SIXTH AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
G-III LEATHER FASHIONS, INC.,
THE LENDERS SIGNATORY HERETO
AND
FLEET NATIONAL BANK
AS AGENT, COLLATERAL MONITORING AGENT
AND ISSUING BANK FOR SUCH LENDERS
APRIL 29, 2002
TABLE OF CONTENTS
PAGE
----
ARTICLE 1. DEFINITIONS..................................................2
Section 1.1 Definitions..................................................2
Section 1.2 Other Definitional Provisions; Construction.................26
ARTICLE 2. REVOLVING CREDIT FACILITY...................................26
Section 2.1 Letters of Credit; Acceptances; Loans; Steamship
Guaranties; Airway Releases...............................26
Section 2.2 Applications for Letters of Credit, Steamship Guaranties
and Airway Releases.......................................28
Section 2.3 Borrowing Notice and Disbursement of Loans..................30
Section 2.4 Notes.......................................................31
Section 2.5 Interest....................................................31
Section 2.6 Fees........................................................32
Section 2.7 Payment of Loans and Acceptances; Voluntary Changes in
Commitment; Mandatory Prepayments.........................33
Section 2.8 Use of Proceeds of Loans....................................34
Section 2.9 Computations................................................35
Section 2.10 Time and Method of Payments; Statement of Account...........36
Section 2.11 Several Obligations.........................................36
Section 2.12 Guaranties..................................................36
Section 2.13 Security....................................................37
Section 2.14 Lending Offices.............................................37
Section 2.15 Obligations Absolute........................................37
Section 2.16 Sharing of Payments and Set-Off Among Lenders...............38
Section 2.17 Additional Costs; Capital Requirements......................39
Section 2.18 Additional L/C Provisions...................................40
Section 2.19 Pro Rata Treatment Among Lenders............................42
Section 2.20 Non-Receipt of Funds by the Agent...........................42
Section 2.21 Collections; Agent's Right to Notify Account Debtors
and Endorse the Borrower's Name...........................43
Section 2.22 Application of Payments and Collections.....................44
Section 2.23 Conversions of Loans........................................45
Section 2.24 Limitation on Types of Loans................................45
Section 2.25 Illegality..................................................46
Section 2.26 Indemnification.............................................46
Section 2.27 Certain Conversions Pursuant to Section 2.17................47
ARTICLE 3. REPRESENTATIONS AND WARRANTIES..............................47
Section 3.1 Organization................................................48
Section 3.2 Power, Authority, Consents..................................48
Section 3.3 No Violation of Law or Agreements...........................49
Section 3.4 Due Execution, Validity, Enforceability.....................49
i
Section 3.5 Properties, Priority of Liens...............................49
Section 3.6 Judgments, Actions, Proceedings.............................50
Section 3.7 No Default; Compliance With Laws............................50
Section 3.8 Burdensome Documents........................................50
Section 3.9 Financial Statements; Projections...........................51
Section 3.10 Tax Returns.................................................51
Section 3.11 Intangible Assets...........................................51
Section 3.12 Regulation U................................................52
Section 3.13 Name Changes, Mergers, Acquisitions; Location of
Collateral................................................52
Section 3.14 Full Disclosure.............................................52
Section 3.15 Licenses and Approvals......................................52
Section 3.16 Labor Disputes; Collective Bargaining Agreements;
Employee Grievances.......................................53
Section 3.17 Condition of Assets.........................................53
Section 3.18 ERISA.......................................................53
Section 3.19 Account Representations and Warranties......................54
Section 3.20 Borrowing Base Certificates.................................55
Section 3.21 Accounts Receivable Aging Reports; Key Item Reports.........55
Section 3.22 Inventory Representations and Warranties....................55
Section 3.23 Forfeiture Proceeding.......................................55
Section 3.24 Americans with Disabilities Act.............................55
Section 3.25 Security Documents..........................................56
ARTICLE 4. CONDITIONS..................................................56
Section 4.1 Conditions to Closing.......................................56
Section 4.2 Conditions to Subsequent Loans and Issuance of L/Cs.........58
ARTICLE 5. DELIVERY OF FINANCIAL REPORTS, DOCUMENTS AND OTHER
INFORMATION...............................................59
Section 5.1 Annual Financial Statements.................................59
Section 5.2 Semi-Annual Financial Statements; Quarterly Financial
Statements................................................59
Section 5.3 Compliance Information......................................60
Section 5.4 No Default Certificate......................................60
Section 5.5 Rental Obligations; Capitalized Lease Obligations...........60
Section 5.6 Accountants' Reports........................................61
Section 5.7 Copies of Documents.........................................61
Section 5.8 Notices of Defaults.........................................61
Section 5.9 ERISA Notices...............................................61
Section 5.10 Additional Information and Reports..........................62
Section 5.11 Confidentiality of Information..............................63
ARTICLE 6. AFFIRMATIVE COVENANTS.......................................64
Section 6.1 Books and Records...........................................64
Section 6.2 Inspections and Field Examinations..........................64
Section 6.3 Maintenance and Repairs.....................................65
Section 6.4 Continuance of Business.....................................65
Section 6.5 Copies of Corporate Documents...............................65
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Section 6.6 Perform Obligations.........................................65
Section 6.7 Notice of Litigation........................................65
Section 6.8 Insurance...................................................66
Section 6.9 Financial Covenants.........................................66
Section 6.10 Notice of Certain Events....................................68
Section 6.11 Comply with ERISA...........................................68
Section 6.12 Environmental Compliance....................................68
Section 6.13 Management Letters..........................................68
Section 6.14 Tax Refunds.................................................69
Section 6.15 Additional Subsidiaries.....................................69
ARTICLE 7. NEGATIVE COVENANTS..........................................69
Section 7.1 Indebtedness................................................69
Section 7.2 Liens.......................................................70
Section 7.3 Guaranties..................................................71
Section 7.4 Mergers; Acquisitions.......................................71
Section 7.5 Redemptions; Distributions..................................71
Section 7.6 Stock Issuance..............................................72
Section 7.7 Changes in Business.........................................72
Section 7.8 Prepayments.................................................72
Section 7.9 Investments.................................................72
Section 7.10 Fiscal Year.................................................74
Section 7.11 ERISA Obligations...........................................74
Section 7.12 Amendments of Documents.....................................74
Section 7.13 Capital Expenditures........................................75
Section 7.14 Capitalized Lease Obligations...............................75
Section 7.15 Management Fees.............................................75
Section 7.16 Transactions with Affiliates................................75
Section 7.17 Activities Leading to Forfeiture Proceeding.................76
Section 7.18 Rental Obligations..........................................76
Section 7.19 Retail Stores...............................................76
Section 7.20 License Agreements..........................................76
ARTICLE 8. EVENTS OF DEFAULT...........................................76
Section 8.1 Payments....................................................77
Section 8.2 Certain Covenants...........................................77
Section 8.3 Other Covenants.............................................77
Section 8.4 Other Defaults..............................................77
Section 8.5 Representations and Warranties..............................78
Section 8.6 Bankruptcy..................................................78
Section 8.7 Judgments...................................................79
Section 8.8 ERISA.......................................................79
Section 8.9 Ownership of Stock..........................................79
Section 8.10 Management..................................................79
Section 8.11 Liens.......................................................80
Section 8.12 Amount of Obligations.......................................80
Section 8.13 Forfeiture Proceedings......................................80
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Section 8.14 Material Adverse Change.....................................80
ARTICLE 9. AGENCY PROVISIONS...........................................80
Section 9.1 Appointment, Powers and Immunities..........................80
Section 9.2 Reliance....................................................81
Section 9.3 Events of Default...........................................81
Section 9.4 Rights as a Lender..........................................81
Section 9.5 Indemnification.............................................82
Section 9.6 Non-Reliance................................................82
Section 9.7 Failure to Act..............................................83
Section 9.8 Resignation or Removal......................................83
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..................88
Section 10.5 Lien on and Set-off of Deposits.............................88
Section 10.6 Modifications, Consents and Waivers; Entire Agreement.......88
Section 10.7 Remedies Cumulative.........................................89
Section 10.8 Further Assurances..........................................89
Section 10.9 Notices.....................................................89
Section 10.10 Counterparts................................................91
Section 10.11 Severability................................................91
Section 10.12 Binding Effect; No Assignment or Delegation by Borrower.....92
Section 10.13 Assignments and Participation by Lenders; Issuance of
L/Cs by Lender Affiliates.................................92
Section 10.14 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF
TRIAL BY JURY.............................................96
Section 10.15 Limitation on Interest......................................97
Section 10.16 Additional Agreements by Borrower and Loan Parties..........98
Section 10.17 Release by Borrower and Loan Parties........................98
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EXHIBITS
A. Form of Note
B. States of Incorporation and Qualification, and Capitalization and
Ownership of Stock, of Borrower and Subsidiaries
C. Consents, Waivers, Approvals; Violation of Agreements
D-1. Form of Available to Sell Report ($)
D-2. Form of Available to Sell Report (Units)
D-3. Form of Inventory Analysis Report
D-4. Form of Key Item Report
E. Permitted Security Interests, Liens and Encumbrances
F. Judgments, Actions, Proceedings
G. Defaults; Compliance with Laws, Regulations, Agreements
H. Burdensome Documents
I. Patents, Trademarks, Trade Names, Service Marks, Copyrights, and
Trade-Style Names
J. Name Changes, Mergers, Acquisitions; Location of Collateral
K. Labor Disputes; Collective Bargaining Agreements; Employee Grievances
L. Pension Plans
M. Permitted Indebtedness and Guaranties
N. Form of Assignment and Acceptance
O. Accounts and Inventory
P. Borrowing Base Certificate
Q. Form of Continuing Agreement for Issuance of Steamship Guaranties and
Airway Releases
SCHEDULES
1.1 Licenses
7.9 Investments
v
SIXTH AMENDED AND RESTATED LOAN AGREEMENT
THIS AGREEMENT, made as of the 29 day of April 2002, by and among:
G-III LEATHER FASHIONS, INC., a New York corporation (the "Borrower");
The lenders that have executed the signature pages hereto (individually, a
"Lender" and collectively, the "Lenders"); and
FLEET NATIONAL BANK, a national banking association, individually ("Fleet")
and as Agent for the Lenders (in such capacity, together with its successors in
such capacity, the "Agent"), as Collateral Monitoring Agent for the Lenders (in
such capacity, together with its successors in such capacity, the "Collateral
Monitoring Agent"), and as Issuing Bank (in such capacity, together with its
successors in such capacity, the "Issuing Bank"),
W I T N E S S E T H:
WHEREAS,
(A) The Borrower, the Agent, the Collateral Monitoring Agent, the Issuing
Bank and the banks signatory thereto entered into the Fifth Amended and Restated
Loan Agreement dated as of May 31, 1999, which was amended pursuant to : (i)
Amendment No. 1 to the Fifth Amended and Restated Loan Agreement dated as of
December 20, 1999, (ii) Amendment No. 2 to the Fifth Amended and Restated Loan
Agreement dated as of March 1, 2000, (iii) Amendment No. 3 to the Fifth Amended
and Restated Loan Agreement dated as of April 7, 2000, (iv) Amendment No. 4 to
the Fifth Amended and Restated Loan Agreement dated as of May 24, 2000, (v)
Amendment No. 5 and Assignment to the Fifth Amended and Restated Loan Agreement
dated as of July 14, 2000, (vi) Amendment No. 6 to the Fifth Amended and
Restated Loan Agreement dated as of January 10, 2001, (vii) Amendment No. 7 to
the Fifth Amended and Restated Loan Agreement dated as of February 12, 2001,
(viii) Amendment No. 8 and Assignment to the Fifth Amended and Restated Loan
Agreement dated as of March 13, 2001, (ix) Amendment No. 9 to the Fifth Amended
and Restated Loan Agreement dated as of May 31, 2001, (x) Amendment No. 10 and
Assignment to the Fifth Amended and Restated Loan Agreement dated as of July 27,
2001, (xi) Amendment No. 11 and Waiver to the Fifth Amended and Restated Loan
Agreement dated as of November 27, 2001, (xii) Amendment No. 12 to the Fifth
Amended and Restated Loan Agreement dated as of November 30, 2001 and (xiii)
Amendment No. 13 and Waiver to the Fifth Amended and Restated Loan Agreement
dated as of March 18, 2002 (as so amended, the "Original Loan Agreement");
(B) The Borrower has requested that the Lenders extend the credit facility
provided for under the Original Loan Agreement and that the Original Loan
Agreement be amended in certain respects;
(C) The Lenders have agreed to extend the credit facility and amend the
Original Loan Agreement, subject to the agreements of the parties, all as
hereinafter set forth; and
(D) In order to effect the amendment of the Original Loan Agreement, the
Lenders, the Agent, the Collateral Monitoring Agent, the Issuing Bank and the
Borrower desire to amend and restate the Original Loan Agreement in its entirety
as set forth herein;
NOW, THEREFORE, the parties hereto agree to amend and restate the Original
Loan Agreement (including al Exhibits and Schedules thereto) in its entirety as
follows:
ARTICLE 1. DEFINITIONS.
Section 1.1 Definitions.
As used in this Agreement, the following terms shall have the following
meanings:
"Acceptance(s)" - time drafts which (a) are drawn by the Borrower's
vendors or suppliers under L/Cs which permit such drawings and are presented to
the Agent in accordance with the terms of the relevant Time Trade L/Cs on or
before the respective expiration dates of such Time Trade L/Cs, (b) are accepted
by a Lender in accordance with the terms hereof and (c) mature no later than the
earlier of (i) 60 days after the date of issuance thereof and (ii) the
Commitment Termination Date.
"Account" - accounts (including but not limited to accounts
receivable), revenues, income, fees and receipts whether now or hereafter
existing or now owned or hereafter acquired and wherever located, of every kind
and description, tangible or intangible, and all rights to receive the same,
whether in the form of contract rights or other rights, and the proceeds of such
rights, whether now owned or hereafter coming into existence, and all chattel
paper, instruments, general intangibles, credits, claims, demands and any other
obligations for the payment of money.
"Account Debtor" or "account debtor" - at any time, any Person who is
obligated to the Borrower under or on account of an Account.
"Accounts Receivable Aging Report" - a summary account receivable trial
balance showing accounts receivable of the Borrower as of the last day of the
preceding week (in the case of a weekly report) or month (in the case of a
monthly report) outstanding from the due date set forth in the invoice in the
following categories: future; current; 1-30 days; 31-60 days; 61-90 days; and 90
days and over.
"Additional Costs" - as defined in Section 2.17(b).
"Administrative Fee" - as defined in Section 2.6(i).
"Advisory Fee" - as defined in Section 2.6(a).
"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
2
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 securities having 5% or more (with respect to any corporation other
than the Parent) or 15% or more (with respect to the Parent) of the 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.
"Agreement" - this Sixth Amended and Restated Loan Agreement as it may
be supplemented, amended or modified from time to time.
"Agent" - as defined in the heading hereof.
"Airway Release(s)" - as defined in Section 2.1(e).
"Applicable Lending Office" - with respect to each Lender, the Lending
Office designated below its name on the signature pages hereto or in the
Assignment and Acceptance pursuant to which it became a Lender hereunder, or
such other office of such Lender or of an affiliate of such Lender as such
Lender may from time to time specify to the Agent and the Borrower as the office
at which its Loans of such type are to be made and maintained.
"Application(s)" - as defined in Section 2.2(a).
"Asset Securitization" - with respect to any Person, a transaction
involving the sale or transfer of receivables by such Person to an SPV;
provided, however, that the Borrower may (A) establish and maintain a reserve
account containing Cash or Securities as a credit enhancement in respect of any
such sale, or (B) purchase or retain a subordinated interest in such receivables
being sold.
"Asset Securitization Recourse Liability" - with respect to any Person,
the maximum amount of such Person's liability (whether matured or contingent)
under any agreement, note or other instrument in connection with any one or more
Asset Securitizations in which such Person has agreed to repurchase receivables
or other assets, to provide direct or indirect credit support (whether through
cash payments, the establishment of reserve accounts containing Cash or
Securities, an agreement to reimburse a provider of a letter of credit for any
draws thereunder, the purchase or retention of a subordinated interest in such
receivables or other assets, or other similar arrangements), or in which such
Person may be otherwise liable for all or a portion of any SPV's obligations
under Securities issued in connection with such Asset Securitizations.
"Assignment and Acceptance" - an agreement in the form of Exhibit N.
"Attributable Indebtedness" - on any date, (a) in respect of any
capital lease of any Person, the capitalized amount thereof that would appear on
a balance sheet of such Person
3
prepared as of such date in accordance with generally accepted accounting
principles, and (b) in respect of any Synthetic Lease Obligation, the
capitalized amount of the remaining lease payments under the relevant lease that
would appear on a balance sheet of such Person prepared as of such date in
accordance with generally accepted accounting principles if such lease were
accounted for as a capital lease.
"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 Standby L/Cs, Acceptances, Loans, Steamship
Guaranties or Airway Releases, the sum of Availability and Direct Debt shall not
exceed the Direct Debt Sublimit.
"Balihides" - P.T. Balihides, an Indonesian limited liability company.
"Bank Swap Contract" - any Swap Contract permitted under this Agreement
whether now existing or hereafter entered into by and between the Borrower and
any Hedge Bank; provided, that each Bank Swap Contract shall (i) have a
termination date of no later than August 31, 2005 and (ii) shall be cash
collateralized on and after June 1, 2005.
"Borrower" - as defined in the preamble hereof.
"Borrowing Base" - as of the date of any determination thereof, an
amount up to, but not in excess of, the lesser of (i) the Borrowing Base Maximum
as of such date and (ii) the sum of:
(A) Eighty (80%) percent of all Eligible Accounts; plus
(B) Fifty (50%) percent of all Eligible Inventory; plus
(C) the applicable Overadvance.
The Borrowing Base shall be subject to reduction at any time and from time to
time because of the reduction by the Collateral Monitoring Agent, in the
exercise of its discretion, of (x) the advance rates expressed as a percentage
in clauses (A) and (B) of this definition and (y) the percentage of Eligible
Accounts and/or Eligible Inventory included therein by the application of a
chargeback reserve, a reserve for credit balances in the ineligible column, a
"contra" reserve and such other appropriate reserves as the Collateral
Monitoring Agent shall establish in accordance with Section 9.10.
"Borrowing Base Certificate" - a certificate executed by the chief
executive officer, president, chief operating officer or chief financial officer
of the Borrower substantially in the form annexed hereto as Exhibit P containing
the information set forth therein.
"Borrowing Base Maximum" - as of any date during any period set forth
below, the amount set forth opposite such period:
4
Period Borrowing Base Maximum
------ ----------------------
Closing Date to and including May 31, 2002 $65,000,000
June 1, 2002 to and including September 30, 2002 $85,000,000
October 1, 2002 to and including November 30, 2002 $70,000,000
December 1, 2002 to and including the $45,000,000
Commitment Termination Date
and the respective periods and amounts for each of Fiscal Year 2004, Fiscal Year
2005 and the Stub Period shall be as preliminarily determined by the Lenders and
the Borrower based on the Projections and the business plan (in each case
delivered pursuant to Section 5.10(e)) for Fiscal Year 2004, Fiscal Year 2005
and Fiscal Year 2006, respectively, and the unaudited financial statements
(delivered pursuant to Section 5.10(e)) for Fiscal Year 2003, Fiscal Year 2004
and Fiscal Year 2005, respectively, but in no event shall the periods be of
different durations or the amounts be less than the amounts for the periods
corresponding to the periods set forth above (based on the assumptions that (i)
the Closing Date occurred on May 1 and (ii) the last time period set forth above
runs from December 1 to April 30 in each Fiscal Year) unless the Lenders
determine (in their reasonable discretion) that such periods and amounts warrant
adjustment based upon such Projections, business plan or unaudited financial
statements and such preliminary determination shall become effective after
receipt and satisfactory review by the Lenders of the Financial Statements for
Fiscal Year 2004, Fiscal Year 2005 and Fiscal Year 2006, respectively.
"Borrowing Notice" - as defined in Section 2.3.
"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.
"Capital Stock" - as to any Person, all shares, interests, partnership
interests, limited liability company interests, participations, rights in or
other equivalents (however
5
designated) of such Person's equity (however designated) and any rights,
warrants or options exchangeable for or convertible into such shares, interests,
participations, rights or other equity.
"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 hereof, 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(g).
"Collateral Monitoring Agent" - as defined in the preamble hereof.
"Collection Account" - an account owned and maintained by the
Collateral Monitoring Agent for the ratable benefit of the Lenders.
"Commitment" - Eighty-five million Dollars ($85,000,000) in the
aggregate, allocated among each of the Lenders, respectively in the amount set
forth opposite such Lender's name on the signature pages hereof under the
caption "Commitment," as such amount is reduced in accordance with the terms
hereof.
"Commitment Termination Date" - May 31, 2005.
"Compliance Certificate" - a certificate executed by the chief
executive officer, president, chief operating officer or chief financial officer
of the Borrower to the effect that: (i) as of the effective date of the
certificate, no Default or Event of Default under this Agreement exists or would
exist after giving effect to the action intended to be taken by the Borrower as
described in such certificate, including, without limitation, that the covenants
set forth in Section 6.9 would not be breached after giving effect to such
action, together with a calculation in reasonable detail, and in form and
substance satisfactory to the Agent and the Lenders, of such compliance, and
(ii) the representations and warranties contained in Article 3 are true and
correct
6
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.
"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" - collectively, Parent, Siena, Holdings, Retail,
Sources, License Company and G-III Brands and each other Subsidiary of Parent or
the Borrower that executes and delivers the Guarantor Security Agreement.
"Credit Period" - the period commencing on the date hereof and ending
on the Commitment Termination Date.
"Debt Instrument" - as defined in Section 8.4(a).
"Default" - an event which with notice or lapse of time, or both, would
constitute an Event of Default.
"Defined Contribution Plan" - a plan which is not covered by Title IV
of ERISA or subject to the minimum funding standards of Section 412 of the Code
and which provides for an individual account for each participant and for
benefits based solely on the amount contributed to the participant's account,
and any income, expenses, gains and losses, and any forfeitures of accounts of
other participants which may be allocated to such participant's account.
"Direct Debt" - the aggregate principal and/or face (or stated) amount,
as applicable, of all outstanding Standby L/Cs, Acceptances, Loans, Steamship
Guaranties and Airway Releases.
"Direct Debt Sublimit" - for each period set forth below, the amount
set forth opposite such period:
7
Period Direct Debt Sublimit
------ --------------------
Closing Date to and including May 31, 2002 $40,000,000
June 1, 2002 to and including June 30, 2002 $55,000,000
July 1, 2002 to and including August 25, 2002 $70,000,000
August 26, 2002 to and including September 27, 2002 $72,000,000
September 28, 2002 to and including November 25, 2002 $62,000,000
November 26, 2002 to and including December 16, 2002 $40,000,000
December 17, 2002 to and including the $30,000,000
Commitment Termination Date
and the respective periods and amounts for each of Fiscal Year 2004, Fiscal Year
2005 and the Stub Period shall be as preliminarily determined by the Lenders and
the Borrower based on the Projections and the business plan (in each case
delivered pursuant to Section 5.10(e)) for Fiscal Year 2004, Fiscal Year 2005
and Fiscal Year 2006, respectively, and the unaudited financial statements
(delivered pursuant to Section 5.10(e)) for Fiscal Year 2003, Fiscal Year 2004
and Fiscal Year 2005, respectively, but in no event shall the periods be of
different durations or the amounts be less than the amounts for the periods
corresponding to the periods set forth above (based on the assumptions that (i)
the Closing Date occurred on May 1 and (ii) the last time period set forth above
runs from December 17 to April 30 in each Fiscal Year) unless the Lenders
determine (in their reasonable discretion) that such periods and amounts warrant
adjustment based upon such Projections, business plan or unaudited financial
statements and such preliminary determination shall become effective after
receipt and satisfactory review by the Lenders of the Financial Statements for
Fiscal Year 2004, Fiscal Year 2005 and Fiscal Year 2006, respectively.
"Dollar(s)" and "$" - lawful money of the United States of America.
"Drawing Fee" - as defined in Section 2.6(c).
"EBITDA" - for any period, net income of the Parent and its
Subsidiaries for such period, determined on a consolidated basis in accordance
with generally accepted accounting principles, plus the sum of, without
duplication, (a) interest expense for such period, (b) provision for income
taxes accrued for such period, (c) depreciation, amortization and other non-
8
cash charges of the Parent and its Subsidiaries and (d) for any period occurring
on or after the decision by the board of directors or management of the Parent
to terminate the business of Balihides, an amount of up to $1,500,000
(representing charges taken in connection with such decision to terminate), each
to the extent deducted in determining such net income for such period, without
giving effect to extraordinary gains or losses from the sales, exchanges and
other dispositions of assets (other than from sales of Inventory in the ordinary
course of business).
"Eligible Account" - an Account which is created by the Borrower in the
ordinary course of business, is genuine and in all respects what it purports to
be, and which meets the following requirements:
(a) as of the date of computation of Eligible Accounts, no such Account
shall have been outstanding for more than the lesser of (i) 60 days from the due
date set forth in the invoice or (ii) 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 any kind, or, if the Account is evidenced by
chattel paper or an instrument, the Borrower has delivered and properly endorsed
such chattel paper or instrument to the Agent;
(d) to the best of the Borrower's knowledge, no event described in
Section 8.6 with respect to the Account Debtor has occurred, the Agent and the
Lenders, in the exercise of their reasonable judgment, deem the Account Debtor
to be creditworthy, and not more than 50% of the aggregate unpaid amount of the
Accounts due from the Account Debtor and Affiliates of such Account Debtor shall
have been outstanding for more than 60 days from the due date set forth in the
invoice relating thereto;
(e) the Account Debtor is located within the United States, Canada or
Mexico;
(f) if the Account Debtor is located in Mexico, it is WalMart or Price
Club and the Account in Mexico of such Account Debtor is in an amount, in the
aggregate, not in excess of $1,000,000;
(g) if the Account Debtor is Wilson's Leather, the Account is in an
amount, in the aggregate, not in excess of $4,000,000;
9
(h) the Account is a valid, legally enforceable obligation of the
Account Debtor;
(i) the Account does not arise out of transactions with an Affiliate
other than Wilson's Leather (subject to subsection (g) of this definition);
(j) the Account does not arise out of the provision of trial services
or delivery of samples or trial merchandise to customers or Account Debtors;
(k) 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;
(l) 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;
(m) the amount of the face value of the Account is not subject to any
set-offs, counterclaims, retainages or holdbacks of any type other than those
set forth on the Borrowing Base Certificate which are acceptable to the Agent
and the Lenders and are excluded from the computation of Eligible Accounts, is
actually and absolutely owing to the Borrower and is not contingent for any
reason, and, except for discounts, credits or allowances allowed by the Borrower
in the ordinary course of its business for prompt payment, all of which
discounts, credits or allowances are reflected in the calculation of and have
been deducted from the face value of the invoice related thereto and in the
calculation of the Borrowing Base;
(n) the Account is not now, and the goods or services giving rise to
the Account were not at the time of the sale or provision thereof, subject to
any Lien, claim, encumbrance or security interest except those of the Agent for
the benefit of the Lenders and those expressly permitted under this Agreement;
and
(o) 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 $500,000 in face amount of
Accounts.
