may be charged or
collected by the Bank. Any such payments of interest which are not made as a
result of the limitation referred to in the preceding sentence shall be made by
the Borrower to the Bank on the earliest interest payment date or dates on which
the receipt
thereof would be permissible under the laws applicable to the Bank limiting
rates of interest which may be charged or collected by the Bank.
Payment of both principal and interest on this Note are to be made at
the office of the Collateral Monitoring Agent at 51 Cragwood Road, South
Plainfield, New Jersey 07080 or such other place as the holder hereof shall
designate to the Borrower in writing, in lawful money of the United States of
America in immediately available funds.
This Note is one of the Fourth Substituted Notes referred to in the
Loan Agreement, is secured in the manner provided therein, may be prepaid upon
and subject to terms and conditions thereof and is entitled to the benefits
thereof.
This Note shall be deemed to be in substitution for and replacement of,
and not a repayment of the Note dated November 22, 1994 made by the Borrower
payable to the Lender (the 'Prior Note') and all interest accrued and unpaid
under such Prior Note shall be deemed evidenced by this Note and payable
hereunder from and after the date of accrual thereof. The execution and delivery
of this Note shall not be construed (i) to have constituted repayment of any
amount of principal or interest on the Prior Note, or (ii) to release, cancel,
terminate or otherwise impair all or an part of any lien or security interest
granted to the Banks party to the Loan Agreement or their agents as collateral
security for the Prior Note.
Upon the occurrence of any Event of Default, as defined in the Loan
Agreement, the principal amount of and accrued interest on this Note may be
declared due and payable in the manner and with the effect provided in the Loan
Agreement.
The Borrower shall pay costs and expenses of collection, including,
without limitation, attorneys' fees and disbursements in the event that any
action, suit or proceeding is brought by the holder hereof to collect this Note.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS RULES
PERTAINING TO CONFLICTS OF LAWS.
G-III LEATHER FASHIONS, INC.
By_____________________________
Title
EXHIBIT B
TO SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
G-III LEATHER FASHIONS, INC.,
THE BANKS SIGNATORY HERETO
AND
NATWEST BANK N.A.,
AS AGENT, COLLATERAL MONITORING AGENT AND ISSUING BANK
STATES OF INCORPORATION AND QUALIFICATION,
AND CAPITALIZATION AND OWNERSHIP
OF STOCK, OF BORROWER AND SUBSIDIARIES
EXHIBIT C
TO SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
G-III LEATHER FASHIONS, INC.,
THE BANKS SIGNATORY HERETO
AND
NATWEST BANK N.A.,
AS AGENT, COLLATERAL MONITORING AGENT AND ISSUING BANK
CONSENTS, WAIVERS, APPROVALS;
VIOLATION OF AGREEMENTS
EXHIBIT D-1
TO SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
G-III LEATHER FASHIONS, INC.,
THE BANKS SIGNATORY HERETO
AND
NATWEST BANK N.A.,
AS AGENT, COLLATERAL MONITORING AGENT AND ISSUING BANK
FORM OF AVAILABLE TO SELL REPORT ($)
[FORM FOLLOWS THIS PAGE.]
EXHIBIT D-2
TO SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
G-III LEATHER FASHIONS, INC.,
THE BANKS SIGNATORY HERETO
AND
NATWEST BANK N.A.,
AS AGENT, COLLATERAL MONITORING AGENT AND ISSUING BANK
FORM OF AVAILABLE TO SELL REPORT (UNITS)
[FORM FOLLOWS THIS PAGE.]
EXHIBIT D-3
TO SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
G-III LEATHER FASHIONS, INC.,
THE BANKS SIGNATORY HERETO
AND
NATWEST BANK N.A.,
AS AGENT, COLLATERAL MONITORING AGENT AND ISSUING BANK
FORM OF INVENTORY ANALYSIS REPORT
[FORM FOLLOWS THIS PAGE.]
EXHIBIT D-4
TO SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
G-III LEATHER FASHIONS, INC.,
THE BANKS SIGNATORY HERETO
AND
NATWEST BANK N.A.,
AS AGENT, COLLATERAL MONITORING AGENT AND ISSUING BANK
FORM OF KEY ITEM REPORT
[FORM FOLLOWS THIS PAGE.]
The key item report will contain the following information presented in
a form satisfactory to the Collateral Monitoring Agent:
1. accounts receivable by subsidiary compared to such accounts
receivable for the corresponding period of the immediately
preceding fiscal year;
2. month-end Inventory balance by location;
3. month-end accounts payable balance by subsidiary;
4. month-end unshipped orders by division, aged by the shipping
month, compared to such unshipped orders for the corresponding
period of the immediately preceding fiscal year;
5. shipped orders by division for such preceding month compared
to same month of the immediately preceding fiscal year and
projection;
6. the balances, if any, in intercompany accounts among the Loan
Parties (other than the Individual Guarantors);
7. divisional sales and gross profit for the preceding calendar
month, compared to such amounts for the corresponding period
of the immediately preceding fiscal year and to the amount
that had been projected for such preceding month, including,
without limitation, a reasonably detailed description of
deviations from the amounts for the preceding year and
projected for such preceding month, together with cumulative
sales and gross profit for the fiscal year to-date compared
with such amount for the immediately preceding fiscal year;
8. sales by warehouse, foreign letters of credit and transfer
letters of credit for such month compared to same month of the
immediately preceding fiscal year and projection;
9. in the month immediately following the last month of each
fiscal quarter, a restatement of such fiscal quarter's profit
and loss statement to reclassify commission income from sales;
10. in the month immediately following the end of each fiscal
year, an aging report of inventory by season, division and
style;
11. in the month immediately following the last month of each
fiscal quarter, a gross profit report by style;
12. receivables from Mexico.
