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CYGNE DESIGNS, INC.
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AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of September 20, 1996
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THE HONGKONG AND SHANGHAI BANKING
CORPORATION LIMITED,
NEW YORK BRANCH
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TABLE OF CONTENTS
SECTION 1. DEFINITIONS AND ACCOUNTING MATTERS............................. 1
1.01 Certain Defined Terms....................................... 1
1.02 Accounting Terms and Determinations.........................14
SECTION 2. THE CREDIT FACILITIES..........................................14
2.01 Facilities..................................................14
2.02 Letters of Credit...........................................15
2.03 Loans.......................................................16
2.04 Changes of Commitments......................................17
2.05 Certain Fees................................................17
2.06 Credit Offices..............................................17
SECTION 3. PAYMENTS OF PRINCIPAL AND INTEREST.............................17
3.01 Repayments of Reimbursement Obligations and Loans...........17
3.02 Interest....................................................18
3.03 Optional Prepayments of Loans...............................18
3.04 Mandatory Prepayments of Loans..............................18
SECTION 4. PAYMENTS; COMPUTATIONS; ETC....................................19
4.01 Payments....................................................19
4.02 Computations................................................19
4.03 Setoff......................................................19
4.04 Minimum Amounts.............................................20
4.05 Certain Notices.............................................20
SECTION 5. YIELD PROTECTION...............................................20
SECTION 6. CONDITIONS PRECEDENT...........................................22
6.01 Initial Credits.............................................22
6.02 Subsequent Credits..........................................24
SECTION 7. REPRESENTATIONS AND WARRANTIES.................................25
7.01 Corporate Existence.........................................25
7.02 Financial Condition.........................................25
7.03 Litigation..................................................26
7.04 No Breach...................................................26
7.05 Corporate Action............................................26
7.06 Approvals...................................................26
7.07 Use of Credits..............................................26
7.08 ERISA.......................................................27
7.09 Taxes.......................................................27
7.10 Investment Company Act......................................27
7.11 Public Utility Holding Company Act..........................27
7.12 Credit Agreements...........................................27
7.13 Hazardous Materials.........................................27
7.14 Subsidiaries................................................27
SECTION 8. COVENANTS OF THE COMPANY.......................................28
8.01 Financial Statements........................................28
8.02 Litigation..................................................30
8.03 Corporate Existence, Etc....................................30
8.04 Insurance...................................................31
8.05 Prohibition of Fundamental Changes..........................33
8.06 Limitation on Liens.........................................33
8.07 Indebtedness................................................35
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8.08 Investments.................................................35
8.09 Dividend Payments...........................................35
8.10 Leverage Ratio..............................................35
8.11 Tangible Net Worth..........................................35
8.12 Current Ratio...............................................36
8.13 Subordinated Indebtedness...................................36
8.14 Lines of Business...........................................36
8.15 Transactions with Affiliates................................36
8.16 Use of Proceeds.............................................37
8.17 Amendments to Other Documents...............................37
8.18 Audit of Inventory and Accounts Receivable..................37
8.19 Bank Accounts...............................................37
8.20 CAT Transaction.............................................37
8.21 Sale of ATSC Shares.........................................38
8.22 Sale of ▇▇▇▇▇▇▇▇ Property...................................38
SECTION 9. EVENTS OF DEFAULT AND REMEDIES.................................38
9.01 Events of Default...........................................38
9.02 Collateral Account..........................................40
SECTION 10. MISCELLANEOUS.................................................41
10.01 Waiver.....................................................41
10.02 Notices....................................................41
10.03 Expenses, Etc..............................................43
10.04 Amendments, Etc............................................43
10.05 Successors and Assigns; Assignment.........................43
10.06 Assignments and Participations.............................43
10.07 Survival...................................................44
10.08 Captions...................................................44
10.09 Counterparts...............................................44
10.10 Governing Law; Submission to Jurisdiction..................44
10.11 Waiver of Jury Trial.......................................44
10.12 Severability...............................................45
10.13 Effectiveness..............................................45
10.14 Effect of Amendment and Restatement........................45
Signature Page
Schedule 2.01 - Existing Letters of Credit
Schedule 7.12 - Credit Agreements
Schedule 7.14 - Subsidiaries
Schedule 8.07 - Indebtedness
Schedule 8.08 - Investments
Exhibit A-1 - Form of LAI Note
Exhibit A-2 - Form of Revolving Note
Exhibit A-3 - Form of Export Loan Note
Exhibit B - Security Agreement
Exhibit C-1 - ACS Guarantee
Exhibit C-2 - CTW Guarantee
Exhibit C-3 - Knits Guarantee
Exhibit D - Letter of Negative Pledge
Exhibit E - Escrow Agreement
Exhibit F - Assignment of Registration Rights
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Exhibit G - Borrowing Base Certificate
Exhibit H - Form of Opinion of Company Counsel
Exhibit I - Commitment Letter
CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT dated as of September 20, 1996
between CYGNE DESIGNS, INC., a Delaware corporation (the "Company"), and THE
HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED, a foreign banking corporation
acting through its New York Branch (the "Bank"). Unless otherwise defined in
this heading or in the recitals to this Agreement, all terms used in this
heading and in such recitals have the respective meanings set forth in Section
1.01 of this Agreement.
W I T N E S S E T H :
WHEREAS, on the date hereof, there exists a credit facility between the
Bank and the Company, which facility is evidenced by a related credit agreement
(the "Existing Credit Agreement");
WHEREAS, the Company has requested the amendment and modification of
certain provisions of the Existing Credit Agreement; and
WHEREAS, the Company has requested that the Existing Credit Agreement, as
amended prior to the date hereof and as amended and modified hereby, be restated
in its entirety to reflect such amendment and modification;
NOW THEREFORE, the parties hereto agree that the Existing Credit Agreement
is hereby amended and restated in its entirety as follows:
SECTION 1. DEFINITIONS AND ACCOUNTING MATTERS.
1.01 Certain Defined Terms. As used herein, the following terms shall have
the following meanings (all terms defined in this Section 1.01 or in other
provisions of this Agreement in the singular to have the same meanings when used
in the plural and vice versa):
"ACS" shall mean AC Services, Inc., a Delaware corporation.
"ACS Guarantee" shall mean the guarantee agreement substantially in the
form of Exhibit C-1 hereto, pursuant to which ACS shall guarantee the Guaranteed
Obligations referred to therein, as amended, supplemented or otherwise modified
and in effect from time to time.
"Affiliate" shall mean, as to any Person, any other Person which directly
or indirectly controls, or is under common control with, or is controlled by,
such Person and, if such Person is an individual, any member of the immediate
family (including parents, spouse and children) of such individual and any trust
whose principal beneficiary is such individual or one or more members of such
immediate family and any Person who is controlled by any such member or trust.
As used in this definition, "control" (including, with its correlative meanings,
"controlled by" and "under common control with") shall mean possession, directly
or indirectly, of power to direct or cause the direction of management or
policies (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise). Notwithstanding the foregoing,
no individual shall be deemed to be an Affiliate of a corporation solely by
reason of his or her being an officer or director of such corporation and a
Person and its subsidiaries shall not be deemed to be Affiliates of each other.
"AT" shall mean AnnTaylor, Inc., a Delaware corporation.
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"Alternative Credit Office" shall mean any office of the Bank other than
the Bank's New York Office.
"ATSC" shall mean AnnTaylor Stores Corporation, a Delaware corporation.
"ATSC Shares" shall mean all of the validly issued, fully paid and
nonassessable shares of common stock, par value $0.0068 per share, of ATSC
acquired by the Company pursuant to the Stock and Asset Purchase Agreement and
pledged by the Company to the Bank.
"Applicable Credit Office" shall mean, with respect to each type of Credit,
the Bank's New York Office or such other office of the Bank as the Bank may from
time to time designate as the office at which its Credits of such type are to be
extended and maintained.
"Applicable Margin" shall mean 1.00%, provided that, in any event, the
Applicable Margin shall mean 1.75% during any period after the Effective Date if
either (x) there is an excess with respect to the aggregate outstanding
principal amount of Loans as described under Section 3.04(b) hereof, or (y) the
Company defaults in the performance of its obligations under Sections 8.10, 8.11
or 8.12 hereof.
"Available Facility" shall mean, as at any date of determination thereof,
the amount equal to the excess of the Total Facility at said date over the
aggregate sum of (i) the outstanding amount of all Reimbursement Obligations at
said date, (ii) the undrawn face amount of all issued Letters of Credit and
Standby Letters of Credit at said date, and (iii) the outstanding principal
amount of all Loans at said date.
"Bank's New York Office" shall mean the New York City office of the Bank,
presently located at ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
"Basle Accord" shall mean the proposals for a risked-based capital
framework described by the Basle Committee on Banking Regulations and
Supervisory Practices in its paper entitled "International Convergence of
Capital Measurement and Capital Standards" dated July 1988, as modified and
supplemented and in effect from time to time.
"Borrowing Base" shall mean, as at any day of determination thereof, the
sum of (i) 80% of the aggregate amount of Eligible Receivables at said date plus
(ii) 50% of the aggregate amount of Eligible Inventory at said date, which
Eligible Inventory shall in no event exceed $7,000,000 in the aggregate prior to
such fractional reduction, plus (iii) 50% of the aggregate face amount of all
undrawn Letters of Credit at said date plus (iv) 50% of the value of the ATSC
Shares then held by the Bank, the value of which ATSC Shares shall in no event
exceed $12,000,000 in the aggregate subsequent to such fractional reduction plus
(v) any balance in the Collateral Account minus (vi) an amount equal to two
times the average monthly commissions or processing fees (to the extent such are
included in the value of Inventory) paid to bailees, warehousemen, terminal
operators, Processors (as defined in the definition of "Eligible Inventory" set
forth in this Section 1.01) or other third parties with whom the Company has
lodged Inventory during the period of two fiscal quarters most recently ended on
or before such
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date, provided that, the Bank may from time to time in its sole and absolute
discretion modify the respective components of the Borrowing Base set forth
herein.
"Borrowing Base Certificate" shall mean a certificate of the chief
financial officer of the Company, in substantially the form of Exhibit G hereto
and appropriately completed.
"Business Day" shall mean any day on which commercial banks are not
authorized or required to close in New York City.
"Cash Proceeds" shall mean, with respect to any sale, assignment, transfer
or other disposition of any property, the aggregate cash payments received
(directly or indirectly), including any cash payments received by way of
deferred payment of principal pursuant to a note or installment receivable or
otherwise, therefrom, but only as and when received.
"CAT Group" shall mean, collectively, CAT US, Inc., a Delaware corporation,
C.A.T. (Far East) Limited, a Hong Kong corporation, and CAT Italy S.r.l., an
Italian corporation.
"CAT Transaction" shall mean, collectively, the transactions contemplated
by the Stock and Asset Purchase Agreement.
"CAT Transaction Documents" shall mean the Stock and Asset Purchase
Agreement and all other documents to which the Company is party delivered in
connection therewith.
"CAT Transfer Date" shall mean the date on which the transactions
contemplated by the Stock and Asset Purchase Agreement are consummated.
"CGFE" shall mean Cygne Group (F.E.) Limited, a Hong Kong corporation.
"CTW" shall mean Cygne TW, Inc., a Delaware corporation.
"CTW Guarantee" shall mean the guarantee agreement substantially in the
form of Exhibit C-2 hereto, pursuant to which CTW shall guarantee the Guaranteed
Obligations referred to therein, as amended, supplemented or otherwise modified
and in effect from time to time.
"Capital Lease Obligations" shall mean, 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 GAAP (including Statement of Financial Accounting
Standards No. 13 of the Financial Accounting Standards Board) and, for purposes
of this Agreement, the amount of such obligations shall be the capitalized
amount thereof, determined in accordance with GAAP (including such Statement No.
13).
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and any successor thereto.
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"Collateral Account" shall mean the collateral account established by the
Company with the Bank as provided in Section 9.02 hereof.
"Commitment Letter" shall mean that certain commitment letter from the Bank
to the Company dated May 15, 1996, a copy of which is attached hereto as Exhibit
I. The terms of the Commitment Letter are incorporated herein by reference and
such terms and conditions as set forth therein shall survive until the Notes
have been repaid in full and this Agreement has been terminated. In the event of
a conflict between the terms of the Commitment Letter and the terms of this
Agreement, the terms of this Agreement shall prevail.
"Commitments" shall mean, collectively, the Letter of Credit Commitment,
the Revolving Loan Commitment, the LAI Commitment, the Export Loan Commitment
and the Standby Letter of Credit Commitment.
"Consolidated Subsidiary" shall mean, as to any Person, each Subsidiary of
such Person (whether now existing or hereafter created or acquired) the
financial statements of which shall be (or should have been) consolidated with
the financial statements of such Person in accordance with GAAP.
"Credit" shall mean a Loan, a Letter of Credit or a Standby Letter of
Credit.
"Credit Documents" shall mean, collectively, this Agreement, the Notes, the
Letter of Credit Documents, the Standby Letter of Credit Documents and the
Security Documents.
"Default" shall mean an Event of Default or an event which with notice or
lapse of time or both would become an Event of Default.
"Dividend Payment" shall mean dividends (in cash, property or obligations)
on, or other payments or distributions on account of, or the setting apart of
money for a sinking or other analogous fund for, the purchase, redemption,
retirement or other acquisition of, any shares of any class of stock of the
Company, but excluding dividends payable solely in shares of common stock of the
Company.
"Dollars" and "$" shall mean lawful money of the United States of America.
"Effective Date" shall have the meaning assigned to such term in Section
10.13 hereof.
"Eligible Inventory" shall mean, as at any date of determination thereof,
the sum of the following (determined without duplication):
(a) the value (determined at the lower of cost or market in accordance with
GAAP, except that cost shall be determined on a first-in-first-out basis) of all
Inventory owned by (and in the possession or under the control of) the Company
and its Subsidiaries (other than with respect to the CAT Group for purposes
hereof) and located in a jurisdiction in the United States of America as to
which appropriate Uniform Commercial Code financing statements have been filed
naming the Company or such Subsidiary, as "debtor" and the Bank as "secured
party"
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(excluding however, except to the extent that the Bank otherwise agrees with
respect to any specific customer or Processor, any such Inventory which has been
shipped to a customer of the Company or such Subsidiary, including Processors
referred to below, even if on a consignment or "sale or return" basis) and which
is in good condition, meets all standards imposed by any governmental agency or
department or division thereof having regulatory authority over such Inventory,
its use or sale and which is either currently useable or currently saleable in
the normal course of the business of the Company and its Subsidiaries without
any notice to, or consent of, any governmental agency or department or division
thereof, plus
(b) the value (determined as described in clause (a) above) of all
Inventory being processed by third parties on behalf of the Company (any such
third party being herein called a "Processor"), but only to the extent that the
Company shall have filed an appropriate uniform commercial code financing
statement in the respective jurisdiction in which such Inventory is located
naming the respective Processor as "debtor", the Company as "secured party" and
the Bank as the "assignee" and delivered to the Bank an opinion of counsel
satisfactory to the Bank to the effect that to the extent such arrangement
constitutes a consignment or security interest under applicable law, the Company
has a valid perfected first priority security interest in such Inventory and
that, by virtue of the Security Agreement, such security interest has been
validly assigned to the Bank and accordingly the Bank has a valid and perfected
security interest in such Inventory under the Security Agreement.
"Eligible Letter of Credit Transaction" shall mean Reimbursement
Obligations arising in connection with trade transactions relating to the
importation of apparel products.
"Eligible Receivables" shall mean, as at any date of determination thereof,
the aggregate of all Receivables at said date due to the Company, other than the
following (determined without duplication):
(a) any Receivable not payable in Dollars,
(b) any Receivable which, at the date of issuance of the respective invoice
therefor, was payable more than ninety days after shipment of the related
Inventory,
(c) any Receivable due from an Affiliate or a Subsidiary of the Company,
(d) any Receivable due from an account debtor whose principal place of
business is located outside of the United States of America unless the Bank has
agreed in writing that such Receivable shall be treated as "Eligible" or backed
by U.S. Government insurance or a letter of credit issued or confirmed by a bank
organized under the laws of the United States of America or a State thereof and
having capital and surplus in excess of $500,000,000 (so long as such letter of
credit has been delivered to the Bank as additional collateral under the
Security Agreement),
(e) any Receivable due from an account debtor which the Bank has notified
the Company does not have a satisfactory credit standing (as determined in the
sole discretion of the Bank),
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(f) any Receivable which remains unpaid for more than ninety days (measured
from the date of the original issuance of the invoice thereof),
(g) all Receivables of any account debtor if more than 20% of the aggregate
amount of the Receivables of such account debtor have at the time remained
unpaid for more than ninety days (measured from the date of the original
issuance of the invoice thereof),
(h) any Receivable as to which there is any unresolved dispute with the
respective account debtor (but only to the extent of the amount thereof in
dispute),
(i) any Receivable evidenced by an Instrument (as defined in the Security
Agreement) not in the possession of the Bank,
(j) any Receivable representing an obligation for goods sold on
consignment, or approval or on a sale-or-return basis or subject to any other
repurchase or return arrangement, except to the extent the Bank shall have
otherwise agreed in writing, and
(k) any Receivable due from an account debtor if such account debtor is
operating under the protection of any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts.
"Environmental Laws" shall mean any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment including, without limitation, ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" shall mean any (a) corporation or trade or business which
is a member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Company, (b) any entity which is under common
control (within the meaning of Section 414(c) of the Code) with the Company, (c)
any member of an affiliated service group (within the meaning of Section 414(m)
of the Code) in which the Company is also a member, and (d) any other entity
affiliated with the Company under Section 414(o) of the Code.
"Escrow Account" shall mean the escrow account established by the Company
with the Escrow Agent as provided in Section 8.19 hereof.
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"Escrow Agent" shall mean Marine Midland Bank, in its capacity as an escrow
agent, under the Escrow Agreement.
"Escrow Agreement" shall mean the escrow agreement substantially in the
form of Exhibit E hereto, pursuant to which the Bank shall retain the ATSC
Shares, as amended, supplemented or otherwise modified and in effect from time
to time.
"Event of Default" shall have the meaning assigned to such term in Section
9.01 hereof.
"Existing Letter of Credit" shall mean each letter of credit set forth in
Schedule 2.01 hereto.
"Existing Standby Letter of Credit" shall mean each standby letter of
credit set forth in Schedule 2.01 hereto.
"Export Loan" shall have the meaning assigned to that term in Section
2.01(d) hereof.
"Export Loan Commitment" shall mean the obligation of the Bank to make
Export Loans up to an aggregate principal amount for all Export Loans at any one
time outstanding up to $3,000,000 (as the same shall be reduced and terminated
from time to time as provided for by Section 2.04 hereof).
"Export Loan Note" shall mean the promissory note provided for by Section
2.03(d) hereof, substantially in the form of Exhibit A-3 hereto.
"Federal Funds Rate" shall mean, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) 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 by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day, provided that (i) if the day for which such rate is to be determined is not
a Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (ii) if such rate is not so published for any day,
the Federal Funds Rate for such day shall be the average rate charged to the
Bank on such day on such transactions.
"GAAP" shall mean generally accepted accounting principles as in effect at
the time of application to the provisions hereof.
"GJM" shall mean H.K.N. (H.K.) Purchasing Limited (formerly known as G.J.M.
(H.K.) Purchasing Limited), a Hong Kong corporation.
"Guarantee" shall mean a guarantee, an endorsement, a contingent agreement
to purchase or to furnish funds for the payment or maintenance of, or otherwise
to be or become contingently liable under or with respect to, the Indebtedness,
other obligations, net worth,
CREDIT AGREEMENT
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working capital or earnings of any Person, or a guarantee of the payment of
dividends or other distributions upon the stock of any corporation, or an
agreement to purchase, sell or lease (as lessee or lessor) property, products,
materials, supplies or services primarily for the purpose of enabling a debtor
to make payment of his, her or its obligations or an agreement to assure a
creditor against loss, and including without limitation, causing a bank to open
a letter of credit for the benefit of another Person, but excluding endorsements
for collection or deposit in the ordinary course of business. The terms
"Guarantee" and "Guaranteed" used as a verb shall have a correlative meaning.
"Inactive Subsidiary" shall mean on any date a Subsidiary having assets on
such date with a book value of less than $10,000 and no operating business.
"Indebtedness" shall mean, as to any Person: (a) indebtedness created,
issued or incurred by such Person for borrowed money (whether by loan or the
issuance and sale of debt securities); (b) obligations of such Person to pay the
deferred purchase or acquisition price of property or services, other than trade
accounts payable (other than for borrowed money) arising, and accrued expenses
incurred, in the ordinary course of business so long as such trade accounts
payable are payable within 180 days of the date the respective goods are
delivered or respective services rendered; (c) Indebtedness of others secured by
a Lien on the property of such Person, whether or not the respective
indebtedness so secured has been assumed by such Person; (d) obligations of such
Person in respect of letters of credit or similar instruments issued or accepted
by banks and other financial institutions for the account of such Person; (e)
Capital Lease Obligations of such Person; and (f) Indebtedness of others
guaranteed by such Person.
"Interest Rate" shall mean the Prime Rate plus the Applicable Margin.
"Inventory" shall mean apparel and related products, and other readily
marketable materials of a type purchased, produced, manufactured or consumed by
the Company and its Subsidiaries in the ordinary course of business as presently
conducted.
"Investment" in any Person shall mean: (a) the acquisition (whether for
cash, property, services or securities or otherwise) of capital stock, bonds,
notes, debentures, partnership or other ownership interests or other securities
of such Person; and (b) any deposit with, or advance, loan or other extension of
credit to, such Person (other than any such advance, loan or extension of credit
having a term not exceeding 90 days representing the purchase price of inventory
or supplies purchased in the ordinary course of business) or guarantee of, or
other contingent obligation with respect to, Indebtedness or other liability of
such Person and (without duplication) any amount committed to be advanced, lent
or extended to such Person.
"Knits" shall mean Cygne Knits Limited, a Delaware corporation.
"Knits Guarantee" shall mean the guarantee agreement substantially in the
form of Exhibit C-3 hereto, pursuant to which Knits shall guarantee the
Guaranteed Obligations referred to therein, as amended, supplemented or
otherwise modified and in effect from time to time.
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"LAI Commitment" shall mean the obligation of the Bank to make LAI Loans up
to an aggregate principal amount for all LAI Loans at any one time outstanding
up to $17,500,000 (as the same shall be reduced and terminated from time to time
as provided for by Section 2.04 hereof).
"LAI Loan" shall have the meaning assigned to that term in Section 2.01(b)
hereof.
"LAI Note" shall mean the promissory note provided for by Section 2.03(b)
hereof, substantially in the form of Exhibit A-1 hereto.
"Letter of Credit" shall have the meaning assigned to such term in Section
2.01(a) hereof and include each Existing Letter of Credit.
"Letter of Credit Commitment" shall mean, respectively and without
duplication, the obligation of the Bank to issue Letters of Credit up to an
aggregate face amount for all Letters of Credit at any one time outstanding up
to (i) $17,500,000 for the period commencing on the Effective Date and ending on
October 30, 1996; (ii) $12,500,000 for the period commencing on October 31, 1996
and ending on November 29, 1996; (iv) $7,500,000 for the period commencing on
November 30, 1996 and ending on December 30, 1996; and (v) $5,000,000 for the
period commencing an December 31, 1996 and ending on the Termination Date (as
the same shall be reduced and terminated from time to time as provided for by
Section 2.04 hereof).
"Letter of Credit Documents" shall mean, with respect to any Letter of
Credit, collectively, such Letter of Credit, any amendments thereto, any
documents delivered thereunder, any application therefor, and any other
agreements, instruments, guarantees or other documents (whether general in
application or applicable only to such Letter of Credit) governing or providing
for (i) the rights and obligations of the parties concerned or at risk or (ii)
any collateral security for such obligations.
"Letter of Negative Pledge" shall mean the agreement substantially in the
form of Exhibit D hereto, pursuant to which each of the parties thereto shall
agree to the effect set forth therein, as amended, supplemented or otherwise
modified and in effect from time to time.
"Leverage Ratio" shall mean, at any time, the ratio of Total Liabilities
(less Subordinated Indebtedness) to Tangible Net Worth (plus Subordinated
Indebtedness) at such time.
"Lien" shall mean, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For purposes of this Agreement, the Company shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset.
"Loan" shall mean an LAI Loan, a Revolving Loan and an Export Loan.
CREDIT AGREEMENT
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"Lock-Box Account" shall mean the lock-box account established by the
Company with the Bank as provided in Section 8.19 hereof.
"Margin Stock" shall mean margin stock within the meaning of Regulations U
and X.
"Material Adverse Effect" shall mean a material adverse effect upon (a) the
financial conditions, operations, business or prospects of the Company and its
Consolidated Subsidiaries taken as a whole, (b) the ability of the Company to
repay any Loan, Reimbursement Obligation or any other amount payable by the
Company hereunder, or (c) the rights and remedies of the Bank under this
Agreement and the other Credit Documents.
"Maturity Date" shall have the meaning assigned to that term in Section
2.01(f) hereof.
"Multiemployer Plan" shall mean a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been made by the Company or
any ERISA Affiliate and which is covered by Title IV of ERISA.
"Note" and "Notes" shall have the respective meanings assigned to such
terms in Section 2.03(d) hereof.
"Obligor" shall mean each of the Company, ACS, CTW and Knits.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Penalty Rate" shall mean, in respect of any principal of any Loan, any
Reimbursement Obligation or any other amount payable by the Company under this
Agreement or any Note that is not paid when due (whether at stated maturity, by
acceleration or otherwise), a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid in
full equal to 2% above the interest rate otherwise in effect.
"Permitted Investments" of any Person shall mean: (a) direct obligations of
the United States of America, or of any agency thereof, or obligations
guaranteed as to principal and interest by the United States of America, or of
any agency thereof, in any case maturing not more than 90 days from the date of
acquisition thereof by such Person; (b) certificates of deposit issued by any
bank or trust company organized under the laws of the United States of America
(or any state thereof) and having capital, surplus and undivided profits of at
least $500,000,000, maturing not more than 90 days from the date of acquisition
thereof by such Person; and (c) commercial paper rated A-1 or better or P-1 by
Standard & Poor's Corporation or ▇▇▇▇▇'▇ Investors Services, Inc., respectively,
maturing not more than 90 days from the date of acquisition thereof by such
Person.
CREDIT AGREEMENT
- 11 -
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated organization or
government (or any agency, instrumentality or political subdivision thereof).
"Plan" shall mean an employee benefit or other plan established or
maintained by the Company or any ERISA Affiliate and which is covered by Title
IV of ERISA, other than a Multiemployer Plan.
"Prime Rate" shall mean the rate of interest from time to time announced by
Marine Midland Bank in New York City as its prime commercial lending rate. Each
change in any interest rate provided for herein based upon the Prime Rate
resulting from a change in the Prime Rate shall take effect at the time of such
change in the Prime Rate.
"Property" shall mean the land and improvements owned by T-Wear and located
in ▇▇▇▇▇▇▇▇, Italy, which land and improvements are to be sold, assigned and
transferred in accordance with Section 8.22 hereof.
"Receivables" shall mean, as at any date of determination thereof, the
unpaid portion of the obligation owed to the Company, as stated on the
respective invoice, of a customer of the Company, CTW or Knits in respect of
Inventory purchased and shipped, net of any credits, rebates or offsets owed to
the respective customer and also net of any commissions payable to third parties
(and for purposes hereof, a credit or rebate paid by check or draft of the
Company shall be deemed to be outstanding until such check or draft shall have
been debited to the respective account of the Company on which such check or
draft was drawn).
"Regulations D, G, T, U and X" shall mean, respectively, Regulations D, G,
T, U and X of the Board of Governors of the Federal Reserve System (or any
successor), as the same may be amended or supplemented from time to time.
"Regulatory Change" shall mean any change after the date of this Agreement
in United States Federal, state or foreign law or regulations or the adoption or
making after such date of any interpretation, directive or request applying to a
class of banks including the Bank of or under any United States Federal, state
or foreign law 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.
"Reimbursement Obligation" shall mean at any time, the obligation of the
Company to reimburse the Bank on demand for amounts theretofore paid by the Bank
pursuant to a drawing under a Letter of Credit or Standby Letter of Credit.
"Revolving Loan Commitment" shall mean the obligation of the Bank to make
Revolving Loans up to an aggregate principal amount for all Revolving Loans at
any one time outstanding up to $10,000,000 (as the same shall be reduced and
terminated from time to time as provided for by Section 2.04 hereof).
CREDIT AGREEMENT
- 12 -
"Revolving Loans" shall have the meaning assigned to that term in Section
2.01(c) hereof.
"Revolving Note" shall mean the promissory note provided for by Section
2.03(c) hereof, substantially in the form of Exhibit A-2 hereto.
"Security Documents" shall mean, collectively, the ACS Guarantee, the CTW
Guarantee, the Knits Guarantee, the Letter of Negative Pledge, the Escrow
Agreement, the Security Agreement and all Uniform Commercial Code financing
statements required by this Agreement and the Security Agreement to be filed
with respect to the security interests in personal property created pursuant to
the Security Agreement.