Notwithstanding the foregoing, the Collateral Monitoring Agent and the Lenders
shall have the right, in the exercise of their reasonable discretion, to limit
the amount of Accounts from any Account Debtor or Affiliate of any Account
Debtor which shall be deemed to be "Eligible Accounts" hereunder.
"Eligible Assignee" - (i) a Lender; (ii) an Affiliate of a Lender; and
(iii) subject to the prior approval of the Agent and, so long as no Event of
Default shall have occurred and be continuing, the Borrower, such approval by
the Agent or the Borrower not to be unreasonably withheld or delayed, (A) a
commercial bank organized under the laws of the United States of America, or any
State thereof, and having total assets in excess of $500,000,000; (B) a savings
10
association or savings bank organized under the laws of the United States of
America, or any State thereof, and having total assets in excess of
$500,000,000; (C) a commercial bank organized under the laws of any other
country that is a member of the Organization for Economic Co-operation and
Development ("OECD") or has concluded special lending arrangements with the
International Monetary Fund associated with its General Arrangements to Borrow
or of the Cayman Islands, or a political subdivision of any such country, and
having total assets in excess of $500,000,000, so long as such bank is acting
through a branch or agency located in the United States of America; (D) the
central bank of any country that is a member of the OECD; and (E) a finance
company, insurance company or other financial institution or fund (whether a
corporation, partnership, trust or other entity) that is engaged in making,
purchasing or otherwise investing in commercial loans (of a size similar to the
Loans) in the ordinary course of its business and having total assets in excess
of $500,000,000; provided, however, that neither the Borrower nor any Affiliate
of the Borrower shall qualify as an Eligible Assignee under this definition.
"Eligible Inventory" - Inventory which: (i) constitutes finished goods
of the Borrower or Retail; (ii) is not slow moving, obsolete or unsaleable;
(iii) is currently useable or saleable in the ordinary course of the Borrower's
or Retail's business; (iv) is valued in accordance with generally accepted
accounting principles applied consistently with past practices of the Borrower
and Retail; (v) is located on the premises listed on the exhibits attached to
this Agreement or other locations permitted under the Borrower Security
Agreement or any security agreement referred to in Section 2.13, or is Inventory
in transit for sale in the ordinary course of business; (vi) is not subject to
any Lien or security interest whatsoever, except for the Liens and security
interests expressly permitted under the Borrower Security Agreement or any
security agreement referred in Section 2.13, and is not on consignment; (vii)
does not include raw materials or work-in progress; (viii) is not now stored or
shall not at any time hereafter be stored with a bailee, warehouseman, or
similar party unless pursuant to a bailment or storage agreement to which the
Agent is a party; (ix) does not include Inventory styles (A) on which the
Borrower has taken a lower of cost or market markdown; or (B) of which the
Borrower has more than a one year supply on hand; (x) includes Inventory subject
to a license agreement which was assigned to Agent on behalf of the Lenders; 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 the 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
11
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 relating to the assets or liabilities of any of them, including,
without limitation, in respect of any "facility" owned, leased or operated by
any of them under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, or under any state, local or municipal
statute, ordinance or regulation in respect thereof, in connection with any
release of any toxic or hazardous waste or other chemical substance, pollutant
or contaminant into the environment, or with the generation, storage or disposal
of any toxic or hazardous wastes or other chemical substances.
"ERISA" - the Employee Retirement Income Security Act of 1974, as it
may be amended from time to time, and the regulations promulgated thereunder.
"ERISA Affiliate" - as applied to any Loan Party, any corporation,
person or trade or business which is a member of a group which is under common
control with any Loan Party, who together with any Loan Party, is treated as a
single employer within the meaning of Section 414(b) - (o) of the Code and, if
applicable, Section 4001(a)(14) and (b) of ERISA.
"Eurodollar Business Day" - Business Day on which dealings in Dollar
deposits are carried out in the London interbank market.
"Eurodollar Loans" - Loans that bear interest at a rate based upon the
LIBOR Base Rate.
"Event(s) of Default" - as defined in Article 8.
12
"Examination Fees" - as defined in Section 2.6(h).
"Existing Acceptances" - the aggregate amount of Acceptances
outstanding on the Closing Date.
"Existing Obligations" - collectively, the Existing Loan and L/C
Obligations and all other indebtedness, liabilities and obligations of the
Borrower to the Lenders under the Original Loan Agreement.
"Existing Loans" - the aggregate amount of Loans made by the Lenders
and outstanding on the Closing Date.
"Existing Loan and L/C Obligations" - collectively, the Existing Loans
and the obligations of the Borrower and certain of its Affiliates in respect of
Existing Standby L/Cs, Existing Trade L/Cs, Existing Steamship Guaranties and
Airway Releases and Existing Acceptances.
"Existing Standby L/Cs" - the aggregate face or stated maximum drawable
amount (and to the maximum amount when a range of amounts is specified) of
Standby L/Cs issued by the Agent outstanding on the Closing Date.
"Existing Steamship Guaranties and Airway Releases" - the aggregate
face or stated amount of Steamship Guaranties and Airway Releases issued by the
Agent and outstanding on the Closing Date.
"Existing Trade L/Cs" - the aggregate face or stated maximum drawable
amount (and to the maximum amount when a range of amounts is specified) of Trade
L/Cs issued by the Agent outstanding on the Closing Date.
"Federal Funds Rate" - for any day, an interest rate per annum equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published for such day (or, if such day is not a Business Day, for the
immediately preceding Business Day) by the Federal Reserve Bank of New York, or,
if such rate is not so published for any day which is a Business Day, the
average of the quotations at approximately 10:00 a.m. (New York time) on such
day on such transactions received by the Agent from three Federal funds brokers
of recognized standing selected by the Agent in its sole discretion.
"Fee(s)" - as defined in Section 2.6(j).
"Financial Statements" - the audited consolidated balance sheet of the
Parent and the Subsidiaries (including the Borrower) as at January 31, 2002,
together with the related consolidated statement of income and retained earnings
and statement of cash flow for the fiscal year then ended.
13
"Fiscal Year" - with respect to the Borrower, the twelve-month period
ending on January 31 of each year (so that, by way of example, Fiscal Year 2003
shall be the period commencing on February 1, 2002 and ending on January 31,
2003).
"Fixed Charge Coverage Ratio" - at any date of determination, the ratio
of (i) EBITDA of the Parent and its Subsidiaries (including the Borrower) on a
consolidated basis in accordance with generally accepted accounting principles
to (ii) Fixed Charges, for the four fiscal quarters ending on such date or, if
such date is not the last day of a fiscal quarter, for the immediately preceding
four fiscal quarter period.
"Fixed Charges" - for any period, the sum of, without duplication, (i)
Capital Expenditures made during such period by the Parent and its Subsidiaries
(including the Borrower), (ii) cash income taxes paid during such period by the
Parent and its Subsidiaries (including the Borrower), (iii) all interest and all
amortization of Indebtedness, amortized discount and expense on all Indebtedness
for borrowed money of the Parent and its Subsidiaries (including the Borrower)
for such period, (iv) the portion of any rents payable under Capital Leases
allocable to interest expense by the Parent and its Subsidiaries (including the
Borrower) in accordance with generally accepted accounting principles and (v)
the aggregate amount of cash dividends paid by the Parent in respect of, and
purchases by the Parent of, its capital stock during such period.
"Fleet" - as defined in the preamble hereof.
"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.
"G-III Brands" - G-III Brands, Ltd., a Delaware corporation.
"Global" - Global International Trading Company, a Korean corporation.
"Governmental Acts" - as defined in Section 2.18(d).
"Granting Bank" - as defined in Section 10.13(i).
"Guarantee Agreement" - the Amended and Restated Guarantee Agreement
dated as of the Closing Date, in form and substance satisfactory to the Agent,
among the Guarantors, the Borrower and the Agent for the benefit of the Lenders,
the Collateral Monitoring Agent and the Issuing Bank, as amended, restated,
supplemented or otherwise modified from time to time.
"Guarantors" - collectively, the Corporate Guarantors, Hong Kong,
Balihides, Wee Beez and Kostroma and each other Person that executes and
delivers the Guarantee Agreement.
14
"Hanil Bank" - P.T. Hanil Tamara Bank.
"Hedge Bank" - any Lender in its capacity as a party to a Bank Swap
Contract.
"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;
(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; (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; (v) Asset Securitization
Recourse Liabilities to the extent, but only to the extent that such obligations
have matured; (vi) Capital Lease Obligations and Synthetic Lease Obligations of
such Person (the amount of any Capital Lease Obligation or Synthetic Lease
Obligation as of any date shall be deemed to be the amount of Attributable
Indebtedness in respect thereof as of such date); and (vii) liabilities or
obligations of such Person in respect of Bank Swap Contracts.
"Interest Period" - with respect to any Eurodollar Loan, each period
commencing on the date such Loan is made or converted from a Prime Rate Loan or
Loans, or with respect to Eurodollar Loans, the last day of the next preceding
Interest Period with respect to such Eurodollar Loan, and ending on the same day
in the first, second or third calendar month thereafter, as the Borrower may
select as provided in Section 2.3, except that each such Interest Period that
commences on the last Eurodollar Business Day of a calendar month (or on any day
for which there is no numerically corresponding day in the appropriate
subsequent calendar month) shall end on the last Eurodollar Business Day of the
appropriate subsequent calendar month. Notwithstanding the foregoing: (i) each
Interest Period that would otherwise end on a day that is not a Business Day
shall end on the next succeeding Business Day (or, in the case of an Interest
Period for Eurodollar Loans, if such next succeeding Eurodollar Business Day
falls in the next succeeding calendar month, on the next preceding Eurodollar
Business Day); (ii) each borrowing of Eurodollar Loans from the Lenders and each
conversion of Prime Rate Loans into Eurodollar Loans shall be in an amount not
less than $1,550,000 in the aggregate; (iii) any Interest Period for any type of
Loan shall end no later than the Commitment Termination Date; and (iv)
notwithstanding clause (iii) above, no Interest Period shall have a duration of
less than one month or greater than three months. In the event that the Borrower
fails to select the
15
duration of any Interest Period for any Loan within the time period and
otherwise as provided in Section 2.3, such Loans will be automatically converted
into a Prime Rate Loan on the last day of the preceding Interest Period for such
Loan.
"Inventory" - inventory of any of the Loan Parties, including finished
products, goods in transit, returns and supplies, licenses as listed on Schedule
1.1 which may be amended from time to time, 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
(b) the amount of any advance, loan or extension of credit by such
Person, to any other Person, or guaranty or other similar obligation of such
Person with respect to any Indebtedness of such other Person, and (without
duplication) any amount committed to be advanced, loaned, or extended by such
Person to any other Person, or any amount the payment of which is committed to
be assured by a guaranty or similar obligation by such Person for the benefit
of, such other Person.
"IRS" - Internal Revenue Service or any successor agency performing the
same functions.
"Issuing Bank" - as defined in the preamble hereof.
"Key Item Report" - is defined in Section 5.10(c)(ii).
"Kostroma" - Kostroma Ltd., a Hong Kong corporation.
"Latest Balance Sheet" - as defined in Section 3.9(a).
"L/C(s)" - Trade L/Cs and/or Standby L/Cs.
"Leases" - leases and subleases (other than Capitalized Leases),
licenses for the use of real property, easements, grants, and other attachment
rights and similar instruments under which the Borrower has the right to use
real or personal property or rights of way.
"Lender(s)" - as defined in the preamble hereof.
"Lender's Commitment" - the amount set forth next to each Lender's name
on the signature pages hereto.
"Lender's Share" - with respect to any Lender, such Lender's pro rata
share determined at any time as its Lender's Commitment as a percentage of the
Commitment.
16
"LIBOR Base Rate" - with respect to any Eurodollar Loan, for any
Interest Period applicable thereto, the rate per annum as determined on the
basis of the offered rates for deposits in Dollars, for a period of time
comparable to such Interest Period for such Eurodollar Loan which appears on the
Telerate page 3750 as of 11:00 a.m. London time on the day that is two (2)
Eurodollar Business Days preceding the first day of such Interest Period for
such Eurodollar Loan; provided, however, if the rate described above does not
appear on the Telerate System on any applicable interest determination date, the
LIBOR Base Rate shall be the rate (rounded upwards, if necessary, to the nearest
one hundred-thousandth of a percentage point), determined on the basis of
offered rates for deposits in Dollars for a period of time comparable to the
Interest Period for such Eurodollar Loan which are offered by four major banks
in the London interbank market at approximately 11:00 a.m. London time, on the
day that is two (2) Eurodollar Business Days preceding the first day such
Interest Period for such Eurodollar Loan as selected by the Agent. The principal
London office of each of the four major London banks will be requested to
provide a quotation of its Dollar deposit offered rate. If at least two such
quotations are provided, the rate for that date will be the arithmetic mean of
the quotations. If fewer than two quotations are provided as requested, the rate
for that date will be determined on the basis of the rates quoted for loans in
Dollars to leading European banks for a period of time comparable to such
Interest Period for such Eurodollar Loan offered by major banks in New York City
at approximately 11:00 a.m., New York City time, on the day that is two (2)
Eurodollar Business Days preceding the first day of such Eurodollar Loan. In the
event that the Agent is unable to obtain any such quotation as provided above,
it will be deemed that the LIBOR Base Rate pursuant to a Eurodollar Loan cannot
be determined.
"LIBOR Rate" - for any Eurodollar Loan for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) determined by the Agent to be equal to the quotient of: (a) (x) the
LIBOR Base Rate for such Loan for such Interest Period; divided by (y) 1 minus
the Reserve Requirement for such Loan for such Interest Period.
"License Company" - G-III License Company, LLC, a Delaware limited
liability company.
"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 Section 2.1(d).
"Loan Documents" - (a) this Agreement, (b) the Notes, (c) the Guarantee
Agreement, (d) the Security Documents, (e) the L/Cs, (f) the Applications, (g)
the Acceptances, (h) the Continuing Agreements for Issuance of Steamship
Guaranties and Airway Releases and (i) the Bank Swap Contracts 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.
17
"Loan Party(ies)" - individually (or collectively in the case of Loan
Parties), the Borrower, the Parent, any Subsidiary, any Guarantor, and any other
Person (other than the Lenders and the Agent) which now or hereafter executes
and delivers to any Lender or the Agent any Loan Document.
"Lockbox" - as defined in Section 2.21(b).
"Lockbox Agreement" - as defined in Section 2.21(b).
"Majority Lenders" - Lenders having at least 66-2/3% of the aggregate
amount of Commitments whether or not Loans or other Obligations are
outstanding hereunder; provided, however, that the vote of 100% of the Lenders
shall at all times be required for all matters not specifically to be determined
by Majority Lenders hereunder, including, but not limited to, extension of the
term, increase in Commitments, change in interest rates, release of Collateral
and/or Guarantors, any change to the definition of Majority Lenders and the
determination pursuant to Section 9.10 that certain asset based lending
provisions set forth herein are no longer required.
"Management Fees" - for any period, all fees, emoluments or similar
compensation paid or incurred by any Person (other than any such fees,
emoluments or similar compensation, including, without limitation, usual and
customary director's fees payable by the Parent to its directors, paid to or
incurred and payable to the Borrower, the Parent or any of the Subsidiaries) in
respect of services rendered in connection with the management or supervision of
the management of such Person, other than salaries, bonuses and other
compensation paid to any full time executive employee in respect of such full
time employment.
"Monthly Dates" - the last Business Day of each calendar month.
"Multiemployer Plan" - a "multiemployer plan" as defined in Section
4001(a)(3) or ERISA to which any Loan Party or any ERISA Affiliate is making, or
is accruing an obligation to make, contributions or has made, or been obligated
to make, contributions within the preceding six (6) years.
"Note(s)" - as defined in Section 2.4.
"Obligations" - collectively, all of the Indebtedness, liabilities and
obligations of the Borrower to the Lenders, the Agent, the Collateral Monitoring
Agent and the Issuing Bank, whether now existing or hereafter arising, whether
or not currently contemplated, including, without limitation, liabilities and
obligations to repay Loans and Acceptances and pay Fees, liabilities and
obligations with respect to L/Cs, Steamship Guaranties and Airway Releases, and
all other Indebtedness, liabilities and obligations arising under the Loan
Documents.
"Original Borrower Security Documents" - as defined in Section 2.13(a).
"Original Guaranties" - as defined in Section 2.12.
18
"Original Guarantor Security Documents" - as defined in Section
2.13(b).
"Original Loan Agreement" - as defined in the recitals hereto.
"Outstanding Obligations" - the aggregate principal and/or face (or
stated) amount, as applicable, of all outstanding Obligations; provided, that
for purposes of calculating Availability, the outstanding Obligations under Bank
Swap Contracts shall be calculated by including the following percentages of
such Obligations: (i) 20% of the face amount of foreign currency exchange Bank
Swap Contracts (other than foreign currency Bank Swap Contracts related to the
Indonesian Rupiah), (ii) 25% of the face amount of foreign currency exchange
Bank Swap Contracts related to the Indonesian Rupiah and (iii) 2% of the face
amount of all other Bank Swap Contracts.
"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" - for each period set forth below, the amount set forth
opposite such period:
Period Overadvance
------ -----------
Closing Date to and including May 31, 2002 $25,000,000
June 1, 2002 to and including July 26, 2002 $32,000,000
July 27, 2002 to and including August 26, 2002 $27,500,000
August 27, 2002 to and including September 29, 2002 $18,000,000
September 30, 2002 to and including October 30, 2002 $5,000,000
October 31, 2002 to and including the $-0-
Commitment Termination Date
and the respective periods and amounts for each of Fiscal Year 2004, Fiscal Year
2005 and the Stub Period shall be as preliminarily determined by the Lenders and
the Borrower based on the Projections and the business plan (in each case
delivered pursuant to Section 5.10(e)) for Fiscal Year 2004, Fiscal Year 2005
and Fiscal Year 2006, respectively, and the unaudited financial statements
(delivered pursuant to Section 5.10(e)) for Fiscal Year 2003, Fiscal Year 2004
and Fiscal Year 2005, respectively, but in no event shall the periods be of
different durations or the amounts be less than the amounts for the periods
corresponding to the periods set forth above
19
unless the Lenders determine (in their reasonable discretion) that such periods
and amounts warrant adjustment based upon such Projections, business plan or
unaudited financial statements, which preliminary determination shall be made
within 70 days of receipt by the Lenders of such Projections, business plan and
unaudited financial statements and such preliminary determination shall become
effective after receipt and satisfactory review by the Lenders of the Financial
Statements for Fiscal Year 2003, Fiscal Year 2004 and Fiscal Year 2005,
respectively; provided, however, that with respect to the Overadvance at all
times (x) the then applicable Overadvance amount and all subsequent Overadvance
amounts shall be reduced by (i) 50% of all tax refunds paid to the Borrower or
the Parent (or paid to the Collection Account, in accordance with the terms
hereof), (ii) the proceeds of the sale of any assets other than in the ordinary
course of business, and (iii) 50% of the proceeds of any sale-leaseback, all of
such reductions to be effective immediately upon the Borrower's receipt (or, if
applicable, the Collateral Monitoring Agent's receipt for the account of the
Borrower) of such refunds or proceeds; but there shall be no reduction to the
then applicable Overadvance amount in the case of any sale-leaseback of newly
acquired assets, provided, that (A) the sale-leaseback transaction is closed
within 90 days of the acquisition of the assets and (B) both the acquisition and
the closing of the sale-leaseback are completed during the same Fiscal Year; and
(y) at any time when Outstanding Obligations have exceeded the Borrowing Base as
a result of (A) Accounts or Inventory believed to be Eligible Accounts or
Eligible Inventory, as the case may be, in fact being or becoming ineligible or
(B) the return of uncollected checks or other items applied to reduce Loans, the
Collateral Monitoring Agent shall have the discretion to continue to advance
Loans and to instruct the Issuing Bank to issue L/Cs, Acceptances, Steamship
Guaranties and Airway Releases, as the case may be, up to an amount which would
result in the relevant Overadvance amount specified above being exceeded by a
factor of 10% (it being understood that the Collateral Monitoring Agent shall
advise the Lenders of all such issuances and advances within 24 hours); and (z)
the applicable Overadvance amount shall be increased by the amount of (1) any
cash collateral held by the Collateral Monitoring Agent for the sole purpose of
securing such increases to the applicable Overadvance amount, and (2) any
amounts invested in U.S. government securities or money market mutual funds
backed by U.S. government securities maintained in an account with Fleet by the
Borrower or the Parent and pledged or assigned to the Agent for the benefit of
the Lenders by the Borrower or the Parent, as the case may be, as collateral
security for the Obligations pursuant to documentation satisfactory to the
Majority Lenders.
"Parent" - G-III Apparel Group, Ltd., a Delaware corporation and the
holder of 100% of the issued and outstanding capital stock of the Borrower.
"Payment Office" - the office of each Lender set forth on the signature
page hereof as the lending office of such Lender.
"Payor" - as defined in Section 2.20.
"PBGC" - Pension Benefit Guaranty Corporation or any successor entity
performing the same functions.
20
"Pension Plan" - at any time an employee pension benefit plan that is
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either: (i) maintained by the Borrower or any
ERISA Affiliate for employees of the Borrower, or by the Borrower for any ERISA
Affiliate, or (ii) maintained pursuant to a collective bargaining agreement or
any other arrangement under which more than one employer makes contributions and
to which the Borrower or any ERISA Affiliate is then making or accruing an
obligation to make contributions or has within the preceding five plan years
made contributions.
"Permitted Liens" - as to any Person: (i) pledges or deposits by such
Person under workers' compensation laws, unemployment insurance laws, social
security laws, or similar legislation, or good faith deposits in connection with
bids, tenders, contracts (other than for the payment of Indebtedness of such
Person), or leases to which such Person is a party, or deposits to secure public
or statutory obligations of such Person or deposits or pledges of Cash or United
States Government Bonds to secure surety, appeal, performance or other similar
bonds to which such Person is a party, or deposits as security for contested
taxes or import duties or for the payment of rent; (ii) Liens imposed by law, in
the aggregate, in an amount not in excess of $50,000, such as carriers',
warehousemen's, materialmen's and mechanics' liens, or Liens arising out of
judgments or awards against such Person with respect to which such Person at the
time shall currently be prosecuting an appeal or proceedings for review and for
which appropriate reserves have been allocated; (iii) Liens for taxes not yet
subject to penalties for non-payment and Liens for taxes the payment of which is
being contested as permitted by Section 6.6 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.
"Permitted Subordinated Funded Debt" - unsecured Indebtedness of the
Borrower or the Parent that is subordinated to the Obligations on terms and
conditions satisfactory to the Lenders in their sole discretion (which shall
include, without limitation, covenants not more restrictive than the covenants
set forth in this Agreement and appropriate standstill provisions) in an
aggregate outstanding principal amount not to exceed $20,000,000 at any time.
"Person" - an individual, a corporation, a partnership, a limited
liability company, a joint venture, a trust or unincorporated organization, a
joint stock company or other similar organization, a government or any political
subdivision thereof, a court, or any other legal entity, whether acting in an
individual, fiduciary or other capacity.
"Post-Default Rate" - (i) in respect of any Loans not paid when due
(whether at stated maturity, by acceleration or otherwise), a rate per annum
during the period commencing
21
on the due date until such Loans are paid in full equal to (a) if such Loans are
Prime Rate Loans, 2% above the Prime Rate as in effect from time to time for
Prime Rate Loans, or (b) if such Loans are Eurodollar Loans, 2% above the rate
of interest in effect thereon at the time of such default until the end of the
then current Interest Period therefor and, thereafter, 2% above the Prime Rate
as in effect from time to time for Prime Rate Loans; and (ii) in respect of
other amounts payable by the Borrower hereunder (other than interest) 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 such other amounts are
paid in full equal to 2% above the Prime Rate as in effect from time to time for
Prime Rate Loans.
"Prime Rate" - the interest rate established from time to time by Fleet
as its prime rate. Notwithstanding the foregoing, the Borrower acknowledges that
Fleet may regularly make domestic commercial loans at rates of interest less
than the rate of interest referred to in the preceding sentence. Changes in the
rate of interest resulting from changes in the Prime Rate shall take place
immediately without notice or demand of any kind.
"Prime Rate Loans" - Loans that bear interest at a rate based upon the
Prime Rate.
"Projections" - the balance sheets, income statements and statements of
cash flow of the Borrower, prepared by the Borrower, as at, and for Fiscal Year
2003, Fiscal Year 2004, Fiscal Year 2005 and Fiscal Year 2006, as applicable.
"Purchase Money Security Interest" - as defined in Section 7.2(c).
"Regulation D" - Regulation D of the Board of Governors of the Federal
Reserve System, as the same may be amended or supplemented from time to time.
"Regulatory Change" - as to any Lender, any change after the date of
this Agreement in United States federal, state or foreign laws or regulations
(including Regulation D) or the adoption or making after such date of any
interpretations, directives or requests applying to a class of banks including
such Lender of or under any United States federal, state, or foreign laws or
regulations (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.
"Related Fund" - as defined in Section 10.13(a).
"Required Payment" - as defined in Section 2.20.
"Reserve Requirement" - the maximum aggregate reserve requirement
(including all basic, supplemental, marginal and other reserves) which is
imposed on member banks of the Federal Reserve System against "Euro-currency
Liabilities" as defined in Regulation D of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
"Retail" - G-III Retail Outlets Inc., a Delaware corporation.
