Exhibit 10.38
FIFTH AMENDMENT TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS FIFTH AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT (the "Amendment") is made and entered into effective as of the 14th
day of March, 2002, by and among BANK OF AMERICA, N.A., formerly NationsBank,
N.A., as agent for the financial institutions party to the Loan Agreement (as
hereafter defined) from time to time (the "Agent"), the financial institutions
party to the Loan Agreement from time to time (the "Lenders"), and ▇▇▇▇▇ ▇▇▇▇▇
INTERNATIONAL, INC., a Florida corporation formerly known as Supreme
International Corporation ("PEI").
W I T N E S S E T H :
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WHEREAS, the Agent, PEI and the Lenders are parties to that certain
Amended and Restated Loan and Security Agreement, dated as of March 26, 1999 (as
amended from time to time, the "Loan Agreement"), pursuant to which the Agent
and the Lenders have agreed to extend certain loans and financial accommodations
to PEI; and
WHEREAS, an Event of Default exists under Section 12.1(a) of the Loan
Agreement; and
WHEREAS, PEI has asked the Agent and the Lenders to waive such
existing Event of Default, and the Agent and the Lenders are willing to do so on
the terms set forth herein; and
WHEREAS, PEI has requested that the Agent and the Lenders consent to
the consummation of the ▇▇▇▇▇▇▇ Acquisition and the incurrence of the Senior
Note Debt pursuant to the Senior Note Offering (as such terms are hereafter
defined), and the Agent and the Lenders are willing to do so on the terms set
forth herein.
NOW, THEREFORE, in consideration of the foregoing premises, and other
good and valuable consideration, the receipt and legal sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows:
1. All capitalized terms used herein and not otherwise expressly
defined herein shall have the respective meanings given to such terms in the
Loan Agreement.
2. In order to induce the Agent and each Lender to enter into this
Amendment and grant the accommodations set forth herein, PEI hereby (a)
represents and warrants that, as of the date hereof, and after giving effect to
the terms hereof, there exists no Default or Event of Default, and (b)
acknowledges and agrees that no right of offset, defense, counterclaim, claim,
causes of action or objection in favor of PEI against the Agent or any Lender
exists arising out of or with respect to any of the Secured Obligations, the
Loan Agreement, or any of the other Loan Documents, or with respect to the
administration or funding of the Secured Obligations.
3. PEI hereby acknowledges that, prior to giving effect to this
Amendment, PEI is in default under Section 12.1(a) of the Loan Agreement for the
fiscal period ending on January 31, 2002. The Agent and the Lenders hereby
waive such Event of Default under Section 12.1(a), but the Agent and the Lenders
expressly reserve their rights and remedies with respect to any other Default or
Event of Default, including, without limitation, any Default or Event of Default
with respect to Section 12.1(a) of the Loan Agreement arising after January 31,
2002. PEI hereby acknowledges and agrees that the execution and delivery of
this Amendment has not established any course of dealing between PEI and the
Agent and the Lenders or any obligation of the Agent or any Lender with respect
to any future restructuring or modification of the Loan Agreement or the other
Loan Documents or the exercise of the Agent's or any Lender's rights and
remedies thereunder.
4. In order to induce the Agent and each Lender to enter into this
Amendment and grant the accommodations set forth herein, PEI hereby covenants
and agrees as follows:
(a) Acquisition Documents. PEI shall furnish to the Agent, (i)
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promptly following the execution thereof and in any event prior to the ▇▇▇▇▇▇▇
Acquisition Date, true, complete and correct copies of the executed ▇▇▇▇▇▇▇
Acquisition Agreement, which ▇▇▇▇▇▇▇ Acquisition Agreement shall be in the form
of the draft ▇▇▇▇▇▇▇ Acquisition Agreement delivered to the Agent on the date of
this Amendment, except for revisions thereto that do not adversely effect the
Agent or the Lenders in any respect, and (ii) on the ▇▇▇▇▇▇▇ Acquisition Date,
final versions (in unexecuted form) of such ▇▇▇▇▇▇▇ Acquisition Documents as the
Agent may request, each of which shall be, upon and after its execution and
delivery, in full force and effect.