"Security Agreement" shall mean the amended and restated security agreement
substantially in the form of Exhibit B hereto, pursuant to which the Company
shall provide collateral security for the Secured Obligations referred to
therein, as amended, supplemented or otherwise modified and in effect from time
to time.
"Standby Letter of Credit" shall have the meaning assigned to such term in
Section 2.01(e) hereof and include each Existing Standby Letter of Credit.
"Standby Letter of Credit Commitment" shall mean the obligation of the Bank
to issue Standby Letters of Credit up to an aggregate face amount for all
Standby Letters of Credit at any one time outstanding up to $2,000,000 (as the
same shall be reduced and terminated from time to time as provided for by
Section 2.04 hereof).
"Standby Letter of Credit Documents" shall mean, with respect to any
Standby Letter of Credit, collectively, such Standby Letter of Credit, any
amendments thereto, any documents delivered thereunder, any application
therefor, and any other agreements, instruments, guarantees or other documents
(whether general in application or applicable only to such Standby Letter of
Credit) governing or providing for (i) the rights and obligations of the parties
concerned or at risk or (ii) any collateral security for such obligations.
"Stock and Asset Purchase Agreement" shall mean that certain Stock and
Asset Purchase Agreement dated as of June 7, 1996 by and between CDI, CGFE, ATSC
and AT, pursuant to which AT shall acquire from the Company and CGFE the
business relating to the CAT Group and other assets referred to therein, as
amended, supplemented or otherwise modified and in effect from time to time.
"Stockholders Agreement" shall mean that certain Stockholders Agreement
dated as of September 20, 1996 by and between ATSC, the Company and CGFE,
delivered in connection with the Stock and Asset Purchase Agreement, pursuant to
which the Company and ATSC shall agree to regulate their relationship with
respect to the ATSC Shares, as amended, supplemented or otherwise modified and
in effect from time to time.
"Subordinated Indebtedness" shall mean, collectively, Indebtedness for
which the Company and/or its Consolidated Subsidiaries are directly and
primarily liable and which is
CREDIT AGREEMENT
- 13 -
subordinated to the obligation of the Company to pay principal of and interest
on the Loans and any Note, any Reimbursement Obligation and any other amount
payable hereunder on terms, and which contains other terms (including interest,
amortization and financial and other covenants), in form and substance
satisfactory to the Bank.
"Subsidiary" shall mean any corporation of which at least a majority of the
outstanding shares of stock having by the terms thereof ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of
whether or not at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
the Company.
"T-Wear" shall mean T. Wear Company S.r.l., an Italian corporation.
"Tangible Net Worth" shall mean, as at any date of determination thereof,
the sum of the following for the Company and its Consolidated Subsidiaries
(other than with respect to the CAT Group for purposes hereof) determined
(without duplication) in accordance with GAAP:
(a) the amount of the capital stock account, plus
(b) the amount of paid-in surplus and retained earnings (or, in the
case of a surplus or retained earnings deficit, minus the amount of such
deficit), minus
(c) the sum of the following: cost of treasury shares and the book
value of all assets of the Company and its Consolidated Subsidiaries which
should be classified as intangibles (without duplication of deductions in
respect of items already deducted in arriving at surplus and retained
earnings) but in any event including good-will, research and development
costs, trade-marks, trade names, copyrights, patents and franchises,
unamortized debt discount and expense, and all reserves.
"Termination Date" shall mean January 31, 1997.
"Total Facility" shall mean, respectively and without duplication, the
aggregate face or principal amount, as to all Credits hereunder, of (i)
$17,500,000 for the period commencing on the Effective Date and ending on
October 30, 1996; (ii) $12,500,000 for the period commencing on October 31, 1996
and ending on November 29, 1996; (iv) $7,500,000 for the period commencing on
November 30, 1996 and ending on December 30, 1996; and (v) $5,000,000 for the
period commencing on December 31, 1996 and ending on the Termination Date.
"Total Liabilities" shall mean, as at any date of determination thereof,
the sum, for the Company and its Consolidated Subsidiaries (other than with
respect to the CAT Group for purposes hereof) determined (without duplication)
in accordance with GAAP, of all Indebtedness of the Company and its Consolidated
Subsidiaries and all other liabilities of the Company and its Consolidated
Subsidiaries which should be classified as liabilities on a balance sheet of the
Company and its Consolidated Subsidiaries prepared in accordance with GAAP and
in any event
CREDIT AGREEMENT
- 14 -
including all reserves (other than general contingency reserves) and all
deferred taxes and other deferred items.
1.02 Accounting Terms and Determinations. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to the Bank hereunder shall be prepared, in accordance
with GAAP. To enable the ready and consistent determination of compliance with
the covenants set forth in Section 8 hereof, the Company will not change the
last day of its fiscal year from the Saturday nearest January 31.
SECTION 2. THE CREDIT FACILITIES.
2.01 Facilities. Subject to the terms and conditions of this Agreement:
(a) The Bank agrees to issue from time to time for the account of the
Company sight letters of credit (each, a "Letter of Credit") in support of
Eligible Letter of Credit Transactions during the period commencing on the
Effective Date and ending on the day falling 30 days before the Termination
Date in an aggregate undrawn face amount (as to all Letters of Credit
issued for account of the Company) not exceeding at any one time
outstanding an amount equal to the excess of the amount of the Letter of
Credit Commitment, as then in effect, over the aggregate outstanding amount
of the Reimbursement Obligations; provided that (i) the Letter of Credit
Commitment shall not at any time exceed the Available Facility, and (ii)
the stated expiry date of each Letter of Credit shall be a Business Day
falling no more than 60 days after the related issuance date and on or
before the Termination Date.
(b) The Bank agrees to make a loan or loans (each, an "LAI Loan") to
the Company during the period commencing on the Effective Date and ending
on the day falling 30 days before the Termination Date to finance
Reimbursement Obligations owed hereunder, in an aggregate principal amount
(as to all LAI Loans) not exceeding at any one time outstanding the LAI
Commitment; provided that the LAI Commitment shall not at any time exceed
the Available Facility.
(c) The Bank agrees to make a loan or loans (each, a "Revolving Loan")
to the Company during the period commencing on the Effective Date and
ending on the day falling 30 days before the Termination Date to finance
general operating expenses, fabric purchases and charges relating to
freight, duty and insurance, in an aggregate principal amount (as to all
Revolving Loans) not exceeding at any one time outstanding the Revolving
Loan Commitment; provided that the Revolving Loan Commitment shall not at
any time exceed the Available Facility.
(d) The Bank agrees to make a loan or loans (each, an "Export Loan")
to the Company during the period commencing on the Effective Date and
ending on the day falling 30 days before the Termination Date, in an
aggregate principal amount (as to all Export Loans) not exceeding at any
one time outstanding the Export Loan Commitment;
CREDIT AGREEMENT
- 15 -
provided that (i) the Export Loan Commitment shall not at any time exceed
the Available Facility, and (ii) on the date of each Export Loan, the
principal amount of such Export Loan shall not exceed 45% of the face
amount value of the underlying letter of credit.
(e) The Bank agrees to issue from time to time for the account of the
Company standby letters of credit (each, a "Standby Letter of Credit") in
support of customs guarantees and related matters during the period
commencing on the Effective Date and ending on the day falling 30 days
before the Termination Date in an aggregate undrawn face amount (as to all
Standby Letters of Credit issued for account of the Company) not exceeding
at any one time outstanding an amount equal to the excess of the amount of
the Standby Letter of Credit Commitment over the aggregate outstanding
amount of the Reimbursement Obligations relating to Standby Letters of
Credit; provided that (i) the Standby Letter of Credit Commitment shall not
at any time exceed the Available Facility, and (ii) the stated expiry date
of each Standby Letter of Credit shall be a Business Day falling no more
than one year after the related issuance date and on or before the
Termination Date.
(f) Each Loan shall mature on the date (the "Maturity Date") falling
the following respective number of days after the funds in connection with
such Loan are made available as provided in Section 2.03 hereof (unless
otherwise indicated): (i) in the case of each LAI Loan, 60 days; (ii) in
the case of each Revolving Loan, 60 days; and (iii) in the case of each
Export Loan, 90 days; provided, the Maturity Date of each Loan shall in any
event fall on or before the Termination Date. Subject to the terms of this
Agreement, the Company may borrow, prepay and reborrow the amount of the
Letter of Credit Commitment, the LAI Commitment, the Revolving Loan
Commitment, the Export Loan Commitment and the Standby Letter of Credit
Commitment.
(g) During the period commencing on the Termination Date, the Company
shall secure any Credit, either then outstanding or to be extended
hereunder, by providing to the Bank, in an amount equal to the face or
principal amount of the related Credit, either (i) a deposit to the
Collateral Account, evidenced by a wire transfer of Federal or other
immediately available funds, or (ii) a standby letter of credit issued on
behalf of the Company in favor of the Bank by a financial institution
acceptable to the Bank in its sole and absolute discretion.
2.02 Letters of Credit.
(a) The Company shall give the Bank notice of each Letter of Credit to
be issued for account of the Company as provided in Section 4.05 hereof
(unless such Letter of Credit is opened through the Bank's Hexagon System).
(b) The issuance by the Bank of each Letter of Credit shall, in
addition to the conditions precedent set forth in Sections 6.01 and 6.02
hereof, be subject to the conditions that such Letter of Credit be in such
form, contain such terms and support such transactions or obligations
(which shall be Eligible Letter of Credit Transactions with respect to
which the Company shall be the primary obligor) as shall be reasonably
CREDIT AGREEMENT
- 16 -
satisfactory to the Bank consistent with its then current practices and
procedures with respect to similar letters of credit and that the
Company shall have executed and delivered such other instruments and
agreements relating to such Letter of Credit as the Bank shall have
reasonably requested consistent with such practices and procedures.
(c) Without duplication of Section 10.03 hereof, the Company hereby
indemnifies and holds harmless the Bank from and against any and all
claims, damages, losses, liabilities, costs or expenses which the Bank may
incur (or which may be claimed against the Bank) by any Person by reason of
or in connection with the issuance or transfer of or payment or failure to
pay under any Letter of Credit; provided that the Company shall not be
required to indemnify the Bank for any claims, damages, losses,
liabilities, costs or expenses to the extent, but only to the extent, (i)
caused by the willful misconduct or gross negligence of the Bank in
determining whether a request presented under any Letter of Credit complied
with the terms of such Letter of Credit, or (ii) caused by the Bank's
failure to pay under any Letter of Credit after the presentation to it of a
request strictly complying with the terms and conditions of such Letter of
Credit, unless such payment is prohibited by any law, regulation, court
order or decree.
2.03 Loans.
(a) The Company shall give the Bank notice of each Loan to be made to
the Company as provided in Section 4.05 hereof. On the date specified for
the making of each Loan, the Bank shall make available the amount of such
Loan to the Company by depositing the same, in immediately available funds,
in an account of the Company maintained with the Bank's New York Office.
(b) The LAI Loans shall be evidenced by a single promissory note of
the Company in substantially the form of Exhibit A-1 hereto (the "LAI
Note"), payable to the Bank in a principal amount equal to the amount of
the LAI Commitment as originally in effect or such lesser amount as may
then be applicable.
(c) The Revolving Loans shall be evidenced by a single promissory note
of the Company in substantially the form of Exhibit A-2 hereto (the
"Revolving Note"), payable to the Bank in a principal amount equal to the
amount of the Revolving Loan Commitment as originally in effect or such
lesser amount as may then be applicable.
(d) The Export Loans shall be evidenced by a single promissory note of
the Company in substantially the form of Exhibit A-3 hereto (the "Export
Loan Note"), payable to the Bank in a principal amount equal to the amount
of the Export Loan Commitment as originally in effect or such lesser amount
as may then be applicable (collectively, the LAI Note, the Revolving Note
and the Export Loan Note are herein referred to as the "Notes" and,
individually, as a "Note").
(e) Each Note shall be dated the date of the delivery of such Note to
the Bank. The date, amount and interest rate of the Loans made by the Bank
to the Company, and each payment made on account of the principal thereof,
shall be recorded by the Bank on
CREDIT AGREEMENT
- 17 -
its books; provided that the failure by the Bank so to record such Loans
shall not affect the obligations of the Company hereunder or under any
Note.
2.04 Changes of Commitments.
(a) The Letter of Credit Commitment, the LAI Commitment and the
Revolving Loan Commitment shall each automatically (i) to the extent any
such Commitment exceeds the Total Facility, reduce to the maximum amount of
the Total Facility, and (ii) terminate on the Termination Date. The Export
Loan Commitment and the Standby Letter of Credit Commitment shall each
automatically terminate on the Termination Date.
(b) Commitments once reduced or terminated in accordance with this
Section 2.04 may not be reinstated.
2.05 Certain Fees.
(a) The Company has paid to the Bank a commitment fee equal to 0.50%
of the aggregate amount of the Commitments (without duplication) upon
execution of the Commitment Letter.
(b) The Company shall pay to the Bank from time to time at then
prevailing rates unless otherwise indicated, in respect of each Letter of
Credit issued for account of the Company, all charges, costs and expenses
customarily charged by the Bank in like circumstances with respect to
similar letters of credit.
(c) The Company shall have paid to the Bank from time to time at then
prevailing rates unless otherwise indicated, in respect of each Standby
Letter of Credit issued for account of the Company, all charges, costs and
expenses customarily charged by the Bank in like circumstances with respect
to similar letters of credit including, on the date of issuance of such
Standby Letter of Credit, a non-refundable issuance fee equal to 0.125% per
month of the face amount thereof for the period from the date of issuance
thereof until the stated expiration date thereof.
2.06 Credit Offices. The Credits shall be extended and maintained at the
Bank's New York Office or an Alternative Credit Office in the United States of
America.
SECTION 3. PAYMENTS OF PRINCIPAL AND INTEREST.
3.01 Repayments of Reimbursement Obligations and Loans.
(a) The Company shall pay to the Bank the amount paid by the Bank in
respect of any drawing under any Letter of Credit issued for account of the
Company, such payment to be made by the Company on demand by the Bank (or,
in the absence of demand, on the same Business Day of such payment by the
Bank).
CREDIT AGREEMENT
- 18 -
(b) The Company shall pay to the Bank the outstanding principal amount
of each Loan on the respective Maturity Date.
3.02 Interest.
(a) The Company will pay to the Bank interest on the unpaid principal
amount of each Loan for the period from and including the date of such Loan
to but excluding the date such Loan shall be paid in full at the Interest
Rate (as in effect from time to time).
(b) Notwithstanding the provisions of clause (a) above, the Company
will pay to the Bank interest at the Penalty Rate on any principal of any
Loan, on any Reimbursement Obligation owing to the Bank and (to the fullest
extent permitted by law) on any other amount payable hereunder or under any
Note, which shall not be paid in full when due (whether at stated maturity,
by acceleration or otherwise), for the period from and including the due
date thereof to but excluding the date the same is paid in full.
(c) Accrued interest on each Loan shall, subject to the following
sentence, be payable on the first Business Day of each month such Loan
remains outstanding, and upon the payment or prepayment thereof. Interest
payable at the Penalty Rate shall be payable in arrears on the first
Business Day of each month and from time to time on demand of the Bank.
(d) Promptly after the determination of any interest rate provided for
herein or any change therein, the Bank shall give notice thereof to the
Company.
3.03 Optional Prepayments of Loans. Subject to Section 4.04 hereof, the
Company shall have the right to prepay the Loans, at any time from time to time,
provided that the Company shall give the Bank notice of each such prepayment, as
provided in Section 4.05 hereof.
3.04 Mandatory Prepayments of Loans.
(a) If the outstanding principal amount of any Loan exceeds on any
date the applicable Commitment on such date (as each such Commitment is
reduced or terminated in accordance with Section 2.04 hereof), the Company
shall cause the applicable Loans to be prepaid on such date in an aggregate
principal amount at least equal to such excess.
(b) If the outstanding principal amount of the Loans exceeds on any
date the amount equal to (i) the Borrowing Base at said date minus (ii) the
amount equal to the sum of (x) the aggregate undrawn face amount of all
issued Letters of Credit and Standby Letters of Credit at said date, and
(y) the outstanding principal amount of Reimbursement Obligations at said
date, the Company shall cause the Loans to be prepaid on such date in an
aggregate principal amount at least equal to such excess.
CREDIT AGREEMENT
- 19 -
(c) Upon the consummation of the CAT Transaction, the Company shall
prepay the Loans or cause the Loans to be prepaid, as the case may be,
immediately upon the receipt of Cash Proceeds therefrom in an aggregate
principal amount equal to such Cash Proceeds, provided that, such
prepayment by the Company of the Loans in connection with the CAT
Transaction shall in no event be for an aggregate principal amount less
than $9,400,000.
SECTION 4. PAYMENTS; COMPUTATIONS; ETC.
4.01 Payments.
(a) Except to the extent otherwise provided herein, all payments of
principal, interest and other amounts to be made by each Obligor under this
Agreement and any Note shall be made in Dollars, in immediately available
funds, without deduction, set-off or counterclaim, to the Bank's New York
Office, not later than 11:00 a.m. New York time on the date on which such
payment shall become due (each such payment made after such time on such
due date to be deemed to have been made on the next succeeding Business
Day).
(b) The Bank may (but shall not be obligated to) debit the amount of
any such payment which is not made by such time to any ordinary deposit
account of the Company with the Bank.
(c) Each Obligor shall, at the time of making each payment under this
Agreement or any Note, specify to the Bank the Loan, Reimbursement
Obligation or other amounts payable by such Obligor hereunder to which such
payment is to be applied (and in the event that it fails to so specify, or
if an Event of Default has occurred and is continuing, the Bank may apply
such payment in such manner as it may determine to be appropriate).
(d) If the due date of any payment under this Agreement or any Note
would otherwise fall on a day which is not a Business Day and such date is
extended to the next succeeding Business Day in accordance with the terms
and conditions hereof, interest shall be payable on any payment amount so
extended for the period of such extension.
4.02 Computations. Interest shall be computed on the basis of a year of 360
days and actual days elapsed (including the first day but excluding the last
day) occurring in the period for which payable.
4.03 Setoff. Each Obligor agrees that, in addition to (and without
limitation of) any right of set-off, bankers' lien or counterclaim the Bank may
otherwise have, the Bank shall be entitled, at its option, to offset balances
held by it for account of such Obligor at any of its offices, in Dollars or in
any other currency, against any principal of or interest on any of the Loans,
any Reimbursement Obligation or any other amount payable to the Bank hereunder
for which such Obligor is liable hereunder which is not paid when due, in which
case it shall
CREDIT AGREEMENT
- 20 -
promptly notify such Obligor thereof, provided that the Bank's failure to give
such notice shall not affect the validity thereof.
4.04 Minimum Amounts. Each borrowing and prepayment of principal of Loans
shall be in an amount at least equal to $20,000.
4.05 Certain Notices. Notices to the Bank of borrowings and prepayments of
Loans and of issuances and extensions of Letters of Credit shall be irrevocable
and shall be effective only if received by the Bank not later than 11:00 a.m.
New York time on the number of Business Days prior to the date of the relevant
borrowing, prepayment, issuance or extension specified below:
Number of
Business
Notice Days Prior
------ ----------
Borrowing or prepayment of Loans .................. 1
Issuance or extension of Letters of Credit ........ 3
Each such notice of borrowing or prepayment shall specify the amount (subject to
Section 4.04 hereof) and date (which shall be a Business Day) such Loan is to be
borrowed or prepaid. Each such notice of issuance or extension shall specify the
date (which shall be a Business Day) such Letter of Credit is to be issued, the
amount thereof, the beneficiary thereof, the expiry date thereof (which shall be
a Business Day) and, in reasonable detail, the other terms of such Letter of
Credit and the nature of the transaction (which shall be an Eligible Letter of
Credit Transaction) to be supported thereby. Each such request for an extension
of a Letter of Credit shall specify the new expiry date thereof (which shall be
a Business Day).
SECTION 5. YIELD PROTECTION.
(a) The Company shall pay directly to the Bank from time to time such
amounts as the Bank may reasonably determine to be necessary to compensate
it for any costs which the Bank determines are attributable to its making
or maintaining any Credit or its obligation to make any Credit hereunder,
or any reduction in any amount receivable by the Bank hereunder in respect
of any such Credit or obligation (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 the
Bank under this Agreement or its Notes in respect of any such Credit
(other than taxes imposed on or measured by the overall net income of
the Bank or its Applicable
CREDIT AGREEMENT
- 21 -
Credit Office for any of such Credits by the jurisdiction in which
such Applicable Credit Office is located); or
(ii) imposes or modifies any reserve, special deposit or similar
requirements relating to any extensions of credit or other assets of,
or any deposits with or other liabilities of, the Bank, or any
Commitment of the Bank available for the Company; or
(iii) imposes any other condition affecting this Agreement or any
Note of the Bank (or any of such extensions of credit or liabilities)
or any Commitment of the Bank available for the Company.
(b) Without limiting the effect of the foregoing provisions of this
Section 5 (but without duplication), the Company shall pay to the Bank from
time to time on request such amounts as the Bank may reasonably determine
to be necessary to compensate the Bank for any costs which it determines
are attributable to the maintenance by the Bank (or any Applicable Credit
Office), pursuant to any law or regulation or any interpretation, directive
or request (whether or not having the force of law) of any court or
governmental or monetary authority following any Regulatory Change, or
pursuant to any risk-based capital guideline or other requirement (whether
or not having the force of law and whether or not the failure to comply
therewith would be unlawful) heretofore or hereafter issued by any
government or governmental or supervisory authority, including any
implementation at the Federal level of the Basle Accord (including, without
limitation, the Final Risk-Based Capital Guidelines of the Board of
Governors of the Federal Reserve System (12 CFR Part 208, Appendix A; ▇▇
▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇) and the Final Risk-Based Capital Guidelines of
the Office of the Comptroller of the Currency (12 CFR Part 3, Appendix A),
of capital in respect of any Commitment of the Bank available for the
Company, any Loan made by the Bank to the Company, any Letter of Credit or
Standby Letter of Credit issued for account of the Company (such
compensation to include, without limitation, an amount equal to any
reduction of the rate of return on assets or equity of the Bank (or any
Applicable Credit Office) to a level below that which the Bank (or any
Applicable Credit Office) could have achieved but for such law, regulation,
interpretation, directive or request).
(c) The Bank will notify the Company of any event occurring after the
date of this Agreement that will entitle the Bank to compensation under
paragraph (a) or (b) of this Section 5 as promptly as practicable, but in
any event within 45 days, after the Bank obtains actual knowledge thereof;
provided, however, that if the Bank fails to give such notice within 45
days after it obtains actual knowledge of such an event, the Bank shall,
with respect to compensation payable pursuant to this Section 5 in respect
of any costs resulting from such event, only be entitled to payment under
this Section 5 for costs incurred from and after the date 45 days prior to
the date that the Bank does give such notice. The Bank will furnish to the
Company a certificate setting forth the basis and amount of each request by
the Bank for compensation under paragraph (a) or (b) of this Section 5.
Determinations and allocations by the Bank for purposes of this Section 5
of the effect of any Regulatory Change pursuant to this Section 5, or of
the effect of capital
CREDIT AGREEMENT
- 22 -
maintained pursuant to the preceding paragraph, on its costs or rate of
return of maintaining Credits or its obligation to make Credits, or on
amounts receivable by it in respect of Credits, and of the amounts required
to compensate the Bank under this Section 5, shall be conclusive, provided
that such determinations and allocations are made on a reasonable basis.
SECTION 6. CONDITIONS PRECEDENT.
6.01 Initial Credits. The obligations of the Bank to extend Credits
hereunder are subject to the conditions precedent that all matters relating to
this Agreement and the transactions contemplated hereby shall be reasonably
satisfactory to the Bank and its counsel, and that:
(a) The Bank shall have received the following, each of which shall be
in form and substance satisfactory to the Bank:
(i) The LAI Note, the Revolving Note and the Export Loan Note,
each duly executed and delivered by the Company;
(ii) The Security Agreement, duly executed and delivered by the
Company, together with evidence of the delivery to the Bank of (x) the
certificates evidencing the shares of capital stock of its
Subsidiaries pledged thereunder and (y) the executed, undated stock
powers referred to therein (which certificates and stock powers shall
be held either by the Bank or in the Escrow Account in the name and
under the control of the Bank);
(iii) The ACS Guarantee, duly executed and delivered by ACS;
(iv) The CTW Guarantee, duly executed and delivered by CTW;
(v) The Knits Guarantee, duly executed and delivered by Knits;
(vi) The Letter of Negative Pledge, duly executed and delivered
by the Company;
(vii) Evidence of authorization from the respective beneficiary
named therein to cancel the Existing Standby Letters of Credit issued
for the account of GJM in an aggregate undrawn face amount of
$300,000;
(viii) Certified copies of the charter or certificate of
incorporation (as the case may be) and by-laws (or equivalent
documents) of each Obligor and of the resolutions of its Board of
Directors authorizing its entering into and performance of its
obligations under the Credit Documents to which it is party and the
transactions contemplated hereby and thereby;
CREDIT AGREEMENT
- 23 -
(ix) Certificate of the secretary or an assistant secretary of
each Obligor in respect of each of the officers (i) who is authorized
to sign on its behalf the Credit Documents to which it is party and
(ii) who will, until replaced by another officer or officers duly
authorized for that purpose, act as its representative for the
purposes of signing documents and giving notices and other
communications in connection with this Agreement and the transactions
contemplated hereby (and the Bank may conclusively rely on such
certificate until it receives notice in writing from such Obligor to
the contrary);
(x) Certificate of the president or a vice president of each
Obligor to the effect that (i) such Obligor has complied and is then
in compliance with all of the terms, conditions and covenants of the
Credit Documents to which it is party, (ii) no Default or Event of
Default has occurred hereunder or thereunder, either before or after
giving effect to the extension of any Credit, (iii) the
representations and warranties of such Obligor contained in the Credit
Documents to which it is party are true in all respects as if such
representations and warranties had been made on such date, and (iv)
there shall have been no material adverse change in the financial
condition, business or property of such Obligor since August 3, 1996;
(xi) Copies of duly completed and executed Uniform Commercial
Code Financing Statements covering the collateral security described
in the Security Agreement, together with evidence satisfactory to the
Bank that such financing statements have been duly filed in all
jurisdictions in which such filing is necessary or appropriate;
(xii) The results of Uniform Commercial Code, tax and judgment
searches as may be requested by the Bank;
(xiii) A Borrowing Base Certificate, certified by the chief
financial officer of the Company;
(xiv) A detailed aged accounts receivable schedule, which shall
be in form and substance satisfactory to the Bank, certified by the
chief financial officer of the Company;
(xv) A detailed inventory schedule, which shall be in form and
substance satisfactory to the Bank, certified by the chief financial
officer of the Company;
(xvi) Results relating to an audit of accounts receivable and
inventory of the Company;
(xvii) Evidence of life insurance policy relating to ▇▇▇▇▇▇▇
▇▇▇▇▇▇ with an aggregate face value equal to no less than $5,000,000,
which policy shall name the Bank as its sole beneficiary;
CREDIT AGREEMENT
- 24 -
(xviii) Evidence of a marine cargo insurance policy in form and
substance satisfactory to the Bank, which policy shall name the Bank
as loss payee;
(xix) Evidence of a Lock-Box Account with Marine Midland Bank in
New York City;
(xx) Evidence of the Collateral Account with the Bank;
(xxi) Evidence of an Escrow Account with Marine Midland Bank in
New York City, together with the Escrow Agreement, duly executed and
delivered by each of the parties thereto;
(xxii) An opinion of Fulbright & ▇▇▇▇▇▇▇▇ L.L.P., counsel to the
Company, substantially in the form of Exhibit H hereto; and
(xxiii) Such other documents, approvals and opinions relating to
the transactions contemplated hereby as the Bank or its counsel may
reasonably request;
(b) The Bank shall not have determined in its good faith judgment that
either a Material Adverse Effect shall have occurred since August 3, 1996
or a significant possibility of a Material Adverse Effect since August 3,
1996 shall exist based upon then current conditions and circumstances;
(c) Other than with respect to the CAT Transaction, neither the
Company nor any of its Subsidiaries shall, after the date of this
Agreement, have (i) disposed of any assets or created any Liens on assets
other than in the ordinary course of its business or entered into any
agreement to do any of the foregoing, (ii) made any change in its
capitalization or corporate structure or entered into any agreement to do
any of the foregoing or (iii) announced an intention to take any of the
steps referred to in clauses (i) and (ii) above; and
(d) No injunction or other restraining order shall have been issued or
filed or a hearing therefor be pending or noticed with respect to the
making of any of the Loans or any of the other transactions contemplated
hereby which the Bank determines, in the reasonable exercise of its
judgment, is or would be materially adverse to the interests of the Bank.
6.02 Subsequent Credits. The extension of Credits by the Bank to the
Company subsequent to the date hereof is subject to the further conditions
precedent that:
(a) the Bank shall not have terminated the applicable Commitment in
accordance with Section 2.04 hereof; and
(b) both immediately prior to the extension of such Credit and also
after giving effect thereto (i) no Default shall have occurred and be
continuing and (ii) the
CREDIT AGREEMENT
- 25 -
representations and warranties made by the Company in Section 7 hereof
shall be true and complete on and as of the date of the extension of such
Credit with the same force and effect as if made on and as of such date.