EXHIBIT E
TO AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
G-III LEATHER FASHIONS, INC.,
THE BANKS SIGNATORY HERETO
AND
NATWEST BANK N.A.,
AS AGENT, COLLATERAL MONITORING AGENT AND ISSUING BANK
PERMITTED SECURITY INTERESTS
LIENS AND ENCUMBRANCES
EXHIBIT F
TO SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
G-III LEATHER FASHIONS, INC.,
THE BANKS SIGNATORY HERETO
AND
NATWEST BANK N.A.,
AS AGENT, COLLATERAL MONITORING AGENT AND ISSUING BANK
JUDGMENTS, ACTIONS, PROCEEDINGS
EXHIBIT G
TO AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
G-III LEATHER FASHIONS, INC.,
THE BANKS SIGNATORY HERETO
AND
NATWEST BANK N.A.,
AS AGENT, COLLATERAL MONITORING AGENT AND ISSUING BANK
DEFAULTS; COMPLIANCE WITH LAWS,
REGULATIONS, AGREEMENTS
EXHIBIT H
TO SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
G-III LEATHER FASHIONS, INC.,
THE BANKS SIGNATORY HERETO
AND
NATWEST BANK N.A.,
AS AGENT, COLLATERAL MONITORING AGENT AND ISSUING BANK
BURDENSOME DOCUMENTS
EXHIBIT I
TO SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
G-III LEATHER FASHIONS, INC.,
THE BANKS SIGNATORY HERETO
AND
NATWEST BANK N.A.,
AS AGENT, COLLATERAL MONITORING AGENT AND ISSUING BANK
PATENTS, TRADEMARKS, TRADE
NAMES, SERVICE MARKS, COPYRIGHTS
EXHIBIT J
TO SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
G-III LEATHER FASHIONS, INC.,
THE BANKS SIGNATORY HERETO
AND
NATWEST BANK N.A.,
AS AGENT, COLLATERAL MONITORING AGENT AND ISSUING BANK
NAME CHANGES, MERGERS, ACQUISITIONS; LOCATION OF COLLATERAL
EXHIBIT K
TO SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
G-III LEATHER FASHIONS, INC.,
THE BANKS SIGNATORY HERETO
AND
NATWEST BANK N.A.,
AS AGENT, COLLATERAL MONITORING AGENT AND ISSUING BANK
LABOR DISPUTES, COLLECTIVE BARGAINING
AGREEMENTS; EMPLOYEE GRIEVANCES
EXHIBIT L
TO SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
G-III LEATHER FASHIONS, INC.,
THE BANKS SIGNATORY HERETO
AND
NATWEST BANK N.A.,
AS AGENT, COLLATERAL MONITORING AGENT AND ISSUING BANK
PENSION PLANS
EXHIBIT M
TO SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
G-III LEATHER FASHIONS, INC.,
THE BANKS SIGNATORY HERETO
AND
NATWEST BANK N.A.,
AS AGENT, COLLATERAL MONITORING AGENT AND ISSUING BANK
PERMITTED INDEBTEDNESS AND GUARANTIES
EXHIBIT N
TO SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
G-III LEATHER FASHIONS, INC.,
THE BANKS SIGNATORY HERETO
AND
NATWEST BANK N.A.,
AS AGENT, COLLATERAL MONITORING AGENT AND ISSUING BANK
FORM OF ASSIGNMENT AND ACCEPTANCE
Dated
Reference is hereby made to the Amended and Restated Loan
Agreement dated (the 'Loan Agreement') by and among G-III
Leather Fashions, Inc., a New York corporation (the 'Borrower'), the Banks
signatory thereto (collectively, the 'Banks') and National Westminster Bank USA
in its capacity as agent for the Banks (in such capacity, the 'Agent').
Capitalized terms used herein that are defined in the Loan Agreement that are
not otherwise defined herein shall have the respective meanings ascribed thereto
in the Loan Agreement.
, a (the
'Assignor') and , a ,
(the 'Assignee') agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and
the Assignee hereby purchases and assumes from the Assignor, a % interest in
and to all of the Assignor's rights and obligations under the Loan Agreement as
of the Effective Date (as defined below) (including, without limitation, such
percentage interest in the Assignor's Commitment as in effect on the Effective
Date, and the Loans owing to the Assignor on the Effective Date, and the Note
held by the Assignor).