22
"Security" - as defined in Section 2(1) of the Securities Act of 1933,
as amended; provided, however, that Asset Securitization Recourse Liabilities
shall not constitute "Securities" except (i) to the extent that such obligations
arise from the Borrower's obligation to repurchase receivables or other assets
as a result of a default in payment by the obligor thereunder or any other
default in performance by such obligor under any agreement related to such
receivables or (ii) if the Borrower shall maintain a reserve account containing
Cash or Securities in respect of any such obligations or shall retain or
purchase a subordinated interest therein to the extent of the amount of such
reserve account or subordinated interest.
"Security Agreement" - the Amended and Restated Security Agreement
dated as of the Closing Date, in form and substance satisfactory to the Agent,
between the Borrower, the Corporate Guarantors and the Agent for the benefit of
the Lenders, the Collateral Monitoring Agent and the Issuing Bank, as amended,
restated, supplemented or otherwise modified from time to time.
"Security Documents" - collectively, the Security Agreement and each
other security agreement, instrument or other document heretofore delivered to
the Agent or executed and delivered from time to time pursuant to Section 6.15
or 10.8 to secure any of the Obligations, in each case as amended, restated,
supplemented or otherwise modified from time to time.
"Settlement Period" - as defined in Section 2.3(b).
"Siena" - Siena Leather Ltd., a New York corporation.
"Sources" - Global Apparel Sourcing, Ltd., a Delaware corporation.
"SPC" - as defined in Section 10.13(i).
"SPV" - with respect to any Person, a special purpose corporation or
grantor trust established solely for the purpose of purchasing receivables of
such Person for Cash in an amount equal to the fair market value of such
receivables.
"Standby L/Cs" - as defined in Section 2.1(b)(ii) and including the
Existing Standby L/Cs which continue to be outstanding, all of which shall
provide for an expiration date no later than August 31, 2005 and shall be cash
collateralized on and after June 1, 2005 as provided in Section 2.2(f).
"Standby L/C Fee" - as defined in Section 2.6(d).
"Steamship Guaranties" - as defined in Section 2.1(e).
"Stub Period" - the period from February 1, 2005 through and including
the Commitment Termination Date.
"Subsidiary" - with respect to any Person, any corporation, limited
liability company, partnership or joint venture whether now existing or
hereafter organized or acquired:
23
(i) in the case of a corporation, of which a majority of the securities having
ordinary voting power for the election of directors (other than securities
having such power only by reason of the happening of a contingency) are at the
time owned by such Person and/or one or more Subsidiaries of such Person, or
(ii) in the case of a partnership, limited liability company or joint venture in
which such Person is a general partner, member or joint venturer, as the case
may be or of which a majority of the partnership or other ownership interests
are at the time owned by such Person and/or one or more of its Subsidiaries.
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.
"Swap Contracts" - (i) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (ii) any and all
transactions of any kind, and the related confirmations, which are subject to
the terms and conditions of, or governed by, any form of master agreement
published by the International Swaps and Derivatives Association, Inc., any
International Foreign Exchange Master Agreement, or any other master agreement
(any such master agreement, together with any related schedules, a "Master
Agreement"), including any such obligations or liabilities under any Master
Agreement.
"Synthetic Lease Obligation" - the monetary obligation of a Person
under (a) a so-called synthetic, off-balance sheet or tax retention lease, or
(b) an agreement for the use or possession of property creating obligations that
do not appear on the balance sheet of such Person but which, upon the insolvency
or bankruptcy of such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).
"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,
provided, however, for any date of determination of Tangible Net Worth occurring
on or after the decision by the board of directors or management of the Parent
to terminate the business of Balihides, there shall be added to Tangible Net
Worth an amount of up to $900,000, representing on an after-tax basis, charges
taken in connection with such decision, to the extent such charges have caused a
reduction in Tangible Net Worth.
"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;
24
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 Code 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 in order to facilitate the
transportation or purchase of goods from foreign vendors by the Borrower in the
ordinary course of its business, which goods are consigned to the Issuing Bank
pursuant to the terms of the Application or otherwise, all of which (i) shall
have an expiration date of no later than August 31, 2005, (ii) shall be cash
collateralized on and after June 1, 2005 as provided in Section 2.2(f), 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.
"Transactional Fees" - as defined in Section 2.6(e).
"UCC" - with respect to any jurisdiction, the Uniform Commercial Code
as then in effect in that jurisdiction.
"Unpaid Drawings" - as defined in Section 2.2(c).
"Unused Commitment" - as at any date, for each Lender, the difference,
if any, between: (a) the amount of such Lender's Commitment as in effect on such
date, minus (b) the sum of the then outstanding principal amount of all Loans
made by such Lender and such Lender's pro rata share of all Outstanding L/Cs and
outstanding Acceptances, Airway Releases and Steamship Guarantees at such time.
"Unused Commitment Fee" - as defined in Section 2.6(b).
"Wee Beez" - Wee Beez International Limited, a Hong Kong corporation.
"Wilson's Leather" - Wilson's The Leather Experts Inc., a Minnesota
corporation.
25
Section 1.2 Other Definitional Provisions; Construction.
(a) All terms defined in this Agreement in the singular shall have
comparable meanings when used in the plural, and vice versa.
(b) The words "hereof," "hereby," "herein," and "hereunder" and words
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provisions of this Agreement, the term
"hereafter" shall mean after, and the term "heretofore" shall mean before, the
date of this Agreement, and Article, Section, schedule, exhibit, annex and like
references are to this Agreement unless otherwise specified.
(c) Any defined term which relates to a document shall include within
its definition any amendments, modifications, renewals, restatements,
extensions, supplements, or substitutions which may have been heretofore or may
be hereafter executed in accordance with the terms thereof and hereof.
(d) References in this Agreement to particular sections of the Code,
ERISA or any other legislation shall be deemed to refer also to any successor
sections thereto or other redesignations for codification purposes.
(e) All terms defined in the UCC and not otherwise defined or modified
herein shall have the same respective meanings as are given to such terms in the
UCC.
(f) 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 hereof, 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.
(g) 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.
(h) 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.
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 hereof, for the Lenders pro rata according to their respective
commitments, issue Trade L/Cs, Standby L/Cs, Acceptances, Airway Releases and
Steamship Guaranties for the account of the Borrower. During the Credit Period
and upon the Borrower's application therefor as hereinafter provided,
26
the Collateral Monitoring Agent shall, subject to the terms and conditions
hereof, for the Lenders pro rata according to their respective shares of the
Commitment, advance Loans to or for the account of the Borrower.
(b) (i) During the Credit Period, the Borrower may apply to the Issuing
Bank for the issuance by the Issuing Bank on behalf of the Lenders of one or
more Trade L/Cs for the account of the Borrower; provided, however, that (i) the
amount of any Trade L/C to be issued shall not exceed the Availability, (ii) the
aggregate amount of all Time Trade L/Cs and Acceptances outstanding at any one
time shall not exceed $3,000,000 and (iii) no Trade L/Cs shall expire on a date
later than August 31, 2005 and shall be collateralized on and after June 1, 2005
as provided in Section 2.2(f).
(ii) During the Credit Period, the Borrower may apply to the
Issuing Bank for the issuance by the Issuing Bank on behalf of the Lenders of
one or more standby letters of credit for the account of the Borrower (each a
"Standby L/C" and, collectively, the "Standby L/Cs"); provided, however, that
(i) the amount of any Standby L/C to be issued shall not exceed the
Availability, (ii) the sum of the amount of Standby L/Cs outstanding at any one
time and the aggregate amount of drawings under Standby L/Cs during the Credit
Period shall not exceed $5,000,000, (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, 2005.
(c) During the Credit Period, the Borrower may apply to the Issuing
Bank for the issuance by the Issuing Bank on behalf of the Lenders of one or
more Acceptances; provided, however, that (i) the aggregate amount of all Time
Trade L/Cs and Acceptances outstanding at any one time shall not exceed
$3,000,000, and (ii) all Acceptances shall be issued only in connection with the
presentation of drafts under outstanding Time Trade L/Cs issued in accordance
with the terms hereof.
(d) During the Credit Period, the Borrower may apply to the Collateral
Monitoring Agent for the advance by the Collateral Monitoring Agent on behalf of
the Lenders of a loan or loans (each a "Loan" and, collectively, the "Loans"),
and subject to the terms hereof, during the Credit Period, the Borrower may
borrow, prepay, repay (provided that prepayment or repayment of Eurodollar Loans
shall be subject to the provisions of Section 2.26) and reborrow by means of
Prime Rate Loans or Eurodollar Loans, and during such period and thereafter
until the date of payment in full of all of the Loans, the Borrower may convert
Loans of one type into Loans of another type as provided in Section 2.23;
provided, however, that the amount of any Loan to be advanced shall not exceed
the Availability.
(e) During the Credit Period, the Borrower may apply to the Issuing
Bank for the issuance by the Issuing Bank on behalf of the Lenders of one or
more steamship guaranties (each a "Steamship Guaranty" and, collectively, the
"Steamship Guaranties") or airway releases (each an "Airway Release" and,
collectively, "Airway Releases"); provided, however, that any
27
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 $2,242,308.19 and that such Existing Loans
are hereby extended and renewed and shall constitute "Loans" hereunder in such
amount, subject to the terms and conditions hereof; (ii) Existing Trade L/Cs are
in the amount of $6,388,887.06 and shall constitute "Trade L/Cs" hereunder in
such amount, subject to the terms and conditions hereof; (iii) Existing
Acceptances are in the amount of $0 and shall constitute "Acceptances" hereunder
in such amount, subject to the terms and conditions hereof; (iv) Existing
Standby L/Cs are in the amount of $1,080,389.50 and shall constitute "Standby
L/Cs" hereunder in such amount, subject to the terms and conditions hereof; and
(v) Existing Steamship Guaranties and Airway Releases are in the amount of
$43,364.40 and shall constitute "Steamship Guaranties" and "Airway Releases"
hereunder, as the case may be, in such amount subject to the terms and
conditions hereof.
(g) As of the date hereof, the Lenders have adjusted the outstanding
principal amount of the Obligations owing to each Lender so that each Lender
holds no more than its Lender's Share of the Obligations after giving effect to
this Agreement.
Section 2.2 Applications for Letters of Credit, Steamship Guaranties
and Airway Releases.
(a) Subject to the provisions of Section 2.1(b), upon the execution and
delivery or electronic transmission by the Borrower simultaneously to the
Issuing Bank and the Collateral Monitoring Agent of the Issuing Bank's standard
form of application for letter of credit (individually, an "Application", and
collectively, the "Applications") and upon payment by the Borrower of the
applicable fees provided for in Section 2.6 and receipt of instructions from the
Collateral Monitoring Agent as to Availability, the Issuing Bank shall, subject
to the terms and conditions hereof, in a timely manner in accordance with its
standard operating procedures, issue an L/C for the account of the Borrower. In
the event of any conflict, discrepancy or any omission of terms provided herein
between the terms established by the Issuing Bank in its Application or
otherwise and this Loan Agreement, the terms provided herein shall prevail.
(b) Subject to the provisions of Section 2.1(e), 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 hereof and receipt of
instructions from the Collateral Monitoring Agent as to Availability, in a
timely manner in accordance with its standard operating procedures, issue
Steamship Guaranties or Airway Releases. Any such Steamship Guaranties or Airway
Releases shall be subject to the terms of the Continuing Agreement for Issuance
of Steamship Guaranties and Airway Releases.
(c) The Borrower shall reimburse the Issuing Bank in immediately
available funds at the Issuing Bank's Payment Office on the same day as demand
therefor is made by the
28
Issuing Bank for any payment made by the Issuing Bank under an L/C (all such
amounts so paid until paid, are hereinafter referred to as "Unpaid Drawings").
(d) The Borrower hereby irrevocably instructs the Collateral Monitoring
Agent to advance to the Issuing Bank from any account of the Borrower with the
Collateral Monitoring Agent and, to the extent sufficient Availability exists to
advance Loans, to pay any Unpaid Drawings. In the event that at any time there
are not sufficient funds in any account of the Borrower with the Collateral
Monitoring 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) 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) and the respective rights, obligations and covenants of the Borrower, the
Agent, the Collateral Monitoring Agent, the Issuing Bank and the Lenders under
this Agreement and the other Loan Documents shall remain in full force and
effect until the date on which the last of the L/Cs, Steamship Guaranties or
Airway Releases expires or is terminated (with the consent of the Borrower and
the beneficiaries thereof) and all payments made by the Issuing Bank under the
L/Cs, the Acceptances, the Steamship Guaranties and Airway Releases are
reimbursed in full by the Borrower, except that the Commitment shall terminate
on the Commitment Termination Date and none of the Lenders, the Issuing Bank or
the Agent shall have any obligation after the Commitment Termination Date to
make Loans or to issue L/Cs, Acceptances, Steamship Guaranties or Airway
Releases hereunder. In addition, the Borrower shall, for the period beginning on
the day after the Commitment Termination Date and ending on the date which is
the later of (x) the last outstanding L/C, Steamship Guaranty or Airway Release
expires or is terminated and (y) the 30th day following the expiration of any
L/C, Steamship Guaranty or Airway Release which expired during the 30-day period
prior to the Commitment Termination Date, with respect to any such Indebtedness
of the Borrower, provide the Issuing Bank with (1)
29
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 Lenders and the Agent. Upon compliance with the
provisions of the foregoing sentence, the Borrower shall, notwithstanding
anything herein to the contrary, be relieved of all other obligations under this
Agreement or the Loan Documents.
Section 2.3 Borrowing Notice and Disbursement of Loans.
(a) The Borrower shall give the Collateral Monitoring Agent written
notice of each borrowing and conversion of each Loan and of the duration of each
Interest Period applicable to each Eurodollar Loan (in each case, a "Borrowing
Notice"). Each Borrowing Notice shall be irrevocable and shall be effective on
the date of the related borrowing, if received by the Agent not later than 12
noon, New York City time, on the date that is:
(i) In the case of each notice of borrowing of, or conversion
into, Prime Rate Loans, on the date of the Borrowing Notice, subject to
Section 2.9(c); and
(ii) In the case of each notice of borrowing of, or conversion
into, Eurodollar Loans, and in the case of any Eurodollar Loan the Interest
Period of which is maturing and is intended to be continued as a Eurodollar
Loan, three (3) Eurodollar Business Days prior to the date of the related
borrowing or conversion or the first day of such Interest Period.
Each such notice of borrowing or conversion shall specify the amount (subject to
Section 2.1) and type of Loans to be borrowed or converted (and, in the case of
a conversion, the type of Loans to result from such conversion), the date of
borrowing or conversion (which shall be: (x) a Business Day in the case of each
borrowing of Prime Rate Loans, and (y) a Eurodollar Business Day in the case of
each borrowing of Eurodollar Loans and each conversion of or into a Eurodollar
Loan). Each such notice of the duration of an Interest Period shall specify the
Loans to which such Interest Period is to relate. The Collateral Monitoring
Agent shall notify the Lenders of the content of each such Borrowing Notice
promptly after its receipt thereof.
(b) The Collateral Monitoring Agent shall render to each Lender
promptly after the end of each week in the case of Prime Rate Loans, on the date
of funding in the case of Eurodollar Loans, or after such shorter period as the
Agent may determine (such week, date of funding or shorter period being
hereinafter referred to as a "Settlement Period"), a summary statement of the
Outstanding Obligations and each Lender's Share thereof for such period. If, as
of the end of any Settlement Period, any Lender's Share of Loans is more than
such Lender's Share for the previous Settlement Period, then such Lender shall
transfer to the Collateral Monitoring Agent good funds for the amount of the
increase (A) on the same Business Day that notice is given by the Collateral
Monitoring Agent to the Lender if such notice is given prior to 12:00 p.m. and
(B) no later than 12:00 p.m. on the following Business Day if notice is given by
the Collateral Monitoring Agent to the Lender after 12:00 p.m.; and, on the
other hand, if any Lender's Share of Loans as of the end of any Settlement
Period is less than such Lender's Share
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of Loans for the previous Settlement Period, then the Collateral Monitoring
Agent shall transfer to such Lender good funds for the amount of the decrease
(A) on the same Business Day if the Collateral Monitoring Agent's calculations
with respect to such Settlement Period are completed before 12:00 p.m. and (B)
on the next Business Day if the Collateral Monitoring Agent's calculations with
respect to such Settlement Period are completed after 12:00 p.m. Unless the
receiving party gives at least five Business Days prior written notice to the
contrary, all funds remitted by the Collateral Monitoring Agent to any Lender
hereunder, and all funds remitted by any Lender to the Collateral Monitoring
Agent hereunder, shall be sent by wire transfer to such party's respective
account as set forth on the signature pages hereof. The Collateral Monitoring
Agent agrees to mark its books and records each Settlement Period to show each
Lender's Share of the Outstanding Obligations. The failure of any Lender to make
a timely payment hereunder shall have no effect on such Lender's liability for
such payment, it being understood that each Lender shall assume the risk to the
extent of its Lender's Share of each Loan made or L/C, Acceptance, Steamship
Guaranty or Airway Release issued as and when made or issued, as the case may
be.
Section 2.4 Notes.
(a) The Loans made by each Lender shall be evidenced by a single
promissory note of the Borrower in substantially the form of Exhibit A payable
to such Lender (each, a "Note" and collectively, the "Notes"). Each Note shall
be dated the date hereof, shall be payable to the order of each Lender on a date
not later than the Commitment Termination Date in a principal amount equal to
such Lender's Commitment as originally in effect, and shall otherwise be duly
completed. The Notes shall be payable as provided in Section 2.7.
(b) Upon receipt of an affidavit of an officer of the Collateral
Monitoring Agent as to the loss, theft, destruction or mutilation of any Note or
any other Security Document which is not of public record, and, in the case of
any such loss, theft, destruction or mutilation, upon surrender and cancellation
of such Note or other Security Document, the Borrower shall issue, in lieu
thereof, a replacement Note or other Security Document in the same principal
amount thereof and otherwise of like tenor.
Section 2.5 Interest.
(a) The Borrower shall pay to the Collateral Monitoring Agent, for the
ratable benefit of the Lenders, interest on the daily balances of the Loans
outstanding during the preceding month for the period commencing on the date of
each such Loan until such Loan shall be paid in full, at the following rates per
annum:
(i) For a Prime Rate Loan, a rate equal to the Prime Rate; and
(ii) For a Eurodollar Loan, a rate equal to the LIBOR Rate plus
two and one-quarter percent (2-1/4%) per annum.
(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
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the extent permitted by law) that shall not be paid in full when due (whether at
stated maturity, by acceleration or otherwise) for the period commencing on the
due date thereof until the same is paid in full at the Post-Default Rate.
(c) Except as provided in the next sentence, accrued interest on each
Loan shall be payable: (i) not later than monthly on the Monthly Dates and (ii)
in the case of any Eurodollar Loan, upon the payment thereof or the conversion
thereof into a Prime Rate Loan (but only on the principal so paid or converted).
Interest that is payable at the Post-Default Rate shall be payable from time to
time on demand of the Collateral Monitoring Agent.
Section 2.6 Fees.
(a) The Borrower shall pay to the Agent, for the ratable benefit of the
Lenders, a non-refundable advisory fee (the "Advisory Fee") in the amount of
$217,000 (subject to adjustment pursuant to this subsection (a)) payable as
follows:
(i) $70,000 payable on the Closing Date;
(ii) $72,000 payable on February 1, 2003; and
(iii) $75,000 payable on February 1, 2004;
provided, however, that in the event that the Borrower shall repay all
Outstanding Obligations and terminate the Commitment at any time after the
Closing Date but prior to February 1, 2004, the Borrower shall pay the fees
provided for in this Section 2.6(a), to the extent such fees shall not have been
previously paid by the Borrower, on the date of such repayment and termination.
(b) The Borrower shall pay to the Agent, for the account of each
Lender, an unused commitment fee (the "Unused Commitment Fee") on the daily
average amount of such Lender's Unused Commitment, for the period from the date
hereof to and including the Commitment Termination Date at a rate equal to
one-quarter of one (1/4%) percent per annum on the portion of the Unused
Commitment of such Lender; provided the amount of the Unused Commitment Fee
shall not exceed $87,500 during the term of this Agreement. The accrued Unused
Commitment Fee shall be calculated every third Monthly Date commencing on July
31, 2002 and such amount shall be payable quarterly in arrears on every third
Monthly Date commencing on August 31, 2002 and on the Commitment Termination
Date.
(c) Upon each drawing under an L/C, the Borrower shall pay to the
Issuing Bank, for the ratable benefit of the Lenders, a drawing fee (the
"Drawing Fee") computed at the rate of one eighth of one percent (1/8%) per
annum of the face amount of such drawing, but in no event shall the Drawing Fee
be less than $70.00.
(d) Upon the execution and delivery by the Borrower of an Application
for a Standby L/C, the Borrower shall pay to the Issuing Bank, for the ratable
benefit of the Lenders, an issuance fee (the "Standby L/C Fee") computed at the
rate of one and one-half
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percent (1-1/2%) per annum on the face amount of the requested Standby L/C
payable quarterly in advance on the applicable Monthly Dates.
(e) Upon the execution and delivery by the Borrower of an Application
for any L/C, Steamship Guarantee or Airway Release (or upon any modification,
amendment, cancellation or extension thereof), the Borrower shall pay directly
to the Issuing Bank for its own account, all issuance, processing and associated
transactional charges (the "Transactional Fees") imposed by the Issuing Bank in
connection with any L/C, Steamship Guarantee or Airway Release.
(f) Upon the execution and delivery of an Acceptance, the Borrower
shall pay to the Issuing Bank, for the ratable benefit of the Lenders, a fee
(the "Acceptance Fee") for such Acceptance equal to the discount rate of the
Agent plus two and one-half percent (2-1/2%) per annum of the principal amount
of such Acceptance for the term thereof payable monthly in advance on the
applicable Monthly Dates.
(g) The Borrower shall pay to the Collateral Monitoring Agent for its
own account a fee of $60,000 per annum, a pro rata portion of which shall be
payable monthly in advance on the first Business Day of each calendar month
(with the first such payment to be made on June 1, 2002) (the "Collateral
Fees").
(h) The Borrower shall pay to the Lenders within ten days following
demand therefor, reimbursement for the fees and expenses of the Collateral
Monitoring Agent's and any Lender's field examiners which accompany the
Collateral Monitoring Agent on inspections and field examinations (pursuant to
Section 6.2 or 9.10(b) or otherwise), such fees and expenses to be calculated at
such Lender's standard per diem rates (the "Examination Fees").
(i) The Borrower shall pay to the Agent for its sole account an
administrative fee (the "Administrative Fee") in accordance with the terms of a
separate agreement between the Agent and the Borrower.
(j) The Advisory Fee, the Unused Commitment Fee, the Drawing Fee, the
Standby L/C Fee, the Transactional Fees, the Acceptance Fee, the Collateral
Fees, the Examination Fees, the Administrative Fee and the Early Termination Fee
are hereinafter sometimes referred to individually as a "Fee" and collectively
as the "Fees".
Section 2.7 Payment of Loans and Acceptances; Voluntary Changes in
Commitment; Mandatory Prepayments.
(a) All outstanding Loans and Acceptances shall be paid in full not
later than the Commitment Termination Date.
(b) Subject to the payment of the fee, if any, required to be paid
pursuant to the proviso to Section 2.6(a), the Borrower shall be entitled to
terminate or reduce either or both of the Commitment and the Direct Debt
Sublimit; provided that the Borrower shall give one (1) Business Day's prior
written notice of such termination or reduction to the Lenders and that any
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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 Lender's Share of the Commitment and the Direct Debt
Sublimit.
(c) Notwithstanding any other provisions hereof, in the event that on
any day the Obligations shall exceed the lesser of (i) the Commitment as of such
date and (ii) 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) as of such date, the
Borrower (i) 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 lesser of (x) the Commitment as of such date and (y) the
Borrowing Base as of such date and (ii) 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.
(d) Within one Business Day of the receipt thereof by the Parent or any
Subsidiary (including the Borrower), the Borrower shall repay the Loans and/or
prepay Advances in an amount equal to 20% of the proceeds (net of underwriting
discounts and commissions and other reasonable costs associated therewith) of
any sale or issuance of any Capital Stock of the Parent or any Subsidiary
(including the Borrower) (other than any sale or issuance of Capital Stock
described in clauses (a), (b) or (c) of Section 7.6) and 20% of any amount of
cash received by the Parent or any Subsidiary (including the Borrower) in
connection with any capital contributions and the Commitment shall be reduced in
the amount of such net proceeds or cash.
(e) Within one Business Day of the receipt thereof by the Parent or any
Subsidiary (including the Borrower), the Borrower shall repay the Loans and/or
prepay Acceptances in an amount equal to 25% of the proceeds (net of
underwriting discounts and commissions and other reasonable costs associated
therewith) of the incurrence of any Indebtedness (other than Indebtedness
permitted by Sections 7.1(a) through 7.1(f)) by the Parent or any Subsidiary
(including the Borrower) and the Commitment shall be reduced in the amount of
such net proceeds.
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 repay in full all indebtedness of the Borrower under the
Original Loan Agreement, in an aggregate principal amount of $2,242,308.19;
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(b) second to pay all fees and expenses of the Agent and the Lenders
associated with the preparation, execution and delivery hereof; and
(c) third to provide working capital for the Borrower.
Section 2.9 Computations.
(a) Interest on all Loans and each Fee shall be computed on the basis
of a year of 360 days and actual days elapsed (including the first day but
excluding the last) occurring in the period for which payable.
(b) (i) For the purpose of computing interest and calculating
Availability hereunder, all payments consisting of cash or wire transfers in
immediately available funds shall be deemed received by the Collateral
Monitoring Agent: (A) on the same Business Day that such payments are deposited
in the 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 deemed to be 12:00 p.m. if
the date of such deposit is the last Business Day of the calendar month or the
Business Day before a holiday;
(ii) For the purpose of calculating Availability hereunder, all
checks, drafts, or similar non-cash items of payment by or for the account of
the Borrower shall be deemed received by the Collateral Monitoring Agent (A) on
the same Business Day that the deposit of such payment is made in the Collection
Account in the event such deposit is made prior to 1:00 p.m.; and (B) one
Business Day following deposit thereof in the Collection Account in the event
such deposit is made after 1:00 p.m.; and
(iii) For the purpose of computing interest and Fees, all checks,
drafts, or similar non-cash items of payment by or for the account of the
Borrower shall be deemed received by the Collateral Monitoring Agent two (2)
Business Days after deposit of such payment in the Collection Account;
provided, however, that, for purposes other than computing interest and Fees and
calculating Availability, no check, drafts, or other instruments received by the
Collateral Monitoring Agent shall constitute payment to the Collateral
Monitoring Agent unless and until such item of payment has actually been
collected by the Collateral Monitoring Agent and such collection has been
credited to the Collection Account.