Each notice by the Company hereunder with respect to the extension of any Credit
shall constitute a certification by the Company to the effect set forth in
Section 6.02(b) above (both as of the date of such notice and, unless the
Company otherwise notifies the Bank prior thereto, as of the date of the
extension of such Credit).
SECTION 7. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to the Bank that:
7.01 Corporate Existence. Each of the Company and its Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation; has all requisite corporate power and
all material governmental licenses, authorizations, consents and approvals
necessary to own its assets and carry on its business as now being or as
proposed to be conducted; and is qualified to do business in all jurisdictions
in which the nature of the business conducted by it makes such qualification
necessary and where failure so to qualify would have a material adverse effect
on the financial condition, business, operations or prospects taken as a whole
of the Company and its Consolidated Subsidiaries.
7.02 Financial Condition. The consolidated and consolidating balance sheets
of the Company and its Consolidated Subsidiaries as at February 3, 1996 and the
related consolidated and consolidating statements of income, retained earnings
and changes in financial position (or of cash flow, as the case may be) of the
Company and its Consolidated Subsidiaries for the fiscal year ended on said
date, with the opinion thereon (in the case of said consolidated balance sheet
and statements) of Ernst & Young LLP, and the unaudited consolidated balance
sheets of the Company and its Consolidated Subsidiaries as at August 3, 1996 and
the related consolidated statements of income, retained earnings and changes in
financial position (or of cash flow, as the case may be) of the Company and its
Consolidated Subsidiaries for the six-month period ended on such date,
heretofore furnished to the Bank, are complete and correct and fairly present
the consolidated and consolidating financial condition, as the case may be, of
the Company and its Consolidated Subsidiaries as at said dates and the
consolidated and consolidating results, as the case may be, of their operations
for the fiscal year and six-month period ended on said dates (subject, in the
case of such financial statements as at August 3, 1996, to normal year-end audit
adjustments), all in accordance with generally accepted accounting principles
and practices applied on a consistent basis. Neither the Company nor any of its
Subsidiaries had on said dates any material contingent liabilities, liabilities
for taxes, unusual forward or long-term commitments or unrealized or anticipated
losses from any unfavorable commitments, except as referred to or reflected or
provided for in said balance sheets as at said dates. Since August 3, 1996,
other than with respect to the CAT Transaction, there has been no material
adverse change in the consolidated financial condition, operations, business or
prospects taken as a whole of the Company and its Consolidated Subsidiaries from
that set forth in said financial statements as at said date.
CREDIT AGREEMENT
- 26 -
7.03 Litigation. Except as set forth in periodic reports filed by the
Company with the Securities and Exchange Commission, (a) there are no actions,
suits or proceedings (whether or not purportedly on behalf of the Company or any
of its Subsidiaries) pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries at law or in equity
or before or by any Federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, which
involve any of the transactions contemplated herein or which, if adversely
determined against the Company or any of its Subsidiaries, would result in a
Material Adverse Effect; and (b) to the knowledge of the Company, neither the
Company nor any of its Subsidiaries is in default with respect to any judgment,
writ, injunction, decree, rule or regulation of any court or Federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which would have a Material Adverse
Effect.
7.04 No Breach. The execution and delivery of the Credit Documents, the
consummation of the transactions herein and therein contemplated and compliance
with the terms and provisions hereof and thereof, will not conflict with or
result in a breach of, or require any consent under, the charter or by-laws of
the Company, or any applicable law or regulation, or any order, writ, injunction
or decree of any court or governmental authority or agency, or any agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which any of them is bound or to which any of them is subject, or constitute a
default under any such agreement or instrument, or result in the creation or
imposition of any Lien upon any of the revenues or assets of the Company or any
of its Subsidiaries pursuant to the terms of any such agreement or instrument.
7.05 Corporate Action. The Company has all necessary corporate power and
authority to execute, deliver and perform its obligations under the Credit
Documents to which it is party; the execution, delivery and performance by the
Company of the Credit Documents to which it is party have been duly authorized
by all necessary corporate action on its part; and this Agreement and the
Security Agreement have been duly and validly executed and delivered by the
Company and constitute, and each Note when executed and delivered for value will
constitute, its legal, valid and binding obligation, enforceable in accordance
with their respective terms, except to the extent that enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally, and by
general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
7.06 Approvals. No authorizations, approvals or consents of, and no filings
or registrations with, any governmental or regulatory authority or agency are
necessary for the execution, delivery or performance by the Company of the
Credit Documents to which it is party or for the validity or enforceability
thereof.
7.07 Use of Credits. Neither the Company nor any of its Subsidiaries is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose, whether immediate, incidental or ultimate, of
buying or carrying Margin Stock and no part of the proceeds of any Credit
hereunder will be used to buy or carry any Margin Stock.
CREDIT AGREEMENT
- 27 -
7.08 ERISA. The Company and its ERISA Affiliates have fulfilled their
respective obligations under the minimum funding standards of ERISA and the Code
with respect to each Plan and are in compliance in all material respects with
the presently applicable provisions of ERISA and the Code, and have not incurred
any liability to the PBGC or any Plan or Multiemployer Plan (other than to make
contributions in the ordinary course of business, each of which has been made on
a timely basis). The total benefit liabilities under each Plan do not exceed the
fair market value of the assets of such Plan by an amount in excess of $50,000,
based on actuarial assumptions which are reasonable, both individually and in
the aggregate.
7.09 Taxes. The Company and its Subsidiaries have filed all United States
Federal income tax returns and all other material tax returns which are required
to be filed by them and have paid all taxes due pursuant to such returns or
pursuant to any assessment received by the Company or any of its Subsidiaries.
The charges, accruals and reserves on the books of the Company and its
Subsidiaries in respect of taxes and other governmental charges are, in the
opinion of the Company, adequate.
7.10 Investment Company Act. Neither the Company nor any of its
Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
7.11 Public Utility Holding Company Act. Neither the Company nor any of its
Subsidiaries is a "holding company", or an "affiliate" of a "holding company" or
a "subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
7.12 Credit Agreements. Schedule 7.12 hereto is a complete and correct
list, as of the date of this Agreement, of each credit agreement, loan
agreement, indenture, purchase agreement, guarantee or other arrangement
providing for or otherwise relating to any Indebtedness or any extension of
credit (or commitment for any Indebtedness or any extension of credit) to, or
guarantee by, the Company or any of its Subsidiaries the aggregate principal or
face amount of which equals or exceeds (or may equal or exceed) $500,000 and the
aggregate principal or face amount outstanding or which may become outstanding
under each such arrangement is correctly described in said Schedule 7.12.
7.13 Hazardous Materials. The Company and its Subsidiaries have obtained
all permits, licenses and other authorizations which are required under all
applicable Environmental Laws, except to the extent failure to have any such
permit, license or authorization would not have a Material Adverse Effect. The
Company and its Subsidiaries are in material compliance with the terms and
conditions of all such permits, licenses and authorizations, and is also in
material compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any applicable Environmental Law or in any regulation, code, plan,
order, decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder.
7.14 Subsidiaries. Set forth in Schedule 7.14 hereto is a complete and
correct list, as of the date of this Agreement, of all Subsidiaries (and the
respective jurisdiction of
CREDIT AGREEMENT
- 28 -
incorporation of each such Subsidiary) reported by the Company in its Form 10-K
pursuant to Item 601(b)(21) of Regulation S-K under the Securities Exchange Act
of 1934, as amended, and of all Investments held by the Company or any of its
Subsidiaries in any joint venture or other Person. Except as disclosed in
Schedule 7.14 hereto the Company owns, free and clear of Liens, all outstanding
shares of such Subsidiaries (and each such Subsidiary owns, free and clear of
Liens, all outstanding shares of its Subsidiaries) and all such shares are
validly issued, fully paid and non-assessable and the Company (or the respective
Subsidiary) also owns, free and clear of Liens, all such Investments.
SECTION 8. COVENANTS OF THE COMPANY. The Company agrees that, so long as
any of the Commitments are in effect and until payment in full of the principal
of and interest on the Loans, the Reimbursement Obligations and all other
amounts payable by the Company hereunder:
8.01 Financial Statements. The Company shall deliver to the Bank:
(a) as soon as available and in any event within 45 days after the end
of each of the first three fiscal quarterly periods of each fiscal year of
the Company, consolidated and consolidating statements of income, retained
earnings and changes in financial position (or of cash flow, as the case
may be) of the Company and its Consolidated Subsidiaries for such period
and for the period from the beginning of the respective fiscal year to the
end of such period, and the related consolidated and consolidating balance
sheets as at the end of such period, setting forth in each case in
comparative form the corresponding consolidated and consolidating figures
for the corresponding period in the preceding fiscal year, accompanied by a
certificate of the chief financial officer of the Company, which
certificate shall state that said financial statements fairly present the
consolidated and consolidating financial condition and results of
operations, as the case may be, of the Company and its Consolidated
Subsidiaries in accordance with generally accepted accounting principles,
consistently applied, as at the end of, and for, such period (subject to
normal year-end audit adjustments, none of which shall be material);
(b) as soon as available and in any event within 120 days after the
end of each fiscal year of the Company, consolidated and consolidating
statements of income, retained earnings and changes in financial position
(or of cash flow, as the case may be) of the Company and its Consolidated
Subsidiaries for such year and the related consolidated and consolidating
balance sheets as at the end of such year, setting forth in each case in
comparative form the corresponding consolidated and consolidating figures
for the preceding fiscal year, and accompanied (i) in the case of said
consolidated statements and balance sheet, by an opinion thereon of
independent certified public accountants of recognized national standing,
which opinion shall state that said consolidated financial statements
fairly present the consolidated financial condition and results of
operations of the Company and its Consolidated Subsidiaries as at the end
of, and for, such fiscal year, and a certificate of such accountants
stating that, in making the examination necessary for their opinion, they
obtained no knowledge, except as specifically stated, of any Default, (ii)
in the case of said consolidating statements and balance sheet, by a
certificate of the chief financial officer of the Company, which
certificate shall state that said consolidating
CREDIT AGREEMENT
- 29 -
financial statements fairly present the consolidating financial condition
and results of operations of the Company and its Consolidated Subsidiaries
in accordance with generally accepted accounting principles, consistently
applied, as at the end of, and for, such fiscal year and (iii) by
projections of sales and profits of the Company and its Consolidated
Subsidiaries for the succeeding fiscal year;
(c) as soon as available and in any event within 30 days after the end
of each of the fiscal quarterly periods of each fiscal year of the Company,
an updated aged accounts receivable schedule and inventory schedule, which
schedules shall be in form and substance satisfactory to the Bank and
certified by the chief financial officer of the Company;
(d) as soon as available and in any event within 7 days after the end
of each calendar week of each fiscal year of the Company, an updated
Borrowing Base Certificate, which certificate shall be in form and
substance satisfactory to the Bank and certified by the chief financial
officer of the Company;
(e) as soon as available and in any event within 10 days after the end
of each calendar month of each fiscal year of the Company, an updated
Borrowing Base Certificate, which certificate shall be in form and
substance satisfactory to the Bank and certified by the chief financial
officer of the Company;
(f) promptly upon their becoming available, copies of all registration
statements and regular periodic reports, if any, which the Company shall
have filed with the Securities and Exchange Commission (or any governmental
agency substituted therefor) or any national securities exchange;
(g) promptly upon the mailing thereof to the shareholders of the
Company generally, copies of all financial statements, reports and proxy
statements so mailed;
(h) as soon as possible, and in any event within 10 days after the
Company knows or has reason to know that any of the events or conditions
specified below with respect to any Plan or Multiemployer Plan have
occurred or exist, a statement signed by the chief financial officer of the
Company setting forth details respecting such event or condition and the
action, if any, which the Company or its ERISA Affiliate proposes to take
with respect thereto (and a copy of any report or notice required to be
filed with or given to PBGC by the Company or an ERISA Affiliate with
respect to such event or condition):
(i) any reportable event, as defined in Section 4043(b) of ERISA
and the regulations issued thereunder, as to which PBGC has not by
regulation waived the requirement of Section 4043(a) of ERISA that it
be notified within 30 days of the occurrence of such event (provided
that a failure to meet the minimum funding standard of Section 412 of
the Code or Section 302 of ERISA shall be a reportable event
regardless of the issuance of any waivers in accordance with Section
412(d) of the Code);
CREDIT AGREEMENT
- 30 -
(ii) the filing under Section 4041 of ERISA of a notice of intent
to terminate any Plan or the termination of any Plan;
(iii) the institution by PBGC of proceedings under Section 4042
of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by the Company or any ERISA
Affiliate of a notice from a Multiemployer Plan that such action has
been taken by PBGC with respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal by the Company or any
ERISA Affiliate under Section 4201 or 4204 of ERISA from a
Multiemployer Plan, or the receipt by the Company or any ERISA
Affiliate of notice from a Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA
or that it intends to terminate or has terminated under Section 4041A
of ERISA; and
(v) the institution of a proceeding against the Company or any
ERISA Affiliate to enforce Section 515 of ERISA, which proceeding is
not dismissed within 30 days;
(i) promptly after the Company knows or has reason to know that any
Default has occurred, a notice of such Default describing the same in
reasonable detail and, together with such notice or as soon thereafter as
possible, a description of the action that the Company has taken and
proposes to take with respect thereto; and
(j) from time to time such other information regarding the business,
affairs or financial condition of the Company or any of its Subsidiaries
(including, without limitation, any Plan or Multiemployer Plan and any
reports or other information required to be filed under ERISA) as the Bank
may reasonably request.
The Company will furnish to the Bank, at the time it furnishes each set of
financial statements pursuant to paragraph (a) or (b) above, a certificate of
the chief financial officer of the Company to the effect that no Default has
occurred and is continuing (or, if any Default has occurred and is continuing,
describing the same in reasonable detail and describing the action that the
Company has taken and proposes to take with respect thereto).
8.02 Litigation. The Company will promptly give to the Bank notice of all
legal or arbitral proceedings, and of all proceedings by or before any
governmental or regulatory authority or agency, and any material development in
respect of such legal or other proceeding affecting the Company or any
Subsidiary, except proceedings which, if adversely determined, would not have a
Material Adverse Effect.
8.03 Corporate Existence, Etc. The Company will, and will cause each of its
Subsidiaries to, preserve and maintain its corporate existence and all of its
material rights, privileges and franchises (provided that nothing in this
Section 8.03 shall prohibit any transaction expressly permitted under Section
8.05 hereof); comply with the requirements of all applicable
CREDIT AGREEMENT
- 31 -
laws, rules, regulations and orders of governmental or regulatory authorities if
failure to comply with such requirements would have a Material Adverse Effect;
pay and discharge all taxes, assessments and governmental charges or levies
imposed on it or on its income or profits or on any of its property prior to the
date on which penalties attach thereto, except for any such tax, assessment,
charge or levy the payment of which is being contested in good faith and by
proper proceedings and against which adequate reserves are being maintained;
maintain all of its properties used or useful in its business in good working
order and condition, ordinary wear and tear excepted; and permit representatives
of the Bank, during normal business hours, to examine, copy and make extracts
from its books and records, to inspect its properties, and to discuss its
business and affairs with its officers, all to the extent reasonably requested
by the Bank; provided, however, the Company may dissolve any Inactive Subsidiary
set forth in Schedule 7.14 hereto.
8.04 Insurance.
(a) The Company will, and will cause each of its Subsidiaries to, keep
insured by financially sound and reputable insurers all property of a
character usually insured by corporations engaged in the same or similar
business similarly situated against loss or damage of the kinds and in the
amounts customarily insured against by such corporations and carry such
other insurance as is usually carried by such corporations, provided that,
in any event, the Company shall maintain:
(i) Casualty Insurance -- insurance against loss or damage
covering all of the tangible real and personal property and
improvements of the Company and its Subsidiaries by reason of any
Peril (as defined below) in such amounts (subject to such deductibles
as shall be satisfactory to the Bank) as shall be reasonable and
customary and sufficient to avoid the insured named therein from
becoming a coinsurer of any loss under such policy but in any event in
an amount (A) in the case of fixed assets and equipment (including
vehicles), at least equal to 100% of the actual replacement cost of
such assets (including foundation, footings and excavation costs),
subject to deductibles as aforesaid and (B) in the case of inventory,
not less than the fair market value thereof, subject to deductibles as
aforesaid;
(ii) Automobile Liability Insurance -- insurance in respect of
all vehicles (whether owned, hired or rented by the Company and its
Subsidiaries) at any time located at, or used in connection with, its
properties or operations against liability for bodily injury and
property damage in such amounts as are then customary for vehicles
used in connection with similar properties and businesses, but in any
event to the extent required by applicable law;
(iii) Comprehensive General Liability Insurance -- insurance
against claims for bodily injury, death or property damage occurring
on, in or about the properties (and adjoining streets, sidewalks and
waterways) of the Company and its Subsidiaries, in such amounts as are
then customary for property similar in use in the jurisdictions where
such properties are located;
CREDIT AGREEMENT
- 32 -
(iv) Workers' Compensation Insurance -- insurance (including
Employers' Liability Insurance) to the extent required by applicable
law;
(v) Product Liability Insurance -- insurance against claims for
bodily injury, death or property damage resulting from the use of
products sold by the Company and its Subsidiaries in such amounts as
are then customarily maintained by responsible persons engaged in
businesses similar to that of the Company and its Subsidiaries;
(vi) Business Interruption Insurance -- insurance against loss of
operating income by reason of any Peril in such amounts as are then
customarily maintained by responsible persons engaged in businesses
similar to that of the Company and its Subsidiaries;
(vii) Environmental Insurance -- insurance covering claims
arising out of the sudden and accidental release or spillage of toxic
wastes or substances in such amounts as are then customary for similar
operations and properties in similar locations; and
(viii) Other Insurance -- such other insurance, including
War-Risk Insurance when and to the extent obtainable from the United
States Government, in each case as generally carried by owners of
similar properties in the jurisdictions where such properties are
located, in such amounts and against such risks as are then customary
for property similar in use.
(b) Such insurance shall be written by financially responsible
companies selected by the Company and having an A.M. Best rating of "A+" or
better and being in a financial size category of XIV or larger, or by other
companies acceptable to the Bank, and (other than workers' compensation)
shall name the Bank as additional insured, or loss payee, as its interests
may appear. Each policy referred to in this Section 8.04 shall provide that
it will not be canceled or reduced, or allowed to lapse without renewal,
except after not less than 30 days' written notice to the Bank and shall
also provide that the interests of the Bank shall not be invalidated by any
act or negligence of the Company or any Person having an interest in any of
the properties nor by occupancy or use of any such property for purposes
more hazardous than permitted by such policy nor by any foreclosure or
other proceedings relating to such property. The Company will advise the
Bank promptly of any policy cancellation, reduction or amendment.
(c) The Company will deliver to the Bank certificates of insurance
satisfactory to the Bank evidencing the existence of all insurance required
to be maintained by the Company hereunder setting forth the respective
coverages, limits of liability, carrier, policy number and period of
coverage and showing that such insurance will be in effect through December
31, 1996, subject only to the payment of premiums as they become due (and
attaching original copies of any policies with respect to casualty
insurance). On each November 15 in each year (commencing with November 15,
1996) prior to the Termination Date, the Company will deliver to the Bank
certificates of insurance
CREDIT AGREEMENT
- 33 -
evidencing that all insurance required to be maintained by the Company
hereunder will be in effect through the December 31 of the calendar year
following the calendar year of the then current November 15, subject only
to the payment of premiums as they become due. In addition, without the
prior written consent of the Bank, the Company will not modify any of the
provisions of any policy with respect to casualty insurance. The Company
will not obtain or carry separate insurance concurrent in form or
contributing in the event of loss with that required by this Section 8.04
unless the Bank is the named insured thereunder, with loss payable as
provided herein. The Company will immediately notify the Bank whenever any
such separate insurance is obtained and shall deliver to the Bank the
certificates evidencing the same.
(d) Without limiting the obligations of the Company under the
foregoing provisions of this Section 8.04, in the event the Company shall
fail to maintain in full force and effect insurance as required by the
foregoing provisions of this Section 8.04, then the Bank may, but shall
have no obligation so to do, procure insurance covering the interests of
the Bank in such amounts and against such risks as the Bank shall deem
appropriate and the Company shall reimburse the Bank in respect of any
premiums paid by the Bank in respect thereof.
For purposes hereof, the term "Peril" shall mean, collectively, fire,
lightning, flood, windstorm, hail, earthquake, explosion, riot and civil
commotion, vandalism and malicious mischief, damage from aircraft, vehicles and
smoke and all other perils covered by the "all-risk" endorsement then in use in
the jurisdictions where the properties of the Company are located.
8.05 Prohibition of Fundamental Changes. The Company will not, nor will it
permit any of its Subsidiaries to, enter into any transaction of merger or
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution). The Company will not, nor will it permit
any of its Subsidiaries to, acquire any business or assets from, or capital
stock of, or be a party to any acquisition of, any Person except for purchases
of inventory and other assets to be sold or used in the ordinary course of
business. The Company will not, nor will it permit any of its Subsidiaries to,
convey, sell, lease, transfer or otherwise dispose of, in one transaction or a
series of transactions, all or a substantial part of its business or assets,
whether now owned or hereafter acquired (including, without limitation,
receivables and leasehold interests, but excluding (i) any inventory or other
assets sold or disposed of in the ordinary course of business and (ii) obsolete
or worn-out property, tools or equipment no longer used or useful in its
business). The Company will not, nor will it permit any of its Subsidiaries to,
amend its certificate of incorporation or by-laws in any manner adverse to the
interests of the Bank hereunder. Notwithstanding the foregoing provisions of
this Section 8.05, the Company may engage in the transactions contemplated by
the Stock and Asset Purchase Agreement.
8.06 Limitation on Liens. The Company will not, nor will it permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any
of its property, assets or revenues, whether now owned or hereafter acquired,
except:
(a) Liens imposed by any governmental authority for taxes, assessments
or charges not yet due or which are being contested in good faith and by
appropriate
CREDIT AGREEMENT
- 34 -
proceedings if adequate reserves with respect thereto are maintained on the
books of the Company or any of its Subsidiaries, as the case may be, in
accordance with GAAP;
(b) carriers', warehousemen's, mechanics', material-men's, repairmen's
or other like Liens arising in the ordinary course of business which are
not overdue for a period of more than 30 days or which are being contested
in good faith and by appropriate proceedings;
(c) pledges or deposits under worker's compensation, unemployment
insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in
the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and encumbrances
consisting of zoning restrictions, easements, licenses, restrictions on the
use of property or minor imperfections in title thereto which, in the
aggregate, are not material in amount, and which do not in any case
materially detract from the value of the property subject thereto or
interfere with the ordinary conduct of the business of the Company or any
of its Subsidiaries;
(f) Liens on assets of corporations which become Subsidiaries of the
Company after the date of this Agreement, provided that such Liens are in
existence at the time the respective corporations become Subsidiaries of
the Company and were not created in anticipation thereof;
(g) Liens upon real and/or tangible personal property acquired after
the date hereof (by purchase, construction or otherwise) by the Company or
any of its Subsidiaries, each of which Liens either (A) existed on such
property before the time of its acquisition and was not created in
anticipation thereof, or (B) was created solely for the purpose of securing
Indebtedness representing, or incurred to finance, refinance or refund, the
cost (including the cost of construction) of the respective property;
provided that no such Lien shall extend to or cover any property of the
Company or such Subsidiary other than the respective property so acquired
and improvements thereon; and provided further that the principal amount of
Indebtedness secured by any such Lien shall at no time exceed 80% of the
fair market value (as determined in good faith by the chief financial
officer of the Company) of the respective property at the time it was
acquired (by purchase, construction or otherwise);
(h) Liens relating to the Indebtedness of the Company listed in
Schedule 8.07 hereto, or in existence on the date hereof and included in
the financial statements provided by the Company under Section 7.02 hereof;
and
CREDIT AGREEMENT
- 35 -
(i) any extension, renewal or replacement of the foregoing, provided,
however, that the Liens permitted hereunder shall not be spread to cover
any additional Indebtedness or property (other than a substitution of like
property).
8.07 Indebtedness. The Company will not, and will not permit any of its
Subsidiaries to, create, incur or suffer to exist any Indebtedness except:
(a) Indebtedness to the Bank hereunder or heretofore outstanding;
(b) Indebtedness outstanding on the date hereof and set forth in
Schedule 8.07 hereto;
(c) Indebtedness of the Company secured by Liens permitted under
Section 8.06(g) hereof up to such amount as is permitted by the Bank in its
sole discretion;
(d) Subordinated Indebtedness as permitted by the Bank in its sole
discretion; and
(e) additional Indebtedness of the Company up to such amount as is
permitted by the Bank in its sole discretion.
8.08 Investments. The Company will not make or permit to remain outstanding
any Investments except:
(a) operating deposit accounts with banks;
(b) Permitted Investments;
(c) Investments outstanding on the date hereof and identified in
Schedule 8.08 hereto; and
(d) such other Investments as permitted by the Bank in its sole
discretion.
8.09 Dividend Payments. The Company will not, and will not permit any of
its Subsidiaries to, declare or make any Dividend Payment at any time.
8.10 Leverage Ratio. The Company will not permit the Leverage Ratio to
exceed the following respective amounts at any time during the following
respective periods:
Period Ratio
------ -----
From the Effective Date
and at all times thereafter .......................... 1.50 to 1
CREDIT AGREEMENT
- 36 -
8.11 Tangible Net Worth. The Company will not permit Tangible Net Worth to
be less than the following respective amounts at any time during the following
respective periods:
Period Amount
------ ------
From the Effective Date
and at all times thereafter .......................... $31,000,000
For purposes hereof, "Tangible Net Worth" shall be calculated to include
Subordinated Indebtedness of the Company and its Consolidated Subsidiaries.
8.12 Current Ratio. The Company will not permit the ratio of current assets
of the Company and its Consolidated Subsidiaries to current liabilities of the
Company and its Consolidated Subsidiaries to be less than the following
respective amounts at any time during the following respective periods:
Period Ratio
------ -----
From the Effective Date
and at all times thereafter .......................... 1.50 to 1
For purposes hereof, the terms "current assets" and "current liabilities" shall
(i) have the respective meanings, determined without duplication, assigned to
them by GAAP, and (ii) be calculated without including the CAT Group.
8.13 Subordinated Indebtedness. Neither the Company nor any of its
Subsidiaries shall purchase, redeem, retire or otherwise acquire for value, set
apart any money for a sinking, defeasance or other analogous fund for, the
purchase, redemption, retirement or other acquisition of, or make any voluntary
payment or prepayment of the principal of or interest on, or any other amount
owing in respect of, any Subordinated Indebtedness, except for regularly
scheduled payments of principal and interest in respect thereof required
pursuant to the instruments evidencing such Subordinated Indebtedness.
8.14 Lines of Business. Without the prior written consent of the Bank,
neither the Company nor any of its Subsidiaries shall engage to any substantial
extent in any line or lines of business activity other than the business of
design, manufacturing, merchandising, importation and wholesale distribution of
apparel and related products.
8.15 Transactions with Affiliates. Except as expressly permitted by this
Agreement, the Company will not, nor will it permit any of its Subsidiaries to,
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;
or (d) enter into any other transaction directly or indirectly with or for the
benefit of an Affiliate (including, without limitation, guarantees and
assumptions of obligations of an Affiliate); provided that (x) any Affiliate who
is an individual may serve as a
CREDIT AGREEMENT
- 37 -
director, officer or employee of the Company or its Subsidiaries and receive
reasonable compensation for his or her services in such capacity and (y) the
Company and its Subsidiaries may enter into transactions with Affiliates (other
than extensions of credit by the Company or any of its Subsidiaries to an
Affiliate) providing for the leasing of property, the rendering or receipt of
services or the purchase or sale of 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 Company and its Subsidiaries as
the monetary or business consideration which would obtain in a comparable
transaction with a Person not an Affiliate.
8.16 Use of Proceeds. The Company will use the proceeds of the Credits
hereunder solely in connection with the importation and wholesale distribution
of apparel products (in compliance with all applicable legal and regulatory
requirements, including, without limitation, Regulations G, T, U and X of the
Board of Governors of the Federal Reserve System and the Securities Act of 1933
and the Securities Exchange Act of 1934 and the regulations thereunder);
provided, that the Bank shall not have any responsibility as to the use of any
of such proceeds.
8.17 Amendments to Other Documents. The Company shall not amend, supplement
or otherwise modify (i) the Stock and Asset Purchase Agreement, the Stockholders
Agreement or any of the other CAT Transaction Documents, or (ii) any of the
documents or instruments evidencing, constituting, governing, Guaranteeing or
securing the payment of any Subordinated Indebtedness.
8.18 Audit of Inventory and Accounts Receivable. At the request of the
Bank, the Company shall permit the Bank to conduct from time to time an audit
(in scope reasonably satisfactory to the Bank) of the inventory and the accounts
receivable of the Company and its Subsidiaries, at the expense of the Company
(provided that the costs of such audit are in accordance with normal industry
practice for similar audits).
