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EXHIBIT 4.7
August 28, 1996
Mr. S. E. Melvin Hecht
Chief Financial Officer
Marisa Christina, Inc.
Marisa Christina Apparel, Inc. Flapdoodles, Inc.
Adrienne Vittadini Enterprises, Inc.
1410 Broadway, 20th Floor
New York, NY 10018
Dear Melvin,
I am pleased to advise you that the Bank of New York (the "Bank") in its sole
discretion is prepared to offer a line of credit to Marisa Christina, Inc. (the
"Company") and its three wholly owned subsidiaries identified below
(collectively with the Company, the "Borrowers") up to a maximum aggregate
amount of $15,000,000 for import financing and working capital purposes.
Utilization of this demand line of credit is subject to the following terms and
conditions and such other terms and conditions as the Bank may require at the
time an advance is requested.
Borrowers: Marisa Christina, Inc.
Marisa Christina Apparel, Inc.
Flapdoodles, Inc.
Adrienne Vittadini Enterprises, Inc.
Amount: A collateralized line of credit up to a
maximum amount of $15,000,000 to be utilized
as letters of credit, bankers' acceptances
and loans.
Documentation: Any loans, bankers' acceptances, or letters
of credit which the Bank may create, will be
evidenced by documents with the borrowers,
Guarantors and third parties in each instance
in form and substance satisfactory to the
Bank and its counsel.
Collateral: The Bank would have a first priority security
interest in all of the following assets and
property of each and all of the Borrowers,
present and future: (a) all imported
inventory, (b) all accounts receivable, (c)
all credit balances at the Factor(s) of
Adrienne Vittadini Enterprises, Inc.
(including BNY Financial Corporation;
"Factor(s)") and (d) all proceeds thereof,
subject only in the case of (b) and (c)
above, in relation to Adrienne Vittadini
Enterprises, Inc., to any rights and
priorities in favor of Factors(s) in any such
accounts receivable and credit balances, to
the extend set forth in an assignment of
factoring proceeds and inter-creditor
agreement to be entered into between the Bank
and such Factor(s) on a
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mutually acceptable basis.
Availability: Availability of letters of credit and
bankers' acceptances will be limited to
Marisa Christina Apparel, Inc., Flapdoodles,
Inc., and Adrienne Vittadini Enterprises,
Inc.
Interest Rate: Advances for loans will bear interest at the
Borrowers' option at the fluctuating: 1)
Alternate Base Rate of The Bank of New York
("ABR"), such rate to change on the effective
date of any change in the ABR; or 2) London
Interbank Offering Rate (LIBOR), as may be
determined by The Bank of New York, plus one
percent, available for 1,2 or 3 month
interest periods. ABR is defined as a rate
per annum equal to the greater of: (i) the
BNY Prime Rate in effect, or (ii) the Federal
Funds Effective Rate plus 1/2 of 1% (Note:
see attachment for definitions of LIBOR, BNY
Prime Rate and Federal Funds Effective Rate).
Bankers' acceptances will bear interest at
The Bank of New York's Bankers' Acceptance
Rate announced to be in effect from time to
time (the "B/A Rate") plus one percent.
Letters of Credit: Transaction costs for each letter
of credit plus 1/8 of 1% of the amount of
each drawing under a letter of credit. There
is a minimum letters of credit drawing fee of
$85. Associated miscellaneous charges will be
at our then current rates as they may change
from time to time.
Balance Requirements: The Company and other Borrowers shall
maintain average net available demand deposit
balances in a minimum amount sufficient to
compensate the Bank for account activity or
alternatively will be charged the usual fees
for services rendered as determined by the
standard fee schedule of the Bank, or as
otherwise agreed upon by the Company and the
Bank. It shall be understood that the
maintenance of such deposits will not in
anyway obligate the Bank to lend, issue
letters of credit, or to create bankers'
acceptances.