(c) On the basis of the daily Borrowing Base Certificate delivered by
the Borrower to the Collateral Monitoring Agent pursuant to Section 5.10(a), the
Collateral Monitoring Agent will determine on a daily basis the Availability and
the Borrower's compliance with the terms hereof, including but not limited to
the provisions of Section 2.7.
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Section 2.10 Time and Method of Payments; Statement of Account.
(a) All payments of principal, interest, Fees and other amounts
(including indemnities) payable by the Borrower hereunder shall be made in
Dollars, in immediately available funds, to the Collateral Monitoring Agent at
its Payment Office not later than 12 noon, New York City time, on the date on
which such payment shall become due. With respect to all such payments, the
Collateral Monitoring Agent shall (i) advance funds in payment and treat such
advance of funds as a Loan or (ii) in the event that there is not sufficient
Availability, debit the amount of any such payment to any ordinary deposit
account of the Borrower with the 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.
Each payment received by the Agent hereunder for the account of a Lender shall
be paid promptly to such Lender, in like funds, for the account of such Lender's
Applicable Lending Office for the Loan in respect of which such payment is made.
Upon its acceptance of an Assignment and Acceptance and recording of the
information contained therein in the Register pursuant to Section 10.13(d), from
and after the effective date of such Assignment and Acceptance, the Agent shall
make all payments hereunder and under the Notes in respect of the interest
assigned thereby to the Lender assignee thereunder, and the parties to such
Assignment and Acceptance shall make all appropriate adjustments in such
payments.
(b) The Collateral Monitoring Agent shall provide the Borrower with a
statement of account on a monthly basis, and each statement of account that is
delivered by the Collateral Monitoring Agent to the Borrower that relates to the
Obligations shall be deemed correct in the absence of manifest error and shall
constitute an account stated between the Borrower and the Collateral Monitoring
Agent unless thereafter waived in writing by the Collateral Monitoring Agent or
unless, within 30 days after the Borrower's receipt of such statement, the
Borrower delivers to the Collateral Monitoring Agent, by registered or certified
mail, written objection thereto specifying the error or errors, if any,
contained in any such statement; provided, however, that any failure by the
Collateral Monitoring Agent to provide the Borrower with a statement of account
shall not affect the Obligations of the Borrower hereunder or under any Note.
Section 2.11 Several Obligations.
No Lender shall be responsible for the failure of the other Lenders to make
Loans to be made by such other Lenders.
Section 2.12 Guaranties.
The Guarantors have heretofore executed and delivered one or more guaranties
(collectively, as amended, restated, modified, supplemented and confirmed form
time to time, the "Original Guaranties") guaranteeing, without limitation, the
due payment and performance of the indebtedness, liabilities and obligations of
the Borrower and the other Guarantors under the Original Loan Agreement and the
instruments, documents and agreement executed and
36
delivered in connection therewith. Each of the Guarantors shall, as a condition
to the effectiveness of this Agreement, execute and deliver to the Agent for the
benefit of the Lenders, the Collateral Monitoring Agent and the Issuing Bank,
the Guarantee Agreement, which shall amend and restate the Original Guaranties.
Section 2.13 Security.
(a) The Borrower has heretofore granted to the Agent, for the ratable
benefit of the Lenders, the Collateral Monitoring Agent and the Issuing Bank, a
Lien on all of the Borrower's personal property pursuant to one or more security
agreements, pledge agreements and assignments (collectively, as amended,
restated, modified, supplemented and confirmed from time to time, the "Original
Borrower Security Documents"). The Borrower shall, as a condition to the
effectiveness of this Agreement, execute and deliver to the Agent for the
benefit of the Lenders, the Collateral Monitoring Agent and the Issuing Bank,
the Security Agreement, which shall amend and restate the Original Borrower
Security Documents.
(b) The Corporate Guarantors have heretofore granted to the Agent, for
the ratable benefit of the Lenders, the Collateral Monitoring Agent and the
Issuing Bank, a Lien on all of the Corporate Guarantors' respective personal
property pursuant to one or more security agreements, pledge agreements and
assignments (collectively, as amended, restated, modified, supplemented and
confirmed from time to time, the "Original Guarantor Security Documents"). The
Corporate Guarantors shall, as a condition to the effectiveness of this
Agreement, execute and deliver to the Agent for the benefit of the Lenders, the
Collateral Monitoring Agent and the Issuing Bank, the Security Agreement, which
shall amend and restate the Original Guarantor Security Documents.
Section 2.14 Lending Offices.
The Loans of each type made by each Lender shall be made at such Lender's
Applicable Lending Office for Loans of such type.
Section 2.15 Obligations Absolute.
The obligations of the Borrower under this Agreement and the Loan Documents
shall be absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with the terms hereof, 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;
37
(iii) the existence of any claim, setoff, defense or other rights
which the Borrower may have at any time against any beneficiary or any
transferee of any beneficiary (or any Persons or entities for whom any
beneficiary or any such transferee may be acting), any Lender or any other
Person, whether in connection with this Agreement, the L/Cs, the Security
Documents, the other Loan Documents or any unrelated transaction;
(iv) any demand presented under the L/Cs (or any endorsement
thereon) proving to be forged, fraudulent, invalid, unenforceable or
insufficient in any respect or any statement therein being inaccurate in any
respect whatsoever;
(v) payment by the Issuing Bank under any L/C against preparation
of a demand which does not comply with the terms of such L/C, including,
without limitation, the circumstances referred to in clause (iv) above or
the failure of any document to bear adequate reference to such L/C;
(vi) the use to which the L/Cs may be put or any acts or omissions
of the Borrower or beneficiaries in connection therewith; and
(vii) any other circumstances or happening whatsoever, whether or
not similar to any of the foregoing, provided that such circumstances or
happening shall not have constituted gross negligence or willful misconduct
of the Agent or any Lender.
Section 2.16 Sharing of Payments and Set-Off Among Lenders.
(a) The Borrower hereby agrees that, in addition to (and without
limitation of) any right of set-off, banker's lien or counterclaim a Lender may
otherwise have, each Lender shall be entitled, at its option, to offset balances
held by it at any of its offices against any principal of or interest on any of
the Obligations hereunder, or any Fee payable under this Agreement, that is not
paid when due (regardless of whether such balances are then due to the
Borrower), in which case it shall promptly notify the Borrower thereof, provided
that its failure to give such notice shall not affect the validity thereof.
Nothing contained herein shall require any Lender to exercise any such right or
shall affect the right of any Lender to exercise and retain the benefits of
exercising, any such right with respect to any other indebtedness or obligation
of the Borrower.
(b) Each Lender:
(i) if it shall effect payment of any principal of or interest on
any Obligations held by it under this Agreement through the exercise of any
rights provided for in subsection (a) above, or
(ii) upon or following any acceleration by the Agent and the
Lenders of the Obligations,
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shall promptly purchase from the other Lenders a participation in the
Obligations held by the other Lenders in such amounts, and make such other
adjustments from time to time as shall be equitable, so that all the Lenders
shall share the benefit of such payment and the Obligations pro rata in
accordance with their respective Commitments. To such end all the Lenders shall
make appropriate adjustments among themselves (by the resale of a participation
sold or otherwise) if any payment received must be restored or any acceleration
is rescinded by the Majority Lenders. The Borrower agrees that any Lender so
purchasing a participation in the Obligations held by the other Lenders may
exercise all rights of set-off, banker's lien, counterclaim or similar rights
with respect to such participation as fully as if such Lender were a direct
holder of Obligations in the amount of such participation. The failure of any
Lender to purchase participations as provided hereunder shall not affect the
validity of the set-off as between such Lender and the Borrower.
Section 2.17 Additional Costs; Capital Requirements.
(a) (i) The Borrower shall pay directly to each Lender from time to
time such amounts as such Lender may determine to be necessary to compensate it
for any increase in costs incurred by such Lender which such Lender determines
are attributable to its making or maintaining any Eurodollar Loans or its
Commitment hereunder or in respect of L/Cs or any reduction in any amount
receivable by such Lender hereunder in respect of any of such Loans, Commitment
or L/Cs (such increases in costs and reductions in amounts receivable being
herein called "Additional Costs"), resulting from any Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to such Lender under
this Agreement or its Note in respect of any of such Loans or in respect of L/Cs
(other than taxes imposed on the overall net income of such Lender or its
Applicable Lending Office for any of such Loans by the jurisdiction in which
such Lender has its principal office or such Applicable Lending Office); or (ii)
imposes or modifies any reserve, special deposit or similar requirements
relating to or any deposits with or other liabilities of, such Lender (including
any deposits referred to in the definition of "LIBOR Base Rate" in Article 1
hereof or in respect of L/Cs); or (iii) imposes any other conditions affecting
this Agreement in respect of the Eurodollar Loans or L/Cs. Each Lender will
notify the Borrower and the Agent of any event occurring after the date of this
Agreement which will entitle such Lender to compensation pursuant to this
Section 2.17(a) as promptly as practicable after it obtains knowledge thereof
and determines to request such compensation. Each Lender will furnish the
Borrower and the Agent with a certificate setting forth the basis and amount of
each request for such Lender for compensation from the Borrower under this
Section 2.17(a). The Borrower may, by notice to such Lender (with a copy to the
Agent), require that such Lender's Loans of the type with respect to which such
compensation is requested be converted into Prime Rate Loans or Eurodollar
Loans, as the case may be, in accordance with Sections 2.23 and 2.27.
(ii) Without limiting the effect of the foregoing provisions of
this Section 2.17, in the event that, by reason of any Regulatory Change, any
Lender either (i) incurs Additional Costs based on or measured by the excess
above a specified level of the amount of a category of deposits or other
liabilities of such Lender which includes deposits by reference to which the
interest rate on Eurodollar Loans is determined as provided in this Agreement or
a category of extensions of credit or other assets of such Lender which includes
Eurodollar Loans
39
or (ii) becomes subject to restrictions on the amount of such a category of
liabilities or assets which it may hold, then, if such Lender so elects by
notice to the Borrower (with a copy to the Agent), the obligation of such Lender
to make, and to convert Loans of any other type into, Loans of such type
hereunder shall be suspended until the date such Regulatory Change ceases to be
in effect (and all Loans of such type of such Lender then outstanding shall be
converted into Prime Rate Loans or Eurodollar Loans, as the case may be, in
accordance with Sections 2.23 and 2.27).
(b) If any existing or future law or regulation or the interpretation
thereof by any court or administrative or governmental authority charged with
the administration thereof, or compliance by any Lender with any request or
directive (whether or not having the force of law) of any such authority, either
imposes, modifies, deems applicable or results in the application of, any
capital maintenance, capital ratio or similar requirement against loan
commitments made by any Lender and the result thereof is to impose upon such
Lender or increase any capital requirement applicable as a result of the making
or maintenance of such Lender's Commitment (which imposition of or increase in
capital requirements may be determined by the Lender's reasonable allocation of
the aggregate of such capital impositions or increases) then, upon demand by
such Lender (a copy of which demand shall be delivered to the Agent), the
Borrower shall immediately pay to the Lender from time to time specified by the
Lender, such additional fees as shall be sufficient to compensate the Lender for
such imposition of or increase in capital requirements. Such Lender will furnish
the Borrower and the Agent with a certificate setting forth the basis and amount
of each request by such Lender for compensation from the Borrower under this
Section 2.17. The Borrower may, by notice to such Lender (with a copy to the
Agent), require that such Lender's Loans of the type with respect to which such
compensation is requested be converted into Prime Rate Loans or Eurodollar
Loans, as the case may be, in accordance with Sections 2.23 and 2.27.
(c) Determinations by any Lender for purposes of this Section 2.17 of
the effect of any Regulatory Change on its costs of making or maintaining Loans
or L/Cs or on amounts receivable by it in respect of Loans or L/Cs, and of the
additional amounts required to compensate such Lender in respect of any
Additional Costs, shall be set forth in writing in reasonable detail and shall
be conclusive, absent manifest error.
Section 2.18 Additional L/C Provisions.
(a) Without limiting the generality of Section 2.17, if:
(i) any change in any law or regulation or in the interpretation
thereof by any court or administrative or governmental authority charged or
claiming to be charged with the administration thereof shall (1) impose,
modify or deem applicable any reserve, special deposit, capital maintenance,
deposit insurance premium or assessment, or similar requirement against
letters of credit issued by or assets held by, or deposits with or for the
account of, any Lender, (2) impose on any Lender any other condition
regarding this Agreement or the L/Cs, or (3) subject any Lender to any tax,
charge, fee,
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deduction or withholding of any kind whatsoever other than changes in the
rate of tax on the over-all net income of such Lender; and
(ii) the result of any such event shall be to increase the cost to
any Lender of the issuance or maintenance of the L/Cs, or reduce the amount
of principal, interest, or any fee or compensation receivable by any Lender
in respect of the L/Cs or this Agreement;
then, upon demand of any Lender, the Borrower shall pay to the Lenders, from
time to time as specified by each of the Lenders, respectively, all additional
amounts which are necessary to compensate such Lender for such increased cost or
reduction incurred by that Lender. All payments of compensation for such
increased cost or reduction shall be accompanied by interest thereon from the
date such increased cost or reduction is incurred by any Lender until payment in
full thereof at the rate provided in Section 2.5(a) and, in the event of
non-payment by the Borrower following demand, thereafter at the Post-Default
Rate. A certificate as to such increased cost incurred by any Lender showing the
manner of calculation thereof shall be submitted by such Lender to the Borrower
and shall be conclusive (absent manifest error) as to the amount thereof. In the
event of any inconsistency between the terms of this Section 2.18 and Section
2.17, the provisions of Section 2.17 shall govern.
(b) No Lender shall be responsible: (i) for the validity or
insufficiency of any instrument transferring or assigning or purporting to
transfer or assign the L/Cs or the rights or benefits thereunder or proceeds
thereof in whole or in part, which may prove to be invalid or ineffective for
any reason; (ii) for errors, omissions, interruptions or delays in transmission
or delivery of any messages, by mail, cable telegraph, telex or otherwise,
whether or not they be in cipher; (iii) for any loss or delay in the
transmission or otherwise of any document or draft required in order to make a
draw under the L/Cs or of proceeds thereof; or (iv) for any consequence arising
from causes beyond the control of any Lender. None of the above shall affect,
impair, or prevent the vesting of any Lender's rights or powers hereunder.
(c) In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by any Lender,
under or in connection with the L/Cs or the related drafts or document(s), if
taken or omitted in good faith, shall be binding upon the Borrower and shall not
put any Lender under any resulting liability to the Borrower.
(d) The Borrower shall at all times protect, indemnify and save
harmless each Lender from and against any and all claims, actions, suits and
other legal proceedings, and from and against any and all loss, claims, demands,
liabilities, damages, costs, charges, counsel fees and other expenses which any
Lender may, at any time, sustain or incur by reason of or in consequence of or
arising out of the issuance of the L/Cs; it being the intention of the parties
that this Agreement shall be construed and applied to protect and indemnify any
Lender against any and all risk involved in the issuance of the L/Cs, all of
which risks are hereby assumed by the Borrower, including, without limitation,
any and all risks of the acts or omissions, whether rightful or wrongful, of any
present or future de jure or de facto government or governmental
41
authority (all such acts and omissions, herein called the "Governmental Acts");
provided, however, that the Borrower shall not be required to indemnify any
Lender for any claims, damages, losses, liabilities, costs or expenses to the
extent, but only to the extent, caused by the willful misconduct or gross
negligence of any Lender in not honoring any demand for payment under any L/C
(after the presentation to it by the beneficiary of drawing documents strictly
complying with the terms and conditions of such L/C) except if as a result of
any Governmental Act or any other cause beyond the control of any Lender.
Notwithstanding any other provision contained in this Agreement, the obligations
of the Borrower under this Section 2.18 shall survive the termination hereof.
Section 2.19 Pro Rata Treatment Among Lenders.
(a) Except as otherwise provided herein: (i) each Loan advanced by the
Collateral Monitoring Agent hereunder, each other advance made by the Collateral
Monitoring Agent, the Issuing Bank or the Agent hereunder (including but not
limited to advances to protect or preserve Collateral), and each payment of any
Fee (other than Transactional Fees, Collateral Fees, the Administrative Fee and
Examination Fees) by the Borrower shall be made by or to the Collateral
Monitoring Agent, the Issuing Bank or the Agent, as the case may be, for the
account of the Lenders according to the respective Lender's Share, (ii) each
conversion of Loans of a particular type under Section 2.23 (other than
conversions provided for by Section 2.25) will be made pro rata among the
Lenders holding Loans of such type according to the respective principal amounts
of such Loans held by such Lenders, and (iii) each payment of principal of or
interest on Loans in each case will be made by or to the Collateral Monitoring
Agent, the Issuing Bank or the Agent, as the case may be, for the account of the
Lenders.
(b) On a monthly basis, after the Collateral Monitoring Agent's receipt
of monthly interest charges pursuant to Section 2.10, and provided a Lender
shall have made all payments to the Collateral Monitoring Agent required to be
made hereunder, the Collateral Monitoring Agent shall pay to such Lender an
amount equivalent to such Lender's Share of such interest and any Fees received
during the prior month.
Section 2.20 Non-Receipt of Funds by the Agent.
Unless the Collateral Monitoring Agent shall have been notified by a
Lender or the Borrower (the "Payor") prior to the date notified on which such
Lender is to make payment to the Collateral Monitoring Agent of the proceeds of
a Loan to be made by it hereunder or the Borrower is to make a payment to the
Collateral Monitoring Agent for the account of one or more of the Lenders, as
the case may be (such payment being herein called the "Required Payment"), which
notice shall be effective upon receipt, that the Payor does not intend to make
the Required Payment to the Collateral Monitoring Agent, the Collateral
Monitoring Agent may assume that the Required Payment has been made and may, in
reliance upon such assumption (but shall not be required to), make the amount
thereof available to the intended recipient on such date and, if the Payor has
not in fact made the Required Payment to the Collateral Monitoring Agent, the
recipient of such payment shall, on demand, repay to the Collateral Monitoring
Agent the amount made available to it together with interest thereon in respect
of
42
each day during the period commencing on the date such amount was so made
available by the Collateral Monitoring Agent until the date the Collateral
Monitoring Agent recovers such amount at a rate per annum equal to the Federal
Funds Rate for such day (when the recipient is a Lender) or equal to the rate of
interest applicable to such Loan (when the recipient is the Borrower).
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, 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 Sections
2.21(a) and 2.21(b), as applicable, the Borrower (or any of its affiliates,
officers, employees, agent, or those Persons acting for or in concert with the
Borrower) shall receive any monies, checks, notes, drafts, or any other payment
relating to any Collateral or as proceeds of any Collateral, the Borrower shall
receive such monies, checks, notes, drafts and other payments as agent for the
Collateral Monitoring Agent and shall hold, or shall cause such Affiliate or
Person to hold, all such items of payment in trust as trustee of an express
trust for the Collateral Monitoring Agent and as property of the Collateral
Monitoring Agent, separate and apart from the funds of the Borrower and such
Affiliate and the Borrower (and all of its Affiliates, officers, employees,
agents and other Persons acting for or in concert with the Borrower) shall: (i)
on the first Business Day following receipt thereof, deposit such items of
payment, or cause such items of payment to be deposited, in kind, in the
Collection Account; and (ii) in addition to all reports required in Article 5,
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
43
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 Section 2.21(d) or any other provision hereof,
nothing contained in this Section 2.21, this Agreement or any other Loan
Document shall be deemed to limit or otherwise restrict the Collateral
Monitoring Agent's normal verification procedures.
Section 2.22 Application of Payments and Collections.
(a) All amounts received by the Collateral Monitoring Agent for the
account of the Borrower pursuant to Section 2.21 or otherwise shall, on each
Business Day, be
(i) applied to Fees which are at such time due and unpaid; then
(ii) applied to amounts payable pursuant to Section 2.26; then
(iii) applied pro rata among the Lenders to reduce the amount of
any outstanding Loans; then
(iv) applied to prepay, in the case of liquidation only, with any
applicable prepayment or "breakage" fee, all Acceptances;
(v) held by the Collateral Monitoring Agent as collateral to
secure any outstanding L/Cs, Acceptances (other than in the case of a
liquidation), Steamship Guaranties and Airway Releases; then
(vi) only if all Loans have been repaid, all Acceptances prepaid
(in the case of a liquidation) and all L/Cs, Acceptances (other than in the
case of a liquidation), Steamship Guaranties and Airway Releases are fully
secured by amounts held by the Collateral Monitoring Agent pursuant to
clause (iii) above, credited to the Borrower's demand deposit account
maintained with the Agent.
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(b) Notwithstanding anything else in this Section 2.22 or in this
Agreement to the contrary, the Borrower irrevocably waives the right to direct
the application of any and all payments and collections at any time or times
hereafter received by the Collateral Monitoring Agent from or on behalf of the
Borrower. The Borrower irrevocably agrees that the Collateral Monitoring Agent
shall have the continuing exclusive right to apply and reapply any and all such
payments and collections received at any time or times hereafter by the
Collateral Monitoring Agent or its agents against the Obligations in such manner
as the Collateral Monitoring Agent may deem advisable, notwithstanding any entry
by the Collateral Monitoring Agent upon any of its books and records.
(c) Except as set forth in Sections 2.17 and 2.24, all payments and
repayments made shall be applied first to the Prime Rate Loans, and shall be
applied to Eurodollar Loans only to the extent any such payment exceeds the
principal amount of Prime Rate Loans outstanding at the time of such payment.
Section 2.23 Conversions of Loans.
The Borrower shall have the right to convert Loans of one type into Loans of
another type from time to time, provided that: (i) the Borrower shall give the
Collateral Monitoring Agent notice of each such conversion as provided in
Section 2.3; (ii) Eurodollar Loans may be converted only on the last day of an
Interest Period for such Loans; and (iii) except as required by Section 2.17, no
Prime Rate Loan may be converted into a Eurodollar Loan if on the proposed date
of conversion a Default or an Event of Default exists. The Collateral Monitoring
Agent shall use its best efforts to notify the Borrower of the effectiveness of
such conversion, and the new interest rate to which the converted Loans are
subject, as soon as practicable after the conversion; provided, however, that
any failure to give such notice shall not affect the Borrower's obligations, or
the Collateral Monitoring Agent's or the Lenders' rights and remedies, hereunder
in any way whatsoever.
Section 2.24 Limitation on Types of Loans.
Anything herein to the contrary notwithstanding, if, on or prior to the
determination of an interest rate for any Eurodollar Loans for any Interest
Period therefor, the Majority Lenders determine (which determination shall be
conclusive) that:
(a) by reason of any event affecting the money markets in the United
States of America or the Eurodollar interbank market, quotations of interest
rates for the relevant deposits are not being provided in the relevant amounts
or for the relevant maturities for purposes of determining the rate of interest
for such Loans under this Agreement; or
(b) the rates of interest referred to in the definition of "LIBOR Base
Rate" in Article 1 upon the basis of which the rate of interest on any
Eurodollar Loans for such period is determined, do not accurately reflect the
cost to the Lenders of making or maintaining such Loans for such period,
45
then the Collateral Monitoring Agent shall give the Borrower and each Lender
prompt notice thereof (and shall thereafter give the Borrower and each Lender
prompt notice of the cessation, if any, of such condition), and so long as such
condition remains in effect, the Lenders shall be under no obligation to make
Loans of such type or to convert Prime Rate Loans into Eurodollar Loans and the
Borrower shall, on the last day(s) of the then current Interest Period(s) for
the outstanding Eurodollar Loans either prepay such Loans in accordance with
Section 2.7 or convert such Eurodollar Loans into Prime Rate Loans in accordance
with Section 2.21. If at any time after the Collateral Monitoring Agent gives
notice under this Section 2.24 the Majority Lenders determines that such
condition no longer exists, they shall give prompt notice of that determination,
in writing, to the Borrower. At such time as such condition no longer exists
(whether or not such notice has been given), the Borrower's right to request,
and the Lender's obligations, if any, to make Eurodollar Loans (and to convert
Prime Rate Loans into Eurodollar Loans) shall be restored.
Section 2.25 Illegality.
Notwithstanding any other provision in this Agreement, in the event that it
becomes unlawful for any Lender or its Applicable Lending Office to: (i) honor
its obligation to make Eurodollar Loans hereunder, or (ii) maintain Eurodollar
Loans hereunder, then such Lender shall promptly notify the Borrower thereof in
writing (with a copy to the Collateral Monitoring Agent), describing such
illegality in reasonable detail (and shall thereafter promptly notify the
Borrower and the Collateral Monitoring Agent of the cessation, if any, of such
illegality), and thereupon such Lender's obligation to make Eurodollar Loans and
to convert other types of Loans into Eurodollar Loans hereunder shall be
suspended until such time as the Lenders may again make and maintain Eurodollar
Loans and the Lenders outstanding Eurodollar Loans shall be converted into Prime
Rate Loans in accordance with Sections 2.23 and 2.27. If at any time after such
Lender gives notice under this Section 2.25 such Lender determines that it may
again make and maintain Eurodollar Loans, such Lender shall promptly give notice
of that determination, in writing, to the Borrower and the Agent, and the Agent
shall promptly transmit the notice to each other Lender. At such time as such
Lender may again make and maintain Eurodollar Loans (whether or not such notice
has been given), the Borrower's right to request, and the Lender's obligations,
if any, to make and to convert such Loans shall be restored.
Section 2.26 Indemnification.