8.19 Bank Accounts. The Company shall (i) maintain all of its principal
bank accounts with the Bank and (ii) establish both a lock-box account and an
escrow account with Marine Midland Bank. The Company shall pay to the Bank or
Marine Midland Bank, as the case may be, from time to time all charges, costs
and expenses customarily charged by financial institutions in like circumstances
with respect to similiar accounts.
8.20 CAT Transaction. On the CAT Transfer Date, the Company shall cause the
delivery to the Bank of the following items in connection with the consummation
of the CAT Transaction, each of which shall be in form and substance
satisfactory to the Bank: (i) the certificate or certificates evidencing the
ATSC Shares received in exchange for Stock Collateral (as defined in the
Security Agreement) pledged under the Security Agreement, together with the
executed, undated stock powers referred to therein; (ii) an instrument of
assignment in favor of the Bank with respect to the registration rights of the
Company relating to the ATSC Shares as provided in the Stockholders Agreement,
substantially in the form of Exhibit F hereto; (iii) the Cash Proceeds received
by the Company in connection with the CAT Transaction in accordance with Section
3.04(c) hereof; (iv) evidence of the release by each of Mitsubishi Corporation
and Mitsubishi International Corporation of Liens relating to the assets subject
to the CAT
CREDIT AGREEMENT
- 38 -
Transaction; and (v) such other documents, approvals and opinions relating to
the CAT Transaction as the Bank or its counsel may reasonably request.
8.21 Sale of ATSC Shares. The Company shall from to time effect a sale,
assignment and transfer of ATSC Shares so as to comply with the mandatory
prepayment obligations of the Company under Sections 3.04(a) and (b) hereof. The
sale, assignment and transfer of ATSC Shares shall be effected by the Escrow
Agent on behalf of the Company through the Escrow Account. The Escrow Agent
shall on behalf of the Company cause the Cash Proceeds from the sale, assignment
and transfer of such ATSC Shares to be remitted directly to the Collateral
Account.
8.22 Sale of ▇▇▇▇▇▇▇▇ Property. The Company shall promptly effect, in a
commercially reasonable manner, through T-Wear, a sale, assignment and transfer
of the Property and hereby assigns to the Bank all proceeds to be received by
the Company or T-Wear in connection therewith.
SECTION 9. EVENTS OF DEFAULT AND REMEDIES.
9.01 Events of Default. If one or more of the following events (herein
called "Events of Default") shall occur and be continuing:
(a) The Company shall default in the payment when due of any principal
of or interest on any Loan, any Reimbursement Obligation or any other
amount payable by it hereunder; or
(b) Any Obligor shall default in the payment when due of any principal
of or interest on any Indebtedness other than its obligations hereunder; or
any event specified in any note, agreement, indenture or other document
evidencing or relating to any such Indebtedness shall occur if the effect
of such event is to cause, or (with the giving of any notice or the lapse
of time or both) to permit the holder or holders of such Indebtedness (or a
trustee or agent on behalf of such holder or holders) to cause, such
Indebtedness to become due, or to be prepaid in full (whether by
redemption, purchase or otherwise), prior to its stated maturity; or
(c) Any representation, warranty or certification made or deemed made
herein (or in any modification or supplement hereto) by the Company, or any
certificate furnished to the Bank pursuant to the provisions hereof (or
thereof), shall prove to have been false or misleading as of the time made
or furnished in any material respect and, unless the Bank reasonably
determines that circumstances rendering such representation, warranty
certification or certificate false or misleading are not reasonably
susceptible of remedy within 15 days after notice thereof, such
circumstances shall continue unremedied for a period of 15 days after
notice thereof to the Company by the Bank; or
(d) The Company shall default in the performance of any of its
obligations under Section 8.01(i) hereof; or any Obligor shall default in
the performance of any of its obligations in this Agreement or the other
Credit Documents to which it is party and
CREDIT AGREEMENT
- 39 -
such default shall continue unremedied for a period of 15 days after
notice thereof to such Obligor by the Bank; or
(e) Any Obligor shall admit in writing its inability to, or be
generally unable to, pay its debts as such debts become due; or
(f) Any Obligor shall (i) apply for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee or
liquidator of itself or of all or a substantial part of its property, (ii)
make a general assignment for the benefit of its creditors, (iii) commence
a voluntary case under any applicable bankruptcy law, (iv) file a petition
seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or readjustment of
debts, (v) fail to controvert in a timely and appropriate manner, or
acquiesce in writing to, any petition filed against it in an involuntary
case under any applicable bankruptcy law, or (vi) take any corporate action
for the purpose of effecting any of the foregoing; or
(g) A proceeding or case shall be commenced, without the application
or consent of any Obligor, in any court of competent jurisdiction, seeking
(i) its liquidation, reorganization, dissolution or winding-up, or the
composition or readjustment of its debts, (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of such Obligor of all
or any substantial part of its assets, or (iii) similar relief in respect
of such Obligor under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and such
proceeding or case shall continue undismissed, or an order, judgment or
decree approving or ordering any of the foregoing shall be entered and
continue unstayed and in effect, for a period of 60 or more days; or an
order for relief against such Obligor shall be entered in an involuntary
case under any applicable bankruptcy law; or
(h) A final judgment or a series of related final judgments for the
payment of money in excess of $150,000 in the aggregate (net of related
insurance proceeds) shall be rendered by a court or courts against any
Obligor and the same shall not be discharged (or provision shall not be
made for such discharge), or a stay of execution thereof shall not be
procured, within 30 days from the date of entry thereof and such Obligor
shall not, within said period of 30 days, or such longer period during
which execution of the same shall have been stayed, appeal therefrom and
cause the execution thereof to be stayed during such appeal; or
(i) An event or condition specified in Section 8.01(h) hereof shall
occur or exist with respect to any Plan or Multiemployer Plan and, as a
result of such event or condition, together with all other such events or
conditions, the Company or any of its ERISA Affiliates shall incur a
liability to a Plan, a Multiemployer Plan or PBGC (or any combination of
the foregoing) in excess of $100,000 in the aggregate for the Company and
all ERISA Affiliates; or
(j) Any of the Security Documents shall cease to be in full force and
effect, or shall cease in any material respect to grant to the Bank the
Liens, rights, powers and
CREDIT AGREEMENT
- 40 -
privileges purported to be created thereby (including, without limitation,
a perfected security interest in, and Lien on, all of the collateral
subject thereto superior and prior to the rights of all third Persons and
subject to no other Liens (except to the extent expressly permitted herein
or therein)); or
(k) Consummation of the CAT Transaction shall not occur on or prior to
September 30, 1996;
THEREUPON: (i) in the case of an Event of Default other than one referred to in
clause (f) or (g) of this Section 9.01 with respect to any Obligor, the Bank
may, by notice to the Company, cancel the Commitments and/or declare the
principal amount then outstanding of, and the accrued interest on, the Loans,
any Reimbursement Obligations and all other amounts payable by the Company
hereunder and under any Note (including, without limitation, any amounts payable
under Section 5 hereof) to be forthwith due and payable, whereupon such amounts
shall be immediately due and payable without presentment, demand, protest or
other formalities of any kind, all of which are hereby expressly waived by the
Company; and (ii) in the case of the occurrence of an Event of Default referred
to in clause (f) or (g) of this Section 9.01 with respect to any Obligor, the
Commitments shall automatically be canceled and the principal amount then
outstanding of, and the accrued interest on, the Loans, any Reimbursement
Obligations and all other amounts payable by the Company hereunder and under any
Note (including, without limitation, any amounts payable under Section 5 hereof)
shall become automatically immediately due and payable without presentment,
demand, protest or other formalities of any kind, all of which are hereby
expressly waived by the Company. In addition, the Company shall, upon the
occurrence and during the continuance of any Event of Default, if requested by
the Bank (and, in case of any Event of Default referred to in clause (f) or (g)
of this Section 9.01, forthwith, without any demand or the taking of any other
action by the Bank), pay to the Bank (to be held by the Bank in the Collateral
Account subject to and in accordance with Section 9.02 hereof) an amount equal
to the aggregate amount of the undrawn face amounts of all Letters of Credit
then issued and outstanding.
9.02 Collateral Account.
(a) The Company hereby establishes with the Bank a cash collateral
account in the name and under the control of the Bank into which there
shall be deposited from time to time certain amounts required or
contemplated to be paid to the Bank as provided in Section 2.01(g) hereof,
Section 8.21 hereof, the last sentence of Section 9.01 hereof and as may
otherwise be provided under this Agreement and the other Credit Documents.
(b) As collateral security for the prompt payment in full when due
(whether at stated maturity, as a mandatory prepayment, by acceleration or
otherwise) of the obligations of the Company hereunder and under the Notes
(whether or not then outstanding or due and payable), the Company hereby
pledges and grants to the Bank a security interest in all of its right,
title and interest in and to the Collateral Account and the balances from
time to time in such Collateral Account. The balance in the Collateral
Account, however, shall not constitute payment of any obligations of the
Company
CREDIT AGREEMENT
- 41 -
hereunder until so applied as hereinafter provided. Anything in this
Agreement to the contrary notwithstanding, funds held in the Collateral
Account shall be subject to withdrawal by the Company only as provided in
this Section 9.02.
(c) If an Event of Default has occurred and is continuing, the Bank
may in its sole discretion at any time and from time to time apply or cause
to be applied any balance in the Collateral Account to the payment of any
of the obligations of the Company then due and payable.
(d) When all of the obligations of the Company hereunder and under the
Notes have been paid in full and the Commitments and all Letters of Credit
have expired or been terminated, the Bank shall deliver to the Company,
against receipt but without any recourse, warranty or representation
whatsoever, the balance remaining in the Collateral Account; provided,
however, for the period of 90 days immediately prior to such date, the
aggregate face or principal amount of the obligations of the Company
hereunder and under the Notes shall not have exceeded the value of the
collateral security provided by the Company in connection therewith.
(e) The Company shall pay to the Bank from time to time such fees as
the Bank normally charges for similar services in connection with the
Bank's administration of the Collateral Account.
SECTION 10. MISCELLANEOUS.
10.01 Waiver. No failure on the part of the Bank to exercise and no delay
in exercising, and no course of dealing with respect to, any right, power or
privilege under this Agreement or any Note shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege under
this Agreement or any Note preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The remedies provided herein
are cumulative and not exclusive of any remedies provided by law.
10.02 Notices. All notices and other communications provided for herein
(including, without limitation, any modifications of, or waivers or consents
under, this Agreement) shall be given or made in writing and telecopied,
telegraphed, cabled, mailed or delivered, addressed as follows:
CREDIT AGREEMENT
- 42 -
if to the Company:
Cygne Designs, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to each of:
Cygne Designs, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
and
Fulbright & ▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
if to the Bank:
The Hongkong and Shanghai Banking
Corporation Limited, New York Branch
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: NYK CBU TRS
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Moon & Ikeda
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
or, as to any party, at such other address as shall be designated by such party
in a notice to each other party. Except as otherwise provided in this
Agreement, all such communications shall be
CREDIT AGREEMENT
- 43 -
deemed to have been duly given when transmitted by telecopier, delivered to the
telegraph or cable office or personally delivered or, in the case of a mailed
notice, 5 Business Days after the date deposited in the mails, postage prepaid,
in each case given or addressed as aforesaid.
10.03 Expenses, Etc. The Company agrees, upon demand, to pay or reimburse
the Bank for paying: (a) all reasonable out-of-pocket expenses of the Bank
(including, without limitation, the reasonable fees and expenses of Messrs. Moon
& Ikeda, counsel to the Bank), in connection with (i) the negotiation,
preparation, execution and delivery of this Agreement and the other Credit
Documents and (ii) any amendment, modification or waiver of any of the terms of
this Agreement or the other Credit Documents; (b) all reasonable costs and
expenses of the Bank (including reasonable counsels' fees) in connection with
any Default and any enforcement or collection proceedings resulting therefrom;
and (c) all transfer, stamp, documentary or other similar taxes, assessments or
charges levied by any governmental or revenue authority in respect of this
Agreement, any Note or any other document referred to herein and all costs,
expenses, taxes, assessments and other charges incurred in connection with any
filing, registration, recording or perfection of any security interest
contemplated by this Agreement or any document referred to herein.
10.04 Amendments, Etc. Any provision of this Agreement may be amended or
modified only by any instrument in writing signed by the Company and the Bank.
10.05 Successors and Assigns; Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
10.06 Assignments and Participations.
(a) The Company may not assign its rights or obligations hereunder or
under the Notes without the prior consent of the Bank.
(b) The Bank may sell or agree to sell to one or more other Persons
("participants") a participation in all or any part of the Loans, the
Notes, the Commitments, the Letters of Credit or the Standby Letters of
Credit, provided that no participant shall have any rights under any Credit
Document (a participant's rights against the Bank in respect of such
participation to be those set forth in the agreement (the "Participation
Agreement") executed by the Bank in favor of the participant).
Notwithstanding any such sale, this Agreement shall continue in full force
and effect in all respects as if the Bank were maintaining and funding each
Commitment and Credit in which participations have been sold in the same
way that it is maintaining and funding the portion of such Commitment and
Credit in which no participations have been sold. All amounts payable by
the Company to the Bank under Section 5 hereof shall be determined as if
the Bank had not sold or agreed to sell any participations in such Loan and
as if the Bank were funding all of such Loan in the same way that it is
funding the portion of such Loan in which no participations have been sold.
In no event shall the Bank be obligated to the participant under the
Participation Agreement to take or refrain from taking any action under the
Credit Document (including without limitation granting
CREDIT AGREEMENT
- 44 -
approval of any amendment or waiver) except that the Bank may agree in the
Participation Agreement that it will not, without the consent of the
participant, agree to (i) the extension of any date fixed for the payment
of principal of or interest on the related Credit, (ii) the reduction of
any payment of principal thereof, (iii) the reduction of the rate at which
either interest is payable thereon or (if the participant is entitled to
any part thereof) fees are payable hereunder to a level below the rate at
which the participant is entitled to receive interest or fees (as the case
may be) in respect of such participation or (iv) the release of any
guarantee or collateral security.
(c) The Bank may furnish any information concerning the Company or any
of its Subsidiaries in the possession of the Bank from time to time to
assignees and participants (including prospective assignees and
participants).
10.07 Survival. The obligations of the Company under Sections 5 and 10.03
hereof shall survive the repayment of the Loans and the Reimbursement
Obligations, and the termination of the Commitments. In addition, each
representation and warranty made, or deemed to be made by a notice of any
extension of Credit, hereunder shall survive the extension of such Credit and
the Bank shall not be deemed to have waived, by reason of extension of such
Credit, any Default or Event of Default which may arise by reason of such
representation or warranty proving to have been false or misleading,
notwithstanding that the Bank may have had notice or knowledge or reason to know
that such representation or warranty was false or misleading at the time of such
extension of Credit.
10.08 Captions. The table of contents and captions and section headings
appearing herein are included solely for convenience of reference and are not
intended to affect the interpretation of any provision of this Agreement.
10.09 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
10.10 Governing Law; Submission to Jurisdiction. THIS AGREEMENT AND EACH
NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK. The Company hereby submits to the nonexclusive jurisdiction
of the United States District Court for the Southern District of New York and of
any New York State Court sitting in New York City for the purposes of all legal
proceedings arising out of or relating to this Agreement or the transactions
contemplated hereby. The Company irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an inconvenient
forum.
10.11 Waiver of Jury Trial. Each of the Company and the Bank hereby
irrevocably waives, to the fullest extent permitted by law, any and all right to
trial by jury in any legal proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby.
CREDIT AGREEMENT
- 45 -
10.12 Severability. If any provision hereof is invalid and unenforceable in
any applicable jurisdiction, then, to the fullest extent permitted by law, (i)
the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Bank in order to
carry out the intentions of the parties hereto as nearly as may be possible and
(ii) the invalidity or unenforceability of any provision hereof in any
jurisdiction shall not affect the validity or enforceability of such provision
in any other jurisdiction.
10.13 Effectiveness. This Agreement shall become effective on the date (the
"Effective Date") on which each of the Company and the Bank shall have signed a
counterpart hereof (whether the same or different counterparts) and shall have
delivered the same to each other.
10.14 Effect of Amendment and Restatement. On the Effective Date, the
Existing Credit Agreement shall be amended, restated and superseded in its
entirety. The parties hereto acknowledge and agree that (a) this Agreement and
the other Credit Documents, whether executed and delivered in connection
herewith or otherwise, do not constitute a novation, payment and reborrowing, or
termination of the obligations of the Obligors under the Existing Credit
Agreement as in effect prior to the Effective Date; (b) such obligations are in
all respects continuing (as amended and restated hereby) with only the terms
thereof being modified as provided in this Agreement; (c) the Liens, guarantees
and security interests as granted in connection with the Existing Credit
Agreement securing payment of such obligations are in all respects continuing
and in full force and effect and secure the payment of the obligations of the
Obligors under this Agreement and the other Credit Documents; and (d) upon the
effectiveness of this Agreement, all Loans outstanding under the Existing Credit
Agreement immediately before the effectiveness of this Agreement will be
continued as Loans hereunder, all Existing Letters of Credit under the Existing
Credit Agreement will be continued as Letters of Credit hereunder, and all
Existing Standby Letters of Credit will be continued as Standby Letters of
Credit hereunder, in each case on the terms and conditions set forth in this
Agreement.
----------
CREDIT AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
CYGNE DESIGNS, INC.
By ▇▇▇ ▇. ▇▇▇▇▇
------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President - Finance
Address for Notices:
▇▇▇▇ ▇▇▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
THE HONGKONG AND SHANGHAI BANKING
CORPORATION LIMITED, NEW YORK BRANCH
By ▇▇▇ ▇▇▇▇▇▇
------------------------
Name: ▇▇▇ ▇▇▇▇▇▇
Title: Vice President
Address for Notices:
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: NYK CBU TRS
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
SCHEDULE 2.01
Existing Letters of Credit
DC Numbers Issuance Date Maturity Date Dollar Amount Reference Number
---------- ------------- ------------- ------------- ----------------
Bills Receivable
----------------
NYK962108 12AUG1996 44,712.00 968412
NYK962108 ▇▇▇▇▇▇▇▇▇ 12,490.20 968412
▇▇▇▇▇▇▇▇▇ 20AUG1996 28,200.00 968413
NYK962102 27AUG1996 80,245.44 968409
NYK962102 06SEP1996 71,260.20 968409
NYK962234 09SEP1996 3,925.60 968490
NYK961849 ▇▇▇▇▇▇▇▇▇ 12,448.15 968245
NYK961849 ▇▇▇▇▇▇▇▇▇ 48,155.25 968245
NYK961849 ▇▇▇▇▇▇▇▇▇ 11,857.56 968245
NYK961849 ▇▇▇▇▇▇▇▇▇ 42,001.96 968245
NYK961540 ▇▇▇▇▇▇▇▇▇ 50,150.00 968089
NYK961540 ▇▇▇▇▇▇▇▇▇ 52,510.00 968089
NYK962234 16SEP1996 5,031.30 968490
Documentary Credit
------------------
NYK962346 23AUG1996 15DEC1996 637,273.00 968559
NYK962344 23AUG1996 20OCT1996 141,808.80 968561
NYK962343 23AUG1996 04NOV1996 244,880.00 968560
1
DC Numbers Issuance Date Maturity Date Dollar Amount Reference Number
---------- ------------- ------------- ------------- ----------------
NYK962345 23AUG1996 15OCT1996 165,760.00 968562
NYK961540 ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 345,115.70 968089
NYK962389 04SEP1996 ▇▇▇▇▇▇▇▇▇ 190,575.00 968571
▇▇▇▇▇▇▇▇▇ 06SEP1996 ▇▇▇▇▇▇▇▇▇ 57,613.50 968587
NYK962262 12AUG1996 01OCT1996 126,367.50 968508
NYK962102 11JUL1996 30SEP1996 108,733.62 968409
NYK962399 06SEP1996 30SEP1996 188,570.24 968588
NYK962400 06SEP1996 30SEP1996 442,356.92 968586
NYK961966 19JUN1996 20SEP1996 76,954.50 968312
NYK962308 ▇▇▇▇▇▇▇▇▇ 20SEP1996 117,768.00 968532
NYK961917 07JUN1996 07SEP1996 367,500.00 968274
▇▇▇▇▇▇▇▇▇ 30MAY1996 31AUG1996 11,848.33 968244
NYK962234 07AUG1996 30AUG1996 1,653.35 968490
NYK961539 ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 17,208.26 968091
NYK962108 ▇▇▇▇▇▇▇▇▇ 18AUG1996 5,863.59 968412
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 18AUG1996 7,151.25 968413
NYK968646 18SEP1996 15OCT1996 39,312.00
Standby DC
----------
NYK957043 ▇▇▇▇▇▇▇▇▇ 31AUG1997 152,113.50
NYK900488 300,000.00
2
DC Numbers Issuance Date Maturity Date Dollar Amount Reference Number
---------- ------------- ------------- ------------- ----------------
NYK943077 214,148.44
NYK882451 50,000.00
NYK920184 250,000.00
3
SCHEDULE 7.12/8.07
Credit Agreements/Indebtedness
----------
CYGNE DESIGNS, INC.
SCHEDULE OF INDEBTEDNESS
SEPTEMBER 20, 1996
Amount Total
Outstanding Facility
----------- --------
CYGNE:
Mitsubishi International Corporation
and Mitsubishi Corporation ............... $ 9,423,000 $10,173,000
The Limited, Inc. .......................... $ 1,488,643 $ 1,607,245
The Hongkong and Shanghai
Banking Corporation Limited .............. $18,445,852 $30,000,000
C.I.T. Financial Corp. ..................... $ 150,673 $ 150,673
Citibank ................................... $ 4,171 $ 4,171
▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇:
The Hongkong and Shanghai
Banking Corporation Limited
(Standby letter of credit) ............... $ 514,148 $ 514,148
GJM:
The Hongkong and Shanghai
Banking Corporation Limited
(Standby letter of credit) ............... $ 300,000 $ 300,000
CYGNE DESIGN ITALY:
Banca Toscana .............................. $ 54,309 $ 54,309
T WEAR:
Casa Di Rispamio Di Firenze ................ $ 946,800 $ 946,800
Casa Di Rispamio Di Firenze ................ $ 982,725 $ 2,500,000
Casa Di Rispamio ▇▇ ▇▇▇▇▇ .................. $ 176,981 $ 1,000,000
Monte Dei Paschi ........................... $ 0 $ 1,000,000
Banca Nationale Di Lavoro .................. $ 0 $ 500,000
M.T.G.I.:
First International Bank Of Israel ......... $ 3,456,327 $ 3,500,000
----------- -----------
TOTAL CYGNE DESIGNS, INC ..................... $35,943,629 $52,250,346
=========== ===========
SCHEDULE 7.14
Subsidiaries
Jurisdiction of % of Stock Nature of
Organization or Beneficially Beneficial
Subsidiary Incorporation Owned Ownership Remarks
---------- --------------- ------------ ---------- -------
ACTIVE
------
Cygne TW, Inc. -- to be renamed
T.Wear International, Inc. ............ Delaware 100 direct
Cygne Group (F.E.) Limited .............. Hong Kong 100 direct
Cygne Guatemala, S.A. ................... Guatemala 100 indirect
JMB Internacional, S.A. ................. Guatemala 100 direct
T. Wear Company, S.r.l. ................. Italy 100 50% direct
50% indirect
M.T.G.I. -- Textile Manufacturers
Group (Israel) Ltd. ................... Israel 100 50% direct 3
50% indirect
C.M. Israel Sewing Houses Ltd. .......... Israel 100 50% direct
50% indirect
INACTIVE -- TO BE LIQUIDATED
----------------------------
AC Services, Inc. ....................... Delaware 100 direct
CDK Inc. ................................ Delaware 100 direct
Cygne Knits Limited ..................... Delaware 100 direct
Cygne Design Italy, S.r.l. .............. Italy 80 indirect 2
HKN (Sales) Inc. ........................ Delaware 100 direct
▇▇▇▇, ▇▇▇▇▇▇ and ▇▇▇▇▇▇, Incorporated ... New York 100 direct
HKN (US) Inc. ........................... New York 100 indirect
▇▇▇▇, ▇▇▇▇▇▇ and ▇▇▇▇▇▇ (F.E.) Limited .. Hong Kong 100 indirect
HKN (HK) Purchasing Ltd. ................ Hong Kong 100 indirect
HKN (HK) Sales Ltd. ..................... Hong Kong 100 indirect
HKN (Sri Lanka) Limited ................. Hong Kong 100 indirect
Jurisdiction of % of Stock Nature of
Organization or Beneficially Beneficial
Subsidiary Incorporation Owned Ownership Remarks
---------- --------------- ------------ ---------- -------
Magnus Fine Sewing Ltd. ................. Philippines 100 indirect
Cygne Group International Ltd. .......... South Korea 66.67 indirect 1
HKN (UK) Sales Ltd. ..................... United Kingdom 100 indirect
HKN (Honduras) Manufacturing ............
Limited, ▇.▇▇ ▇.▇. Honduras 100 indirect
Tralee S.A. ............................. Uruguay 100 direct
Cygne GJM Ltd. .......................... British Virgin Islands 100 direct
HKN Purchasing Ltd. ..................... British Virgin Islands 100 indirect
▇▇▇▇▇▇ Trading Ltd. ..................... British Virgin Islands 100 indirect
Remarks
-------
1. 33.33% owned by ▇▇▇▇▇▇ ▇▇▇.
2. 20% owned by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
3. Subject to the right of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ under certain circumstances, upon
consummation of a public offering of stock of MTGI in Israel, to acquire
20% of the stock of MTGI for a purchase price of $200,000.
Note: Excludes liens in favor of The Hongkong and Shanghai Banking Corporation
Limited and Mitsubishi Corporation.
Regarding Investment in Subsidiaries -- see Schedule 8.08.
SCHEDULE 8.08
SCHEDULE OF INVESTMENTS--1 of 2
CYGNE DESIGNS, INC.
INTERCOMPANY BALANCES
SEPTEMBER 20, 1996
Payable:
CDI CY-ITALY CGI CGFE ACS KNITS TWEAR-US TWSRL MTGI
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
Receivable ........
------------------------------------------------------------------------------------------------------------------------------
CDI ............... 275,602 155,643 3,804,823 24,585 1,065,902 3,100,911 1,971,999
------------------------------------------------------------------------------------------------------------------------------
CGFE .............. 80,434
------------------------------------------------------------------------------------------------------------------------------
KNITS ............. 1,098,057
------------------------------------------------------------------------------------------------------------------------------
TWSRL ............. 44,610 163,314 1,263,072
------------------------------------------------------------------------------------------------------------------------------
MTGI .............. 807,500
------------------------------------------------------------------------------------------------------------------------------
CFE ............... 1,312 1,023,723 120,167
------------------------------------------------------------------------------------------------------------------------------
CYG-GUA ...........
------------------------------------------------------------------------------------------------------------------------------
TOTAL PAYABLE ... 1,098,057 400,646 156,955 5,636,046 24,585 120,167 1,229,216 3,100,911 3,235,071
==============================================================================================================================
TOTAL
CM SEWING JMB CYG-GUA TRALEE FWM-US FWM-HK GJM RECEIVABLE
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Receivable ........
-------------------------------------------------------------------------------------------------------------------------
CDI ............... 4,249,489 222,211 1,408,222 739,448 3,297,085 9,834,852 50,150,732
-------------------------------------------------------------------------------------------------------------------------
CGFE .............. 1,065,895 2,380,320 3,506.649
-------------------------------------------------------------------------------------------------------------------------
KNITS ............. 1,098,057
-------------------------------------------------------------------------------------------------------------------------
TWSRL ............. 1,470,998
-------------------------------------------------------------------------------------------------------------------------
MTGI .............. 336,100 1,145,600
-------------------------------------------------------------------------------------------------------------------------
CFE ............... 1,145,222
-------------------------------------------------------------------------------------------------------------------------
CYG-GUA ........... 196,949 196,949
-------------------------------------------------------------------------------------------------------------------------
TOTAL PAYABLE ... 336,100 4,448,438 1,208,106 1,408,222 739,448 5,657,365 9,834,852 0
=========================================================================================================================
SCHEDULE 8.08
SCHEDULE--2 of 2
CYGNE DESIGNS, INC.
INVESTMENT IN SUBSIDIARIES
SEPTEMBER 20, 1996
Investment in:
CY-ITALY CGI (KOREA) CGFE ACS CKL CTW TWEAR MTGI CM-SEWING JMB CY-GUA TOTAL
------------------------------------------------------------------------------------------------------------------------------------
CDI ........ -- 420,000 8,897 1,000 368,612 2,243,289 240,515 1,045,241 -- 57,000 -- 4,384,554
CGFE ....... 290,135 -- -- -- -- -- 175,000 282,500 100 -- 875 748,610
------------------------------------------------------------------------------------------------------------------------------------
TOTAL ... 290,135 420,000 8,897 1,000 368,612 2,243,289 415,515 1,327,741 100 57,000 875 5,133,164
====================================================================================================================================
EXHIBIT A-1
LAI NOTE
$17,500,000 September 20, ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
FOR VALUE RECEIVED, CYGNE DESIGNS, INC., a Delaware corporation (the
"Company"), hereby promises to pay to THE HONGKONG AND SHANGHAI BANKING
CORPORATION LIMITED, NEW YORK BRANCH (the "Bank"), at its office located at ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, on or before the Termination Date the principal
sum of Seventeen Million Five Hundred Thousand Dollars ($17,500,000) or such
lesser amount as shall equal the aggregate unpaid principal amount of the LAI
Loans made by the Bank to the Company under the Amended and Restated Credit
Agreement dated as of September 20, 1996 between the Company and the Bank (as
modified and supplemented and in effect from time to time, the "Credit
Agreement"), in lawful money of the United States of America and in immediately
available funds, and to pay interest on the unpaid principal amount of each such
LAI Loan, at such office, in like money and funds, for the period commencing on
the date of such LAI Loan until such LAI Loan shall be paid in full, at the
rates per annum and on the dates provided in the Credit Agreement. In no event
shall interest hereunder exceed the maximum rate allowed under New York law.