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Guarantees: Unlimited cross-collateralized corporate
guarantees by each of the Borrowers of the
other Borrowers, as well as the unlimited
corporate guarantees of each of the Borrowers
by each of the following:
C.M. Marisa Christina (H.K.) limited,
Marisa Christina Outlet Holdings, Inc.,
Marisa Christina Outlets Stores of
California, Inc.,
Marisa Christina Outlets Stores of Colorado,
Inc.,
Marisa Christina Outlets Stores of New York,
Inc., and
MF Showroom Holdings, Inc.
(Collectively, "Guarantors")
As an ongoing condition of this credit facility, the Bank requires the Company
to furnish the following:
1) Copies of the Company's Form 10-K
including annual audited fiscal statements
prepared in accordance with generally
accepted accounting principles filed with
Securities and Exchange Commission, to be
delivered within five (5) business days of
the filing, but in any case no later than one
hundred twenty (120) days after the end of
fiscal year, together with consolidating
annual fiscal statements.
2) Copies of the Company's Form 10-Q
including quarterly financial statements
prepared in accordance with generally
accepted accounting principles filed with the
Securities and Exchange Commission, to be
received within ten (10) business days of the
filing but in any case no later than sixty
(60) days after the end of the each fiscal
quarter, together with consolidating
quarterly fiscal statements.
3) Copies of any reports, submitted to any of
the Borrowers, by independent certified
public accountants in connection with the
examination in connection with the financial
statements of such Borrowers made by such
accountants.
As you know, lines of credit are discretionary and cancelable by either party at
any time and the making of advances, the creation of bankers' acceptances and
the issuance of letters of credit, if any, is subject to the Bank's review and
exercise of its discretion and to the Bank's satisfaction with the business,
assets, operations and prospects of the Borrowers and the Guarantors at the time
of each drawdown.
The Bank will consider requests for accommodations under the line of credit
subject to these terms until June 30, 1997 unless this discretionary line is
earlier terminated by the Company or the Bank.
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Please acknowledge your understanding of and agreement to the foregoing by
signing and returning the enclosed copy of this letter to the undersigned by no
later than September 15, 1996.
We very much look forward to beginning a long-term relationship with Marisa
Christina.
Sincerely,
THE BANK OF NEW YORK
Ronald R. Reech
Vice President
Accepted and Agreed to:
This 29th day of August, 1996
MARISA CHRISTINA, INC.
By:______________________
Title______________________
MARISA CHRISTINA APPAREL, INC.
By:_______________________
Title:______________________
FLAPDOODLES, INC.
By:_______________________
Title:______________________
ADRIENNE VITTADINI ENTERPRISES, INC.
By:___________________________
Title:__________________________
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DEFINITIONS
"BNY PRIME RATE": A rate of interest per annum equal to the rate of interest
publicly announced in New York City by The Bank of New York from time to time as
its prime commercial lending rate, such rate to be adjusted automatically
(without notice) on the effective date of any change in such publicly announced
rate.
"FEDERAL FUNDS EFFECTIVE RATE": for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
Systems arranged by Federal funds brokers, as published for such day (or, if
such day is not a domestic business day, for the next preceding; domestic
business day) by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day which is a domestic business day, the average (rounded,
if necessary, to the nearest 1/100 of 1%, then to the next higher 1/100 of 1%)
of the quotations for such day on such transactions received by The Bank of New
York from three Federal funds brokers or recognized standing selected by it.
"LIBOR": means, relative to any interest period for which Advances are to be
governed by the London Interbank Offering Rate, the rate of interest equal to
the average (rounded upwards, if necessary, to the nearest 1/100th of 1%) of the
rates per annum on Eurodollar deposits in U.S. Dollars offered to the Bank's
LIBOR Office in the London interbank eurodollar market on the second business
day prior to the beginning of such interest period, for delivery on the first
day of such interest period, and in an amount approximately equal to the amount
of such Advances at LIBOR and for a period approximately equal to such interest
period.