The Borrower shall pay to the Collateral Monitoring Agent for the account of
each Lender, upon the request of such Lender through the Collateral Monitoring
Agent, such amount or amounts as shall compensate such Lender for any loss
(including loss of profit), cost or expense incurred by such Lender (as
reasonably determined by such Lender) as a result of:
(a) any payment or prepayment or conversion of a Eurodollar Loan held
by such Lender on a date other than the last day of an Interest Period for such
Eurodollar Loan; or
(b) any failure by the Borrower to borrow a Eurodollar Loan held by
such Lender on the date for such borrowing specified in the relevant Borrowing
Notice under Section 2.3;
46
such compensation to include, without limitation, an amount equal to the excess,
if any, of (i) the amount of interest which would have accrued on the amount so
paid, prepaid or converted or not borrowed for the period from the date of such
payment, prepayment or conversion or failure to borrow, convert or prepay to the
last day of the then current Interest Period for such Eurodollar Loan (or, in
the case of a failure to borrow, the Interest Period for such Eurodollar Loan
which would have commenced on the date of such failure to borrow) at the
applicable rate of interest for such Eurodollar Loan provided for herein over
(ii) the amount of interest (as reasonably determined by such Lender) such
Lender would have bid in the London interbank market for Dollar deposits of
amounts comparable to such principal amount and maturities comparable to such
period.
Section 2.27 Certain Conversions Pursuant to Section 2.17.
If the Loans of any Lender of a particular type (Loans of such type being
herein called "Affected Loans" and such type being herein called the "Affected
Type") are to be converted pursuant to Section 2.17, such Lender's Affected
Loans shall be converted into Prime Rate Loans or Eurodollar Loans of another
type (the "New Type Loans") on the last day(s) of the then current Interest
Period(s) for the Affected Loans (or, in the case of a conversion required by
Section 2.17(b) on such earlier date as such Lender may specify to the Borrower
with a copy to the Agent) and, until such Lender gives notice as provided below
that the circumstances specified in Section 2.17 which gave rise to such
conversion no longer exist:
(a) to the extent that such Lender's Affected Loans have been so
converted, all payments and prepayments of principal which would otherwise be
applied to such Affected Loans shall be applied instead to its New Type Loans;
(b) all Loans which would otherwise be made by such Lender as Loans of
the Affected Type shall be made instead as New Type Loans and all Loans of such
Lender which would otherwise be converted into Loans of the Affected Type shall
be converted instead into (or shall remain as) New Type Loans; and
(c) if Loans of the Affected Type are subsequently converted into Loans
of another type (other than New Type Loans), such Lender's New Type Loans shall
be automatically converted on the conversion date into Loans of such other type
to the extent necessary so that, after giving effect thereto, all Loans held by
such Lender and the Lenders whose Loans are so converted are held pro rata (as
to principal amounts, types and, to the extent applicable, Interest Periods) in
accordance with their respective Commitments.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES.
Each of the Borrower and the other Loan Parties hereby represents and
warrants to the Lenders, the Collateral Monitoring Agent, the Issuing Bank and
the Agent that:
47
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 accurately and completely lists, as to each of the Borrower,
the Parent, each Subsidiary and each other Loan Party: (i) the state of
incorporation or organization of each such entity, and the type of legal entity
that each of them is, (ii) as to each of them that is a corporation, the classes
and number of authorized and outstanding shares of capital stock of each such
corporation, and, except with respect to the Parent, the owners of such
outstanding shares of capital stock, (iii) as to each of them that is a legal
entity other than a corporation (but not a natural person), the type and amount
of equity interests authorized and outstanding of each such entity, and, except
with respect to the Parent, the owners of such equity interests, and (iv) the
business in which each of such entities is engaged. All of the foregoing shares
or other equity interests that are issued and outstanding have been duly and
validly issued and are fully paid and non-assessable, and are owned by the
Persons referred to on Exhibit B, free and clear of any Lien except as otherwise
provided for herein. Except as set forth on Exhibit B, there are no outstanding
warrants, options, contracts or commitments of any kind entitling any Person to
purchase or otherwise acquire any shares of capital stock or other equity
interests of the Borrower or any Subsidiary or any other Loan Party other than
the Parent nor are there outstanding any securities that are convertible into or
exchangeable for any shares of capital stock or other equity interests of the
Borrower, any Subsidiary or any other Loan Party other than the Parent. Except
as set forth on Exhibit B, neither the Borrower, the Parent, any Subsidiary nor
any other Loan Party has any Subsidiary.
(b) Each of the Borrower, the Parent, each Subsidiary and each other
Loan Party is in good standing in its state of organization and in each state in
which it is qualified to do business. There are no jurisdictions other than as
set forth on Exhibit B 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 hereof. 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
48
distraint or other similar right and no consent, license, certificate of need,
approval, authorization or declaration of any governmental authority, bureau or
agency, is or will be required in connection with the execution, delivery or
performance by the Borrower or any other Loan Party, or the validity,
enforcement or priority, of the Loan Documents or any Lien created and granted
thereunder, except as set forth on Exhibit C, each of which either has been duly
and validly obtained on or prior to the date hereof and is now in full force and
effect, or is designated on Exhibit C as waived by the Majority Lenders.
Section 3.3 No Violation of Law or Agreements.
The execution and delivery by the Borrower and each other Loan Party of each
Loan Document to which it is a party and performance by it hereunder and
thereunder, will not violate any provision of law and will not, except as set
forth on Exhibit C, conflict with or result in a breach of any order, writ,
injunction, ordinance, resolution, decree, or other similar document or
instrument of any court or governmental authority, bureau or agency, domestic or
foreign, or any certificate of incorporation or by-laws of the Borrower or any
other corporate Loan Party or partnership agreement or other organizational
document or instrument of any Loan Party that is not a corporation, or create
(with or without the giving of notice or lapse of time, or both) a default under
or breach of any agreement, bond, note or indenture to which the Borrower or any
other Loan Party is a party, or by which any of them is bound or any of their
respective properties or assets is affected (which default or breach would have
a material adverse effect on the business, financial conditions or operations of
the Borrower, the Parent and the Subsidiaries taken as a whole), or result in
the imposition of any Lien of any nature whatsoever upon any of the properties
or assets owned by or used in connection with the business of the Borrower or
any other Loan Party, except for the Liens created and granted pursuant to the
Security Documents.
Section 3.4 Due Execution, Validity, Enforceability.
This Agreement and each other Loan Document to which any Loan Party is a
party has been duly executed and delivered by the Loan Party that is a party
thereto and each constitutes the valid and legally binding obligation of the
Borrower or such other Loan Party that is a party thereto, enforceable in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or other similar
laws, now or hereafter in effect, relating to or affecting the enforcement of
creditors' rights generally and except that the remedy of specific performance
and other equitable remedies are subject to judicial discretion; provided,
however, that such laws shall not materially interfere with the practical
realization of the benefits of the Security Documents or the Liens created
thereby, except for: (i) possible delay, (ii) situations that may arise under
Chapters 11 and 7 of the Bankruptcy Code and applicable state bankruptcy laws,
and (iii) equitable orders of the Bankruptcy Court.
Section 3.5 Properties, Priority of Liens.
All of the properties and assets owned by the Borrower and each other Loan
Party that is executing a Security Document are owned by each of them,
respectively, free and clear of any Lien of any nature whatsoever, except as
provided for in the Security Documents, and as
49
permitted by Section 7.2. The Liens that 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.
Section 3.6 Judgments, Actions, Proceedings.
Except as set forth on Exhibit F, 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, neither the Borrower, the Parent, any
Subsidiary nor any other Loan Party is in default under any agreement,
ordinance, resolution, decree, bond, note, indenture, order or judgment to which
it is a party or by which it is bound, or any other agreement or other
instrument by which any of the properties or assets owned by it or used in the
conduct of its business is affected, which default could have a material adverse
effect on the business, operations, financial condition or properties of the
Borrower, the Parent, any Subsidiary and any other Loan Party, taken as a whole,
or on the ability of the Borrower or any other Loan Party to perform its
obligations under the Loan Documents to which it is a party. The Borrower, the
Parent, and each Subsidiary has complied and is in compliance in all respects
with all applicable laws, ordinances and regulations, resolutions, ordinances,
decrees and other similar documents and instruments of all courts and
governmental authorities, bureaus and agencies, domestic and foreign, including,
without limitation, all applicable Environmental Laws and Regulations,
non-compliance with which could have a material adverse effect on the business,
operations, financial condition or properties of the Borrower, the Parent, and
any Subsidiary, taken as a whole, or on the ability of the Borrower, the Parent
or any Subsidiary to perform its obligations under the Loan Documents to which
it is a party.
Section 3.8 Burdensome Documents.
Except as set forth on Exhibit H, neither the Borrower nor any of the other
Loan Parties is a party to or bound by, nor are any of the properties or assets
owned by the Borrower or any other Loan Party used in the conduct of their
respective businesses affected by, any agreement, ordinance, resolution, decree,
bond, note, indenture, order or judgment, including, without limitation, any of
the foregoing relating to any Environmental Matter, that materially and
adversely effects their respective businesses, assets or conditions, financial
or otherwise.
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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 for Fiscal Year 2003 have been prepared, and the
Projections for Fiscal Years 2004, 2005 and 2006 will be prepared, on the basis
of the assumptions accompanying them and reflect as of the date thereof the
Borrower's good faith projections, after reasonable analysis, of the matters set
forth therein, based on such assumptions; provided, however, that the Lenders
and the Agent acknowledge that projections as to future events are not
statements of fact and that actual results during the period or periods covered
by such Projections may differ from the projected results.
Section 3.10 Tax Returns.
Each of the Borrower, the Parent and the Subsidiaries has filed all federal,
state and local tax returns required to be filed by it and has not failed to pay
any taxes, or interest and penalties relating thereto, on or before the due
dates thereof including any extensions thereof. Except to the extent that
reserves therefor are reflected in the Financial Statements: (i) there are no
material federal, state or local tax liabilities of the Borrower, the Parent or
any Subsidiary due or to become due for any tax year ended on or prior to the
date of the Latest Balance Sheet relating to such entity, whether incurred in
respect of or measured by the income of such entity, that are not properly
reflected in the Latest Balance Sheet relating to such entity, and (ii) there
are no material claims pending or, to the knowledge of the Borrower, proposed or
threatened against any of the Borrower, the Parent or any Subsidiary for past
federal, state or local taxes, except those, if any, as to which proper reserves
are reflected in the Financial Statements.
Section 3.11 Intangible Assets.
Each of the Borrower, the Parent, and the Subsidiaries possesses all
patents, Trademarks, 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, trade names,
copyrights, trade-style names and rights with respect to the foregoing, of any
other Person, and each of such patents, Trademarks, trade names, copyrights,
trade-style names and rights with respect thereto, together with any pending
applications therefor, are listed
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on Exhibit I. Exhibit I sets forth all patents, Trademarks, 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, 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.
Section 3.13 Name Changes, Mergers, Acquisitions; Location of
Collateral.
(a) Except as set forth on Exhibit J, neither the Borrower nor any
other Loan Party that is granting Liens on its assets pursuant to any Security
Document has within the six (6) year period immediately preceding the date
hereof changed its name, been the surviving entity of a merger or consolidation,
or acquired all or substantially all of the assets of any Person.
(b) Neither the Borrower nor any other Loan Party that is granting
liens on its assets pursuant to any Security Document has granted liens (other
than statutory liens) to any person other than the Lenders on Collateral
constituting personal property which Collateral has, at any time during the
four-month period immediately preceding the date hereof, been located anywhere
other than at its location on the date hereof.
Section 3.14 Full Disclosure.
None of the Financial Statements, the Projections, nor any certificate,
opinion, or any other statement made or furnished in writing to the Agent or any
Lender by or on behalf of the Borrower, the Parent, any of the Subsidiaries or
any other Loan Party in connection with this Agreement or the transactions
contemplated herein, contains any untrue statement of a material fact, or omits
to state a material fact necessary in order to make the statements contained
therein or herein not misleading, as of the date such statement was made. There
is no fact known to the Borrower or the Parent that has, or would in the now
foreseeable future have, a material adverse effect on the business, prospects or
condition, financial or otherwise, of the Borrower, the Parent, any of the
Subsidiaries and any other Loan Party, taken as a whole, which fact has not been
set forth herein, in the Financial Statements, the Projections, or any
certificate or other written statement so made or furnished to the Agent or the
Lenders other than any statement with respect to matters affecting the economy
as a whole or set forth in the Parent's filings with the Securities and Exchange
Commission.
Section 3.15 Licenses and Approvals.
The Borrower, the Parent and each of the Subsidiaries has all necessary
licenses, permits and governmental authorizations, the absence of which would
have a material adverse effect on the business, financial condition or
operations of the Borrower, the Parent and the Subsidiaries,
52
taken as a whole, including, without limitation, licenses, permits and
authorizations relating to Environmental Matters, to own and operate its
properties and to carry on its business as now conducted.
Section 3.16 Labor Disputes; Collective Bargaining Agreements; Employee
Grievances.
(i) All collective bargaining agreements or other labor contracts covering
the Borrower, the Parent or any Subsidiary are set forth on Exhibit K; (ii)
except as set forth on Exhibit K, no such collective bargaining agreement or
other labor contract will expire during the term hereof; (iii) 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; (iv) 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; (v) 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 (vi) 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, 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, neither the Parent nor the Borrower is a participating employer in: (i) any
Pension Plan under which more than one employer makes contributions as described
in Sections 4063 and 4064 of ERISA, or (ii) a multiemployer plan as defined in
Section 4001(a)(3) of ERISA. With respect to any Multiemployer Plan, both the
Borrower and the Parent have paid or accrued all contributions pursuant to the
terms of the applicable collective bargaining agreement required to be paid or
accrued by it; neither the Borrower nor the Parent has had a complete withdrawal
under Section 4203 of ERISA or partial withdrawal under Section 4205 of ERISA;
and neither the Borrower nor the Parent had any mass withdrawal liability.
53
(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) Except as described in Exhibit L, 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 4980B 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 hereof relating to ERISA, shall be deemed to refer to
the Borrower, the Parent and all other entities which are considered ERISA
Affiliates.
Section 3.19 Account Representations and Warranties.
Except as specifically disclosed on Exhibit O, 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
54
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, with respect to all present
and future Eligible Inventory included in the determination of the Borrowing
Base:
(a) All Inventory is located on the premises listed on the schedules
attached to the Borrower Security Agreement or is Eligible Inventory in transit
for sale in the ordinary course of business;
(b) No Inventory is subject to any Lien or security interest
whatsoever, except for the Liens and security interests of the Agent and the
Lenders and those Liens or security interests set forth in Section 7.2; 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.
55
Section 3.25 Security Documents.
(a) The Security Agreement is effective to create in favor of the
Agent, for the ratable benefit of the Lenders, the Collateral Monitoring Agent
and the Issuing Bank, a legal, valid and enforceable security interest in the
Collateral (as defined in the Security Agreement) and, when (i) the pledged
property constituting such Collateral is delivered to the Agent, (ii) financing
statements in appropriate form are filed in the offices of the secretary of
state of the jurisdiction of organization of the Borrower and each Corporate
Guarantor or such other office specified by the UCC and (iii) all other
applicable filings under the UCC or otherwise that are required or permitted
under the Loan Documents are made, the Security Agreement shall constitute a
fully perfected Lien on, and security interest in, all right, title and interest
of the grantors thereunder in such Collateral (other than the intellectual
property or any other Collateral for which perfection of a security interest is
not governed by the UCC), in each case prior and superior in right to any other
Person, other than with respect to Liens expressly permitted by Section 7.2.
(b) Except to the extent that the recording of an assignment or other
transfer of title to the Agent or the recording of other applicable documents in
the United States Patent and Trademark Office, the United States Copyright
Office or the filing of financing statements in the appropriate form in the
offices of the secretary of state of the jurisdiction of organization of the
Borrower and each Corporate Guarantor or such other office specified by the UCC
may be necessary for perfection, the Security Agreement shall constitute a fully
perfected Lien on, and security interest in, all right, title and interest of
the Borrower and the Corporate Guarantors in the intellectual property in which
a security interest may be perfected by filing, recording or registering a
security agreement, financing statement or analogous document in the United
States Patent and Trademark Office or the United States Copyright Office, as
applicable, in each case to the extent permitted by applicable law prior and
superior in right to any other Person, other than with respect to Liens
expressly permitted by Section 7.2.
ARTICLE 4. CONDITIONS.
Section 4.1 Conditions to Closing.
The obligation of the Collateral Monitoring Agent to make Loans, and the
obligation of the Issuing Bank to issue or amend Trade L/Cs, Standby L/Cs,
Acceptances, Steamship Guaranties and Airway Releases hereunder, in each case
for the account of the Lenders, shall be subject to the fulfillment (to the
satisfaction of the Agent, the Collateral Monitoring Agent, the Issuing Bank and
the Lenders) of the following conditions precedent:
(a) The Borrower shall have executed and delivered to each Lender its
Note;
(b) The Borrower shall have executed and delivered to the Agent an
Application with respect to each L/C, if any, requested by it;
(c) The Guarantors shall have executed and delivered to the Agent the
Guarantee Agreement;
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(d) The Borrower and the Corporate Guarantors shall have executed and
delivered the Security Agreement, and shall have delivered to the Agent:
(i) To the extent not previously delivered to the Agent, any stock
certificates or other instruments representing the capital stock or other
equity interests pledged pursuant to such agreement owned by the Borrower or
any such Corporate Guarantor;
(ii) To the extent not previously delivered to the Agent, any
promissory notes or other instruments evidencing the indebtedness assigned
pursuant to such agreement owed or owing to the Borrower or any such
Corporate Guarantor;
(iii) To the extent not previously delivered to the Agent, stock
powers and instruments of transfer, endorsed in blank, with respect to such
stock certificates, promissory notes and other instruments; and
(iv) All instruments and other documents, including Uniform
Commercial Code financing statements, required by law or reasonably
requested by the Agent to be filed, registered or recorded to create or
perfect the Liens intended to be created under the Security Agreement;
(e) The Borrower shall have delivered to the Agent the Continuing
Agreement for Issuance of Steamship Guaranty and Airway Releases;
(f) The Borrower shall have delivered evidence of insurance coverage on
the Inventory and as otherwise required by the terms hereof, with endorsements
showing the Agent as co-insured and loss payee, for the ratable benefit of the
Lenders, and an undertaking by the insurance company or companies to give the
Agent not less than 30 days notice of any proposed cancellation or non-renewal;
(g) The Borrower shall have delivered to the Agent evidence of (i)
insurance policies on the life of Morris Goldfarb required to be maintained by
the Parent pursuant to Section 6.8(c) and (ii) payment of the premium in
connection with such insurance policies covering the period through May 31,
2002.
(h) Fulbright & Jaworski L.L.P., counsel to the Borrower, the Parent,
Siena, Retail, Holdings, Sources, License Company and G-III Brands shall have
delivered their opinion to, and in form and substance satisfactory to, the Agent
and the Lenders;
(i) The Agent shall have received true and complete copies of the
Financial Statements and the Projections for Fiscal Year 2003, each certified as
such in a certificate executed by the president, chief operating officer or
chief financial officer of the Borrower, and the Financial Statements shall show
no material changes from the unaudited consolidated financial statements of the
Parent and its Subsidiaries (including the Borrower) as at and for the Fiscal
Year ending January 31, 2002 previously delivered to the Agent;
57
(j) The Agent shall have received copies of all of the consents,
approvals and waivers referred to on Exhibit C (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;
(k) The Agent shall have received such documentation and certificates
as the Agent or its counsel may reasonably request relating to the organization,
existence and good standing of each Loan Party, the authorization of the
execution, delivery and performance of each of the Loan Documents to which it is
a party and the transactions contemplated thereby, the incumbency of the
officers of such Loan Party executing any such Loan Document and any other legal
matters relating to the Loan Parties, the Loan Documents or the transactions
contemplated thereby, all in form and substance satisfactory to the Agent;
(l) (i) The Borrower shall have complied and shall then be in
compliance with all of the terms, covenants and conditions hereof;
(ii) After giving effect to the execution and delivery hereof,
there shall exist no Default or Event of Default hereunder; and
(iii) The representations and warranties contained in Article
3 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 Section 4.1(l) are
satisfied on such date; and
(m) All legal matters incident to the initial closing shall be
satisfactory to counsel to the Agent and the Lenders.
Section 4.2 Conditions to Subsequent Loans and Issuance of L/Cs.
The obligation of the Collateral Monitoring Agent to make any Loan and the
obligation of the Issuing Bank to issue or amend a Trade L/C, Standby L/C,
Acceptance, Steamship Guaranty or Airway Release, in each case for the account
of the Lenders, subsequent to the date hereof shall be subject to the
fulfillment (to the reasonable satisfaction of the Collateral Monitoring Agent,
the Issuing Bank, the Agent and the Lenders) of the following conditions
precedent:
(a) The Collateral Monitoring Agent shall have received a Borrowing
Base Certificate of current date;
(b) All legal matters incident to such transaction shall be reasonably
satisfactory to counsel for, the Collateral Monitoring Agent, the Issuing Bank,
the Agent and the Lenders;
(c) The representations and warranties contained in each Loan Document
shall be correct in all material respects on and as of such date, before and
after giving effect to
58
such borrowing or issuance or amendment and to the application of the proceeds
therefrom, as though made on and as of such date, other than any such
representations or warranties that, by their terms, refer to a specific date
other than the date of such borrowing, issuance or amendment, in which case, as
of such specific date; and
(d) No event shall have occurred and shall be continuing, or would
result from such borrowing or issuance or amendment or from the application of
the proceeds therefrom, that constitutes a Default.
ARTICLE 5. DELIVERY OF FINANCIAL REPORTS, DOCUMENTS AND OTHER INFORMATION.
While the Commitments are outstanding, and so long as the Borrower is
indebted to any Lender, the Agent, the Collateral Monitoring Agent or the
Issuing Bank and until payment in full of the Loans and Acceptances and the
termination or expiration of all the L/Cs, Steamship Guaranties and Airway
Releases, and full and complete performance of all of its other obligations
arising hereunder, the Borrower shall deliver to the Collateral Monitoring Agent
and each Lender the following, subject to the provisions of Section 5.11:
Section 5.1 Annual Financial Statements.
(a) Annually, as soon as available, but in any event within 90 days
after the last day of each of its fiscal years, a consolidated and consolidating
balance sheet of the Parent and the Subsidiaries (including the Borrower) as at
such last day of the fiscal year, and consolidated and consolidating statements
of income and retained earnings and consolidated statements of cash flow of the
Parent and the Subsidiaries (including the Borrower), for such fiscal year, each
prepared in accordance with generally accepted accounting principles
consistently applied, in reasonable detail, and, as to the consolidated
statements of the Parent, certified without qualification by Ernst & Young
L.L.P. or another firm of independent certified public accountants reasonably
satisfactory to the Agent and the Lenders, and certified, as to the
consolidating statements, by the chief executive officer, president, chief
operating officer or the chief financial officer of the Parent, as fairly
presenting the financial position and the results of operations of the Parent
and the Subsidiaries (including the Borrower) as at and for the year ending on
its date and as having been prepared in accordance with generally accepted
accounting principles.
(b) Annually, within 120 days after the last day of each of its fiscal
years, management prepared divisional income statements in reasonable detail for
the preceding fiscal year.
Section 5.2 Semi-Annual Financial Statements; Quarterly Financial
Statements.
(a) As soon as available, but in any event within 45 days after the end
of the Parent's first three (3) fiscal quarterly periods, a consolidating and
consolidated balance sheet of the Parent and the Subsidiaries (including the
Borrower) as of the last day of such quarter, a
59
statement of income and retained earnings and consolidating and consolidated
statements of income and retained earnings of the Parent and the Subsidiaries
(including the Borrower) as of the last day of such quarter and for the fiscal
year to date, and consolidated statements of cash flow, and on a comparative
basis figures for the corresponding period of the immediately preceding fiscal
year, all in reasonable detail, each such statement (i) to provide a specific
certification with respect to compliance with the financial covenants set forth
in Section 6.9 and (ii) to be certified in a certificate of the president, chief
operating officer or chief financial officer of the Parent as accurately
presenting the financial position and the results of operations of the Parent
and the Subsidiaries (including the Borrower), as at its date and for such
quarter and for the fiscal year to date and as having been prepared in
accordance with generally accepted accounting principles consistently applied
(subject to year-end audit adjustments).
(b) Within 60 days after a request by the Agent from time to time, a
management prepared divisional income statement for the preceding quarter and
for the fiscal year to date and on a comparative basis figures for the
corresponding period of the immediately preceding fiscal year, all in reasonable
detail.
Section 5.3 Compliance Information.
Promptly after a written request therefor, such other financial data or
information evidencing compliance with the requirements hereof, the Notes and
the other Loan Documents, as any Lender may reasonably request from time to
time.
Section 5.4 No Default Certificate.
At the same time as it delivers the financial statements required under
the provisions of Section 5.1 and 5.2, a certificate of the chief executive
officer, president, chief operating officer or chief financial officer of the
Borrower and the Parent, respectively, to the effect that no Default hereunder
and that no default 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.
Section 5.5 Rental Obligations; Capitalized Lease Obligations.
Within 15 days after the end of each of the Parent's fiscal quarters, a
certificate of the chief executive officer, president, chief operating officer
or chief financial officer of the Parent setting forth the dollar amount of
expenditures made by the Borrower, the Parent and its Subsidiaries in respect of
rental obligations and Capitalized Lease Obligations for the fiscal period
ending on such date and a calculation indicating that the Borrower, the Parent
and its Subsidiaries are in compliance with the provisions of Sections 7.14 and
7.18.
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Section 5.6 Accountants' Reports.
Promptly upon receipt thereof, copies of all other reports or
correspondence submitted to the Borrower or the Parent by its independent
accountants in connection with any annual or interim audit or review of the
books of the Borrower or the Parent made by such accountants, including, without
limitation, accountant's management letters.
Section 5.7 Copies of Documents.
Promptly upon their becoming available, copies of any: (i) financial
statements, projections, non-routine reports, notices (other than routine
correspondence), requests for waivers and proxy statements, in each case,
delivered by the Borrower, the Parent or any of the Subsidiaries to any lending
institution other than the Lenders; (ii) correspondence or notices received by
the Borrower or the Parent from any federal, state or local governmental
authority that regulates the operations of the Borrower, the Parent or any of
its Subsidiaries, relating to an actual or threatened change or development that
would be materially adverse to the Borrower, the Parent or any Subsidiary, taken
as a whole; (iii) registration statements and any amendments and supplements
thereto, and any regular and periodic reports, if any, filed by the Borrower or
the Parent or any of its Subsidiaries with any securities exchange or with the
Securities and Exchange Commission or any governmental authority succeeding to
any or all of the functions of the said Commission; (iv) letters of comment or
correspondence sent to the Borrower or the Parent or any of the Subsidiaries by
any such securities exchange or such Commission in relation to the Borrower or
the Parent or any of the Subsidiaries and its affairs; (v) written reports
submitted by the Borrower or the Parent or any of the Subsidiaries by its
independent accountants in connection with any annual or interim audit of the
books of the Borrower or the Parent or the Subsidiaries made by such
accountants; (vi) proxy statements, notices and other correspondence delivered
by the Parent to its shareholders; (vii) any appraisals received by the Borrower
or the Parent or any of the Subsidiaries with respect to the properties or
assets of the Borrower or the Parent or the Subsidiaries; and (viii) any other
information reasonably requested by the Agent or any Lender.