The date, amount and interest rate of each LAI Loan made by the Bank to the
Company, and each payment made on account of the principal thereof, shall be
recorded by the Bank on its books; provided that the failure by the Bank so to
record such LAI Loans shall not affect the obligations of the Company hereunder.
This Note is the LAI Note referred to in Section 2.03(b) of the Credit
Agreement and evidences LAI Loans made by the Bank thereunder. This Note
modifies that certain note dated as of September 28, 1995 (the "Existing LAI
Note") made by the Company in favor of the Bank in the principal amount of Fifty
Million Dollars ($50,000,000) and is hereby delivered in substitution for the
Existing LAI Note, but not in payment, satisfaction or cancellation of the
outstanding obligations evidenced by the Existing LAI Note. This Note is subject
to the terms and conditions set forth in the Credit Agreement, which terms and
conditions are incorporated herein by reference. Capitalized terms used but not
defined herein have the respective meanings assigned to them in the Credit
Agreement.
The payment of this Note is supported by collateral security provided under
the Security Documents referred to in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of this
Note upon the occurrence of certain events and for prepayments of LAI Loans upon
the terms and conditions specified therein.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO NOTES MADE AND TO BE
PERFORMED THEREIN.
CYGNE DESIGNS, INC.
By
---------------------------
Name:
Title:
SCHEDULE
This LAI Note evidences LAI Loans made under the Credit Agreement to the
Company, on the dates, in the principal amounts and bearing interest at the
rates set forth below, subject to the payments and prepayments of principal set
forth below.
Principal Amount Unpaid
Date Amount of Interest Paid or Principal Notation
Made LAI Loan Rate Prepaid Amount Made By
---- -------- ---- ------- ------ -------
EXHIBIT A-2
REVOLVING NOTE
$10,000,000 September 20, ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
FOR VALUE RECEIVED, CYGNE DESIGNS, INC., a Delaware corporation (the
"Company"), hereby promises to pay to THE HONGKONG AND SHANGHAI BANKING
CORPORATION LIMITED, NEW YORK BRANCH (the "Bank"), at its office located at ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, on or before the Termination Date the principal
sum of Ten Million Dollars ($10,000,000) or such lesser amount as shall equal
the aggregate unpaid principal amount of the Revolving Loans made by the Bank to
the Company under the Amended and Restated Credit Agreement dated as of
September 20, 1996 between the Company and the Bank (as modified and
supplemented and in effect from time to time, the "Credit Agreement"), in lawful
money of the United States of America and in immediately available funds, and to
pay interest on the unpaid principal amount of each such Revolving Loan, at such
office, in like money and funds, for the period commencing on the date of such
Revolving Loan until such Revolving Loan shall be paid in full, at the rates per
annum and on the dates provided in the Credit Agreement. In no event shall
interest hereunder exceed the maximum rate allowed under New York law.
The date, amount and interest rate of each Revolving Loan made by the Bank
to the Company, and each payment made on account of the principal thereof, shall
be recorded by the Bank on its books; provided that the failure by the Bank so
to record such Revolving Loans shall not affect the obligations of the Company
hereunder.
This Note is the Revolving Note referred to in Section 2.03(c) of the
Credit Agreement and evidences Revolving Loans made by the Bank thereunder. This
Note modifies that certain note dated as of September 28, 1995 (the "Existing
Revolving Note") made by the Company in favor of the Bank in the principal
amount of Eleven Million Dollars ($11,000,000) and is hereby delivered in
substitution for the Existing Revolving Note, but not in payment, satisfaction
or cancellation of the outstanding obligations evidenced by the Existing
Revolving Note. This Note is subject to the terms and conditions set forth in
the Credit Agreement, which terms and conditions are incorporated herein by
reference. Capitalized terms used but not defined herein have the respective
meanings assigned to them in the Credit Agreement.
The payment of this Note is supported by collateral security provided under
the Security Documents referred to in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of this
Note upon the occurrence of certain events and for prepayments of Revolving
Loans upon the terms and conditions specified therein.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO NOTES MADE AND TO BE
PERFORMED THEREIN.
CYGNE DESIGNS, INC.
By
---------------------------
Name:
Title:
SCHEDULE
This Revolving Note evidences Revolving Loans made under the Credit
Agreement to the Company, on the dates, in the principal amounts and bearing
interest at the rates set forth below, subject to the payments and prepayments
of principal set forth below.
Principal Amount Unpaid
Date Amount of Interest Paid or Principal Notation
Made Revolging Loan Rate Prepaid Amount Made By
---- -------------- -------- ------- --------- --------
EXHIBIT A-3
EXPORT LOAN NOTE
$3,000,000 September 20, ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
FOR VALUE RECEIVED, CYGNE DESIGNS, INC., a Delaware corporation (the
"Company"), hereby promises to pay to THE HONGKONG AND SHANGHAI BANKING
CORPORATION LIMITED, NEW YORK BRANCH (the "Bank"), at its office located at ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, on or before the Termination Date the principal
sum of Three Million Dollars ($3,000,000) or such lesser amount as shall equal
the aggregate unpaid principal amount of the Export Loans made by the Bank to
the Company under the Amended and Restated Credit Agreement dated as of
September 20, 1996 between the Company and the Bank (as modified and
supplemented and in effect from time to time, the "Credit Agreement"), in lawful
money of the United States of America and in immediately available funds, and to
pay interest on the unpaid principal amount of each such Export Loan, at such
office, in like money and funds, for the period commencing on the date of such
Export Loan until such Export Loan shall be paid in full, at the rates per annum
and on the dates provided in the Credit Agreement. In no event shall interest
hereunder exceed the maximum rate allowed under New York law.
The date, amount and interest rate of each Export Loan made by the Bank to
the Company, and each payment made on account of the principal thereof, shall be
recorded by the Bank on its books; provided that the failure by the Bank so to
record such Export Loans shall not affect the obligations of the Company
hereunder.
This Note is the Export Loan Note referred to in Section 2.03(d) of the
Credit Agreement and evidences Export Loans made by the Bank thereunder. This
Note modifies that certain note dated as of September 28, 1995 (the "Existing
Export Loan Note") made by the Company in favor of the Bank in the principal
amount of Seven Million Five Hundred Thousand Dollars ($7,500,000) and is hereby
delivered in substitution for the Existing Export Loan Note, but not in payment,
satisfaction or cancellation of the outstanding obligations evidenced by the
Existing Export Loan Note. This Note is subject to the terms and conditions set
forth in the Credit Agreement, which terms and conditions are incorporated
herein by reference. Capitalized terms used but not defined herein have the
respective meanings assigned to them in the Credit Agreement.
The payment of this Note is supported by collateral security provided under
the Security Documents referred to in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of this
Note upon the occurrence of certain events and for prepayments of Export Loans
upon the terms and conditions specified therein.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO NOTES MADE AND TO BE
PERFORMED THEREIN.
CYGNE DESIGNS, INC.
By
---------------------------
Name:
Title:
SCHEDULE
This Export Loan Note evidences Export Loans made under the Credit
Agreement to the Company, on the dates, in the principal amounts and bearing
interest at the rates set forth below, subject to the payments and prepayments
of principal set forth below.
Principal Amount Unpaid
Date Amount of Interest Paid or Principal Notation
Made Export Loan Rate Prepaid Amount Made By
---- ----------- -------- ------- --------- --------
EXHIBIT B
AMENDED AND RESTATED SECURITY AGREEMENT
AMENDED AND RESTATED SECURITY AGREEMENT dated as of September 20, 1996
between CYGNE DESIGNS, INC., a Delaware corporation having an office at ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Company"), and THE HONGKONG AND SHANGHAI
BANKING CORPORATION LIMITED, a foreign banking corporation acting through its
New York Branch (the "Bank").
W I T N E S S E T H :
WHEREAS, the Company has provided a security interest to the Bank under a
Security Agreement dated as of September 28, 1995 (as modified and supplemented
and in effect from time to time, the "Existing Agreement");
WHEREAS, the Company has requested that the Existing Agreement, as amended
prior to the date hereof and as amended and modified hereby, be restated in its
entirety to reflect the amendment of certain provisions thereof; and
WHEREAS, the Company and the Bank are parties to an Amended and Restated
Credit Agreement dated as of September 20, 1996 (as modified and supplemented
and in effect from time to time, the "Credit Agreement"), providing, subject to
the terms and conditions thereof, for extensions of credit (by issuing letters
of credit and making loans) to be made by the Bank to the Company in an
aggregate face or principal amount not exceeding $17,500,000;
NOW, THEREFORE, to induce the Bank to enter into the Credit Agreement, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company has agreed to continue to pledge and grant
a security interest in the Collateral (as hereinafter defined) as security for
the Secured Obligations (as hereinafter defined). Accordingly, the parties
hereto agree that the Original Agreement is hereby amended and restated in its
entirety as follows:
Section 1. Definitions. Terms defined in the Credit Agreement are used
herein as defined therein. In addition, as used herein:
"Accounts" shall have the meaning ascribed thereto in Section 3(e)
hereof.
"CAT Shares" shall mean the 6,000 validly issued, fully paid and
nonassessable shares of common stock, par value $0.01 per share, of CAT US,
Inc., a Delaware corporation, as set forth on Annex I hereto.
- 2 -
"Collateral" shall have the meaning ascribed thereto in Section 3
hereof.
"Documents" shall have the meaning ascribed thereto in Section 3(j)
hereof.
"Equipment" shall have the meaning ascribed thereto in Section 3(h)
hereof.
"Instruments" shall have the meaning ascribed thereto in Section 3(f)
hereof.
"Inventory" shall have the meaning ascribed thereto in Section 3(g)
hereof.
"Issuers" shall mean, collectively, the respective corporations
identified in Annex 1 hereto under the caption "Issuers".
"Lockbox Account" shall have the meaning ascribed thereto in Section
4(a) hereof.
"Pledged Stock" shall have the meaning ascribed thereto in Section
3(b) hereof.
"Secured Obligations" shall mean, collectively, (a) the principal of
and interest on the Loans made by the Bank to, and the Notes held by the
Bank of, the Company, and all other amounts from time to time owing to the
Bank by the Company under the Credit Agreement or the Notes, (b) all
obligations of the Company to the Bank hereunder, and (c) all obligations
of the Company under any other Credit Document to which it is party.
"Stock Collateral" shall mean, collectively, the Collateral
described in clauses (a) through (d) of Section 3 hereof and the proceeds
of and to any such property and, to the extent related to any such property
or such proceeds, all books, correspondence, credit files, records,
invoices and other papers.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in
effect in the State of New York from time to time.
Section 2. Representations and Warranties. The Company represents and
warrants to the Bank that:
(a) the Company is the sole beneficial owner of the Collateral and no
Lien exists or will exist upon any Collateral at any time (and, with
respect to the Stock Collateral, no right or option to acquire the same
exists in favor of any other Person), except for (i) Liens permitted under
Section 8.06 of the Credit Agreement and (ii) the pledge and security
interest in favor of the Bank created or provided for herein which pledge
and security interest constitutes a first priority perfected pledge and
security interest in and to all of the Collateral;
SECURITY AGREEMENT
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(b) the Pledged Stock evidenced by the certificates identified in
Annex 1 hereto and the ATSC Shares are, and all other Pledged Stock will
be, duly authorized, validly issued, fully paid and nonassessable and none
of such Pledged Stock is or will be subject to any contractual restriction,
or any restriction under the charter or by-laws of the respective Issuers
of such Pledged Stock, upon the transfer of such Pledged Stock (except for
any such restriction contained herein or in the Credit Agreement or, with
respect to the ATSC Shares, in the Stockholders Agreement or under Federal
and state securities law);
(c) the Pledged Stock evidenced by the certificates identified in
Annex 1 hereto constitutes the indicated percentage of the total issued and
outstanding shares of capital stock of any class of the Issuers
beneficially owned by the Company on the date hereof (whether or not
registered in the name of the Company) and said Annex 1 correctly
identifies, as at the date hereof, the respective Issuers of such Pledged
Stock, the respective class and par value of the shares comprising such
Pledged Stock and the respective number of shares (and registered owner
thereof) evidenced by each such certificate; and
(d) any goods now or hereafter produced by the Company or any of its
Subsidiaries included in the Collateral have been and will be produced in
compliance with the requirements of the Fair Labor Standards Act, as
amended.
Section 3. Collateral. As collateral security for the prompt payment in
full when due (whether at stated maturity, by acceleration or otherwise) of the
Secured Obligations, the Company hereby continues to pledge and grant to the
Bank a security interest in all of the Company's right, title and interest in
the following property, whether now owned by the Company or hereafter acquired
and whether now existing or hereafter coming into existence, and wherever
located (all being collectively referred to herein as "Collateral"):
(a) all of the ATSC Shares received by the Company in exchange for the
sale of the CAT Shares in connection with the CAT Transaction, which shares
of common stock, and certain other assets of the Company, the Company has
previously pledged to the Bank pursuant to the Existing Agreement;
(b) the respective shares of common/preferred stock of the Issuers
evidenced by the certificates identified in Annex 1 hereto and all other
shares of capital stock of whatever class of the Issuers, now or hereafter
owned by the Company, together with in each case the certificates
evidencing the same (collectively, together with the ATSC Shares, the
"Pledged Stock");
(c) all shares, securities, moneys or property representing a dividend
on any of the Pledged Stock, or representing a distribution or return of
capital upon or in respect of the
SECURITY AGREEMENT
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Pledged Stock, or resulting from a split-up, revision, reclassification or
other like change of the Pledged Stock or otherwise received in exchange
therefor, and any subscription warrants, rights or options issued to the
holders of, or otherwise in respect of, the Pledged Stock;
(d) without affecting the obligations of the Company under any
provision prohibiting such action hereunder or under the Credit Agreement,
in the event of any consolidation or merger in which any Issuer is not the
surviving corporation, all shares of each class of the capital stock of the
successor corporation (unless such successor corporation is the Company
itself) formed by or resulting from such consolidation or merger;
(e) all accounts and general intangibles (each as defined in the
Uniform Commercial Code) of the Company constituting any right to the
payment of money, including (but not limited to) all moneys due and to
become due to the Company in respect of any loans or advances for the
purchase price of Inventory or Equipment or other goods sold or leased or
for services rendered, all moneys due and to become due to the Company
under any guarantee (including a letter of credit) of the purchase price of
Inventory or Equipment sold by the Company and all tax refunds (such
accounts, general intangibles and moneys due and to become due being herein
called collectively "Accounts");
(f) all instruments, chattel paper or letters of credit (each as
defined in the Uniform Commercial Code) of the Company evidencing,
representing, arising from or existing in respect of, relating to, securing
or otherwise supporting the payment of, any of the Accounts, including (but
not limited to) promissory notes, drafts, bills of exchange and trade
acceptances (herein collectively called "Instruments");
(g) all inventory (as defined in the Uniform Commercial Code) of the
Company, all goods obtained by the Company in exchange for such inventory,
and any products made or processed from such inventory including all
substances, if any, commingled therewith or added thereto (herein
collectively called "Inventory");
(h) all equipment (as defined in the Uniform Commercial Code) of the
Company (herein collectively called "Equipment");
(i) each contract and other agreement of the Company relating to the
sale or other disposition of Inventory or Equipment;
(j) all documents of title (as defined in the Uniform Commercial Code)
or other receipts of the Company covering, evidencing or representing
Inventory or Equipment (herein collectively called "Documents");
SECURITY AGREEMENT
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(k) all rights, claims and benefits of the Company against any Person
arising out of, relating to or in connection with Inventory or Equipment
purchased by the Company, including, without limitation, any such rights,
claims or benefits against any Person storing or transporting such
Inventory or Equipment;
(l) the balance from time to time in the Lockbox Account;
(m) the balance from time to time in the Collateral Account;
(n) the balance from time to time in the Escrow Account; and
(o) all other tangible or intangible property of the Company,
including, without limitation, all proceeds, products and accessions of and
to any of the property of the Company described in clauses (a) through (n)
above in this Section 3 (including, without limitation, any proceeds of
insurance thereon), and, to the extent related to any property described in
said clauses or such proceeds, products and accessions, all books,
correspondence, credit files, records, invoices and other papers, including
without limitation all tapes, cards, computer runs and other papers and
documents in the possession or under the control of the Company or any
computer bureau or service company from time to time acting for the
Company.
Section 4. Lockbox Account.
(a) The Company shall maintain a lockbox account (the "Lockbox
Account") with Marine Midland Bank (the "Lockbox Bank") in New York City,
and shall instruct debtors relating to the Accounts to make all remittances
directly to the Lockbox Account, which account (together with any related
disbursement account) shall be subject to the exclusive control of the
Bank; provided, however, unless and until an Event of Default shall have
occurred and be continuing, the Company shall have access to the proceeds
of such bank accounts. Upon the occurrence of an Event of Default, the
Company shall cease to have access to such bank accounts and the Bank shall
have sole access. The Company shall promptly deposit in the Lockbox Account
all payments relating to the Accounts received directly by the Company.
Without the prior written consent of the Bank, the Company shall not
provide debtors relating to the Accounts with payment instructions other
than as set forth above.
(b) The Lockbox Bank shall serve as the agent of the Bank with respect
to (i) the depositing of items comprising collections on Accounts and (ii)
the disbursements to be paid from any disbursement account relating to the
Lockbox Account. The rights, duties and obligations of the Lockbox Bank,
including, without limitation, its fees, shall be as such are
SECURITY AGREEMENT
- 6 -
set forth in the related agreement between the Bank and the Lockbox Bank.
The Company shall pay all fees in connection with the Lockbox Account.
Section 5. Further Assurances; Remedies. In furtherance of the grant of the
pledge and security interest pursuant to Section 3 hereof, the Company hereby
agrees with the Bank as follows:
5.01 Delivery and Other Perfection. The Company shall:
(a) if any of the above-described shares, securities, monies or
property required to be pledged by the Company under clauses (a), (b), (c)
and (d) of Section 3 hereof are received by the Company, forthwith either
(x) transfer and deliver to the Bank such shares or securities so received
by the Company (together with the certificates for any such shares and
securities duly endorsed in blank or accompanied by undated stock powers
duly executed in blank) all of which thereafter shall be held by the Bank,
pursuant to the terms of this Agreement, as part of the Collateral or (y)
take such other action as the Bank shall deem necessary or appropriate to
duly record the Lien created hereunder in such shares, securities, monies
or property referred to in said clauses (a), (b), (c) and (d);
(b) deliver and pledge to the Bank any and all Instruments, endorsed
and/or accompanied by such instruments of assignment and transfer in such
form and substance as the Bank may request; provided, that so long as no
Default shall have occurred and be continuing, the Company may retain for
collection in the ordinary course any Instruments received by it in the
ordinary course of business and the Bank shall, promptly upon request of
the Company, make appropriate arrangements for making any other Instrument
pledged by the Company available to it for purposes of presentation,
collection or renewal (any such arrangement to be effected, to the extent
deemed appropriate by the Bank, against trust receipt or like document);
(c) give, execute, deliver, file and/or record any financing
statement, notice, instrument, document, agreement or other papers that may
be necessary or desirable (in the judgment of the Bank) to create,
preserve, perfect or validate any security interest granted pursuant hereto
or to enable the Bank to exercise and enforce its rights hereunder with
respect to such security interest, including, without limitation, causing
any or all of the Stock Collateral to be transferred of record into the
name of the Bank or its nominee (and the Bank agrees that if any Stock
Collateral is transferred into its name or the name of its nominee, the
Bank will thereafter promptly give to the Company copies of any notices and
communications received by it with respect to the Stock Collateral),
provided that notices to account debtors in respect of any Accounts or
Instruments shall be subject to the provisions of clause (g) below;
SECURITY AGREEMENT
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(d) upon the acquisition after the date hereof by the Company of any
Equipment covered by a certificate of title or ownership, cause the Bank to
be listed as the lienholder on such certificate of title and within 120
days of the acquisition thereof deliver evidence of the same to the Bank;
(e) keep full and accurate books and records relating to the
Collateral, and stamp or otherwise ▇▇▇▇ such books and records in such
manner as the Bank may reasonably require in order to reflect the security
interests granted by this Agreement;
(f) permit representatives of the Bank, upon reasonable notice, at any
time during normal business hours to inspect and make abstracts from its
books and records pertaining to the Collateral, and permit representatives
of the Bank to be present at the Company's place of business to receive
copies of all communications and remittances relating to the Collateral,
and forward copies of any notices or communications by the Company with
respect to the Collateral, all in such manner as the Bank may require; and
(g) upon the occurrence and during the continuance of any Default,
upon request of the Bank, promptly notify (and the Company hereby
authorizes the Bank so to notify) each account debtor in respect of any
Accounts or Instruments that such Collateral has been assigned to the Bank
hereunder, and that any payments due or to become due in respect of such
Collateral are to be made directly to the Bank.
5.02 Other Financing Statements and Liens. Without the prior written
consent of the Bank, the Company shall not file or suffer to be on file, or
authorize or permit to be filed or to be on file, in any jurisdiction, any
financing statement or like instrument with respect to the Collateral in which
the Bank is not named as the sole secured party.
5.03 Preservation of Rights. The Bank shall not be required to take steps
necessary to preserve any rights against prior parties to any of the Collateral.
5.04 Special Provisions Relating to Stock Collateral.
(a) The Company will cause the Stock Collateral to constitute at all
times the percentage indicated on Annex 1 hereto of the total number of
shares of each class of capital stock of each Issuer then outstanding, but
in no event shall such percentage exceed 65% with respect to any class of
capital stock of a Foreign Subsidiary; provided, however, the ATSC Shares
may constitute a decreasing percentage of the capital stock of the related
Issuer in accordance with the terms and conditions of the Credit Agreement.
SECURITY AGREEMENT
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(b) So long as no Event of Default shall have occurred and be
continuing, the Company shall have the right to exercise all voting,
consensual and other powers of ownership pertaining to the Stock Collateral
for all purposes not inconsistent with the terms of this Agreement, the
Credit Agreement, the Notes or any other instrument or agreement referred
to herein or therein, provided that the Company agrees that it will not
vote the Stock Collateral in any manner that is inconsistent with the terms
of this Agreement, the Credit Agreement, the Notes or any such other
instrument or agreement (as determined by the Bank in its reasonable
judgment); and the Bank shall execute and deliver to the Company or cause
to be executed and delivered to the Company all such proxies, powers of
attorney, dividend and other orders, and all such instruments, without
recourse, as the Company may reasonably request for the purpose of enabling
the Company to exercise the rights and powers which it is entitled to
exercise pursuant to this Section 5.04(b).
(c) All shares, securities, moneys or other property representing
stock which are payable in connection with dividends or liquidating
dividends (including without limitation in connection with the liquidation
of any Issuer on or after such liquidation) and (ii) all additional
Collateral described in clauses (a), (b), (c) and (d) of Section 3 hereof
constituting a distribution or return of capital upon or in respect of any
Pledged Stock, or resulting from a conversion, split-up, revision,
reclassification or other like change of any Pledged Stock or received in
exchange therefor as a result of a merger, consolidation or otherwise,
shall be paid or transferred directly to the Bank (or its agent or nominee,
as the case may be), as part of the Collateral subject to this Agreement.
(d) If any Event of Default shall have occurred, then so long as such
Event of Default shall continue, and whether or not the Bank exercises any
available right to declare any Secured Obligation due and payable or seeks
or pursues any other relief or remedy available to it under applicable law
or under this Agreement, the Credit Agreement, the Notes or any other
agreement relating to such Secured Obligation, all dividends and other
distributions on the Stock Collateral shall be paid directly to the Bank
and retained by it in the Custodial Trust Account as part of the Stock
Collateral, subject to the terms of this Agreement, and, if the Bank shall
so request in writing, the Company agrees to execute and deliver to the
Bank appropriate additional dividend, distribution and other orders and
documents to that end, provided that if such Event of Default is cured, any
such dividend or distribution theretofore paid to the Bank shall, upon
request of the Company (except to the extent theretofore applied to the
Secured Obligations) be returned by the Bank to the Company.
5.05 Events of Default, etc. During the period during which an Event of
Default shall have occurred and be continuing:
SECURITY AGREEMENT
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(i) the Company shall, at the request of the Bank, assemble the
Collateral owned by it at such place or places, reasonably convenient to
both the Bank and the Company, designated in its request;
(ii) the Bank may make any reasonable compromise or settlement deemed
desirable with respect to any of the Collateral and may extend the time of
payment, arrange for payment in installments, or otherwise modify the terms
of, any of the Collateral;
(iii) the Bank shall have all of the rights and remedies with respect
to the Collateral of a secured party under the Uniform Commercial Code
(whether or not said Code is in effect in the jurisdiction where the rights
and remedies are asserted) and such additional rights and remedies to which
a secured party is entitled under the laws in effect in any jurisdiction
where any rights and remedies hereunder may be asserted, including, without
limitation, the right, to the maximum extent permitted by law, to exercise
all voting, consensual and other powers of ownership pertaining to the
Collateral (in the case of the ATSC Shares, subject to the Stockholders
Agreement) as if the Bank were the sole and absolute owner thereof (and the
Company agrees to take all such action as may be appropriate to give effect
to such right);
(iv) the Bank in its discretion may, in its name or in the name of the
Company or otherwise, demand, ▇▇▇ for, collect or receive any money or
property at any time payable or receivable on account of or in exchange for
any of the Collateral, but shall be under no obligation to do so; and
(v) the Bank may (in the case of the ATSC Shares, subject to the
Stockholders Agreement), upon 10 Business Days' prior written notice to the
Company of the time and place, with respect to the Collateral or any part
thereof which shall then be or shall thereafter come into the possession,
custody or control of the Bank, or any of its agents, sell, lease, assign
or otherwise dispose of all or any of such Collateral, at such place or
places as the Bank deems best, and for cash or on credit or for future
delivery (without thereby assuming any credit risk), at public or private
sale, without demand of performance or notice of intention to effect any
such disposition or of time or place thereof (except such notice as is
required above or by applicable statute and cannot be waived) and the Bank
or anyone else may be the purchaser, lessee, assignee or recipient of any
or all of the Collateral so disposed of at any public sale (or, to the
extent permitted by law, at any private sale), and thereafter hold the same
absolutely, free from any claim or right of whatsoever kind, including any
right or equity of redemption (statutory or otherwise), of the Company,
SECURITY AGREEMENT
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any such demand, notice or right and equity being hereby expressly waived
and released. The Bank may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time
by announcement at the time and place fixed for the sale, and such sale may
be made at any time or place to which the same may be so adjourned.
The proceeds of each collection, sale or other disposition under this Section
5.05 shall be applied in accordance with Section 5.09 hereof.
The Company recognizes that, by reason of certain prohibitions contained in
the Securities Act of 1933, as amended, and applicable state securities laws,
the Bank may be compelled, with respect to any sale of all or any part of the
Collateral, to limit purchasers to those who will agree, among other things, to
acquire the Collateral for their own account, for investment and not with a view
to the distribution or resale thereof. The Company acknowledges that any such
private sales may be at prices and on terms less favorable to the Bank than
those obtainable through a public sale without such restrictions, and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner and that the Bank
shall have no obligation to engage in public sales and no obligation to delay
the sale of any Collateral for the period of time necessary to permit the
respective Issuer thereof to register it for public sale.
5.06 Deficiency. If the proceeds of sale, collection or other realization
of or upon the Collateral pursuant to Section 5.05 hereof are insufficient to
cover the costs and expenses of such realization and the payment in full of the
Secured Obligations, the Company shall remain liable for any deficiency.
5.07 Removals, etc. Without at least 30 days prior written notice to the
Bank, the Company shall not (i) maintain any of its books or records with
respect to the Collateral at any office or maintain its chief executive office
or its principal place of business at any place, or permit any Inventory or
Equipment to be located anywhere other than at the address indicated beneath the
signature of the Company to the Credit Agreement or at one of the locations
identified in Annex 2 hereto or in transit from one of such locations to another
(or, with respect to Inventory, in transit from one of such locations to a
customer of the Company) or (ii) change its corporate name, or the name under
which it does business, from the name shown on the signature page hereto.
5.08 Private Sale. The Bank shall incur no liability as a result of the
sale of the Collateral, or any part thereof, at any private sale pursuant to
Section 5.05 hereof conducted in a commercially reasonable manner. The Company
hereby waives any claims against the Bank arising by reason of the fact that the
price at which the Collateral may have been sold at such a
SECURITY AGREEMENT
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private sale was less than the price which might have been obtained at a public
sale or was less than the aggregate amount of the Secured Obligations, even if
the Bank accepts the first offer received and does not offer the Collateral to
more than one offeree.