2. The Assignor: (i) represents and warrants that as of the
date hereof its Commitment (without giving effect to assignments thereof that
have not yet become effective) is $ and the aggregate outstanding
principal amount of Loans owing to it (without giving effect to assignments
thereof that have not yet become effective) is $ ; (ii) represents and
warrants that it is the legal and beneficial owner of the interest being
assigned by it hereunder, and that such interest is free and clear of any
adverse claim; (iii) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Loan Agreement or any other instrument or
document furnished pursuant thereto; and (iv) makes no representation or
warranty and assumes no responsibility with respect to the
financial condition of the Borrower or any other Loan Party or the performance
or observance by the Borrower or any other Loan Party of any of its obligations
under the Loan Agreement or any other instrument or document furnished pursuant
thereto; and (v) attaches the Note referred to in paragraph 1 above and requests
that the Agent exchange such Note for new Notes as follows: a Note dated the
Effective Date (as such term is defined below) in the principal amount of
$ payable to the order of the Assignee, and a Note dated the Effective
Date in the principal amount of $ payable to the order of the Assignor.
3. The Assignee: (i) confirms that it has received a copy of
the Loan 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 this Assignment and Acceptance; (ii)
agrees that it will, independently and without reliance upon the Agent, the
Assignor or any other Bank 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 the Loan Agreement; (iii) confirms that it is
an Eligible Assignee; (iv) appoints and authorizes the Agent to take such action
as its agent on its behalf and to exercise such powers under the Loan Agreement
as are delegated to the Agent by the terms thereof, together with such powers as
are reasonably incidental thereto; (v) agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Loan Agreement
are required to be performed by it as a Bank; and (vi) specifies as its
addresses for Loans (and address for notices) the office set forth beneath its
name on the signature pages hereof.
4. The effective date for this Assignment and Acceptance shall
be (the 'Effective Date'). Following the execution of this
Assignment and Acceptance, it will be delivered to the Agent for acceptance by
the Agent.
5. Upon such acceptance, as of the Effective Date: (i) the
Assignee shall be a party to the Loan Agreement and, to the extent provided in
this Assignment and Acceptance, have the rights and obligations of a Bank
thereunder and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Loan Agreement.
6. Upon such acceptance, from and after the Effective Date,
the Agent shall make all payments under the Loan Agreement and the Note in
respect of the interest assigned hereby (including, without limitation, all
payments of principal, interest and commitment fees with respect thereto) to the
Assignee. The Assignor and Assignee shall make all appropriate adjustments in
payments under the Loan Agreement and the Note for periods prior to the
Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York.
[NAME OF ASSIGNOR]
By_______________________________________
Title
[NAME OF ASSIGNEE]
By_______________________________________
Title
Lending Office for Prime Rate Loans:
Attention:
Address for Notices:
Attention:
Telephone No.:
Telex No.:
Accepted this day
of , 199
NATWEST BANK N.A.,
as Agent
By_____________________________________
Title
EXHIBIT O
TO SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
G-III LEATHER FASHIONS, INC.,
THE BANKS SIGNATORY HERETO
AND
NATWEST BANK N.A.,
AS AGENT, COLLATERAL MONITORING AGENT AND ISSUING BANK
ACCOUNTS AND INVENTORY
NONE
EXHIBIT P
TO SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
G-III LEATHER FASHIONS, INC.,
THE BANKS SIGNATORY HERETO
AND
NATWEST BANK N.A.,
AS AGENT, COLLATERAL MONITORING AGENT AND ISSUING BANK
BORROWING BASE CERTIFICATE
As of
[FORM OF BORROWING BASE CERTIFICATE FOLLOWS THIS PAGE]
EXHIBIT Q
TO SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
G-III LEATHER FASHIONS, INC.,
THE BANKS SIGNATORY HERETO
AND
NATWEST BANK N.A.,
------------------
AS AGENT, COLLATERAL MONITORING AGENT AND ISSUING BANK
-------------------------------------------------------
FORM OF CONTINUING AGREEMENT FOR ISSUANCE
OF STEAMSHIP GUARANTIES AND AIRWAY RELEASES
-------------------------------------------
[FORM FOLLOWS THIS PAGE.]
SCHEDULE 1
TO SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
G-III LEATHER FASHIONS, INC.,
THE BANKS SIGNATORY HERETO
AND
NATWEST BANK N.A.,
------------------
AS AGENT, COLLATERAL MONITORING AGENT AND ISSUING BANK
------------------------------------------------------
EXISTING EVENTS OF DEFAULT
--------------------------
SCHEDULE 7.9
TO SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
G-III LEATHER FASHIONS, INC.,
THE BANKS SIGNATORY HERETO
AND
NATWEST BANK N.A.,
------------------
AS AGENT, COLLATERAL MONITORING AGENT AND ISSUING BANK
------------------------------------------------------
INVESTMENTS
-----------
5
1,000
6-MOS
JAN-31-1996
JUL-31-1995
2,720
0
27,099
0
32,481
68,452
6,877
0
77,855
47,309
0
65
0
0
28,720
77,855
39,462
45,307
35,001
0
10,845
0
1,397
(1,936)
(620)
0
0
0
0
(1,316)
(.20)
(.20)