Section 5.8 Notices of Defaults.
Promptly, notice of the occurrence of any Default or Event of Default,
any event that after any necessary notice and/or cure period may become a
Default or Event of Default under Section 8.4(b) or any event that would
constitute or cause a material adverse change in the condition, financial or
otherwise, or the operations of the Borrower or the Parent or any of the
Subsidiaries, including, without limitation, a default or a cancellation under
any lease of property where inventory is stored.
Section 5.9 ERISA Notices.
(a) Concurrently with such filing, a copy of each Form 5500 that is
filed with respect to each Pension Plan with the IRS; and
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(b) Promptly, upon their becoming available, copies of: (i) all
correspondence with the PBGC, the Secretary of Labor or any representative of
the IRS with respect to any Pension Plan, relating to an actual or threatened
change or development that would be materially adverse to the Borrower or the
Parent or any Subsidiary; (ii) copies of all actuarial valuations received by
the Borrower or the Parent with respect to any Pension Plan; and (iii) copies of
any notices of Plan termination filed by any Pension Plan Administrator (as
those terms are used in ERISA) with the PBGC and of any notices from the PBGC to
the Borrower or the Parent with respect to the intent of the PBGC to institute
involuntary termination proceedings; and
(c) Promptly upon receipt by the Borrower or the Parent of any
correspondence from a Multiemployer Plan with respect to withdrawal liability.
Section 5.10 Additional Information and Reports.
To the Collateral Monitoring Agent only, unless requested by any Lender with
respect to a specific delivery or deliveries and then only for such specific
delivery or deliveries so requested (except in the case of the reports
identified in clauses (c)(ii), (iii) and (v) and (e) below, which Borrower shall
at all times deliver to each Lender),
(a) Daily, a Borrowing Base Certificate in the form attached hereto as
Exhibit P, with ineligible Accounts and ineligible Inventory in Item 6 of such
Borrowing Base Certificate being recalculated on a weekly basis only at the time
the reports identified in Section 5.10(b) are delivered.
(b) Weekly, with respect to each week ending Friday delivered by
Wednesday of the following week:
(i) an Accounts Receivable Aging Report;
(ii) an Available to Sell Report designated in Dollars in the form
attached hereto as Exhibit D-1;
(iii) an Available to Sell Report designated in units of Inventory
in the form attached hereto as Exhibit D-2;
(iv) an Inventory Analysis Report on LDP Cost vs LCM Cost in the
form attached hereto as Exhibit D-3; and
(v) a divisional status report detailing by division: (A) open
customer orders detailed by "this year versus last year" and "TLC/FLC versus
warehouse"; and (B) inventory detailed as to inventory on hand and in
transit.
(c) Monthly, delivered not more than 25 days (except as otherwise
provided below) after the end of each calendar month:
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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-4; provided, however,
that such statement may be delivered not more than 30 days after the end of
each calendar month; provided further that such statement shall not be
required during the months of February and March;
(iii) a statement with respect to compliance with the financial
covenants set forth in Section 6.9 (other than the covenant in Section
6.9(a)); provided, however, that such statement may be delivered not more
than 30 days after the end of each calendar month;
(iv) a reconciliation between the general ledger and the Accounts
Receivable Aging Report and the month-end Borrowing Base Certificate; and
(v) the report on the accounts receivable delivered to CIT
pursuant to the Amended and Restated Accounts Receivable Purchase Agreement
dated November 8, 1995 between the Borrower and CIT;
(vi) a Gross Margin Report in form satisfactory to the Collateral
Monitoring Agent and the Lenders; and
(vii) an accounts payable aging report in form satisfactory to the
Collateral Monitoring Agent;
each of which shall be certified as true and correct by the chief executive
officer, president, chief operating officer or the chief financial officer of
the Borrower or the Parent, as the case may be.
(d) Promptly after a request by the Agent, such other information
regarding the business, affairs and condition of the Borrower, the Parent and
the Subsidiaries as the Agent may from time to time reasonably request.
(e) By no later than December 15 each year during the term hereof, (A)
Projections for the next fiscal year, (B) a business plan for such fiscal year
and (C) preliminary forecasted annual unaudited consolidated financial
statements for the current fiscal year.
Section 5.11 Confidentiality of Information.
The Agent, the Collateral Monitoring Agent, the Issuing Bank and the Lenders
acknowledge that any information provided to any of them pursuant to this
Article 5 which is marked "confidential" shall be delivered to the recipient
with the understanding that, subject to the provisions of Section 10.13(g), 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
63
on such understanding in delivering that information; provided, however, that,
notwithstanding the foregoing, each of the Agent, the Collateral Monitoring
Agent, the Issuing Bank and the Lenders may disclose or disseminate such
information to: (a) its directors, officers, employees, agents, attorneys,
accountants and other professional advisors who would ordinarily have access to
such information in the normal course of the performance of their duties or
services with the understanding that each of such individuals will use its best
efforts to hold all such information confidential; and (b) such third parties as
it may, in its discretion, deem reasonably necessary or desirable in connection
with or in response to (i) compliance with any law, ordinance or governmental
order, regulation, rule, policy, subpoena, investigation or request, or (ii) any
order, decree, judgment, subpoena, notice of discovery or similar ruling or
pleading issued, filed, served or purported on its face to be issued, filed or
served (x) by or under authority of any court, tribunal, arbitration board of
any governmental agency, commission, authority, board or similar entity, or (y)
in connection with any proceeding, case or matter pending (or on its face
purported to be pending) before any court, tribunal, arbitration board or any
governmental agency, commission, authority, board or similar entity. The Agent,
the Collateral Monitoring Agent, the Issuing Bank and the Lenders shall have no
continuing obligations with respect to confidentiality of information following
an Event of Default.
ARTICLE 6. AFFIRMATIVE COVENANTS.
While the Commitments are outstanding and, so long as the Borrower is
indebted to the Lenders, the Agent, the Collateral Monitoring Agent or the
Issuing Bank and until payment in full of the Loans and Acceptances and the
termination or expiration of all L/Cs, Steamship Guaranties and Airway Releases,
and full and complete performance of all of its other obligations arising
hereunder, the Borrower and the Parent shall and the Parent shall cause each
Subsidiary to:
Section 6.1 Books and Records.
Keep proper books of record and account in a manner reasonably satisfactory
to the Agent and the Lenders in which full, true and correct entries shall be
made of all dealings or transactions in relation to its business and activities.
Section 6.2 Inspections and Field Examinations.
Permit the Collateral Monitoring Agent and the Lenders (in the case of the
Lenders, only when accompanying the Collateral Monitoring Agent) to make or
cause to be made, inspections and field examinations of any books, records and
papers of the Borrower, the Parent and each of the Subsidiaries and to make
extracts therefrom and copies thereof, or to make inspections and examinations
of any properties and facilities of the Borrower, the Parent and the
Subsidiaries, on reasonable notice, at all such reasonable times and as often as
the Agent and the Lenders may reasonably require (and in any event not less than
three times in any twelve-month period with respect to field examinations), in
order to assure that each the Borrower and the Parent is and will be in
compliance with its obligations under the Loan Documents or to evaluate the
Lenders' investment in the then Outstanding Obligations.
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Section 6.3 Maintenance and Repairs.
Maintain in good repair, working order and condition, subject to normal wear
and tear, all material properties and assets from time to time owned by it and
used in or necessary for the operation of its business, and make all reasonable
repairs, replacements, additions and improvements thereto.
Section 6.4 Continuance of Business.
(a) Do, or cause to be done at its expense, all things reasonably
necessary to preserve and keep in full force and effect its corporate existence
and all permits, rights and privileges necessary for the proper conduct of its
business, except where the failure to keep any of the foregoing in effect will
not have a material adverse effect on the business of the Borrower, and continue
generally to engage in the same line of business and comply in all material
respects with all applicable laws, regulations and orders.
(b) Do, or cause to be done at its expense, all things reasonably
necessary to preserve and maintain all patents, Trademarks, copyrights and
trade-style names which are of material value to the operation of its business.
Section 6.5 Copies of Corporate Documents.
Without limiting the prohibitions set forth in Section 7.12, promptly
deliver to the Agent and each Lender copies of any amendments or modifications
to the Borrower's, the Parent's and any Subsidiary's certificate of
incorporation and by-laws, certified with respect to the certificate of
incorporation by the Secretary of State of its state of incorporation and, with
respect to the by-laws, by the secretary or assistant secretary of such
corporation.
Section 6.6 Perform Obligations.
Pay and discharge all of its obligations and liabilities, including, without
limitation, all taxes, assessments and governmental charges upon its income and
properties when due, unless and to the extent only that such obligations,
liabilities, taxes, assessments and governmental charges shall be contested in
good faith and by appropriate proceedings and that, to the extent required by
generally accepted accounting principles then in effect, proper and adequate
book reserves relating thereto are established by the Borrower, or, as the case
may be, by the Parent or the appropriate Subsidiary, and then only to the extent
that a bond is filed in cases where the filing of a bond is necessary to avoid
the creation of a Lien against any of its properties.
Section 6.7 Notice of Litigation.
Promptly notify the Agent and the Lenders in writing of any litigation,
legal proceeding or dispute, other than disputes in the ordinary course of
business or, whether or not in the ordinary course of business, involving
amounts in excess of One Hundred Thousand Dollars ($100,000), 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
65
to workers' compensation claims or negligence claims relating to use of motor
vehicles, if fully covered by insurance, subject to deductibles).
Section 6.8 Insurance.
(a) (i) Maintain with responsible insurance companies acceptable to the
Agent such insurance on such of its properties, in such amounts and against such
risks as is customarily maintained by similar businesses similarly situated,
naming the Agent as loss payee for the ratable benefit of the Lenders; (ii) file
with the Agent upon its request a detailed list of the insurance then in effect,
stating the names of the insurance companies, the amounts and rates of the
insurance, the dates of the expiration thereof and the properties and risks
covered thereby; (iii) within 10 days after notice in writing from the Agent,
obtain such additional insurance as the Agent may reasonably request; and (iv)
provide for endorsements or certifications (1) scheduling the coverage under
such insurance, (2) identifying the Agent as "loss payee" for the ratable
benefit of the Lenders, and (3) specifying that such insurance shall be
non-cancelable unless not less than 30 days' notice is given to the Agent;
(b) Carry all insurance available through the PBGC or any private
insurance companies covering its obligations to the PBGC; and
(c) (i) Maintain with one or more responsible insurance companies
acceptable to the Agent and the Lenders, term life insurance on the life of
Morris Goldfarb, in the amount of not less than $20,000,000 naming the Agent for
the ratable benefit of the Lenders as assignee of such insurance and (ii) file
with the Agent upon its request a detailed list of the insurance on the life of
Morris Goldfarb, then in effect, stating the names of the insurance companies,
the amounts and rates of insurance and the expiration dates thereof.
Section 6.9 Financial Covenants.
(a) Have or maintain, with respect to the Parent on a consolidated
basis, EBITDA on a cumulative basis from the first day of each fiscal year
through the date set forth below at not less than, or, in the case of a loss,
not more than, the respective amounts set forth below opposite each such last
day of the fiscal quarter:
Date EBITDA
---- ------
April 30, 2002 ($ 7,300,000)
July 31, 2002 ($ 2,500,000)
October 31, 2002 $10,300,000
January 31, 2003 $ 8,800,000
and the respective amounts for each of Fiscal Year 2004, Fiscal Year 2005 and
the Stub Period shall be preliminarily determined by the Majority Lenders and
the Borrower based on the Projections and business plan (in each case delivered
pursuant to Section 5.10(e)) for Fiscal Year 2004, Fiscal Year 2005 and Fiscal
Year 2006, respectively and the unaudited financial statements (delivered
pursuant to Section 5.10(e)) for Fiscal Year 2003, Fiscal Year 2004 and
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Fiscal Year 2005, respectively, but in no event shall the periods be of
different durations or the amounts be less than (if such amount is negative) or
greater than (if such amount is positive) the amounts for the periods
corresponding to the periods set forth above unless the Majority Lenders
determine (in their reasonable discretion) that such periods and amounts warrant
adjustment based on the financial condition of the Borrower as set forth in the
applicable Projections, business plan or unaudited financial statements, which
preliminary determination shall be made within 60 days of receipt by the Lenders
of such Projections, business plan and unaudited financial statements, and such
determination shall become effective after receipt and satisfactory review by
the Lenders of the Financial Statements for Fiscal Year 2003, Fiscal Year 2004,
and Fiscal Year 2005, respectively.
(b) Have or maintain, with respect to the Parent on a consolidated
basis, Tangible Net Worth as of the dates set forth below at not less than the
respective amounts set forth opposite each such date:
Minimum
Date Tangible Net Worth
---- ------------------
April 30, 2002 $46,500,000
July 31, 2002 $48,700,000
October 31, 2002 $56,200,000
January 31, 2003 $53,500,000
and the respective amounts for each of Fiscal Year 2004, Fiscal Year 2005 and
the Stub Period shall be determined in the sole discretion of the Majority
Lenders within 60 days of receipt by the Lenders of the Projections and business
plan (in each case delivered pursuant to Section 5.10(e)) for Fiscal Year 2004,
Fiscal Year 2005 and Fiscal Year 2006, respectively and the unaudited financial
statements (delivered pursuant to Section 5.10(e)) for Fiscal Year 2003, Fiscal
Year 2004 and Fiscal Year 2005, respectively, and such determination shall
become effective after receipt and satisfactory review by the Lenders of the
Financial Statements for Fiscal Year 2003, Fiscal Year 2004 and Fiscal Year
2005, respectively.
(c) Have no Loans and Acceptances outstanding for 45 consecutive days
during each period from December 1 through April 30 during the term hereof;
provided, however, that if Acceptances are outstanding during any such period,
the Borrower shall nevertheless be deemed to have satisfied such requirement if
the Collateral Monitoring Agent is holding for the account of the Borrower
during such 45 consecutive day period excess cash in an amount which would be
sufficient to repay such outstanding Acceptances.
(d) Maintain Direct Debt outstanding at an amount not to exceed 75% of
Eligible Accounts plus any cash held by the Collateral Monitoring Agent for the
account of the Borrower for 45 consecutive days during each period from November
1 through April 30 during the term hereof.
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Section 6.10 Notice of Certain Events.
(a) Promptly notify the Agent in writing of the occurrence of any
Reportable Event, as defined in Section 4043 of ERISA, with respect to a Pension
Plan maintained by the Borrower or an ERISA Affiliate, if a notice of such
Reportable Event is required under ERISA to be delivered to the PBGC within 30
days after the occurrence thereof, together with a description of such
Reportable Event and a statement of the action the Borrower or the Parent, as
the case may be, intends to take with respect thereto, together with a copy of
the notice thereof given to the PBGC.
(b) Promptly notify the Agent in writing of the receipt by the Borrower
or the Parent of an assessment of withdrawal liability in connection with a
complete or partial withdrawal with respect to any Multiemployer Plan and the
statement of the action that the Loan Party or ERISA Affiliate intends to take
with respect thereto.
(c) Promptly notify the Agent in writing if the Borrower or the Parent
or any other Loan Party receives: (i) any notice of any violation or
administrative or judicial complaint or order having been filed or about to be
filed against the Borrower or the Parent or such other Loan Party alleging
violations of any Environmental Law and Regulation, or (ii) any notice from any
governmental body or any other Person alleging that the Borrower or the Parent
or such other Loan Party is or may be subject to any Environmental Liability;
and promptly upon receipt thereof, provide the Agent with a copy of such notice
together with a statement of the action the Borrower or the Parent or such other
Loan Party intends to take with respect thereto.
Section 6.11 Comply with ERISA.
Comply with all applicable provisions of ERISA now or hereafter in effect
unless the failure to so comply will not have a material effect on the business
of the Borrower or any ERISA Affiliate.
Section 6.12 Environmental Compliance.
Operate all property owned or leased by it such that no obligation,
including a clean-up obligation, shall arise under any Environmental Law and
Regulation, which obligation would constitute a Lien on any property of the
Borrower 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 Letters.
If the Borrower, the Parent or any Subsidiary receives a management letter
with respect to the Borrower, the Parent or any Subsidiary prepared by Ernst &
Young L.L.P. or another firm of independent certified public accountants,
provide a copy of such management letter to the Lenders within five (5) days
following receipt.
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Section 6.14 Tax Refunds.
Instruct, or otherwise arrange with, the IRS, state tax authorities and
other relevant authorities for all tax refunds payable to the Parent, the
Borrower or any Subsidiaries to be paid as a cash refund, rather than as applied
as a credit against their current or future tax liabilities. The Parent, the
Borrower and all Subsidiaries will apply for all available tax refunds within 60
days following the date hereof and will thereafter diligently prosecute such
applications to conclusion.
Section 6.15 Additional Subsidiaries.
If any Subsidiary organized under the laws of the United States of America
or any state thereof is formed or acquired after the Closing Date, (a) notify
the Agent and the Lenders in writing thereof within five Business Days after the
date on which such Subsidiary is formed or acquired and (i) cause such
Subsidiary to (A) execute and deliver the Guarantee Agreement (or otherwise
become a party thereto in the manner provided therein) and (B) become a party to
each applicable Security Document in the manner provided therein, in each case
within five Business Days after the date on which such Subsidiary is formed or
acquired, and (ii) promptly take such actions to create and perfect Liens on
such Subsidiary's assets to secure the Obligations as the Agent or the Majority
Lenders shall reasonably request and (b) if any equity securities issued by any
such Subsidiary are owned or held by or on behalf of the Parent, the Borrower or
any Subsidiary or any loans, advances or other debt is owed or owing by any such
Subsidiary to the Parent, the Borrower or any Subsidiary, cause such equity
securities and promissory notes and other instruments evidencing such loans,
advances and other debt to be pledged pursuant to the Security Agreement within
five Business Days after the date on which such Subsidiary is formed or
acquired.
ARTICLE 7. NEGATIVE COVENANTS.
So long as the Borrower is indebted to the Lenders or the Agent, and until
payment in full of the Loans and Acceptances and the termination or expiration
of all the L/Cs, and Steamship Guaranties and Airway Releases, and full and
complete performance of all of its other obligations arising hereunder, the
Borrower shall not and the Parent shall not and shall not permit any of its
Subsidiaries to do, agree to do, or permit to be done, any of the following:
Section 7.1 Indebtedness.
Create, incur, permit to exist or have outstanding any Indebtedness, except:
(a) Indebtedness of the Borrower to the Lenders, the Agent, the
Collateral Monitoring Agent and the Issuing Bank and other Obligations under
this Agreement;
(b) Taxes, assessments and governmental charges, non-interest bearing
accounts payable and accrued liabilities, in any case not more than 90 days past
due from the original due date thereof, and non-interest bearing deferred
liabilities other than for borrowed
69
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
Section 7.2(c) 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 would not be breached;
(d) Indebtedness of the Borrower under Bank Swap Contracts; provided,
that the amount of Indebtedness pursuant to this Section 7.1(d) shall not exceed
a notional amount in the aggregate of $4,000,000 at any time;
(e) As set forth on Exhibit M 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;
(f) Indebtedness of the Parent, the Borrower or any Subsidiary to the
extent permitted under Section 7.9(c); and
(g) Permitted Subordinated Funded Debt in an aggregate principal amount
not to exceed $20,000,000 at any time; provided, however, that after giving
effect to each incurrence of such Permitted Subordinated Funded Debt (i) no
Default or Event of Default shall exists of result therefrom, (ii) on a pro
forma basis the Fixed Charge Coverage Ratio shall be not less than 1.50 to 1.00,
and (iii) the net proceeds therefrom are applied in accordance with Section
2.7(e).
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 Section 7.1(c); 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
70
assets or properties of the Borrower, the Parent, or, as the case may be,
any Subsidiary; and
(iii) The Indebtedness secured or covered by any Purchase Money
Security Interest shall not exceed the lesser of the cost or fair market
value of the property or asset acquired and shall not be renewed, extended
or prepaid from the proceeds of any borrowing by the Borrower, the Parent or
any Subsidiary;
(d) The interests of the lessor under any Capitalized Lease permitted
hereunder; and
(e) As set forth on Exhibit E.
Section 7.3 Guaranties.
Except as set forth on Exhibit M, assume, endorse, be or become liable for,
or guarantee, the obligations of any Person, except by the endorsement of
negotiable instruments for deposit or collection in the ordinary course of
business; provided, however, that the Parent may guaranty (i) the obligations of
Siena and the Borrower in respect of trade accounts payable, Capitalized Lease
Obligations and rental obligations permitted to be incurred in accordance with
the provisions of Sections 7.1(b), 7.14 and 7.18, 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 hereof. 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.
(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
71
(b) Declare or pay any dividends or make any distribution of any kind
on the Borrower's or the Parent's outstanding stock, or set aside any sum for
any such purpose, except that the Borrower or the Parent may declare or pay any
dividend payable solely in shares of its respective common stock; provided,
however, that if any such issuance would result in the issuance of fractional
shares, the Borrower or the Parent, as the case may be, may pay dividends in
cash in the amount of such fractional shares to the holders thereof in lieu of
issuing fractional shares to such holders provided that the amount of such cash
dividends in the aggregate shall not exceed $10,000.
Section 7.6 Stock Issuance.
Issue any additional shares or any right or option to acquire any shares, or
any security convertible into any shares, of the Capital Stock of the Parent or
any Subsidiary (including the Borrower), except (a) in connection with stock
dividends as permitted under Section 7.5(b), (b) the issuance of any rights or
options to acquire any security of the Parent to any director, officer, employee
or consultant of the Parent pursuant to the Parent's 1989 Stock Option Plan, as
amended, the 1997 Stock Option Plan, as amended and the 1999 Non-Employee
Directors' Plan, as amended, or any other similar employee stock option plan or
non-employee director's stock option plan established by the Parent after the
Closing Date and the issuance of any shares of Capital Stock of the Parent upon
the exercise of any such right or option, (c) issuances of Capital Stock of the
Parent in connection with any acquisition of assets or capital stock of any
Person permitted by Section 7.4 and (d) other issuances of Capital Stock of the
Parent, provided that (x) after giving effect to such issuance, no Default or
Event of Default exists or would result therefrom and (y) the net proceeds
therefrom are applied in accordance with Section 2.7(d).
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 Lenders) for borrowed money incurred or permitted
to exist under the terms hereof.
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
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shareholder, director, officer or employee of the Borrower, the Parent or any of
the Subsidiaries, except:
(a) Investments in:
(i) obligations issued or guaranteed by the United States of
America;
(ii) certificates of deposit, bankers acceptances and other "money
market instruments" issued by any bank or trust company organized under the
laws of the United States of America or any State thereof and having capital
and surplus in an aggregate amount of not less than $100,000,000;
(iii) open market commercial paper bearing the highest credit
rating issued by Standard & Poor's Corporation or by another nationally
recognized credit rating agency;
(iv) repurchase agreements entered into with any bank or trust
company organized under the laws of the United States of America or any
State thereof and having capital and surplus in an aggregate amount of not
less than $100,000,000 relating to United States of America government
obligations; and
(v) shares of "money market funds", each having net assets of not
less than $100,000,000;
in each case maturing or being due or payable in full not more than 180 days
after the Borrower's, the Parent's or any Subsidiary's acquisition thereof;
(b) Investments in the form of loans to employees of the Borrower, the
Parent or any Subsidiary, provided that the outstanding principal amount of all
such loans to any one employee shall at no time exceed $100,000 and that the
aggregate outstanding principal amount of all such loans shall at no time exceed
$200,000;
(c) Without duplication, (i) Investments by the Parent or any
Subsidiary in the Borrower; (ii) Investments by the Borrower or the Parent in
any Subsidiary as in effect as of January 31, 2002 and set forth on Schedule
7.9; (iii) an advance or advances in the ordinary course of business during the
term hereof to G-III Brands; (iv) an advance or advances in the ordinary course
of business during the term hereof to any Subsidiary (other than G-III Brands)
by the Borrower which shall not exceed $6,000,000 in the aggregate outstanding
at any time; and (v) advances to Balihides by the Borrower in an aggregate
principal amount not to exceed $3,477,765.67; provided, that (A) such advances
shall be evidenced by one or more promissory notes and such promissory notes
shall be pledged to the Agent on terms and conditions satisfactory to the Agent
and there shall be no restrictions whatsoever on the ability of Balihides to
repay such advance or advances; and (B) in the case of the advance or advances
made subsequent to the Closing Date, (I) the proceeds of such advance or
advances shall be used by Balihides to repay the entire outstanding balance
under a certain line of credit provided by PT Hanil Tamara Bank of Korea to
Balihides, (II) such line or credit (or a portion thereof equal to
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the amount of such prepayment) shall be terminated contemporaneously with such
repayment and (III) such advance or advances shall be evidenced by a promissory
note and such promissory note shall be pledged to the Agent on terms and
conditions satisfactory to the Agent and there shall be no restrictions
whatsoever on the ability of Balihides to repay such advance or advances;
(d) Investments in retail stores existing on the date hereof;
(e) Investments by the Borrower in Bank Swap Contracts to the extent
permitted by Section 7.1(d);
(f) Investments in the Qingdao Garments Production Co., Ltd.
("Qingdao") not to exceed $1,000,000 on a cost basis (excluding the earnings or
losses attributed to such investment); provided, that in the event that any
amounts advanced for such purpose that are evidenced by one or more promissory
notes, that such promissory notes shall be pledged to the Agent on terms and
conditions satisfactory to the Agent and there shall be no restriction
whatsoever on the ability of Qingdao to repay such amount or amounts; and
(g) Other investments in any factories, ventures or retail stores as in
effect on the date hereof as set forth on Schedule 7.9.
Section 7.10 Fiscal Year.
Change its fiscal year.
Section 7.11 ERISA Obligations.