5.09 Application of Proceeds. Except as otherwise herein expressly
provided, the proceeds of any collection, sale or other realization of all or
any part of the Collateral pursuant hereto, and any other cash at the time held
by the Bank under Section 4 hereof or this Section 5, shall be applied by the
Bank:
First, to the payment of the costs and expenses of such collection,
sale or other realization, including reasonable out-of-pocket costs and
expenses of the Bank and the fees and expenses of its agents and counsel,
and all expenses and advances made or incurred by the Bank in connection
therewith;
Next, to the payment in full of the Secured Obligations then due and
payable, ratably in accordance with the respective outstanding amounts
thereof then due and payable; and
Finally, to the payment to the Company, or its successors or assigns,
or as a court of competent jurisdiction may direct, of any surplus then
remaining.
As used in this Section 5, "proceeds" of Collateral shall mean cash, securities
and other property realized in respect of, and distributions in kind of,
Collateral, including any thereof received under any reorganization, liquidation
or adjustment of debt of the Company or any issuer of or obligor on any of the
Collateral.
5.10 Attorney-in-Fact. Without limiting any rights or powers granted by
this Agreement to the Bank while no Event of Default has occurred and is
continuing, upon the occurrence and during the continuance of any Event of
Default the Bank is hereby appointed the attorney-in-fact of the Company for the
purpose of carrying out the provisions of this Section 5 and taking any action
and executing any instruments which the Bank may deem necessary or advisable to
accomplish the purposes hereof, which appointment as attorney-in-fact is
irrevocable and coupled with an interest. Without limiting the generality of the
foregoing, so long as the Bank shall be entitled under this Section 5 to make
collections in respect of the Collateral, the Bank shall have the right and
power to receive, endorse and collect all checks made payable to the order of
the Company representing any dividend, payment, or other distribution in respect
of the Collateral or any part thereof and to give full discharge for the same.
5.11 Perfection. Prior to or concurrently with the execution and delivery
of this Agreement, the Company shall (i) file such financing statements and
other documents in such offices as the Bank may request to perfect the security
interests granted by Section 3 of this
SECURITY AGREEMENT
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Agreement, and (ii) deliver to the Bank all certificates identified in Annex 1
hereto, accompanied by undated stock powers duly executed in blank.
5.12 Termination. When all Secured Obligations shall have been paid in full
and the Facilities of the Bank under the Credit Agreement and all liabilities of
the Bank relating to issued Letters of Credit shall have expired or been
terminated, this Agreement shall terminate, and the Bank shall forthwith cause
to be assigned, transferred and delivered, against receipt but without any
recourse, warranty or representation whatsoever, any remaining Collateral and
money received in respect thereof, to or on the order of the Company. The Bank
shall also execute and deliver to the Company upon such termination such Uniform
Commercial Code termination statements and such other documentation as shall be
reasonably requested by the Company to effect the termination and release of the
Liens on the Collateral.
5.13 Expenses. The Company agrees to pay to the Bank all out-of-pocket
expenses (including reasonable expenses for legal services of every kind) of, or
incident to, the enforcement of any of the provisions of this Section 5, or
performance by the Bank of any obligations of the Company in respect of the
Collateral which the Company has failed or refused to perform, or any actual or
attempted sale, or any exchange, enforcement, collection, compromise or
settlement in respect of any of the Collateral, and for the care of the
Collateral and defending or asserting rights and claims of the Bank in respect
thereof, by litigation or otherwise, including expenses of insurance, and all
such expenses shall be Secured Obligations to the Bank secured under Section 3
hereof.
5.14 Further Assurances. The Company agrees that, from time to time upon
the written request of the Bank, the Company will execute and deliver such
further documents and do such other acts and things as the Bank may reasonably
request in order fully to effect the purposes of this Agreement.
5.15 Collateral Audit. The Company shall permit representatives of the Bank
to undertake an annual audit of the Collateral, and the Company agrees to pay
all reasonable expenses of the Bank incurred in connection therewith.
Section 6. Miscellaneous.
6.01 No Waiver. No failure on the part of the Bank or any of its agents to
exercise, and no course of dealing with respect to, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise by the Bank or any of its agents of any
right, power or remedy hereunder preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. The remedies herein are
cumulative and are not exclusive of any remedies provided by law.
SECURITY AGREEMENT
- 13 -
6.02 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the law of the State of New York.
6.03 Notices. All notices, requests, consents and demands hereunder shall
be in writing and telexed, telecopied, telegraphed, cabled or delivered to the
intended recipient at its address or telex number specified pursuant to Section
10.02 of the Credit Agreement and shall be deemed to have been given at the
times specified in said Section 10.02.
6.04 Waivers, etc. The terms of this Agreement may be waived, altered or
amended only by an instrument in writing duly executed by the Company and the
Bank. Any such amendment or waiver shall be binding upon the Bank, each holder
of any Secured Obligation and the Company.
6.05 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the respective successors and assigns of the Company, the
Bank, and each holder of the Secured Obligations (provided, however, that the
Company shall not assign or transfer its rights hereunder without the prior
written consent of the Bank).
6.06 Counterparts. This Agreement may be executed in any number of
counterparts, all of which together shall constitute one and the same instrument
and any of the parties hereto may execute this Agreement by signing any such
counterpart.
6.07 Banks. The Bank may employ agents and attorneys-in-fact in connection
herewith and shall not be responsible for the negligence or misconduct of any
such agents or attorneys-in-fact selected by it in good faith.
6.08 Severability. If any provision hereof is invalid and unenforceable in
any applicable jurisdiction, then, to the fullest extent permitted by law, (i)
the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Bank in order to
carry out the intentions of the parties hereto as nearly as may be possible and
(ii) the invalidity or unenforceability of any provision hereof in any
jurisdiction shall not affect the validity or enforceability of such provision
in any other jurisdiction.
SECURITY AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed as of the day and year first above written.
CYGNE DESIGNS, INC.
By
---------------------------------
Name:
Title:
Address for Notices:
▇▇▇▇ ▇▇▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
THE HONGKONG AND SHANGHAI BANKING
CORPORATION LIMITED, NEW YORK BRANCH
By
---------------------------------
Name:
Title:
Address for Notices:
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: NYK CBU TRS
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
ANNEX 1
LIST OF PLEDGED STOCK
Certificate Registered
Issuer Nos. Owner Number of Shares
------ ----------- ---------- ----------------
1. CAT US, Inc. #9 Cygne Designs, Inc. 6,000 shares of
common stock having
a par value of
$0.01 per share
(60% of outstanding
capital stock)
2. Cygne Group (F.E.) Limited #7 Cygne Designs, Inc. 65 shares of 99 shares
(formerly known as of common stock
Cygne Design F.E. Limited) having a par value of
HK$1,000 per share
(65% of outstanding
capital stock)
3. M.T.G.I. Textile Manufacturers N/A Cygne Designs, Inc. 109,050 ordinary shares
Group (Israel) Ltd. having a nominal value
of NIS 1.00 each (50%
of outstanding capital
stock)
4. T. Wear Company S.r.l. N/A Cygne Designs, Inc. Shares for lire 150,000,000
(50% of share capital)
5. JMB International, S.A. #18-49 Cygne Designs, Inc. 32 shares of stock having
a par value of Q100.00 each
(64% of outstanding capital
stock)
ANNEX 2
LIST OF LOCATIONS
EXHIBIT C-1
GUARANTEE AGREEMENT
GUARANTEE AGREEMENT dated as of September 20, 1996 between AC SERVICES,
INC., a Delaware corporation (the "Guarantor"), and THE HONGKONG AND SHANGHAI
BANKING CORPORATION LIMITED, a foreign banking corporation acting through its
New York Branch (the "Bank").
Cygne Designs, Inc., a Delaware corporation (the "Company"), and the Bank
are parties to that certain Amended and Restated Credit Agreement dated as of
September 20, 1996 (as modified and supplemented and in effect from time to
time, the "Credit Agreement"), providing, subject to the terms and conditions
thereof, for extensions of credit (by issuing letters of credit and making
loans) to be made by the Bank to the Company in an aggregate face or principal
amount not exceeding $17,500,000.
To induce the Bank to enter into the Credit Agreement and to extend credit
thereunder, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Guarantor has agreed (to the
extent hereinafter provided) to guarantee the Guaranteed Obligations (as
hereinafter defined). Accordingly, the parties hereto agree as follows:
Section 1. Definitions. Unless otherwise defined, terms defined in the
Credit Agreement are used herein as defined therein. In addition, as used
herein:
"Guaranteed Obligations" shall mean the obligations of the Company
(including obligations to pay principal of and interest on Loans and to pay
Reimbursement Obligations), whenever arising, under the Credit Agreement, the
Notes and the Security Documents.
Section 2. The Guarantee.
2.01 Guarantee. The Guarantor hereby guarantees to the Bank and its
successors and assigns the prompt payment in full when due (whether at stated
maturity, by acceleration or otherwise) of the Guaranteed Obligations, in each
case strictly in accordance with the terms thereof. The Guarantor hereby further
agrees that if any of the Guaranteed Obligations are not paid in full when due
(whether at stated maturity, by acceleration or otherwise), the Guarantor will
promptly pay the same, without any demand or notice whatsoever, and that in the
case of any extension of time of payment or renewal of any of the Guaranteed
Obligations, the same will be promptly paid in full when due (whether at
extended maturity, by acceleration or otherwise) in accordance with the terms of
such extension or renewal.
- 2 -
2.02 Obligations Unconditional. The obligations of the Guarantor under
Section 2.01 hereof are absolute and unconditional, irrespective of the value,
genuineness, validity, regularity or enforceability of the Credit Agreement, the
Notes or any other agreement or instrument referred to herein or therein, or any
substitution, release or exchange of any other guarantee of or security for any
of the Guaranteed Obligations, and, to the fullest extent permitted by
applicable law, irrespective of any other circumstance whatsoever which might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor, it being the intent of this Section 2.02 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and all
circumstances. Without limiting the generality of the foregoing, it is agreed
that the occurrence of any one or more of the following shall not affect the
liability of the Guarantor hereunder:
(i) at any time or from time to time, without notice to the Guarantor,
the time for any performance of or compliance with any of the Guaranteed
Obligations shall be extended, or such performance or compliance shall be
waived;
(ii) any of the acts mentioned in any of the provisions of the Credit
Agreement, any Note or any other agreement or instrument referred to herein
or therein shall be done or omitted;
(iii) the maturity of any of the Guaranteed Obligations shall be
accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under the Credit
Agreement, any Note or any other agreement or instrument referred to herein
or therein shall be waived or any other guarantee of any of the Guaranteed
Obligations or any security therefor shall be released or exchanged in
whole or in part or otherwise dealt with; or
(iv) any lien or security interest granted to, or in favor of, the
Bank as security for any of the Guaranteed Obligations shall fail to be
perfected.
The Guarantor hereby expressly waives diligence, presentment, demand of payment,
protest and all notices whatsoever, and any requirement that the Bank exhaust
any right, power or remedy or proceed against any Person under the Credit
Agreement, any Note or any other agreement or instrument referred to herein or
therein, or against any other Person under any other guarantee of, or security
for, any of the Guaranteed Obligations.
2.03 Reinstatement. The obligations of the Guarantor under this Section 2
shall be automatically reinstated if and to the extent that for any reason any
payment by or on behalf of any Person in respect of the Guaranteed Obligations
is rescinded or must be otherwise restored by any holder of any of the
Guaranteed Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise and the Guarantor agrees that it will indemnify the
ACS GUARANTEE
- 3 -
Bank on demand for all reasonable costs and expenses (including, without
limitation, fees of counsel) incurred by the Bank in connection with such
rescission or restoration.
2.04 Subrogation. The Guarantor hereby agrees that until the payment and
satisfaction in full of all Guaranteed Obligations it shall not exercise any
right or remedy arising by reason of any performance by it of its guarantee in
Section 2.01 hereof, whether by subrogation or otherwise, against any Person or
any other guarantor of any of the Guaranteed Obligations or any security for any
of the Guaranteed Obligations.
2.05 Remedies. The Guarantor agrees that, as between the Guarantor and the
Bank, the Guaranteed Obligations may be declared to be forthwith due and payable
as provided in Section 9 of the Credit Agreement (and shall be deemed to have
become automatically due and payable in the circumstances provided in said
Section 9) for purposes of Section 2.01 hereof notwithstanding any stay,
injunction or other prohibition preventing such declaration (or such obligations
from becoming automatically due and payable) as against any Person and that, in
the event of such declaration (or such obligations being deemed to have become
automatically due and payable), such Guaranteed Obligations (whether or not due
and payable by any Person) shall forthwith become due and payable by the
Guarantor for purposes of said Section 2.01.
2.06 Continuing Guarantee. The guarantee in this Section 2 is a continuing
guarantee, and shall apply to all Guaranteed Obligations whenever arising.
Section 3. Representations and Warranties. The Guarantor represents and
warrants to the Bank that:
3.01 Corporate Existence. The Guarantor is a corporation duly organized and
validly existing under the laws of the jurisdiction of its incorporation; has
all requisite corporate power, and has all material governmental licenses,
authorizations, consents and approvals necessary to own its assets and carry on
its business as now being or as proposed to be conducted; and is qualified to do
business in all jurisdictions in which the nature of the business conducted by
it makes such qualification necessary and where failure so to qualify would have
a material adverse effect on its financial condition, operations, business or
prospects.
3.02 Litigation. Except as disclosed to the Bank in writing prior to the
date of this Agreement, there are no legal or arbitral proceedings or any
proceedings by or before any governmental or regulatory authority or agency, now
pending or (to the knowledge of the Guarantor) threatened against the Guarantor
which, if adversely determined, could have a material adverse effect on the
financial condition, operations, business or prospects of the Guarantor.
3.03 No Breach. None of the execution and delivery of this Agreement, the
consummation of the transactions herein contemplated or compliance with the
terms and
ACS GUARANTEE
- 4 -
provisions hereof will conflict with or result in a breach of, or require any
consent under, the charter or by-laws of the Guarantor, or any applicable law or
regulation, or any order, writ, injunction or decree of any court or
governmental authority or agency, or any agreement or instrument to which the
Guarantor is a party or by which it is bound or to which it is subject, or
constitute a default under any such agreement or instrument, or result in the
creation or imposition of any Lien upon any of the revenues or assets of the
Guarantor pursuant to the terms of any such agreement or instrument.
3.04 Corporate Action. The Guarantor has all necessary corporate power and
authority to execute, deliver and perform its obligations under this Agreement;
the execution, delivery and performance by the Guarantor of this Agreement have
been duly authorized by all necessary corporate action on its part; and this
Agreement has been duly and validly executed and delivered by the Guarantor and
constitutes its legal, valid and binding obligation, enforceable in accordance
with its terms, except to the extent that enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally, and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
3.05 Approvals. No authorizations, approvals and consents of, and no
filings and registrations with, any governmental or regulatory authority or
agency are necessary for the execution, delivery or performance by the Guarantor
of this Agreement or for the validity or enforceability hereof.
Section 4. Covenants. The Guarantor agrees that, until the payment and
satisfaction in full of the Guaranteed Obligations:
4.01 Litigation. The Guarantor will promptly give to the Bank notice of all
legal or arbitral proceedings, and of all proceedings by or before any
governmental or regulatory authority or agency, affecting the Guarantor, except
proceedings which, if adversely determined, would not have a material adverse
effect on the financial condition, operations, business or prospects of the
Guarantor.
4.02 Corporate Existence, Etc. The Guarantor will preserve and maintain its
corporate existence and all of its material rights, privileges and franchises;
comply with the requirements of all applicable laws, rules, regulations and
orders of governmental or regulatory authorities if failure to comply with such
requirements would materially and adversely affect the financial condition,
operations, business or prospects taken as a whole of the Guarantor; pay and
discharge all taxes, assessments and governmental charges or levies imposed on
it or on its income or profits or on any of its property prior to the date on
which penalties attach thereto, except for any such tax, assessment, charge or
levy the payment of which is being contested in good faith and by proper
proceedings and against which adequate reserves are being maintained;
ACS GUARANTEE
- 5 -
maintain all of its properties used or useful in its business in good working
order and condition, ordinary wear and tear excepted; permit representatives of
the Bank, during normal business hours, to examine, copy and make extracts from
its books and records, to inspect its properties, and to discuss its business
and affairs with its officers, all to the extent reasonably requested by the
Bank; and keep insured by financially sound and reputable insurers all property
of a character usually insured by corporations engaged in the same or similar
business similarly situated against loss or damage of the kinds and in the
amounts customarily insured against by such corporations and carry such other
insurance as is usually carried by such corporations.
Section 5. Miscellaneous.
5.01 No Waiver. No failure on the part of the Bank or any of its agents to
exercise, and no course of dealing with respect to, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise by the Bank or any of its agents of any
right, power or remedy hereunder preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. The remedies herein are
cumulative and are not exclusive of any remedies provided by law.
5.02 Governing Law; Submission to Jurisdiction. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
The Guarantor hereby submits to the nonexclusive jurisdiction of the United
States District Court for the Southern District of New York and of any New York
State Court sitting in New York City for the purposes of all legal proceedings
arising out of or relating to this Agreement or the transactions contemplated
hereby. The Guarantor irrevocably waives, to the fullest extent permitted by
law, any objection which it may now or hereafter have to the laying of the venue
of any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.
5.03 Notices. All notices, requests, consents and demands hereunder shall
be in writing and telexed, telecopied, telegraphed, cabled or delivered to the
intended recipient at its or their address or telex number specified beneath its
or their signature hereto or, at such other telex number or address as shall be
designated by either party in a notice to the other party, and shall be deemed
to have been given when transmitted by telex or telecopier, delivered to the
telegraph or cable office or personally delivered or, in the case of a mailed
notice, 5 Business Days after the date deposited in the mails, postage prepaid,
in each case given or addressed as aforesaid.
5.04 Amendments, etc. The terms of this Agreement may be waived, altered or
amended only by an instrument in writing duly executed by the Guarantor and the
Bank. Any such amendment or waiver shall be binding upon the Bank, each holder
of any of the Guaranteed Obligations and the Guarantor.
ACS GUARANTEE
- 6 -
5.05 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the respective successors and assigns of the Guarantor, the
Bank and each holder of any of the Guaranteed Obligations (provided, however,
that the Guarantor shall not assign or transfer its rights hereunder without the
prior written consent of the Bank).
5.06 Counterparts. This Agreement may be executed in any number of
counterparts, all of which together shall constitute one and the same instrument
and any of the parties hereto may execute this Agreement by signing any such
counterpart.
----------
ACS GUARANTEE
IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement
to be duly executed as of the day and year first above written.
AC SERVICES, INC.
By
-----------------------------------
Name:
Title:
Address for Notices:
▇▇▇▇ ▇▇▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
THE HONGKONG AND SHANGHAI BANKING
CORPORATION LIMITED, NEW YORK BRANCH
By
-----------------------------------
Name:
Title:
Address for Notices:
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
EXHIBIT C-2
GUARANTEE AGREEMENT
GUARANTEE AGREEMENT dated as of September 20, 1996 between CYGNE TW INC., a
Delaware corporation (the "Guarantor"), and THE HONGKONG AND SHANGHAI BANKING
CORPORATION LIMITED, a foreign banking corporation acting through its New York
Branch (the "Bank").
Cygne Designs, Inc., a Delaware corporation (the "Company"), and the Bank
are parties to that certain Amended and Restated Credit Agreement dated as of
September 20, 1996 (as modified and supplemented and in effect from time to
time, the "Credit Agreement"), providing, subject to the terms and conditions
thereof, for extensions of credit (by issuing letters of credit and making
loans) to be made by the Bank to the Company in an aggregate face or principal
amount not exceeding $17,500,000.
To induce the Bank to enter into the Credit Agreement and to extend credit
thereunder, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Guarantor has agreed (to the
extent hereinafter provided) to guarantee the Guaranteed Obligations (as
hereinafter defined). Accordingly, the parties hereto agree as follows:
Section 1. Definitions. Unless otherwise defined, terms defined in the
Credit Agreement are used herein as defined therein. In addition, as used
herein:
"Guaranteed Obligations" shall mean the obligations of the Company
(including obligations to pay principal of and interest on Loans and to pay
Reimbursement Obligations), whenever arising, under the Credit Agreement, the
Notes and the Security Documents.
Section 2. The Guarantee.
2.01 Guarantee. The Guarantor hereby guarantees to the Bank and its
successors and assigns the prompt payment in full when due (whether at stated
maturity, by acceleration or otherwise) of the Guaranteed Obligations, in each
case strictly in accordance with the terms thereof. The Guarantor hereby further
agrees that if any of the Guaranteed Obligations are not paid in full when due
(whether at stated maturity, by acceleration or otherwise), the Guarantor will
promptly pay the same, without any demand or notice whatsoever, and that in the
case of any extension of time of payment or renewal of any of the Guaranteed
Obligations, the same will be promptly paid in full when due (whether at
extended maturity, by acceleration or otherwise) in accordance with the terms of
such extension or renewal.
- 2 -
2.02 Obligations Unconditional. The obligations of the Guarantor under
Section 2.01 hereof are absolute and unconditional, irrespective of the value,
genuineness, validity, regularity or enforceability of the Credit Agreement, the
Notes or any other agreement or instrument referred to herein or therein, or any
substitution, release or exchange of any other guarantee of or security for any
of the Guaranteed Obligations, and, to the fullest extent permitted by
applicable law, irrespective of any other circumstance whatsoever which might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor, it being the intent of this Section 2.02 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and all
circumstances. Without limiting the generality of the foregoing, it is agreed
that the occurrence of any one or more of the following shall not affect the
liability of the Guarantor hereunder:
(i) at any time or from time to time, without notice to the Guarantor,
the time for any performance of or compliance with any of the Guaranteed
Obligations shall be extended, or such performance or compliance shall be
waived;
(ii) any of the acts mentioned in any of the provisions of the Credit
Agreement, any Note or any other agreement or instrument referred to herein
or therein shall be done or omitted;
(iii) the maturity of any of the Guaranteed Obligations shall be
accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under the Credit
Agreement, any Note or any other agreement or instrument referred to herein
or therein shall be waived or any other guarantee of any of the Guaranteed
Obligations or any security therefor shall be released or exchanged in
whole or in part or otherwise dealt with; or
(iv) any lien or security interest granted to, or in favor of, the
Bank as security for any of the Guaranteed Obligations shall fail to be
perfected.
The Guarantor hereby expressly waives diligence, presentment, demand of payment,
protest and all notices whatsoever, and any requirement that the Bank exhaust
any right, power or remedy or proceed against any Person under the Credit
Agreement, any Note or any other agreement or instrument referred to herein or
therein, or against any other Person under any other guarantee of, or security
for, any of the Guaranteed Obligations.
2.03 Reinstatement. The obligations of the Guarantor under this Section 2
shall be automatically reinstated if and to the extent that for any reason any
payment by or on behalf of any Person in respect of the Guaranteed Obligations
is rescinded or must be otherwise restored by any holder of any of the
Guaranteed Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise and the Guarantor agrees that it will indemnify the
CTW GUARANTEE
- 3 -
Bank on demand for all reasonable costs and expenses (including, without
limitation, fees of counsel) incurred by the Bank in connection with such
rescission or restoration.
2.04 Subrogation. The Guarantor hereby agrees that until the payment and
satisfaction in full of all Guaranteed Obligations it shall not exercise any
right or remedy arising by reason of any performance by it of its guarantee in
Section 2.01 hereof, whether by subrogation or otherwise, against any Person or
any other guarantor of any of the Guaranteed Obligations or any security for any
of the Guaranteed Obligations.
2.05 Remedies. The Guarantor agrees that, as between the Guarantor and the
Bank, the Guaranteed Obligations may be declared to be forthwith due and payable
as provided in Section 9 of the Credit Agreement (and shall be deemed to have
become automatically due and payable in the circumstances provided in said
Section 9) for purposes of Section 2.01 hereof notwithstanding any stay,
injunction or other prohibition preventing such declaration (or such obligations
from becoming automatically due and payable) as against any Person and that, in
the event of such declaration (or such obligations being deemed to have become
automatically due and payable), such Guaranteed Obligations (whether or not due
and payable by any Person) shall forthwith become due and payable by the
Guarantor for purposes of said Section 2.01.
2.06 Continuing Guarantee. The guarantee in this Section 2 is a continuing
guarantee, and shall apply to all Guaranteed Obligations whenever arising.
Section 3. Representations and Warranties. The Guarantor represents and
warrants to the Bank that:
3.01 Corporate Existence. The Guarantor is a corporation duly organized and
validly existing under the laws of the jurisdiction of its incorporation; has
all requisite corporate power, and has all material governmental licenses,
authorizations, consents and approvals necessary to own its assets and carry on
its business as now being or as proposed to be conducted; and is qualified to do
business in all jurisdictions in which the nature of the business conducted by
it makes such qualification necessary and where failure so to qualify would have
a material adverse effect on its financial condition, operations, business or
prospects.
3.02 Litigation. Except as disclosed to the Bank in writing prior to the
date of this Agreement, there are no legal or arbitral proceedings or any
proceedings by or before any governmental or regulatory authority or agency, now
pending or (to the knowledge of the Guarantor) threatened against the Guarantor
which, if adversely determined, could have a material adverse effect on the
financial condition, operations, business or prospects of the Guarantor.
3.02 No Breach. None of the execution and delivery of this Agreement, the
consummation of the transactions herein contemplated or compliance with the
terms and
CTW GUARANTEE
- 4 -
provisions hereof will conflict with or result in a breach of, or require any
consent under, the charter or by-laws of the Guarantor, or any applicable law or
regulation, or any order, writ, injunction or decree of any court or
governmental authority or agency, or any agreement or instrument to which the
Guarantor is a party or by which it is bound or to which it is subject, or
constitute a default under any such agreement or instrument, or result in the
creation or imposition of any Lien upon any of the revenues or assets of the
Guarantor pursuant to the terms of any such agreement or instrument.
3.04 Corporate Action. The Guarantor has all necessary corporate power and
authority to execute, deliver and perform its obligations under this Agreement;
the execution, delivery and performance by the Guarantor of this Agreement have
been duly authorized by all necessary corporate action on its part; and this
Agreement has been duly and validly executed and delivered by the Guarantor and
constitutes its legal, valid and binding obligation, enforceable in accordance
with its terms, except to the extent that enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally, and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
3.05 Approvals. No authorizations, approvals and consents of, and no
filings and registrations with, any governmental or regulatory authority or
agency are necessary for the execution, delivery or performance by the Guarantor
of this Agreement or for the validity or enforceability hereof.
Section 4. Covenants. The Guarantor agrees that, until the payment and
satisfaction in full of the Guaranteed Obligations:
4.01 Litigation. The Guarantor will promptly give to the Bank notice of all
legal or arbitral proceedings, and of all proceedings by or before any
governmental or regulatory authority or agency, affecting the Guarantor, except
proceedings which, if adversely determined, would not have a material adverse
effect on the financial condition, operations, business or prospects of the
Guarantor.
4.02 Corporate Existence, Etc. The Guarantor will preserve and maintain its
corporate existence and all of its material rights, privileges and franchises;
comply with the requirements of all applicable laws, rules, regulations and
orders of governmental or regulatory authorities if failure to comply with such
requirements would materially and adversely affect the financial condition,
operations, business or prospects taken as a whole of the Guarantor; pay and
discharge all taxes, assessments and governmental charges or levies imposed on
it or on its income or profits or on any of its property prior to the date on
which penalties attach thereto, except for any such tax, assessment, charge or
levy the payment of which is being contested in good faith and by proper
proceedings and against which adequate reserves are being maintained;
CTW GUARANTEE
- 5 -
maintain all of its properties used or useful in its business in good working
order and condition, ordinary wear and tear excepted; permit representatives of
the Bank, during normal business hours, to examine, copy and make extracts from
its books and records, to inspect its properties, and to discuss its business
and affairs with its officers, all to the extent reasonably requested by the
Bank; and keep insured by financially sound and reputable insurers all property
of a character usually insured by corporations engaged in the same or similar
business similarly situated against loss or damage of the kinds and in the
amounts customarily insured against by such corporations and carry such other
insurance as is usually carried by such corporations.
Section 5. Miscellaneous.
5.01 No Waiver. No failure on the part of the Bank or any of its agents to
exercise, and no course of dealing with respect to, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise by the Bank or any of its agents of any
right, power or remedy hereunder preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. The remedies herein are
cumulative and are not exclusive of any remedies provided by law.
5.02 Governing Law; Submission to Jurisdiction. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
The Guarantor hereby submits to the nonexclusive jurisdiction of the United
States District Court for the Southern District of New York and of any New York
State Court sitting in New York City for the purposes of all legal proceedings
arising out of or relating to this Agreement or the transactions contemplated
hereby. The Guarantor irrevocably waives, to the fullest extent permitted by
law, any objection which it may now or hereafter have to the laying of the venue
of any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.
5.03 Notices. All notices, requests, consents and demands hereunder shall
be in writing and telexed, telecopied, telegraphed, cabled or delivered to the
intended recipient at its or their address or telex number specified beneath its
or their signature hereto or, at such other telex number or address as shall be
designated by either party in a notice to the other party, and shall be deemed
to have been given when transmitted by telex or telecopier, delivered to the
telegraph or cable office or personally delivered or, in the case of a mailed
notice, 5 Business Days after the date deposited in the mails, postage prepaid,
in each case given or addressed as aforesaid.
5.04 Amendments, etc. The terms of this Agreement may be waived, altered or
amended only by an instrument in writing duly executed by the Guarantor and the
Bank. Any such amendment or waiver shall be binding upon the Bank, each holder
of any of the Guaranteed Obligations and the Guarantor.
CTW GUARANTEE
- 6 -
5.05 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the respective successors and assigns of the Guarantor, the
Bank and each holder of any of the Guaranteed Obligations (provided, however,
that the Guarantor shall not assign or transfer its rights hereunder without the
prior written consent of the Bank).
5.06 Counterparts. This Agreement may be executed in any number of
counterparts, all of which together shall constitute one and the same instrument
and any of the parties hereto may execute this Agreement by signing any such
counterpart.
----------
CTW GUARANTEE
IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement
to be duly executed as of the day and year first above written.
CYGNE TW INC.
By
-----------------------------------
Name:
Title:
Address for Notices:
▇▇▇▇ ▇▇▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
THE HONGKONG AND SHANGHAI BANKING
CORPORATION LIMITED, NEW YORK BRANCH
By
-----------------------------------
Name:
Title:
Address for Notices:
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
EXHIBIT C-3
GUARANTEE AGREEMENT
GUARANTEE AGREEMENT dated as of September 20, 1996 between CYGNE KNITS
LIMITED, a Delaware corporation (the "Guarantor"), and THE HONGKONG AND SHANGHAI
BANKING CORPORATION LIMITED, a foreign banking corporation acting through its
New York Branch (the "Bank").
Cygne Designs, Inc., a Delaware corporation (the "Company"), and the Bank
are parties to that certain Amended and Restated Credit Agreement dated as of
September 20, 1996 (as modified and supplemented and in effect from time to
time, the "Credit Agreement"), providing, subject to the terms and conditions
thereof, for extensions of credit (by issuing letters of credit and making
loans) to be made by the Bank to the Company in an aggregate face or principal
amount not exceeding $17,500,000.
To induce the Bank to enter into the Credit Agreement and to extend credit
thereunder, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Guarantor has agreed (to the
extent hereinafter provided) to guarantee the Guaranteed Obligations (as
hereinafter defined). Accordingly, the parties hereto agree as follows:
Section 1. Definitions. Unless otherwise defined, terms defined in the
Credit Agreement are used herein as defined therein. In addition, as used
herein:
"Guaranteed Obligations" shall mean the obligations of the Company
(including obligations to pay principal of and interest on Loans and to pay
Reimbursement Obligations), whenever arising, under the Credit Agreement, the
Notes and the Security Documents.
Section 2. The Guarantee.
2.01 Guarantee. The Guarantor hereby guarantees to the Bank and its
successors and assigns the prompt payment in full when due (whether at stated
maturity, by acceleration or otherwise) of the Guaranteed Obligations, in each
case strictly in accordance with the terms thereof. The Guarantor hereby further
agrees that if any of the Guaranteed Obligations are not paid in full when due
(whether at stated maturity, by acceleration or otherwise), the Guarantor will
promptly pay the same, without any demand or notice whatsoever, and that in the
case of any extension of time of payment or renewal of any of the Guaranteed
Obligations, the same will be promptly paid in full when due (whether at
extended maturity, by acceleration or otherwise) in accordance with the terms of
such extension or renewal.
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2.02 Obligations Unconditional. The obligations of the Guarantor under
Section 2.01 hereof are absolute and unconditional, irrespective of the value,
genuineness, validity, regularity or enforceability of the Credit Agreement, the
Notes or any other agreement or instrument referred to herein or therein, or any
substitution, release or exchange of any other guarantee of or security for any
of the Guaranteed Obligations, and, to the fullest extent permitted by
applicable law, irrespective of any other circumstance whatsoever which might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor, it being the intent of this Section 2.02 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and all
circumstances. Without limiting the generality of the foregoing, it is agreed
that the occurrence of any one or more of the following shall not affect the
liability of the Guarantor hereunder:
(i) at any time or from time to time, without notice to the Guarantor,
the time for any performance of or compliance with any of the Guaranteed
Obligations shall be extended, or such performance or compliance shall be
waived;
(ii) any of the acts mentioned in any of the provisions of the Credit
Agreement, any Note or any other agreement or instrument referred to herein
or therein shall be done or omitted;
(iii) the maturity of any of the Guaranteed Obligations shall be
accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under the Credit
Agreement, any Note or any other agreement or instrument referred to herein
or therein shall be waived or any other guarantee of any of the Guaranteed
Obligations or any security therefor shall be released or exchanged in
whole or in part or otherwise dealt with; or
(iv) any lien or security interest granted to, or in favor of, the
Bank as security for any of the Guaranteed Obligations shall fail to be
perfected.
The Guarantor hereby expressly waives diligence, presentment, demand of payment,
protest and all notices whatsoever, and any requirement that the Bank exhaust
any right, power or remedy or proceed against any Person under the Credit
Agreement, any Note or any other agreement or instrument referred to herein or
therein, or against any other Person under any other guarantee of, or security
for, any of the Guaranteed Obligations.
2.03 Reinstatement. The obligations of the Guarantor under this Section 2
shall be automatically reinstated if and to the extent that for any reason any
payment by or on behalf of any Person in respect of the Guaranteed Obligations
is rescinded or must be otherwise restored by any holder of any of the
Guaranteed Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise and the Guarantor agrees that it will indemnify the
KNITS GUARANTEE
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Bank on demand for all reasonable costs and expenses (including, without
limitation, fees of counsel) incurred by the Bank in connection with such
rescission or restoration.
2.04 Subrogation. The Guarantor hereby agrees that until the payment and
satisfaction in full of all Guaranteed Obligations it shall not exercise any
right or remedy arising by reason of any performance by it of its guarantee in
Section 2.01 hereof, whether by subrogation or otherwise, against any Person or
any other guarantor of any of the Guaranteed Obligations or any security for any
of the Guaranteed Obligations.
2.05 Remedies. The Guarantor agrees that, as between the Guarantor and the
Bank, the Guaranteed Obligations may be declared to be forthwith due and payable
as provided in Section 9 of the Credit Agreement (and shall be deemed to have
become automatically due and payable in the circumstances provided in said
Section 9) for purposes of Section 2.01 hereof notwithstanding any stay,
injunction or other prohibition preventing such declaration (or such obligations
from becoming automatically due and payable) as against any Person and that, in
the event of such declaration (or such obligations being deemed to have become
automatically due and payable), such Guaranteed Obligations (whether or not due
and payable by any Person) shall forthwith become due and payable by the
Guarantor for purposes of said Section 2.01.
2.06 Continuing Guarantee. The guarantee in this Section 2 is a continuing
guarantee, and shall apply to all Guaranteed Obligations whenever arising.
Section 3. Representations and Warranties. The Guarantor represents and
warrants to the Bank that:
3.01 Corporate Existence. The Guarantor is a corporation duly organized and
validly existing under the laws of the jurisdiction of its incorporation; has
all requisite corporate power, and has all material governmental licenses,
authorizations, consents and approvals necessary to own its assets and carry on
its business as now being or as proposed to be conducted; and is qualified to do
business in all jurisdictions in which the nature of the business conducted by
it makes such qualification necessary and where failure so to qualify would have
a material adverse effect on its financial condition, operations, business or
prospects.
3.02 Litigation. Except as disclosed to the Bank in writing prior to the
date of this Agreement, there are no legal or arbitral proceedings or any
proceedings by or before any governmental or regulatory authority or agency, now
pending or (to the knowledge of the Guarantor) threatened against the Guarantor
which, if adversely determined, could have a material adverse effect on the
financial condition, operations, business or prospects of the Guarantor.
3.03 No Breach. None of the execution and delivery of this Agreement, the
consummation of the transactions herein contemplated or compliance with the
terms and
KNITS GUARANTEE
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provisions hereof will conflict with or result in a breach of, or require any
consent under, the charter or by-laws of the Guarantor, or any applicable law or
regulation, or any order, writ, injunction or decree of any court or
governmental authority or agency, or any agreement or instrument to which the
Guarantor is a party or by which it is bound or to which it is subject, or
constitute a default under any such agreement or instrument, or result in the
creation or imposition of any Lien upon any of the revenues or assets of the
Guarantor pursuant to the terms of any such agreement or instrument.
3.04 Corporate Action. The Guarantor has all necessary corporate power and
authority to execute, deliver and perform its obligations under this Agreement;
the execution, delivery and performance by the Guarantor of this Agreement have
been duly authorized by all necessary corporate action on its part; and this
Agreement has been duly and validly executed and delivered by the Guarantor and
constitutes its legal, valid and binding obligation, enforceable in accordance
with its terms, except to the extent that enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally, and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
3.05 Approvals. No authorizations, approvals and consents of, and no
filings and registrations with, any governmental or regulatory authority or
agency are necessary for the execution, delivery or performance by the Guarantor
of this Agreement or for the validity or enforceability hereof.
Section 4. Covenants. The Guarantor agrees that, until the payment and
satisfaction in full of the Guaranteed Obligations:
4.01 Litigation. The Guarantor will promptly give to the Bank notice of all
legal or arbitral proceedings, and of all proceedings by or before any
governmental or regulatory authority or agency, affecting the Guarantor, except
proceedings which, if adversely determined, would not have a material adverse
effect on the financial condition, operations, business or prospects of the
Guarantor.
4.02 Corporate Existence, Etc. The Guarantor will preserve and maintain its
corporate existence and all of its material rights, privileges and franchises;
comply with the requirements of all applicable laws, rules, regulations and
orders of governmental or regulatory authorities if failure to comply with such
requirements would materially and adversely affect the financial condition,
operations, business or prospects taken as a whole of the Guarantor; pay and
discharge all taxes, assessments and governmental charges or levies imposed on
it or on its income or profits or on any of its property prior to the date on
which penalties attach thereto, except for any such tax, assessment, charge or
levy the payment of which is being contested in good faith and by proper
proceedings and against which adequate reserves are being maintained;
KNITS GUARANTEE
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maintain all of its properties used or useful in its business in good working
order and condition, ordinary wear and tear excepted; permit representatives of
the Bank, during normal business hours, to examine, copy and make extracts from
its books and records, to inspect its properties, and to discuss its business
and affairs with its officers, all to the extent reasonably requested by the
Bank; and keep insured by financially sound and reputable insurers all property
of a character usually insured by corporations engaged in the same or similar
business similarly situated against loss or damage of the kinds and in the
amounts customarily insured against by such corporations and carry such other
insurance as is usually carried by such corporations.
Section 5 Miscellaneous.
5.01 No Waiver. No failure on the part of the Bank or any of its agents to
exercise, and no course of dealing with respect to, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise by the Bank or any of its agents of any
right, power or remedy hereunder preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. The remedies herein are
cumulative and are not exclusive of any remedies provided by law.
5.02 Governing Law; Submission to Jurisdiction. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
The Guarantor hereby submits to the nonexclusive jurisdiction of the United
States District Court for the Southern District of New York and of any New York
State Court sitting in New York City for the purposes of all legal proceedings
arising out of or relating to this Agreement or the transactions contemplated
hereby. The Guarantor irrevocably waives, to the fullest extent permitted by
law, any objection which it may now or hereafter have to the laying of the venue
of any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.
5.03 Notices. All notices, requests, consents and demands hereunder shall
be in writing and telexed, telecopied, telegraphed, cabled or delivered to the
intended recipient at its or their address or telex number specified beneath its
or their signature hereto or, at such other telex number or address as shall be
designated by either party in a notice to the other party, and shall be deemed
to have been given when transmitted by telex or telecopier, delivered to the
telegraph or cable office or personally delivered or, in the case of a mailed
notice, 5 Business Days after the date deposited in the mails, postage prepaid,
in each case given or addressed as aforesaid.
5.04 Amendments, etc. The terms of this Agreement may be waived, altered or
amended only by an instrument in writing duly executed by the Guarantor and the
Bank. Any such amendment or waiver shall be binding upon the Bank, each holder
of any of the Guaranteed Obligations and the Guarantor.
KNITS GUARANTEE
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5.05 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the respective successors and assigns of the Guarantor, the
Bank and each holder of any of the Guaranteed Obligations (provided, however,
that the Guarantor shall not assign or transfer its rights hereunder without the
prior written consent of the Bank).
5.06 Counterparts. This Agreement may be executed in any number of
counterparts, all of which together shall constitute one and the same instrument
and any of the parties hereto may execute this Agreement by signing any such
counterpart.
----------
KNITS GUARANTEE
IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement
to be duly executed as of the day and year first above written.
CYGNE KNITS LIMITED
By
-----------------------------------
Name:
Title:
Address for Notices:
▇▇▇▇ ▇▇▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy:
Telex:
THE HONGKONG AND SHANGHAI BANKING
CORPORATION LIMITED, NEW YORK BRANCH
By
-----------------------------------
Name:
Title:
Address for Notices:
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy:
Telex:
EXHIBIT D
LETTER OF NEGATIVE PLEDGE
The Hongkong and Shanghai Banking Corporation Limited
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Re: Credit Agreement dated as of September 20, 1996
with Cygne Designs, Inc. (the "Company") up to an
aggregate amount of $17,500,000
-------------------------------------------------
Dear Sir/Madam:
In consideration of your agreeing to grant, continue and/or further extend
credit facilities and other financial accommodation to the Company, the Company
hereby irrevocably and unconditionally covenants and undertakes with you as
follows:
1. The Company shall not, nor will it permit any of its Subsidiaries to:
a. Create or attempt to create, assume or permit to subsist any mortgage,
security interest, charge, pledge, lien, or other encumbrance upon, or
permit any lien, security interest or other encumbrance (except for
statutory or constitutional liens arising in the ordinary course of
business with respect to any obligation or indebtedness which is not
yet due and payable) to arise on or affect, the whole or any part of
its respective undertaking, property, assets and rights, other than
pledges created over goods and/or services acquired pursuant to
documentary credits opened in the ordinary course of business for the
purpose of financing the acquisition or provision of such goods and
services; or
b. Transfer, sell or otherwise dispose of or attempt or agree to
transfer, sell or dispose of the whole or any part of its respective
undertaking, property, assets and rights, except by way of sale at
full value in the usual and ordinary course of business as now
conducted and for the purpose of carrying on the relevant business; or
▇. ▇▇▇▇▇, issue or extend any guarantee or indemnity or enter into any
other form of contractual undertaking or arrangement of similar effect
in respect of any indebtedness or obligations, actual or continent, of
any other Person whatsoever except in the usual and ordinary course of
business as now conducted by the Company and its Subsidiaries and for
the purpose of the carrying on by the Company or the relevant
Subsidiary of its business.
Letter of Negative Pledge
Page 2
2. The undertakings set out herein shall not be deemed breached by reason only
of the existence of any mortgage, security interest, charge, pledge, lien
or other encumbrance or guarantee or indemnity which has been created,
assumed or which subsists or has arisen prior to the date hereof, provided,
that any further or additional encumbrance over or affecting the relevant
asset, or increase in the amount secured by or other variation of the
relevant encumbrance or guarantee or indemnity of similar effect, shall
constitute such a breach.
3. The Company further authorizes you, in your absolute discretion, at any
time and from time to time to notify any creditors of the Company and its
Subsidiaries of the terms of the undertakings set out herein in the event
that you receive notice of proposals which, if implemented, would or might
be in breach of such undertakings.
Yours faithfully,
CYGNE DESIGNS, INC.
By
---------------------------------
Name:
Title:
Date: As of September 20, 1996
EXHIBIT E
ESCROW AGREEMENT
ESCROW AGREEMENT dated as of September 20, 1996 by and among CYGNE DESIGNS,
INC., a Delaware corporation ("CDI"), and Cygne Group (F.E.) Limited, a Hong
Kong corporation ("CGFE" and, together with CDI, the "Company"), THE HONGKONG
AND SHANGHAI BANKING CORPORATION LIMITED, a foreign banking corporation acting
through its New York Branch (the "Bank"), and MARINE MIDLAND BANK, a banking
corporation and trust company organized and existing under the laws of the State
of New York, as the escrow agent hereunder (the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, the Company and the Bank are parties to an Amended and Restated
Credit Agreement dated as of September 20, 1996 (as modified and supplemented
and in effect from time to time, the "Credit Agreement"), providing, subject to
the terms and conditions thereof, for extensions of credit (by issuing letters
of credit and making loans) to be made by the Bank to the Company in an
aggregate face or principal amount not exceeding $17,500,000;
WHEREAS, the Credit Agreement provides for the Company (i) to grant a first
priority perfected pledge and security interest to the Bank under the Security
Agreement (as defined in the Credit Agreement) with respect to all of the
validly issued, fully paid and nonassessable shares of common stock of AnnTaylor
Stores Corporation ("ATSC"), par value $0.0068 per share (the "ATSC Shares"),
received by the Company in connection with the Stock and Asset Purchase
Agreement (as defined in the Credit Agreement), (ii) to effect the sale,
assignment and transfer from time to time of the ATSC Shares through an escrow
account maintained with the Escrow Agent in accordance with the terms and
conditions thereof and (iii) to cause the Escrow Agent to remit all proceeds
relating to each such sale, assignment and transfer of ATSC Shares (the
"Proceeds") directly to the Collateral Account (as defined in the Credit
Agreement); and
WHEREAS, the Company and the Bank desire to appoint Marine Midland Bank as
the Escrow Agent, and Marine Midland Bank is willing to act as the Escrow Agent
hereunder, in accordance with the terms and conditions hereof;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
Section 1. Definitions. Unless otherwise defined herein, terms defined in
the Credit Agreement are used herein as defined therein.
Section 2. Establishment of Escrow Account. The ATSC Shares delivered by
the Bank shall be accepted by the Escrow Agent and placed into an account with
the Escrow
- 2 -
Agent in the name of the Bank (the "Escrow Account") to be held and administered
in accordance with the terms and conditions hereof.
Section 3. Establishment of Brokerage Account. The ATSC Shares shall be
sold, assigned and transferred pursuant to instructions delivered by the Bank to
the Escrow Agent from time to time in accordance with the terms and conditions
hereof through an account in the name of the Escrow Agent (the "Brokerage
Account") at a Specified Broker (as defined below). The instructions delivered
by the Bank to the Escrow Agent shall be based upon instructions provided to the
Bank by the Company, which instructions shall specify the number of shares to be
sold, the Specified Broker through which the shares are to be sold and any
pricing limitations. The Escrow Agent shall deliver a certificate or
certificates representing the appropriate number of ATSC Shares to be sold,
assigned and transferred to the Specified Broker set forth in the sale
instructions of the Company provided to the Bank, against payment on the
settlement date of each respective sale, assignment and transfer. For purposes
hereof, "Specified Broker" shall mean Bear, ▇▇▇▇▇▇▇ & Co, Inc., ▇▇▇▇▇▇▇▇▇ Lufkin
& ▇▇▇▇▇▇▇▇ Securities Corporation, ▇.▇. ▇▇▇▇▇▇ & Co. and ▇▇▇▇▇▇ Brothers Inc.
Section 4. Notice of Pledge and Assignment. The Company and the Bank hereby
notify the Escrow Agent that (i) the Company has pledged and granted to the Bank
under the Security Agreement a first priority perfected pledge and security
interest in all of the ATSC Shares owned by the Company and the proceeds thereof
and (ii) the Company has assigned to the Bank the Registration Rights (as
defined in the Assignment dated as of September 20, 1996 made by the Company in
favor of the Bank) of the Company relating to the ATSC Shares as provided in the
Stockholders Agreement. The Escrow Agent hereby acknowledges such pledge and
security interest and such assignment, and shall, at the request of the Bank,
deliver to the Bank the certificate or certificates evidencing the number of
ATSC Shares than remaining in the Escrow Account.
Section 5. Sale of ATSC Shares; Proceeds. The Company hereby requests the
Bank to instruct the Escrow Agent to sell, assign and transfer the ATSC Shares,
and remit the Proceeds, in accordance with the provisions set forth below:
(a) The Company shall deliver notice to the Escrow Agent and the Bank
that the shelf registration filed by ATSC with the Securities Exchange
Commission with respect to the ATSC Shares shall have been declared
effective, which notice shall include the effective date of such
registration (the "Effective Date");
(b) On the day the Company delivers the notice of the Effective Date,
and in the case of clause (z) of this Section 5(b), at such other times as
it deems appropriate (but in no case more than once a week), and on each
day every two (2) weeks thereafter during the term of this Agreement, the
Company shall deliver to the Bank a report, certified by the chief
financial officer of the Company (the "Obligations Report"), setting forth
(i) the obligations of the Company under the Credit Agreement, either then
outstanding or to become due and payable within the immediately succeeding
two (2) week period, and (ii) the number of ATSC Shares, if any, to be
sold, assigned and transferred hereunder to
ESCROW AGREEMENT
- 3 -
permit the Company (x) to pay to the Bank, and to provide to the Bank
collateral security therefor, the face or principal amount of such
obligations, including any interest thereon, described in clause (i) above,
(y) to comply with the mandatory prepayment obligations of the Company
under the Credit Agreement (together with the amount described in clause
(x) above, the "Required Collateral Balance"), and (z) to increase the
balance in the Collateral Account (the "Cash Collateral Balance");
(c) After the receipt by the Bank of the notice of the Effective Date,
and upon receipt of each Obligations Report, the Bank shall instruct the
Escrow Agent, in accordance with Section 3 hereof, (i) to deliver to the
Specified Broker such certificate or certificates evidencing the number of
ATSC Shares equal to or greater than, after disposition and net of related
costs, (A) the difference between the Required Collateral Balance and the
Cash Collateral Balance pursuant to Sections 5(b)(x) and (y) above, and (B)
the amount of the increase, if any, in the Cash Collateral Balance pursuant
to Section 5(b)(z) above, but in no event shall the number of shares or
clauses (A) and (B) be in excess of two percent (2%) of the then
outstanding shares of common stock of ATSC with respect to any two (2) week
period, and (ii) to instruct the Specified Broker to execute through the
Brokerage Account from time to time the sale, assignment and transfer of
such ATSC Shares at the best market price then available;
(d) Upon receipt thereof from the Specified Broker, the Escrow Agent
shall remit all Proceeds directly to the Collateral Account; and
(e) If the Company shall fail in any event to notify the Escrow Agent
in a timely fashion with respect to any notice required hereunder, the Bank
shall effect such notice.
Section 6. Instructions as to Certain Conditions. With respect to each
sale, assignment and transfer of ATSC Shares hereunder, the Escrow Agent is
hereby instructed to instruct the Specified Broker, that (i) no sale, assignment
and transfer of ATSC Shares may knowingly be made to any person who beneficially
owns in excess of five percent (5%) of the then outstanding shares of common
stock of ATSC and (ii) no sale, assignment and transfer of more than two percent
(2%) of the then outstanding shares of common stock of ATSC may knowingly be
made to a single purchaser (or group of related purchasers).
Section 7. Termination of Escrow Agreement. Upon the receipt of written
notice from the Bank that the obligations of the Company to the Bank under the
Credit Agreement and the Notes have been paid in full, the Commitments have
expired or been terminated, and the Letters of Credit and the Standby Letters of
Credit have expired or been terminated, (i) the Escrow Agent shall deliver to
the Bank the certificate or certificates evidencing the number of ATSC Shares
then remaining in the Escrow Account, and (ii) the Escrow Account shall be
deemed dissolved and this Escrow Agreement terminated.
Section 8. Commercially Reasonable Manner. The Company acknowledges that
the sale, assignment and transfer of ATSC Shares hereunder may or may not be
made at the highest possible price available during the term of this Agreement,
but agrees that any such
ESCROW AGREEMENT
- 4 -
transaction and the actions of the parties hereunder shall be deemed to have
been made in a commercially reasonable manner.
Section 9. Escrow Agent. The Company agrees to pay the Escrow Agent the
compensation, pursuant to separate letter agreement between them, promptly upon
request therefor, and to reimburse the Escrow Agent for all reasonable expenses
or disbursements incurred by the Escrow Agent in the performance of its duties
hereunder, including reasonable fees, expenses and disbursements of counsel to
the Escrow Agent. The Escrow Agent shall have a lien upon the Escrow Account for
its costs, expenses and fees which may arise hereunder and may retain that
portion of the Escrow Account equal to such unpaid amounts, until all such
costs, expenses and fees have been paid.
Section 10. Rights, Duties and Immunities of Escrow Agent. Acceptance by
the Escrow Agent of its duties under this Escrow Agreement is subject to the
following terms and conditions, which all parties hereto hereby agree shall
govern and control the rights, duties and immunities of the Escrow Agent.
(a) The duties and obligations of the Escrow Agent shall be determined
solely by the express provisions hereof and the Escrow Agent shall not be
liable except for the performance of such duties and obligations as are
specifically set out herein. This Escrow Agreement shall not be deemed to
create a fiduciary relationship between the parties hereto under state or
federal law.
(b) The Escrow Agent shall not be responsible in any manner for the
validity or sufficiency of any property delivered hereunder, or for the
value or collectability of any note, check or other instrument so
delivered, or for any representations made or obligations assumed by any
party other than the Escrow Agent. Nothing herein contained shall be deemed
to obligate the Escrow Agent to deliver any cash, instruments, documents or
any other property referred to herein, unless the same shall have first
been received by the Escrow Agent pursuant to this Escrow Agreement.
(c) The Company shall reimburse and indemnify the Escrow Agent for,
and hold it harmless against, any loss, liability or expense, including but
not limited to counsel fees, incurred without bad faith or willful
misconduct on the part of the Escrow Agent arising out of or in conjunction
with its acceptance, or the performance, of its duties and obligations
hereunder as well as the costs and expenses of defending against any claim
or liability arising out of or relating to this Escrow Agreement.
(d) The Escrow Agent shall be fully protected in acting on and relying
upon any written notice, direction, request, waiver, consent, receipt or
other paper or document which the Escrow Agent in good faith believes to
have been signed and presented by the proper party or parties.
ESCROW AGREEMENT
- 5 -
(e) The Escrow Agent shall not be liable for any (i) error of
judgment, (ii) act done or step taken or omitted by it in good faith, (iii)
mistake in act or law, or (iv) action taken or refrained from in connection
herewith, except its own willful misconduct.
(f) The Escrow Agent may seek the advice of legal counsel in the event
of any dispute or question as to the construction of any provision hereof
or its duties hereunder, and it shall incur no liability and shall be fully
protected in respect of any action taken, omitted or suffered by it in good
faith in accordance with the opinion of such counsel.
(g) The agreements set forth in this Section 10 shall survive the
termination hereof and the payment of all amounts hereunder.
Section 11. Resignation of Escrow Agent. The Escrow Agent shall have the
right to resign upon thirty (30) days written notice to the Company and the
Bank. In the event of such resignation, the Bank shall appoint a successor
escrow agent hereunder by delivering to the Escrow Agent a written notice of
such appointment. Upon receipt of such notice, the Escrow Agent shall deliver to
the designated successor escrow agent all money and other property held
hereunder and shall thereupon be released and discharged from any and all
further responsibilities whatsoever hereunder; provided, however, that the
Escrow Agent shall not be deprived of its compensation earned prior to such
time. If no successor escrow agent shall have been designated by the date
specified in the notice of the Escrow Agent, all obligations of the Escrow Agent
hereunder shall nevertheless cease and terminate. Its sole responsibility
thereafter shall be to keep safely all property then held by it and to deliver
the same to the Bank.
Section 12. Notices. All notices and other communications provided for
herein (including, without limitation, any modifications of, or waivers or
consents under, this Agreement) shall be given or made in writing and
telecopied, telegraphed, cabled, mailed or delivered, addressed to the parties
at the addresses set forth herein or, as to any party, at such other address as
shall be designated by such party in a notice to each other party. Except as
otherwise provided in this Agreement, all such communications shall be deemed to
have been duly given when transmitted by telecopier, delivered to the telegraph
or cable office or personally delivered or, in the case of a mailed notice, 5
Business Days after the date deposited in the mails, postage prepaid, in each
case given or addressed as aforesaid.
Section 13. Successors and Assigns; Assignment. This Escrow Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
Section 14. Amendments, Etc. Any provision hereof may be amended or
modified only by an instrument in writing signed by each of the parties hereto.
Section 15. Governing Law; Submission to Jurisdiction. This Escrow
Agreement shall be governed by, and construed and enforced in accordance with,
the laws of the State of New York applicable to contracts to be performed
entirely within the State of New York, without reference to or application of
rules or principles of conflicts of law. Each of the parties hereto
ESCROW AGREEMENT
- 6 -
hereby submits to the nonexclusive jurisdiction of the United States District
Court for the Southern District of New York and of any New York State Court
sitting in New York City for the purposes of all legal proceedings arising out
of or relating to this Agreement or the transactions contemplated hereby. Each
of the parties hereto irrevocably waives, to the fullest extent permitted by
law, any objection which it may now or hereafter have to the laying of the venue
of any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.