(a) Be or become obligated (after a final determination) to the PBGC in
excess of $50,000 other than in respect of annual premium payments;
(b) Be or become obligated (after a final determination) to the IRS in
excess of $50,000 with respect to excise or other penalty taxes provided for in
Section 4975 of the Code;
(c) Incur a complete withdrawal or partial withdrawal with respect to
any Multiemployer Plan if such withdrawal would result in a material adverse
change in the business, operations or condition, financial or otherwise, of the
Borrower, the Parent or its Subsidiaries; or
(d) Fail to make any contribution or payment to any Multiemployer Plan
which the Borrower or the Parent is required to make under any agreement
relating to such Multiemployer Plan, or any law pertaining thereto if such
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.
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Section 7.13 Capital Expenditures.
Make or be or become obligated to make Capital Expenditures for the Parent,
Borrower and the Subsidiaries, in an amount in excess of (a) $1,750,000 in the
aggregate during any Fiscal Year during the term hereof and (b) $800,000 in the
aggregate during the Stub Period. Capital Expenditures shall not include
expenditures to the extent that such expenditures constitute a reinvestment of
proceeds from any asset sale permitted under this Agreement.
Section 7.14 Capitalized Lease Obligations.
Make or be or become obligated to make expenditures in respect of
Capitalized Lease Obligations in excess of (a) aggregate annual payments of
$750,000 with respect to all Leases entered into during any Fiscal Year during
the term hereof, and (b) aggregate payments of $250,000 with respect to all
Leases entered into during the Stub Period; 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 Management Fees to any Person, or
any interest on any deferred obligation therefor, including, without limitation,
to any shareholder, director, officer or employee of the Borrower other than in
usual and customary amounts with respect to the services rendered or management
supervision provided.
Section 7.16 Transactions with Affiliates.
Except as expressly permitted by this Agreement, directly or indirectly: (a)
make any investment in an Affiliate; (b) transfer, sell, lease, assign or
otherwise dispose of any assets to an Affiliate; (c) merge into or consolidate
with or purchase or acquire assets from an Affiliate; (d) enter into any other
transaction 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 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.
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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), other than Leases which require the Borrower, the Parent or any
Subsidiary to pay in the aggregate not in excess of (a) $750,000 during any
Fiscal Year during the term hereof, and (b) $250,000 during the Stub Period;
provided, however, that such limitations shall not apply to the portion of any
lease payment due which is determined as a percentage of the revenues of the
applicable retail store of the Borrower, the Parent or any Subsidiary.
Section 7.19 Retail Stores.
Open any additional retail stores during the period from the date hereof
through the Commitment Termination Date; provided, however, that the Borrower
may (i) open seasonal, outlet-type stores so long as (A) not more than four (4)
such stores are open at any time, (B) the occupancy of each such store shall not
exceed five (5) months, (C) the Borrower shall not make any capital expenditures
in connection with such stores, and (D) 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 and (ii) during any Fiscal Year, enter into leases, the aggregate rent
payable with respect to which shall not exceed $150,000 per year, for store
space to conduct sample sales.
Section 7.20 License Agreements.
Enter into any licensing agreement which would prohibit or limit the Agent's
exercise of rights to liquidate Collateral other than license agreements
pursuant to which the minimum royalty payable by the Borrower during each of the
first three years of the term thereof shall be less than or equal to $500,000
per year and that otherwise contain terms and conditions satisfactory to the
Agent.
ARTICLE 8. EVENTS OF DEFAULT.
If any one or more of the following events ("Events of Default") shall occur
and be continuing, the Commitments shall terminate and the entire unpaid balance
of the principal of and interest on the Notes outstanding and all other
Obligations and Indebtedness of the Borrower to the Lenders, the Collateral
Monitoring Agent, the Issuing Bank and the Agent arising hereunder and under the
other Loan Documents, shall immediately become due and payable upon written
notice to that effect given to the Borrower by the Agent (except that in the
case of the occurrence of any Event of Default described in Section 8.6 no such
notice shall be required), without presentment or demand for payment, notice of
non-payment, protest or further notice or demand of any kind, all of which are
expressly waived by the Borrower:
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Section 8.1 Payments.
Failure by the Borrower to (i) make any payment or mandatory 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, (iv) make any required payment under
Section 2.7, or (v) make any required payment under Section 2.17, 2.18 and 10.1
and, with respect to clause (v) only, such failure shall continue unremedied for
a period of 10 days in the case of Section 2.17 and 2.18 and three (3) days in
the case of Section 10.1, in each case after receipt by Borrower of a demand
therefor; or
Section 8.2 Certain Covenants.
Failure to perform or observe any of the agreements of the Borrower, the
Parent or any Subsidiary contained in Section 6.9 or Article 7; or
Section 8.3 Other Covenants.
(a) Failure by the Borrower to perform or observe any other term, condition
or covenant hereof or of any of the other Loan Documents to which it is a party,
which shall remain unremedied for a period of 15 days after the earlier of (i)
when the Borrower becomes aware of such failure and (ii) notice thereof shall
have been given to the Borrower by the Agent; or
(b) Failure by any Loan Party other than the Borrower to perform or observe
any term, condition or covenant of any of the Loan Documents to which it is a
party, which shall remain unremedied for a period of 15 days after the earlier
of (i) when such Loan Party becomes aware of such failure and (ii) notice
thereof shall have been given to the Borrower by the Agent; or
Section 8.4 Other Defaults.
(a) Other than the defaults set forth on Exhibit G, 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;
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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) and shall either (i) declare due and payable the
Indebtedness evidenced or secured thereby or (ii) shall commence the exercise of
remedies on the basis of such default, such declaration or exercise shall
constitute an Event of Default hereunder, upon the happening of which the
Lenders may take action notwithstanding Section 10.16; and provided, further,
that the provisions of this Section 8.4 shall not be applicable to any Debt
Instrument that on the date this Section 8.4 would otherwise be applicable
thereto, relates to or evidences Indebtedness in a principal amount of less than
$50,000; or
Section 8.5 Representations and Warranties.
Any representation or warranty made in writing to the Lenders or the Agent
in any of the Loan Documents or in connection with the making of the Loans or
the issuance of any L/Cs, Acceptances, Steamship Guaranties or Airway Releases,
or any certificate, statement or report made or delivered in compliance with
this Agreement, shall have been false or misleading in any material respect when
made or delivered or deemed made or deemed delivered; or
Section 8.6 Bankruptcy.
(a) The Borrower, the Parent or any Subsidiary shall make an assignment
for the benefit of creditors, file a petition in bankruptcy, be adjudicated
insolvent, petition or apply to any tribunal for the appointment of a receiver,
custodian, or any trustee for it or him or a substantial part of its or his
assets, or shall commence any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, whether now or hereafter in effect, or the Borrower, the
Parent or any Subsidiary shall take any corporate action to authorize any of the
foregoing actions; or there shall have been filed any such petition or
application, or any such proceeding shall have been commenced against it or him,
that remains unstayed or undismissed for a period of 60 days or more; or any
order for relief shall be entered in any such proceeding; or the Borrower, the
Parent or any Subsidiary by any act or omission shall indicate its or his
consent to, approval of or acquiescence in any such petition, application or
proceeding or the appointment of a custodian, receiver or any trustee for it or
him or any substantial part of any of its or his properties, or shall suffer any
custodianship, receivership or trusteeship to continue unstayed or undischarged
for a period of 60 days or more; or
(b) The Borrower, the Parent or any Subsidiary shall generally not pay
its or his debts as such debts become due; or
(c) The Borrower, the Parent or any Subsidiary shall have concealed,
removed, or permitted to be concealed or removed, any part of its or his
property, with intent to hinder, delay or defraud its or his creditors or any of
them or made or suffered a transfer of any of its or his property that may be
fraudulent under any bankruptcy, fraudulent conveyance or similar law; or shall
have made any transfer of its or his property to or for the benefit of a
creditor at a time when other creditors similarly situated have not been paid;
or shall have
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suffered or permitted, while insolvent, any creditor to obtain a Lien upon any
of its or his property through legal proceedings or distraint that is not stayed
or vacated within 60 days from the date thereof; or
Section 8.7 Judgments.
Any judgment against the Borrower, the Parent or any Subsidiary or any
attachment, levy or execution against any of its properties for any amount in
excess of $200,000 in respect of any judgment after deducting from such judgment
the amount of any insurance proceeds payable to the judgment debtor with respect
thereto, shall remain unpaid, unstayed on appeal, undischarged, unbonded or
undismissed for a period of 30 days or more; or
Section 8.8 ERISA.
(a) The institution by the PBGC of proceedings for the involuntary
termination of any Pension Plan by reason of, or that could result in, an
"accumulated funding deficiency" under Section 412 of the Code which would have
a material adverse effect on the business, operations or condition, financial or
otherwise, of the Borrower, the Parent or its Subsidiaries; or
(b) Failure by the Borrower or the Parent to make required
contributions, in accordance with the applicable provisions of ERISA, to each of
the Employee Benefit Plans or Plans hereafter established or assumed by it
including any Plan which is a Multiemployer Plan, if such failure would result
in the imposition of a Lien, which would have a material adverse effect on the
business, financial condition or properties of the Borrower, the Parent and its
Subsidiaries, on the assets 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 Lenders) to be and continuously
perform the duties of chief executive officer of the Borrower or, if such
cessation shall occur as a result of the death or such disability, no successor
satisfactory to the Agent and the Lenders, in their sole discretion, shall have
become and shall have commenced to perform the duties of chief executive officer
of the Borrower within 90 days after such cessation; provided, however, that if
any satisfactory successor or interim management shall have been so elected and
shall have commenced performance of such duties within such
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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
Section 8.11 Liens.
Any of the Liens created and granted to the Agent for the ratable benefit of
the Lenders under the Security Documents shall fail to be valid, first,
perfected Liens, subject to no prior or equal Lien, except as permitted by
Section 7.2; 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 Section 2.7(c) at any time; or
Section 8.13 Forfeiture Proceedings.
Any Forfeiture Proceeding shall have been commenced or the Borrower shall
have given any Lender written notice of the commencement of any Forfeiture
Proceeding as provided in Section 5.11 or any Lender has a good faith basis to
believe that a Forfeiture Proceeding has been threatened or commenced.
Section 8.14 Material Adverse Change.
There shall have occurred a material adverse change in the financial
condition or business prospects of the Borrower, the Parent and the
Subsidiaries, taken as a whole, since the date hereof.
ARTICLE 9. AGENCY PROVISIONS.
Section 9.1 Appointment, Powers and Immunities.
Each Lender hereby irrevocably appoints and authorizes each of the
Collateral Monitoring Agent, the Issuing Bank and the Agent to act as its agent
hereunder, under the Security Documents and the other Loan Documents with such
powers as are specifically delegated to such parties, respectively, by the terms
hereof, the Security Documents and the other Loan Documents together with such
other powers as are reasonably incidental thereto. Each of the Collateral
Monitoring Agent, the Issuing Bank and the Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement, the
Security Documents and the other Loan Documents and shall be a trustee for any
Lender. None of the Collateral Monitoring Agent, the Issuing Bank or the Agent
shall be responsible to the Lenders for any recitals, statements,
representations or warranties contained in this Agreement, the Security
Documents, or the other Loan Documents, in any Application, certificate or other
document referred to or provided for in, or received by any of them under, this
Agreement, the Security Documents or the other Loan Documents, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency hereof, the
Security Documents or the other Loan Documents or any other document referred to
or provided for herein or therein or for the collectibility of the Loans
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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 Lenders, and such
instructions of the Majority Lenders and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders.
Section 9.3 Events of Default.
Neither the Collateral Monitoring Agent or the Agent shall be deemed to have
knowledge of the occurrence of a Default unless the such party has received
notice from a Lender or the Borrower specifying such Default and stating that
such notice is a "Notice of Default". In the event that either the Agent or the
Collateral Monitoring Agent receives such a notice of the occurrence of a
Default, the Agent or the Collateral Monitoring shall promptly give notice
thereof to the Lenders. The Agent shall (subject to Section 9.7) take such
action with respect to such Default as shall be directed by the Majority
Lenders.
Section 9.4 Rights as a Lender.
Each of the Collateral Monitoring Agent, the Issuing Bank and the Agent in
its capacity as a Lender hereunder, shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not
acting as an agent hereunder, and the term "Lender" or "Lenders" shall, unless
the context 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
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having to account therefor to any Lender) accept deposits from, lend money to
and generally engage in any kind of banking, trust or other business with the
Borrower or its Affiliates, as if it were not acting as an agent of the Lenders
hereunder, and may accept fees from the Borrower or its Affiliates, for services
in connection with this Agreement, the Security Documents or any of the other
Loan Documents or otherwise without having to account for the same to the
Lenders; provided, however, that each of the Collateral Monitoring Agent,
Issuing Bank and the Agent will not accept more than its Lender's Share of any
fee paid by the Borrower to the Lenders or to the Agent for the account of the
Lenders in connection with this Agreement.
Section 9.5 Indemnification.
The Lenders shall indemnify each of the Collateral Monitoring Agent, the
Issuing Bank and the Agent (to the extent not reimbursed by the Borrower under
Sections 10.1 and 10.2), 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, but excluding normal
administrative costs and expenses incident to the performance of their agency
duties hereunder or under the Security Documents unless a default by the
Borrower with respect to the payment thereof has occurred and is continuing) or
the enforcement of any of the terms hereof or of the Security Documents, or of
any such other documents, provided that no Lender shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the party to be indemnified.
Section 9.6 Non-Reliance.
Each Lender agrees that it has, independently and without reliance on the
Collateral Monitoring Agent, the Issuing Bank or the Agent or any other Lender,
and based on such documents and information as it has deemed appropriate, made
its own credit analysis of the Borrower and decision to enter into this
Agreement and that it will, independently and without reliance upon the
Collateral Monitoring Agent, the Issuing Bank or the Agent or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own analysis and decisions in taking or not taking
action under this Agreement, the Security Documents or the other Loan Documents.
None of the Collateral Monitoring Agent, the Issuing Bank or the Agent shall be
required to keep itself informed as to the performance or observance by the
Borrower of this Agreement, the Security Documents or the other Loan Documents
or any other document referred to or provided for herein or therein or to
inspect the properties or books of the Borrower. Except for notices, reports and
other documents and information expressly required to be furnished to the
Lenders by the Collateral Monitoring Agent, the Issuing Bank or the Agent
hereunder or under the Security Documents, or the other Loan Documents, none of
the Collateral Monitoring Agent, the Issuing Bank or the
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Agent shall have any duty or responsibility to provide any Lender with any
credit or other information concerning the affairs, financial condition or
business of the Borrower, that may come into the possession of the Collateral
Monitoring Agent, the Issuing Bank or the Agent or any of its Affiliates.
Section 9.7 Failure to Act.
Except for action expressly required of the Collateral Monitoring Agent, the
Issuing Bank or the Agent hereunder, or under the Security Documents, each of
the Collateral Monitoring Agent, the Issuing Bank or the Agent shall in all
cases be fully justified in failing or refusing to act hereunder or thereunder
unless it shall be indemnified to its satisfaction by the Lenders against any
and all liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.
Section 9.8 Resignation or Removal.
Subject to the appointment and acceptance of a successor as provided below,
each of the Collateral Monitoring Agent, the Issuing Bank or the Agent (i) may
resign at any time by giving not less than 10 days' prior written notice thereof
to the Lenders and the Borrower and (ii) may be removed at any time with or
without cause by the Majority Lenders. Upon any such resignation or removal, the
Majority Lenders shall have the right to appoint a successor. If no successor
Collateral Monitoring Agent, Issuing Bank or Agent shall have been so appointed
by the Majority Lenders and shall have accepted such appointment within 30 days
after the retiring party's giving of notice of resignation or the Majority
Lenders' removal of the retiring party, then the retiring Collateral Monitoring
Agent, the Issuing Bank or Agent, as the case may be, may, on behalf of the
Lenders, after consultation with the Borrower, appoint a successor which shall
be one of the Lenders. Upon the acceptance of any appointment as successor
hereunder or under the Security Documents, such successor Collateral Monitoring
Agent, Issuing Bank or Agent, as the case may be, shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
party, and the retiring party shall be discharged from its duties and
obligations hereunder and under the Security Documents. After any retiring
party's resignation or removal hereunder as Collateral Monitoring Agent, Issuing
Bank or Agent, as the case may be, the provisions of this Article 9 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as the Collateral Monitoring Agent, the
Issuing Bank or Agent hereunder.
Section 9.9 Sharing of Collateral and Payments.
Upon or following any acceleration by the Agent and the Lenders of the
Obligations, and following the purchase by each Lender of its proportional share
of the Obligations pursuant to Section 2.16(b), in the event that any Lender
shall obtain payment in respect of any such Obligation, or interest thereon, or
receive any Collateral or proceeds thereof with respect to any such Obligation,
whether voluntarily or involuntarily, and whether through the exercise of a
right of banker's lien, set-off or counterclaim against the Borrower or any
other Loan Party or otherwise, in a greater proportion than any such payment
obtained by any other Lender in respect of the aggregate amount of the
corresponding Obligation held by such Lender, then the Lender
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so receiving such greater proportionate payment or such greater proportionate
amount of Collateral, shall purchase for cash from the other Lender or Lenders
such portion of each such other Lender's or Lenders' Loan, or shall provide the
other Lenders with the benefits of any such Collateral, or the proceeds thereof,
as shall be necessary to cause such Lender receiving the proportionate
overpayment to share the excess payment or benefits of such Collateral or
proceeds ratably with each Lender. For the purposes of this Section, payments on
Obligations received by each Lender and receipt of Collateral by each Lender
shall be in the same proportion as the proportion of: (A) the Obligations owing
to such Lender in respect of the Obligations held by such Lender to (B) the
Obligations owing to all of the Lenders in respect of all of the Obligations;
provided, however, that, with respect to the foregoing, if all or any portion of
such excess payment or benefits is thereafter recovered from the Lender that
received the proportionate overpayment, such purchase of Obligations or payment
of benefits, as the case may be, shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest.
Section 9.10 Additional Provisions as to the Collateral Monitoring
Agent.
(a) The Collateral Monitoring Agent shall prepare and submit to the
Lenders, monthly on or before the 20th day of the following month, reports as
to:
(i) a summary of projected Availability vs actual Availability
(including a calculation of the Borrowing Base amount);
(ii) an accounts receivable aging analysis;
(iii) an accounts receivable concentration summary;
(iv) ineligible calculations for both Accounts and Inventory; and
(v) accounts receivable statistics (including sales, turnover and
dilution) on both a monthly and cumulative basis.
(b) Whenever the Collateral Monitoring Agent conducts a field
examination, the Collateral Monitoring Agent will deliver to the Lenders a
report prepared by the Collateral Monitoring Agent as to the results of such
field examination as promptly as possible, but in any event no later than 30
days following the Collateral Monitoring Agent's receipt of the field
examination reports. The Collateral Monitoring Agent agrees to conduct, at the
Borrower's expense: (i) at least three (3) field examinations of the Borrower's
Accounts per annum during the term hereof, and (ii) at the Collateral Monitoring
Agent's discretion, field examinations of the Borrower's Inventory, provided
that the Collateral Monitoring Agent shall conduct at least two (2) such
examinations of Inventory per annum during the term hereof. Upon reasonable
advance request of the Collateral Monitoring Agent, the Lenders shall have the
right to examine at the Collateral Monitoring Agent's offices, or to request
copies (prepared at the requesting Lender's cost) of, all field reports,
resulting correspondence with the Borrower and other work product relating to
such field examination. The Collateral Monitoring Agent agrees to respond
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to, and to refer to the Borrower when appropriate and then to respond to,
reasonable inquiries made by the Lenders arising with respect to field
examinations or reports.
(c) The Collateral Monitoring Agent may include Inventory labeled as
"Season X" in Eligible Inventory if the Borrower establishes to the satisfaction
of the Collateral Monitoring Agent that existing orders for such Inventory
exceed such Inventory currently on hand; provided, however, that prior to
including such Inventory in Eligible Inventory (x) the Collateral Monitoring
Agent has given the Lenders at least 24 hours notice that the Agent intends to
include such Inventory in Eligible Inventory, and (y) the Collateral Monitoring
Agent has not been notified of objections by the Lenders to the inclusion of
such Inventory in Eligible Inventory within the 24-hour period following the
giving of such notice.
(d) Without limiting the generality of any other provision hereof, the
Collateral Monitoring Agent shall specifically not have authority to:
(i) increase or decrease the percentages of Eligible Accounts or
Eligible Inventory to be included in the Borrowing Base, other than by
adjustment of the reserves provided for in the definition of "Borrowing
Base"; provided, however, that the Collateral Monitoring Agent may establish
additional reserves if (x) the Collateral Monitoring Agent has given the
Lenders at least 24 hours notice that the Agent intends to establish such
additional reserves and (y) the Collateral Monitoring Agent has not been
notified of objections by the Lenders to the establishing of such additional
reserves within the 24-hour period following the giving of such notice; and
provided, further, that once an additional reserve has been established the
Collateral Monitoring Agent may adjust that reserve in its discretion.
(ii) release Collateral;
(iii) waive any violation or default under this Agreement, the
Security Documents, the Loan Documents or otherwise on behalf of the
Lenders; or
(iv) modify the amount of any Fees or interest payable pursuant to
this Loan Agreement.
ARTICLE 10. MISCELLANEOUS PROVISIONS.
Section 10.1 Fees and Expenses; Indemnity.
The Borrower will promptly (and in any event within 30 days after its
receipt of an invoice or statement therefor) pay all costs of the Collateral
Monitoring Agent, the Issuing Bank, the Agent and each of the Lenders in
preparing the Loan Documents and all costs and expenses of the Collateral
Monitoring Agent and the Lenders of the issuance of the Notes, L/Cs,
Applications, Acceptances, Steamship Guaranties and Airway Releases and of the
Borrower's and the other Loan Parties' performance of and compliance with all
agreements and conditions contained herein on its part to be performed or
complied with (including, without limitation, all costs of filing or recording
any assignments, mortgages, financing statements and other
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documents except any such costs incurred in connection with an assignment or
participation pursuant to Section 10.13), and the reasonable fees and expenses
and disbursements of counsel to the Collateral Monitoring Agent, the Issuing
Bank, the Agent and the Lenders in connection with the preparation, execution
and delivery, administration, interpretation and enforcement hereof, the other
Loan Documents, the L/Cs, Applications, Acceptances, Steamship Guaranties and
Airway Releases and all other agreements, instruments and documents relating to
this transaction, the consummation of the transactions contemplated by all such
documents, the preservation of all rights of the Lenders and the Collateral
Monitoring Agent, the Issuing Bank, and the Agent the negotiation, preparation,
execution and delivery of any amendment, modification or supplement of or to, or
any consent or waiver under, any such document (or any such instrument that is
proposed but not executed and delivered) and with any claim or action
threatened, made or brought against any of the Lenders or the Collateral
Monitoring Agent, the Issuing Bank and the Agent arising out of or relating to
any extent to this Agreement, the other Loan Documents or the transactions
contemplated hereby or thereby and including, without limitation, the allocated
costs of internal counsel to the Lenders with respect to the amending and
restating of the Original Loan Agreement. In addition, the Borrower will
promptly pay all costs and expenses (including, without limitation, reasonable
fees, costs and disbursements of counsel) suffered or incurred by each Lender in
connection with its enforcement hereof, the Loan Documents and the Notes held by
it, the L/Cs, Applications, Acceptances, Steamship Guaranties and Airway
Releases or any other sum due to it under this Agreement or any of the other
Loan Documents or any of its other rights hereunder or thereunder. In addition
to the foregoing, the Borrower shall indemnify each Lender and the Collateral
Monitoring Agent, the Issuing Bank and the Agent and each of their respective
directors, officers, employees, attorneys, agents and Affiliates against, and
hold each of them harmless from, any loss, liabilities, damages, claims, costs
and expenses (including reasonable attorneys' fees and disbursements, including
cost allocated by in-house counsel to any Lender) suffered or incurred by any of
them arising out of, resulting from or in any manner connected with, the
execution, delivery and performance of this Agreement and each of the other 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 Lender or the
Collateral Monitoring Agent, the Issuing Bank and the Agent or any of their
respective directors, officers, employees, attorneys, agents or Affiliates
arising out of or related to any Environmental Matter, Environmental Liability
or Environmental Proceeding, or in investigating, preparing for, defending
against, or providing evidence, producing documents or taking any other action
in respect of any commenced or threatened litigation, administrative proceeding
or investigation under any federal securities law or any other statute of any
jurisdiction, or any regulation, or at common law or otherwise. The indemnity
set forth herein shall be in addition to any other obligations or liabilities of
the Borrower to the Agent and the Lenders hereunder or at common law or
otherwise. The provisions of this Section 10.1 shall survive the payment of the
Notes, L/Cs, Acceptances, Steamship Guaranties and Airway Releases and the
termination hereof.
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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 Lenders and the Collateral Monitoring
Agent, the Issuing Bank and the Agent against and save each of them harmless
from any loss or damage resulting from or arising out of the nonpayment or delay
in payment of any such tax. If any such tax or taxes shall be assessed or levied
against any Lender or any other holder of a Note, or issuer of an L/C,
Acceptance, Steamship Guarantee or Airway Release, such Lender, or such other
holder or issuer, as the case may be, may notify the Borrower and make immediate
payment thereof, together with interest or penalties in connection therewith,
and shall thereupon be entitled to and shall receive immediate reimbursement
therefor from the Borrower. Notwithstanding any other provision contained in
this Agreement, the covenants and agreements of the Borrower in this Section
10.2 shall survive payment of the Notes, L/Cs, Acceptances, Steamship Guaranties
and Airway Releases and the termination hereof.
Section 10.3 Payments.
As set forth in Article 2, 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, levies, imposts, duties or other similar charges of whatever
nature imposed by any government or any political subdivision or taxing
authority thereof, other than any tax (except those referred to in clause (ii)
below) on or measured by the net income of the Lender to which any such payment
is due pursuant to applicable federal, state and local income tax laws, and (ii)
deduction of amounts equal to the taxes on or measured by the net income of such
Lender payable by such Lender with respect to the amount by which the payments
required to be made under this sentence exceed the amounts otherwise specified
to be paid in this Agreement and the Notes, L/Cs, Acceptances, Steamship
Guaranties and Airway
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Releases). Upon payment in full of any Note, the Lender holding such Note shall
mark the Note "Paid" and return it to the Borrower.
Section 10.4 Survival of Agreements and Representations.