Section 16. Captions. The captions and section headings contained in this
Escrow Agreement are included solely for convenience or reference and shall not
affect the meaning or interpretation of any provision hereof.
Section 17. Waiver of Jury Trial. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, any and all right to
trial by jury in any legal proceeding arising out of or relating to this Escrow
Agreement.
Section 18. Counterparts. This Escrow Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties hereto may execute this Escrow Agreement
by signing any such counterpart.
Section 19. Severability. If any provision hereof is invalid and
unenforceable in any applicable jurisdiction, then, to the fullest extent
permitted by law, (i) the other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in favor of the
Bank in order to carry out the intentions of the parties hereto as nearly as may
be possible and (ii) the invalidity or unenforceability of any provision hereof
in any jurisdiction shall not affect the validity or enforceability of such
provision in any other jurisdiction.
----------
ESCROW AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to
be duly executed as of the day and year first above written.
CYGNE DESIGNS, INC.
By
-----------------------------------
Name:
Title:
Address for Notices:
▇▇▇▇ ▇▇▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
CYGNE GROUP (F.E.) LIMITED
By
-----------------------------------
Name:
Title:
Address for Notices:
▇▇▇▇ ▇▇▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
THE HONGKONG AND SHANGHAI BANKING
CORPORATION LIMITED, NEW YORK BRANCH
By
-----------------------------------
Name:
Title:
Address for Notices:
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: NYK CBU TRS
MARINE MIDLAND BANK, as Escrow Agent
By
-----------------------------------
Name:
Title:
Address for Notices:
Corporate Trust Services
▇▇▇ ▇▇▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
ESCROW AGREEMENT
EXHIBIT F
ASSIGNMENT OF REGISTRATION RIGHTS
ASSIGNMENT dated as of September 20, 1996 between CYGNE DESIGNS, INC., a
Delaware corporation having an office at ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
("CDI"), and CYGNE GROUP (F.E.) LIMITED, a Hong Kong corporation ("CGFE" and,
together with CDI, hereinafter referred to as the "Assignor"), and THE HONGKONG
AND SHANGHAI BANKING CORPORATION LIMITED, a foreign banking corporation acting
through its New York Branch (the "Assignee").
W I T N E S S E T H :
WHEREAS, the Assignor and the Assignee are parties to an Amended and
Restated Credit Agreement dated as of September 20, 1996 (as modified and
supplemented and in effect from time to time, the "Credit Agreement"),
providing, subject to the terms and conditions thereof, for extensions of credit
(by issuing letters of credit and making loans) to be made by the Assignee to
the Assignor in an aggregate face or principal amount not exceeding $17,500,000;
WHEREAS, the Credit Agreement provides for the Assignor (i) to grant a
first priority perfected pledge and security interest under the Security
Agreement (as defined in the Credit Agreement) with respect to all of the
validly issued, fully paid and nonassessable shares of common stock of AnnTaylor
Stores Corporation ("ATSC"), par value $0.0068 per share (the "ATSC Shares"),
received by the Assignor in connection with the Stock and Asset Purchase
Agreement (as defined in the Credit Agreement), and (ii) to assign to the
Assignee all rights relating to the registration by ATSC of the ATSC Shares with
the Securities and Exchange Commission as provided in the Stockholders Agreement
(as defined in the Credit Agreement);
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
Section 1. Definitions. Unless otherwise defined herein, terms defined in
the Credit Agreement are used herein as defined therein.
Section 2. Assignment. The Assignor does hereby assign, transfer and set
over unto the Assignee all the Assignor's rights and interests, but not any of
its obligations, with respect to the registration by ATSC of the ATSC Shares
with the Securities and Exchange Commission under the Stockholders Agreement
(the "Registration Rights"), including without limitation, the rights of the
Assignor to cause ATSC to file a registration statement under the Securities Act
of 1933, as amended; provided, the Assignee shall comply with applicable
transfer
- 2 -
restrictions set forth in the Stockholders Agreement. The Assignee hereby
accepts such assignment.
Section 3. (a) Liabilities of the Assignor. It is expressly agreed that,
anything herein contained to the contrary notwithstanding:
(1) The Assignor shall at all times remain liable to ATSC under the
Stockholders Agreement to perform all duties and obligations of the Holder
(as defined in the Stockholders Agreement) thereunder to the same extent as
if this Assignment had not been executed, including, without limitation,
the Assignor's obligations with respect to compliance with applicable
Federal and state securities law and the indemnification provisions set
forth in Section 2.06(b) of the Stockholders Agreement.
(2) The exercise by the Assignee of any right assigned hereunder shall
not release the Assignor from any of its duties or obligations to ATSC
under the Stockholders Agreement.
(3) The Assignee shall have no obligation or liability under the
Stockholders Agreement by reason of or arising out of this Assignment nor
shall the Assignee be obligated to perform any of the obligations or duties
of the Assignor under the Stockholders Agreement or to present or file any
claim or to take any other action to collect or enforce any claim with
respect to any rights assigned hereunder.
(b) Indemnification Limitation. It is expressly agreed that, anything
herein contained to the contrary notwithstanding, Assignee shall have no right
to indemnification from Assignor in respect of the failure of Assignee to meet
its obligations under applicable Federal and state securities law.
Section 4. Further Assurances. The Assignor agrees that at any time and
from time to time upon the written request of the Assignee, the Assignor will
promptly and duly execute and deliver such further documents and take such
further actions as the Assignee may reasonably request in order to obtain the
full benefits of this Assignment and of the rights and powers granted herein.
Section 5. Events of Default. Effective from and after the time, if any,
that an Event of Default shall occur or be continuing, and until such time as
such Event of Default shall no longer be continuing, the Assignor does hereby
constitute the Assignee, its successors and assigns, the Assignor's true and
lawful attorney-in-fact irrevocably, with full power (in the name of the
Assignor or otherwise), at the sole cost and expense of the Assignor, to assert
and enforce whatever claims and rights the Assignee may have under or arising
out of the
ASSIGNMENT
- 3 -
Stockholders Agreement with respect to the Registration Rights and, for such
period as the Assignee may exercise rights with respect thereto under this
Assignment, to file any claims or take any actions or institute (or, if
previously commenced, assume control of) any proceedings and to obtain any
recovery in connection therewith which the Assignee may deem to be necessary or
advisable with respect to such claims and rights.
Section 6. Representations and Warranties. The Assignor hereby represents
and warrants to the Assignee that:
(a) The Stockholders Agreement is in full force and effect and is
enforceable in accordance with its terms, except as such enforceability may
be limited by (i) bankruptcy, insolvency, reorganization, moratorium or
other similar laws of general applicability affecting the enforcement of
creditors' rights and (ii) the application of general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
(b) The Assignor is not in default under the Stockholders Agreement.
(c) The Assignor has received all necessary consents to the assignment
and transfer contemplated herein and such consents are in full force and
effect.
(d) The Assignor has not assigned or pledged, and hereby covenants
that, so long as this Assignment shall remain in effect, it will not assign
or pledge the whole or any part of the rights assigned hereby to anyone
other than the Assignee.
Section 7. Notices. All notices and other communications provided for
herein (including, without limitation, any modifications of, or waivers or
consents under, this Agreement) shall be given or made in writing and
telecopied, telegraphed, cabled, mailed or delivered, addressed to the parties
at the addresses set forth herein or, as to either party, at such other address
as shall be designated by such party in a notice to the other party. Except as
otherwise provided in this Agreement, all such communications shall be deemed to
have been duly given when transmitted by telecopier, delivered to the telegraph
or cable office or personally delivered or, in the case of a mailed notice, five
(5) Business Days after the date deposited in the mails, postage prepaid, in
each case given or addressed as aforesaid.
Section 8. Successors and Assigns; Assignment. This Assignment shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
Section 9. Amendments, Etc. Any provision hereof may be amended or modified
only by an instrument in writing signed by each of the parties hereto.
ASSIGNMENT
- 4 -
Section 10. Governing Law; Submission to Jurisdiction. This Assignment
shall be governed by, and construed and enforced in accordance with, the laws of
the State of New York applicable to contracts to be performed entirely within
the State of New York, without reference to or application of rules or
principles of conflicts of law. Each of the parties hereto hereby submits to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State Court sitting in New York City
for the purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. Each of the parties hereto
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum.
Section 11. Captions. The captions and section headings contained in this
Assignment are included solely for convenience or reference and shall not affect
the meaning or interpretation of any provision hereof.
Section 12. Waiver of Jury Trial. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, any and all right to
trial by jury in any legal proceeding arising out of or relating to this
Assignment.
Section 13. Counterparts. This Assignment may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Assignment by signing
any such counterpart.
Section 14. Severability. If any provision hereof is invalid and
unenforceable in any applicable jurisdiction, then, to the fullest extent
permitted by law, (i) the other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in favor of the
Bank in order to carry out the intentions of the parties hereto as nearly as may
be possible and (ii) the invalidity or unenforceability of any provision hereof
in any jurisdiction shall not affect the validity or enforceability of such
provision in any other jurisdiction.
----------
ASSIGNMENT
IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be
duly executed as of the day and year first above written.
CYGNE DESIGNS, INC.
By_____________________
Name:
Title:
Address for Notices:
▇▇▇▇ ▇▇▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
CYGNE GROUP (F.E.) LIMITED
By_____________________
Name:
Title:
Address for Notices:
c/o Cygne Designs, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
THE HONGKONG AND SHANGHAI BANKING
CORPORATION LIMITED, NEW YORK BRANCH
By_____________________
Name:
Title:
Address for Notices:
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: NYK CBU TRS
Acknowledged by:
ANNTAYLOR STORES CORPORATION
By_____________________
Name:
Title:
ASSIGNMENT
EXHIBIT G
[Form of Borrowing Base Certificate]
BORROWING BASE CERTIFICATE
Monthly accounting period ended ___________, 19__
Reference is made to the Credit Agreement dated as of September 20, 1996
(as modified and supplemented and in effect from time to time, the "Credit
Agreement") between CYGNE DESIGNS, INC., a Delaware corporation, and THE
HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED, a foreign banking corporation
acting through its New York Branch. Terms defined in the Credit Agreement are
used herein as defined therein.
Pursuant to Section [6.01(a)(xiii)/8.01(d)] of the Credit Agreement, the
undersigned, the Chief Financial Officer/Controller of the Company, hereby
certifies that, to the best of [his/her] knowledge, attached hereto as Annex 1
is a true and accurate calculation of the Borrowing Base as at the end of the
monthly accounting period ended ___________, 19___ determined in accordance with
the requirements of the Credit Agreement.
IN WITNESS WHEREOF, the undersigned has caused this certificate to be duly
executed as of the ____ day of _______, 19___.
--------------------------------
Name:
Title:
Annex 1
CYGNE DESIGNS, INC.
Borrowing Base Certificate
Omitted (000's)
Receivables (determined net of credits)
-- beginning balance period ended
______________, 19 _____ ............................. ______
Plus: total sales for period .......................... ______
Less: total cash receipts for period .................. ______
total other adjustments for period
(+/-) (details attached) including
rebates, offsets and commissions .............. ______
Receivables (determined net of credits)
-- ending balance period ending
_____________, 19 _____ .............................. ______
Less: ineligible Receivables at period end
(determined without duplication):
Receivables not payable in Dollars ..................... ______
Receivables over 90 days original terms ................ ______
Receivables due from an Affiliate or a Subsidiary ...... ______
Export Receivables, letters of credit or
U.S. Government Insurance ............................ ______
Receivables from creditors with
unsatisfactory credit standing (as
determined by the Bank) .............................. ______
Receivables over 90 days from invoice date ............. ______
Receivables with excess of 20% of balances
past 90 days from invoice date ....................... ______
Receivables subject to dispute ......................... ______
Receivables evidenced by Instruments
not in the possession of the Bank .................... ______
Receivables arising out of sale or
return transactions .................................. ______
Receivables from DIP creditors ......................... ______
Total ineligible Receivables ........................... ______
Total Eligible Receivables ............................. ______
--------------------------
Inventory at lower of cost or market
covered by appropriate filings
(from attached schedule): ............................ ______
Beginning period Inventory Balance
____________, 19 _____ ............................... ______
Ending period Inventory Balance
____________, 19 _____ ............................... ______
Plus: Inventory held by Processors covered
by appropriate UCC filings .................... ______
Less: Inventory held more than ___ days ............... ______
Total Eligible Inventory ............................... ______
-----------------------
Borrowing Base Certificate (continued)
80% of Eligible Receivables ............................ ______
Plus: 50% of Eligible Inventory ....................... ______
(no more than $3,500,000)
Plus: 50% of the aggregate face amount of
all undrawn Letters of Credit ................... ______
Plus: 50% of the value of the ATSC Shares ............. ______
(no more than $12,000,000)
Less: 2 times average monthly commissions
to bailees, Processors, etc. .................... ______
Borrowing Base: ........................................ ______
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
Loan Balance: Period begin ___________, 19 ___ ........ ______
advances for period ..................... ______
reductions for period ................... ______
other adjustments (+/-) ................. ______
Loan Balance: Period end __________, 19 ___ ........... ______
Plus: [Describe other obligations] .................... ______
Total outstanding ...................................... ______
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
Availability (overadvance) ............................. ______
CYGNE DESIGNS, INC.
Inventory Schedule
Unit
Cost
Quantity Cents/ Value Eligible
M Units Unit M$ M$
-------- ------ ----- -------
Finished Product Inventory
--------------------------
Location/product/unit ..............
Total fin. prod. inv. ..............
Raw Material Inventory
----------------------
Location/product/unit ..............
Total raw material inv. ............
Inventory Value -- M$
---------------------
Finished product inventory .........
Raw materials inventory ............
EXHIBIT H
[Form of Opinion of Counsel to the Obligors]
September __, 1996
The Hongkong and Shanghai Banking
Corporation Limited, New York Branch
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Gentlemen:
We have acted as counsel to Cygne Designs, Inc. (the "Company") in
connection with the Credit Agreement (the "Credit Agreement") dated as of
September 20, 1996 between the Company and The Hongkong and Shanghai Banking
Corporation Limited, New York Branch (the "Bank"), providing for letters of
credit to be issued and loans to be made by the Bank in an aggregate face or
principal amount not exceeding $17,500,000. Terms defined in the Credit
Agreement are used herein as defined therein.
In rendering the opinion expressed below, we have examined the originals or
conformed copies of such corporate records, agreements and instruments of the
Company and its Subsidiaries, certificates of public officials and of officers
of the Company and its Subsidiaries, and such other documents and records, and
such matters of law, as we have deemed appropriate as a basis for the opinions
hereinafter expressed.
Based upon the foregoing, we are of the opinion that:
1. Each Obligor is a corporation duly incorporated, validly existing
and in good standing under the laws of the jurisdiction of its organization
and has the necessary corporate power to execute, perform and deliver its
obligations under the Credit Documents to which it is a party. Further, the
Company has the necessary corporate power to open Letters of Credit for its
account, borrow Loans and refinance certain existing indebtedness under the
Credit Agreement. Each Obligor is duly qualified to transact business in
such jurisdictions where failure so to qualify would have a material
adverse effect on the financial condition, operations, business or
prospects of such Obligor.
September 20, 1996
Page 2
2. The execution, delivery and performance by each Obligor of the
Credit Documents to which it is a party, and the borrowings by the Company
under the Credit Agreement, have been duly authorized by all necessary
corporate action, and do not and will not violate and provision of law or
regulation or any provision of the charter or by-laws of any Obligor or
result in the breach of, or constitute a default or require any consent
under, or (except for the Liens created pursuant to the Security Documents)
result in the creation of any lien upon any of the properties, revenues or
assets of any Obligor pursuant to, any indenture or other agreement or
instrument to which the Company or any Subsidiary is a party or by which
the Company or any Subsidiary or its assets may be bound.
3. The Credit Agreement and Security Documents (in the case of each
Obligor) constitute, and any Notes when executed and delivered for value
will constitute, legal, valid and binding obligations of the Company
enforceable in accordance with their respective terms, except as such
enforceability may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general applicability
affecting the enforcement of creditors' rights and (b) the application of
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law.)
4. There are no legal or arbitral proceedings, and no proceedings by
or before any governmental or regulatory authority or agency, pending or
(to our knowledge) threatened against or affecting the Company or any of
its Subsidiaries, or any properties or rights of the Company or any of its
Subsidiaries, which, if adversely determined, would have a material adverse
effect on the consolidated financial condition, operations, business or
prospects taken as a whole of the Company and its Consolidated
Subsidiaries.
5. No authorizations, consents, approvals, licenses, filings or
registrations with, any governmental or regulatory authority or agency are
required in connection with the execution, delivery or performance by any
Obligor of the Credit Documents to which it is a party, except the filings
and recordings of Liens to be created pursuant to the Security Documents.
6. The Security Agreement creates, in favor of the Bank, valid
security interests (to the extent the Uniform Commercial Code is applicable
thereto) in all Collateral (as defined therein) in which the Company has
rights, in each case as collateral security for the payment of the Secured
Obligations described in the Security Agreement. All such security
interests which can be perfected by a Uniform Commercial Code filing in the
United States of America will have been, upon such filings being completed,
so perfected.
September 20, 1996
Page 3
7. The issued and outstanding shares of capital stock of each Issuer
under and as defined in the Security Agreement is correctly described in
Annex 1 thereto, and evidenced by the certificates therein identified. The
security interest in the Pledged Stock under and as defined in the Security
Agreement evidenced by each such certificate constitutes a valid, perfected
security interest, subject to no equal or prior liens, encumbrances,
charges or other security interests as security for the Secured Obligations
(as defined in the Security Agreement), so long as the Bank holds such
certificates.
Very truly yours,
Fulbright & ▇▇▇▇▇▇▇▇, L.L.P.
EXHIBIT I
HSBC Corporate Banking
The Hongkong and Shanghai Banking Corporation Limited
New York Branch: ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
PRIVATE & CONFIDENTIAL
Cygne Designs, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇ ▇. ▇▇▇▇▇
Vice President Finance,
Chief Financial Officer
Dear ▇▇▇,
BANKING FACILITIES:
We are pleased to advise you that The Kongkong and Shanghai Banking Corporation
Limited, New York Branch is willing to make available to your company
USD30,000,000.- in committed facilities until 31 January 1997 on the following
terms and conditions:
Borrower: Cygne Designs, Inc. ("CDI" or "the Company"),
Lender: The Hongkong and Shanghai Banking Corporation
Limited, New York Branch ("the Bank")
To the earlier of 31 August 1996 or the sale
of CDI's 60% interest in CAT to AnnTaylor
Inc. ("CAT/ATI transaction"):
Facility/Amount: Import Facility (IMP) USD30,000,000.-
For sight DC's within which:
Technical T/R (IMC01) (USD30,000,000.-)
(Where Bank does not control
title to the goods)
Loans Against Imports (IMC02) (USD30,000,000.-)
(up to 60 days)
Revolving Loan (RLN) (USDl0,100,000.-)
(up to 60 days)
Export Loans (EXC) (USD 3,500,000.-)
(up to 90 day)
Standby LIC's (SLC) (USD 2,000,000.-)
(up to one year)
Hold Cover (HLD0l) (to be determined)
---------------
Total USD30,000,000.-
I
15 May 1996 Page 2 of 8
Cygne Designs, Inc.
Effective the earlier of closing of the
CAT/ATI transaction or 31 August 1996
facilities will reduce as follows:
Import Facility (IMP) * USD22,500,000.-
For sight DC's within which:
Technical T/R (IMC01) *(USD22,500,000.-)
(Where Bank does not control
title to the goods)
Loans Against Imports **(USD17,500,000.-)
(1MC02) (up to 60 days)
Revolving Loan (RLN) **(USD10,000,000.-)
(Up to 60 days)
Export Loans (EXC) **(USD 3,000,000.-)
(Up to 90 days)
Standby Letters of Credit (USD 2,000,000.-)
(SLC) (Up to one year)
----------------
Total USD22,500,000.-
* The IMP and IMC shall be reduced to USD15,000,000.00
at 31 October 1996, USD10,000,000.00 at 30 November
1996, and USD5,000,000.00 at 31 December 1996. Any
remaining obligations outstanding as at 31 January
1997 must be secured by cash or a standby letter of
credit from a bank or financial institution approved in
advance by the Bank.
** on a reducing basis at the earlier of the CAT/ATI
transaction or 31 August 1996.
Borrowing Base: Availability under these limits will be based on 80% of
Eligible Accounts Receivable (A/R). Eligible A/R to
exclude - Returns, discounts, claims, credits and
allowances of any nature at any time issued, owing,
granted, outstanding, available or claimed and accounts
and credit balances over 90 days from invoice date
(including ATI); total account balance where excess 20%
over 90 days past invoice date; non-approved foreign
accounts; any other uncollectible items (including
companies with debtor in possession financing, Chapter
7 and 11 bankruptcy filings, and any chargebacks).
50% of Eligible Inventory (Maximum contribution not to
exceed UBD14.0M, reducing to USD7.0M effective the
earlier of closing of the CAT/ATI transaction or 31
August 1996, and thereafter reducing in line with the
Customers
15 May 1996 Page 3 of 8
Cygne Designs, Inc.
projections.) Eligible inventory to exclude - obsolete,
damaged, not fit for traditional resale and work in
process; Foreign inventory not covered by Bank's lien;
(Note: Inventory in transit is eligible.)
50% of outstanding DC's issued.
50% of market value of AnnTaylor Stock pledged to the
Bank (Maximum contribution not to exceed USD12.0M).
Continuing standards of eligibility may be fixed and
revised from time to time solely by the Bank in its
exclusive judgement.
Purpose: For working capital and to facilitate the manufacture
and importation of apparel goods.
Availability: Upon receipt of all duly executed documentation
required by the Bank and the Borrower's compliance with
the terms and conditions of this Offer Letter.
Commission on All Bank charges will be applied according to the
Letters of credit: Bank's standard Tariff Structure and are subject to
changes at the Bank's discretion.
Commission on 0.125% per month.
Standby LC's:
Interest on IMC Interest will be calculated at a rate equal to 1.75%
and RLN: p.a. above prime rate, subject to fluctuation, and
commencing on the date of each advance, reducing at the
earlier of 31 August 1996 or the close of the CAT/ATI
transaction to 1.00% p.a. above prime rate, subject to
compliance with financial covenants and elimination of
any borrowing base overadvance.
"Prime Rate" means the rate per annum announced from
time to time by Marine Midland Bank, at its principal
office in New York City as its prime rate, and is a
base rate for calculating interest on certain loans.
All payments of interest will be automatically debited
from the Borrower's current account with the Bank upon
maturity.
15 May 1996 Page 4 of 8
Cygne Designs, Inc.
Commitment Fee: 1/2% (USD150,000.00) Payable upon acceptance of this
Facility letter.
Penalty Interest: 2% p.a. over the rate of interest otherwise applicable
to these advances.
Prepayment: There will be no penalty for prepayments; however the
Bank must be made whole for any expenses related to
break funding costs.
Payments: On the earlier of (i) the maturity date for each
advance specified on or before the time such advance or
extension or credit is made, or (ii) expiry of the
line.
DC: at sight.
RLN/IMC: for up to 60 days.
EXC: for up to 90 days.
All payments will be automatically debited to the
Borrower's current account with the Bank.
Security and The Bank shall require.
Other Collateral
Documentation: 1. Uniform Commercial Code filings providing
a first lien over all accounts receivable and
inventory of the Company and its US subsidiaries.
The Bank shall also require control over the
disposition of any tax refund.
2. Intercreditor and subordination agreement with
Mitsubishi International Corporation (MIC) and
Mitsubishi Corporation (MC) acknowledging proposed
interest only payments restriction.
3. Cross Corporate Guarantees among the Company and
its US subsidiaries.
4. Letters of Negative Pledge over all assets of
CDI, including those of any Controlled Foreign
Corporations (CFC's):
5. Pledge of 65% of the stock of the Company's CFC's
6. Pledge of 100% of the Company's stock in AnnTaylor
Stores corporation, and assignment of registration
rights thereto.
15 May 1996 Page 5 of 8
Cygne Designs, Inc.
7. Pledge of the shares of the Company held by
Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ (approximately 1,691,437
shares and 1,119,423 shares respectively.)
8. Collateral mortgage, second position, on
office/warehouse near Florence, Italy.
9. Key Man Life insurance on principals up to a value
of USD5.0M, assigned to the Bank.
10. Marine Cargo Insurance Policy with the Bank named
as loss payee.
11. Where any advances are made for Loans Against
Imports (IMC), Clean Import Loans (CIL) or Trust
Receipts (TR) loans, borrower's indebtedness will
be evidenced by an Optional Advance Time Note (Time
Note). Any time period set by the Bank for maturity
of drawings under the Time Note shall be inclusive
of any usance periods provided under letters of
credit or by the terms of sale of Borrower's
suppliers.
12. The execution or the Bank's General Security
Agreement.
Financial The granting of this facility is also subject to receipt
Reporting: of the following items duly certified by an authorized
officer of the Company, as having been prepared in
accordance with GAAP where appropriate.
Annually (Within 120 days)
Latest consolidated audited financial statements,
internal consolidating financial statements and
projections of sales and profits for the coming year.
Ouarterly (Within 45 days)
Consolidated financial statements with a summary
explanation of results, and internal consolidating
financial statements.
Quarterly (Within 30 days)
Inventory and Accounts receivable aging
15 May 1996 Page 6 of 8
Cygne Designs, Inc.
reports.
Monthly (within 10 days)
Signed Borrowing Base Certificate.
Weekly (Within 7 days)
Signed Borrowing Base Certificate
Affirmative The company must maintain the following:
Covenants:
1. Min. current ratio of 0.75X, increasing to 1.5X at
the earlier of the CAT/ATI transaction or 31 August
1996.
2. Min. Tangible Net Worth plus subordinated debt of
USDl4M increasing to USD34.5M at the earlier of the
CAT/ATI transaction or 31 August 1996.
3. Max. Leverage Ratio (total liabilities less
subordinated debt/tangible net worth plus
subordinated debt) shall not exceed 4.0X, decreasing
to l.5X at the earlier of the CAT/ATI transaction or
31 August 1996.
Conditions
Precedent: 1. USD7M Borrowing Base overadvance available upon
pledge/delivery of CDI shares owned by Messrs ▇▇▇▇▇▇
and ▇▇▇▇▇▇.
2. Satisfactory legal review of registration rights
accruing to the restricted AnnTaylor shares to be
pledged.
3. Satisfactory updated collateral audit.
4. MIC and MC must release their second position lien on
any assets being sold by CDI in the CAT/ATI
transaction.
Miscellaneous: The proceeds of all accounts receivable must be paid
directly to the Bank through a lock box established with
Marine Midland Bank. Wire transfers directly to CDI's
account with the Bank are also acceptable.
No downstreaming of funds without the Bank's prior
approval, except in the normal course of business.
15 May 1996 Page 7 of 8
Cygne Designs, Inc.
The Bank reserves the right, at the Borrower's expense,
to appoint its agent to undertake a collateral audit.
This commitment is conditional upon (i) the preparation,
execution and delivery of legal documentation in form
and substance satisfactory to the Bank and to our
counsel incorporating substantially the terms and
conditions outlined or referred to above and (ii) the
absence of a material adverse change in the financial
condition or operations of the Customer as submitted in
projection 5.2 dated 14 May 1996.
All costs, legal fees, and other out-of-pocket expenses
will be for the account of the Borrower. All other
costs, including but not limited to UCC charges and
costs incurred by the Bank in performing credit checks,
will be paid by the Borrower.
Taxation: All payments of principal, interest, fees and other
expenses shall be made by the Customer free and clear of
taxes, levies, imposts, duties, charges or withholdings
of any nature whatsoever.
Governing Law: The laws of the State of New York, without regard to
principles of conflict of laws, with non-exclusive
courts of jurisdiction.
Please be advised that your relationship officers are:
▇▇▇ ▇▇▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 5115
Should you have any matters of an operational nature to discuss, however, we
suggest that you contact either of the following:
Trade Finance ▇▇▇▇ ▇▇▇▇▇ . (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇ ▇▇▇▇▇ 2930
Customer Service ▇▇▇▇▇ ▇▇▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ 2953
15 May 1996 Page 8 of 8
Cygne Designs, Inc.
Please arrange for authorized signatories of your company, in accordance with
the terms of the mandate given to the Bank, to sign and return to us the
duplicate copy of this letter to signify your understanding and acceptance of
the terms and conditions under which the above facility is granted.
The above commitment will expire at 5:00 pm (Eastern) Daylight Time on 23 May
1996, unless we have received a fully executed copy of this letter from your
company by such time. Upon acceptance of this commitment letter, all defaults
under our Credit Agreement dated 28 September 1995 are permanently waived.
We are pleased to be of further assistance.
Yours sincerely,
/s/ ▇ ▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇ ▇▇▇▇▇▇
-------------------------------- ------------------------------
▇ ▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
Senior Vice President Vice President
Corporate Banking Corporate Banking
ACCEPTED AND AGREED TO:
Cygne DESIGNS, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman - Chief Executive Officer
Date: May 17, 1996