All agreements, representations and warranties made herein shall survive the
delivery hereof, the Notes and any other instruments evidencing Obligations.
Section 10.5 Lien on and Set-off of Deposits.
As security for the due payment and performance of all the Obligations,
the Borrower hereby grants to Agent for the ratable benefit of the Lenders a
Lien on any and all deposits or other sums at any time credited by or due from
the Agent or any Lender to the Borrower, whether in regular or special
depository accounts or otherwise, and any and all monies, securities and other
property of the Borrower, and the proceeds thereof, now or hereafter held or
received by or in transit to any Lender, the Collateral Monitoring Agent, the
Issuing Bank or the Agent from or for the Borrower, whether for safekeeping,
custody, pledge, transmission, collection or otherwise, and any such deposits,
sums, monies, securities and other property, may at any time after the
occurrence and during the continuance of any Event of Default be set-off,
appropriated and applied by any Lender or the Agent against any of the
Obligations, whether or not any of such Obligations is then due or is secured by
any collateral, or, if it is so secured, whether or not the collateral held by
the Agent is considered to be adequate, all as set forth in and pursuant to
Section 2.16.
Section 10.6 Modifications, Consents and Waivers; Entire Agreement.
No modification, amendment or waiver of or with respect to any provision
hereof, any Notes, the Security Documents, or any of the other Loan Documents
and all other agreements, instruments and documents delivered pursuant hereto or
thereto, nor consent to any departure by the Borrower from any of the terms or
conditions thereof, shall in any event be effective unless it shall be in
writing and signed by the Agent and each Lender and the Borrower except that:
(i) any modification or amendment of, or waiver or consent with respect to,
Article 4 may be signed only by the Agent and the Majority Lenders and the
Borrower (provided, however, that the consummation of a transaction by a Lender
shall be deemed, with respect to such Loan only, to have the effect of the
execution by such Lender of a waiver of, or consent to a departure from, any
term or provision of Article 4 that has not been satisfied as of the date of the
consummation of such transaction); and (ii) any modification or amendment of, or
waiver or consent with respect to, Articles 1, 5, 6, 7, 8 and 10 (other than
this Section 10.6) may be signed only by the Agent and the Majority Lenders and
the Borrower; provided further, however, no such modification or amendment of
any of the following definitions appearing in Article 1 shall be effective
without the written consent of the Agent, each of the Lenders and the Borrower:
"Borrowing Base", "Borrowing Base Maximum", "Direct Debt Sublimit", "Eligible
Account", "Eligible Inventory", "Majority Lenders" or "Overadvance". 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
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embody the entire agreement and understanding among the Lenders, the Collateral
Monitoring Agent, the Issuing Bank, the Agent and the Borrower and supersede all
prior agreements and understandings relating to the subject matter hereof.
Section 10.7 Remedies Cumulative.
Each and every right granted to the Collateral Monitoring Agent, the Issuing
Bank, the Agent and the Lenders hereunder or under any other document delivered
hereunder or in connection herewith, or allowed it by law or equity, shall be
cumulative and may be exercised from time to time. No failure on the part of the
Collateral Monitoring Agent, the Issuing Bank, the Agent or any Lender or the
holder of any Note or the issuer of any L/C, Acceptance, Steamship Guarantee or
Airway Release to exercise, and no delay in exercising, any right shall operate
as a waiver thereof, nor shall any single or partial exercise of any right
preclude any other or future exercise thereof or the exercise of any other
right. The due payment and performance of the Obligations shall be without
regard to any counterclaim, right of offset or any other claim whatsoever that
the Borrower may have against any Lender, the Collateral Monitoring Agent, the
Issuing Bank or the Agent and without regard to any other obligation of any
nature whatsoever that any Lender, the Collateral Monitoring Agent, the Issuing
Bank or the Agent may have to the Borrower, and no such counterclaim or offset
shall be asserted by the Borrower in any action, suit or proceeding instituted
by any Lender, the Collateral Monitoring Agent, the Issuing Bank or the Agent
for payment or performance of the Obligations or otherwise.
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 hereof, the other Loan Documents and any other agreements,
instruments and documents delivered pursuant hereto or in connection with the
Loans, including, without limitation, the execution and delivery to the Agent of
mortgages in form and substance reasonably satisfactory to the Agent and the
Lenders covering all real property or interests therein acquired by the
Borrower, and all leases of real property entered into by the Borrower as tenant
or lessee, after the date hereof, 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 which may be sent by
ordinary first-class mail) or telegram or telecopy, addressed as follows:
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(a) If to the Borrower or any other Loan Party:
G-III Leather Fashions, Inc.
512 Seventh Avenue
New York, New York 10018
Attention: Wayne S. Miller,
Senior Vice President,
Treasurer and Secretary
Telecopier No.: (212) 719-0921
with a copy to:
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
Attention: Neil Gold, Esq.
Telecopier No.: (212) 318-3400
(b) If to any Lender:
To its address set forth below its name on the signature
pages hereof, with a copy to the Agent; and
(c) If to the Collateral Monitoring Agent:
Fleet Capital Corporation
570 Walnut Avenue
Cranford, New Jersey 07016
Attention: Laura Eichhorn,
Vice President
Telecopier No.: (908) 709-6352
(d) If to the Issuing Bank:
Fleet National Bank
1185 Avenue of the Americas
New York, New York 10036
Attention: Stephen Leavenworth,
Vice President
Telecopier No.: (212) 819-4105
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(e) If to the Agent:
Fleet National Bank
1185 Avenue of the Americas
New York, New York 10036
Attention: Stephen Leavenworth,
Vice President
Telecopier No.: (212) 819-4105
with a copy (with respect to notices, requests, reports and other
communications to the Collateral Monitoring Agent, the Issuing
Bank or the Agent other than in the case of Borrowing Notices and
reports and other documents delivered in compliance with Article
5), to:
Emmet, Marvin & Martin, LLP
120 Broadway
New York, New York 10271
Attention: Richard S. Talesnick
Telecopier No.: (212) 238-3100
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
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
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otherwise within the limitations of, another covenant shall not avoid the
occurrence of a Default or an Event of Default if such action is taken or
condition exists.
Section 10.12 Binding Effect; No Assignment or Delegation by Borrower.
This Agreement shall be binding upon and inure to the benefit of the
Borrower and its successors and to the benefit of the Lenders, the Collateral
Monitoring Agent, the Issuing Bank and the Agent and their respective successors
and assigns. The rights and obligations of the Borrower under this Agreement
shall not be assigned or delegated without the prior written consent of the
Agent, the Collateral Monitoring Agent, the Issuing Bank and the Lenders, and
any purported assignment or delegation without such consent shall be void.
Section 10.13 Assignments and Participation by Lenders; Issuance of
L/Cs by Lender Affiliates.
(a) Each Lender may assign to one or more Eligible Assignees 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
Obligations, and the Note or Notes held by it); provided, however, that (i) each
such assignment shall be of a uniform, and not a varying, percentage of the
assigned rights and obligations, (ii) except in the case of an assignment to a
Person that, immediately prior to such assignment, was a Lender or an assignment
of all of a Lender's rights and obligations under this Agreement, the amount of
the Commitment of the assigning Lender being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $5,000,000 (unless
such lesser amount is equal to the assigning Lender's then outstanding
Commitment) in the aggregate and provided that in the event of concurrent
assignments to two or more Related Funds, all such concurrent assignments (which
in any event shall not be less than $2,500,000) shall be aggregated in
determining compliance with this requirement, and (iii) the parties to each such
assignment shall execute and deliver to the Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, together with any Note
or Notes subject to such assignment and a processing and recordation fee of
$3,500; provided, however, that no such fee shall be payable in the case of an
assignment to a Related Fund. For purposes of this Section, "Related Fund" shall
mean, with respect to any Bank which is a fund that invests in loans, any other
fund that invests in loans and is controlled by the same investment advisor as
such Bank or by any affiliate that is controlled by such investment advisor.
(b) Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in such Assignment and Acceptance, (i) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and (y) the
Lender assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this Agreement
(and, in the case of an
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Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto).
(c) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any other Loan Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of, or the perfection or priority of any lien
or security interest created or purported to be created under or in connection
with, this Agreement or any other Loan Document or any other instrument or
document furnished pursuant hereto or thereto; (ii) such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or the performance or observance by the
Borrower of any of its obligations under any Loan Document or any other
instrument or document furnished pursuant thereto; (iii) such assignee confirms
that it has received a copy of this Agreement, together with copies of such
financial statements and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Agent, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi)
such assignee appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers and discretion under this Agreement and
the other Loan Documents as are delegated to the Agent by the terms hereof and
thereof, together with such powers and discretion as are reasonably incidental
thereto; and (vii) such assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of this Agreement are
required to be performed by it as a Lender.
(d) The Agent shall maintain at its address referred to in Section 10.9
a copy of each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Lenders and the
Commitment of, and principal amount of the Obligations owing to or L/Cs issued
by, each Lender from time to time (the "Register"). No such Assignment and
Acceptance shall be effective unless and until it is recorded in the Register.
The entries in the Register shall be conclusive and binding for all purposes,
absent manifest error, and the Borrower, the Agent, the Collateral Monitoring
Agent, the Issuing Bank and the Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee representing that it is an Eligible Assignee,
together with any Note, Application or other instrument evidencing an Obligation
subject to such assignment and the appropriate processing and reconciliation
fee, the Agent shall, if such Assignment and
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Acceptance has been completed and is in substantially the form of Exhibit N: (i)
accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Borrower. In
the case of any assignment by a Lender, 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 Lender has retained a
portion of its Commitment hereunder, a new such instrument to the order of the
assigning Lender in an amount equal to the Lender's Commitment retained by it
hereunder. Such new instrument shall be in an aggregate principal amount equal
to the aggregate principal amount of such surrendered instrument, shall be dated
the effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of Exhibit N.
(f) (i) Each Lender may sell participations to one or more Persons
(other than the Borrower or any of its Affiliates) in all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of its Lender's Commitment, the Loans owing to it, amounts
outstanding in respect of outstanding Obligations, and the Note held by it) at
any time and from time to time and without the consent of the Borrower; and
(ii) Fleet may arrange for the issuance of L/Cs which it is
obligated to issue hereunder by an Affiliate of such Lender;
provided, however, that: (v) such Lender's obligations under this Agreement
(including, without limitation, its Lender's Commitment hereunder) shall remain
unchanged, (w) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (x) such Lender shall remain the
holder of any such Note and the issuer of the L/C or other Obligation in respect
of Direct Debt (whenever issued) for all purposes of this Agreement, (y) the
Borrower, the Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and (z) no participant under any such
participation shall have any right to approve any amendment, waiver or other
modification of any provision of this Agreement or any other Loan Document, or
any consent to any departure by the Borrower therefrom, except to the extent
that such amendment, waiver, modification or consent would reduce the principal
of, or interest on, the Note or other Obligation in respect of Direct Debt or
any fees or other amounts payable hereunder, in each case to the extent subject
to such participation, postpone any date fixed for any payment of principal of,
or interest on, the Note, Obligation in respect of Direct Debt or any fees or
other amounts payable hereunder, in each case to the extent subject to such
participation.
(g) Any Lender may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 10.13, disclose
to the assignee or participant or proposed assignee or participant, any
information relating to the Borrower furnished to such Lender by or on behalf of
the Borrower; provided that, prior to any such disclosure, the assignee or
participant or proposed assignee or participant shall agree to preserve
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the confidentiality of any confidential information relating to the Borrower
received by it from such Lender.
(h) Any Lender may at any time grant, pledge or assign a security
interest in all or any portion of the Loans owing to it and the Note held by it
to secure obligations of such Lender, including any pledge or assignment to
secure obligations in favor of any Federal Reserve Bank in accordance with
Regulation A of the Board of Governors of the Federal Reserve System, and this
Section 10.13 shall not apply to any such pledge or assignment of a security
interest, provided that no such pledge or assignment of a security interest
shall release a Lender from any of its obligations hereunder or substitute any
such pledgee or assignee for such Lender as a party hereto.
(i) Notwithstanding anything to the contrary contained herein, any
Lender (a "Granting Bank") may grant to a special purpose funding vehicle (a
"SPC"), identified as such in writing from time to time by the Granting Bank to
the Agent and the Borrower, the option to provide to the Borrower all or any
part of any Loan that such Granting Bank would otherwise be obligated to make to
the Borrower pursuant to this Agreement; provided that (i) nothing herein shall
constitute a commitment by any SPC to make any Loan, and (ii) if an SPC elects
not to exercise such option or otherwise fails to provide all or any part of
such Loan, the Granting Bank shall be obligated to make such Loan pursuant to
the terms hereof. The making of a Loan by an SPC hereunder shall utilize the
Commitment of the Granting Bank to the same extent, and as if, such Loan were
made by such Granting Bank. Each party hereto hereby agrees that no SPC shall be
liable for any indemnity or similar payment obligation under this Agreement (all
liability for which shall remain with the Granting Bank). In furtherance of the
foregoing, each party hereto hereby agrees (which agreement shall survive the
termination of this Agreement) that, prior to the date that is one year and one
day after the payment in full of all outstanding commercial paper or other
senior indebtedness of any SPC, it will not institute against, or join any other
person in instituting against, such SPC any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under the laws of the United
States or any State thereof. In addition, notwithstanding anything to the
contrary contained in this Section 10.13(i), any SPC may (i) with notice to, but
without the prior written consent of, the Borrower and the Agent and without
paying any processing fee therefor, assign all or a portion of its interests in
any Loans to the Granting Bank or to any financial institutions (consented to by
the Borrower and Agent) providing liquidity or credit support to or for the
account of such SPC to support the funding or maintenance of Loans and (ii)
disclose on a confidential basis any non-public information relating to its
Loans to any rating agency, commercial paper dealer or provider of any surety,
guarantee or credit or liquidity enhancement to such SPC. This Section 10.13(i)
may not be amended without the written consent of each Granting Bank, all or any
of whose Loans are being funded by an SPC at the time of such amendment. It is
understood and acknowledged that the Granting Bank shall for all purposes,
including, without limitation, the approval of any amendment or waiver of any
provision of any Loan Document or the obligation to pay any amount otherwise
payable by the Granting Bank under the Loan Documents, continue to be the Lender
of record 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) THE BORROWER IRREVOCABLY CONSENTS THAT ANY LEGAL ACTION OR
PROCEEDING AGAINST IT UNDER, ARISING OUT OF OR IN ANY MANNER RELATING TO THIS
AGREEMENT, AND EACH OTHER LOAN DOCUMENT MAY BE BROUGHT IN ANY COURT OF THE STATE
OF NEW YORK, COUNTY OF NEW YORK, OR IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK. THE BORROWER BY THE EXECUTION AND DELIVERY OF
THIS AGREEMENT, EXPRESSLY AND IRREVOCABLY ASSENTS AND SUBMITS TO THE PERSONAL
JURISDICTION OF ANY OF SUCH COURTS IN ANY SUCH ACTION OR PROCEEDING. THE
BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF ANY COMPLAINT, SUMMONS,
NOTICE OR OTHER PROCESS RELATING TO ANY SUCH ACTION OR PROCEEDING BY DELIVERY
THEREOF TO IT BY HAND OR BY MAIL IN THE MANNER PROVIDED FOR IN SECTION 10.9. THE
BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES ANY CLAIM OR DEFENSE IN ANY
SUCH ACTION OR PROCEEDING BASED ON ANY ALLEGED LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS OR ANY SIMILAR BASIS. THE BORROWER SHALL
NOT BE ENTITLED IN ANY SUCH ACTION OR PROCEEDING TO ASSERT ANY DEFENSE GIVEN OR
ALLOWED UNDER THE LAWS OF ANY STATE OTHER THAN THE STATE OF NEW YORK UNLESS SUCH
DEFENSE IS ALSO GIVEN OR ALLOWED BY THE LAWS OF THE STATE OF NEW YORK. NOTHING
IN THIS SECTION 10.14 SHALL AFFECT OR IMPAIR IN ANY MANNER OR TO ANY EXTENT THE
RIGHT OF ANY LENDER TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE BORROWER IN ANY JURISDICTION OR TO SERVE PROCESS IN ANY MANNER PERMITTED BY
LAW.
(c) EACH OF THE BORROWER, THE AGENT, THE COLLATERAL MONITORING AGENT,
THE ISSUING BANK AND THE LENDERS MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED
HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, ANY NOTE OR
ANY OTHER LOAN DOCUMENT EXECUTED OR TO BE EXECUTED IN CONNECTION HEREWITH OR ANY
COURSE OF CONDUCT,
96
COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS OR ACTIONS OF THE AGENT, THE COLLATERAL MONITORING AGENT, THE ISSUING
BANK OR THE LENDERS RELATING TO THE ADMINISTRATION OF THE LOANS OR THE OTHER
OBLIGATIONS, OR ENFORCEMENT OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS, AND
AGREES THAT NO PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER
ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. EXCEPT AS
PROHIBITED BY LAW, THE BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR
RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. THE
BORROWER CERTIFIES THAT NO REPRESENTATIVE, AGENT, OR ATTORNEY OF THE AGENT, THE
COLLATERAL MONITORING AGENT, THE ISSUING BANK OR ANY LENDER HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT THE AGENT, THE COLLATERAL MONITORING AGENT, THE
ISSUING BANK OR ANY LENDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR
THE AGENT, THE COLLATERAL MONITORING AGENT, THE ISSUING BANK AND THE LENDERS TO
ENTER INTO THIS AGREEMENT AND MAKE LOANS, ISSUE L/CS AND MAKE AVAILABLE
STEAMSHIP GUARANTIES, AIRWAY RELEASES AND ACCEPTANCES.
Section 10.15 Limitation on Interest.
All agreements between the Borrower, the Agent, the Collateral Monitoring
Agent, the Issuing Bank and the Lenders are hereby limited so that in no
contingency or event whatsoever, whether by reason of acceleration of the Loans
and the other Obligations of the Borrower to the Agent, the Collateral
Monitoring Agent, the Issuing Bank or the Lenders hereunder or under the Notes
or otherwise, shall the amount paid or agreed to be paid to the Agent, the
Collateral Monitoring Agent, the Issuing Bank or the Lenders for the use or the
forbearance of the Loans or such other Obligations exceed the maximum
permissible under applicable law. As used herein, "applicable law" shall mean
the law in effect as of the date hereof; provided, however, that in the event
there is a change in law which results in a higher permissible rate of interest,
then this Agreement and the Notes shall be governed by such new law as of its
effective date. In this regard, it is expressly agreed that it is the intent of
the parties hereto in the execution, delivery and acceptance of this Agreement
and the Notes to contract in strict compliance with the laws of New York State
from time to time in effect. If, under or from any circumstances whatsoever,
fulfillment of any provision hereof or of any of the other Loan Document at the
time of performance of such provision shall be due, shall involve transcending
the limit of such validity prescribed by applicable law, then the obligation to
be fulfilled shall automatically be reduced to the limits of such validity, and
if under or from circumstances whatsoever the Lenders should ever receive as
interest an amount which would exceed the highest lawful rate, such amount which
would be excessive interest shall be applied to the reduction of the principal
balance evidenced by the Notes and not to the payment of interest. This
provision shall control every
97
other provision of all agreements between Borrower, the Agent, the Collateral
Monitoring Agent, the Issuing Bank and the Lenders.
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 Lenders shall
be entitled to the automatic and absolute lifting of any automatic stay as to
the enforcement of their rights and remedies under this Agreement and the
Security Documents, including specifically, but not limited to the stay imposed
by Section 362 of the United States Bankruptcy Code, as amended, and each of the
Borrower and the Loan Parties hereby consents to the immediate lifting of any
such automatic stay, and will not contest any motion by the Collateral
Monitoring Agent, the Issuing Bank, the Agent or the Lenders to lift such stay.
Section 10.17 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 Lenders, their
respective parents, subsidiaries and affiliates, and the officers, directors,
employees, agents and attorneys of each of them from any and all liability,
actions, claims, causes of action, suits, debts, damages, executions and demands
whatsoever, in law or in equity which the Borrower or the Loan Parties or any of
their respective Subsidiaries, Affiliates, successors or assigns might have,
arising out of, based upon, in connection with or otherwise relating to any
matter whatsoever, including without limitation, the Obligations, from the
beginning of time to the date hereof.
[Signature pages follow.]
98
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
G-III LEATHER FASHIONS, INC.
By: /s/ Wayne S. Miller
-------------------------------------
Senior Vice President
Agreed:
G-III HONG KONG LTD.
By: /s/ Wayne S. Miller
-------------------------------------
Director
G-III APPAREL GROUP, LTD.
By: /s/ Wayne S. Miller
-------------------------------------
Senior Vice President
SIENA LEATHER LTD.
By: /s/ Wayne S. Miller
-------------------------------------
Vice President
GLOBAL INTERNATIONAL TRADING
COMPANY
By: /s/ Wayne S. Miller
-------------------------------------
Vice President
[Signatures continued on next page.]
S-1
INDAWA HOLDING CORP.
By: /s/ Wayne S. Miller
-------------------------------------
Vice President
GLOBAL APPAREL SOURCING, LTD.
By: /s/ Wayne S. Miller
-------------------------------------
Vice President
G-III RETAIL OUTLETS INC.
By: /s/ Wayne S. Miller
-------------------------------------
Vice President
P.T. BALIHIDES
By: /s/ Guiseppe De Marco
-------------------------------------
President Director
WEE BEEZ INTERNATIONAL LIMITED
By: /s/ Wayne S. Miller
-------------------------------------
Director
KOSTROMA LTD.
By: /s/ Wayne S. Miller
-------------------------------------
Director
G-III LICENSE COMPANY, LLC, by G-III Apparel Group, Ltd., as manager
By: /s/ Wayne S. Miller
-------------------------------------
Senior Vice President
[Signatures continued on next page.]
S-2
G-III BRANDS, LTD.
By: /s/ Philip H. Litwinoff
-------------------------------------
Chief Financial Officer
[Signatures continued on next page.]
S-3
COMMITMENT:
$20,828,125.00 FLEET NATIONAL BANK,
(as a percentage: 24.50%) AS AGENT, COLLATERAL MONITORING
AGENT, ISSUING BANK AND AS A LENDER
BY: /S/ STEPHEN LEAVENWORTH
-------------------------------------
VICE PRESIDENT
Lending Office for Prime Rate Loans
and Eurodollar Loans:
1185 Avenue of the Americas
New York, New York 10036
Attention: Stephen Leavenworth,
Vice President
Address for Notices:
1185 Avenue of the Americas
New York, New York 10036
Attention: Stephen Leavenworth,
Vice President
Telex No.: 232369
Answer-Back Code: NBNA UR
Telecopier: (212) 819-4105
Wire Transfer Instructions:
-----------------------------------------
-----------------------------------------
-----------------------------------------
S-4
COMMITMENT:
$17,742,476.61 JPMORGAN CHASE BANK
(as a percentage:
20.87%
BY: /S/ JUAN CARLOS ZAINO
-------------------------------------
JUAN C. ZAINO
Title: VICE PRESIDENT
Lending Office for Prime Rate Loans
and Eurodollar Loans:
1411 Broadway
5th Floor
New York, New York 10018
Attention: Juan Zaino,
Vice President
Address for Notices:
1411 Broadway
5th Floor
New York, New York 10018
Attention: Juan Zaino,
Vice President
Telex No.: 175666
Answer-Back Code: CBC.UT
Telecopier: (212) 391-7118
Wire Transfer Instructions:
-----------------------------------------
-----------------------------------------
-----------------------------------------
S-5
COMMITMENT:
$16,971,065.06 THE CIT GROUP/COMMERCIAL
(as a percentage: SERVICES, INC.
19.97%)
BY: /S/ LISA MURAKAMI
-------------------------------------
VICE PRESIDENT
Lending Office for Prime Rate Loans
and Eurodollar Loans:
1211 Avenue of the Americas
New York, New York 10036
Attention: Lisa Murakami,
Vice President
Address for Notices:
1211 Avenue of the Americas
New York, New York 10036
Attention: Lisa Murakami,
Vice President
Telex No.:
Answer-Back Code:
Telecopier: (212) 382-6814
Wire Transfer Instructions:
-----------------------------------------
-----------------------------------------
-----------------------------------------
S-6
COMMITMENT:
$8,958,333.33 ISRAEL DISCOUNT BANK OF
(as a percentage: NEW YORK
10.54%)
BY: /S/ HOWARD WEINBERG
-------------------------------------
SENIOR VICE PRESIDENT
BY: /S/ MATILDE REYES
-------------------------------------
VICE PRESIDENT
Lending Office for Prime Rate Loans
and Eurodollar Loans:
511 Fifth Avenue
New York, New York 10017
Attention: Matilde Reyes,
Vice President
Address for Notices:
511 Fifth Avenue
New York, New York 10017
Attention: Matilde Reyes,
Vice President
Telex No.:
Answer-Back Code:
Telecopier: (212) 551-8720
Wire Transfer Instructions:
-----------------------------------------
-----------------------------------------
-----------------------------------------
S-7
COMMITMENT:
$13,000,000.00 HSBC BANK USA
(as a percentage:
15.29%)
BY: /S/ MICHAEL BEHUNIAK
-------------------------------------
VICE PRESIDENT
Lending Office for Prime Rate Loans
and Eurodollar Loans:
452 Fifth Avenue
New York, New York 10018
Attention: Michael Behuniak,
First Vice President
Address for Notices:
452 Fifth Avenue
New York, New York 10018
Attention: Michael Behuniak,
First Vice President
Telex No.:
Answer-Back Code:
Telecopier: (212) 525-6905
Wire Transfer Instructions:
-----------------------------------------
-----------------------------------------
-----------------------------------------
S-8
COMMITMENT:
$7,500,000.00 BANK LEUMI USA
(as a percentage:
8.82%)
BY: /S/ JOHN KOENIGSBERG
-------------------------------------
FIRST VICE PRESIDENT
BY: /S/ PHYLLIS ROSENFELD
-------------------------------------
VICE PRESIDENT
Lending Office for Prime Rate Loans
and Eurodollar Loans:
562 Fifth Avenue
New York, New York 10036
Attention: Phyllis Rosenfeld,
Vice President
Address for Notices:
562 Fifth Avenue
New York, New York 10036
Attention: Phyllis Rosenfeld,
Vice President
Telex No.:
Answer-Back Code:
Telecopier: (212) 626-1311
Wire Transfer Instructions:
-----------------------------------------
-----------------------------------------
-----------------------------------------
S-9