(b) Senior Note Documents. PEI shall furnish to the Agent, (i)
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promptly following the issuance thereof and in any event prior to the incurrence
of the Senior Note Debt, true, complete and correct copies of the Senior Note
Offering Memorandum, which Senior Note Offering Memorandum shall be in the form
of the draft Senior Note Offering Memorandum delivered to the Agent on the date
of this Amendment, except for revisions thereto that do not adversely effect the
Agent or the Lenders in any respect, and (ii) on or prior to the ▇▇▇▇▇▇▇
Acquisition Date, final versions (in unexecuted form) of such Senior Note
Documents as the Agent may request, each of which shall be, upon and after its
execution and delivery, in full force and effect.
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5. Based on PEI's representations, warranties, covenants and agreements
set forth in this Amendment and the other Loan Documents, including the
covenants and agreements set forth in Paragraph 4 above, the Agent and the
Lenders hereby consent to the contemporaneous consummation of the ▇▇▇▇▇▇▇
Acquisition and the incurrence of the Senior Note Debt on the ▇▇▇▇▇▇▇
Acquisition Date, subject to the following conditions:
(a) No Default or Event of Default (including without limitation any
Event of Default as described in Paragraph 6 below) shall exist after giving
effect to the consummation of the ▇▇▇▇▇▇▇ Acquisition and the incurrence of the
Senior Note Debt.
(b) After giving pro forma effect to the consummation of the ▇▇▇▇▇▇▇
Acquisition and the incurrence of the Senior Note Debt, PEI shall be in
compliance with each of the financial covenants set forth in Section 12.1 (as
amended hereby), and the Agent shall have received a certificate and supporting
calculations from the Financial Officer evidencing such compliance.
(c) On the ▇▇▇▇▇▇▇ Acquisition Date, (i) the Agent shall have received
true and complete executed or conformed copies of the Senior Note Documents;
(ii) the Senior Note Documents shall be in full force and effect and no material
term or condition thereof shall have been amended, modified or waived after the
execution thereof (other than solely to extend the date by which the Senior Note
Debt is to be incurred) except with the prior written consent of the Agent;
(iii) none of the parties to any of the Senior Note Documents shall have failed
to perform any material obligation or covenant required by such Senior Note
Document to be performed or complied with by it on or before the ▇▇▇▇▇▇▇
Acquisition Date; (iv) all requisite approvals by Governmental Authorities and
regulatory bodies having jurisdiction over the parties to the Senior Note
Documents in respect of the Senior Note Offering shall have been obtained by
such parties, and no such approvals shall impose any unsatisfied conditions to
the incurrence of the Senior Note Debt; (v) the incurrence of the Senior Note
Debt pursuant to the Senior Note Offering shall be consummated (A) in accordance
with all applicable laws and the terms of the Senior Note Offering Memorandum,
and (B) pursuant to the Senior Note Documents in form consistent with the Senior
Note Offering Memorandum and otherwise satisfactory to the Agent, without any
amendment or waiver of any material provision thereof; (vi) all opinion letters
delivered in connection with the Senior Note Documents and the transactions
contemplated thereby shall be addressed to the Agent, for the benefit of the
Lenders, or accompanied by a written authorization from the firm delivering such
opinion letter stating that the Agent, for the benefit of the Lenders, may rely
on such opinion letter as though it were addressed to it; and (vii) the Agent
shall have received the duly executed and delivered Intercreditor Agreement in
substantially the form attached to this Amendment as Exhibit A (the "Trademark
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Intercreditor Agreement").
(d) On the ▇▇▇▇▇▇▇ Acquisition Date, (i) the Agent shall have received
true and complete executed or conformed copies of the ▇▇▇▇▇▇▇ Acquisition
Documents; (ii) the ▇▇▇▇▇▇▇ Acquisition Documents shall be in full force and
effect and no material term or condition thereof shall have been amended,
modified or waived after the execution thereof (other than solely to extend the
date by which the ▇▇▇▇▇▇▇ Acquisition is required to occur) except with the
prior written consent of the Agent; (iii) none of the parties to any of the
▇▇▇▇▇▇▇ Acquisition
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Documents shall have failed to perform any material obligation or covenant
required by such ▇▇▇▇▇▇▇ Acquisition Document to be performed or complied with
by it on or before the ▇▇▇▇▇▇▇ Acquisition Date; (iv) all material
representations and warranties of the Jantzen Sellers contained in the ▇▇▇▇▇▇▇
Acquisition Agreement and the other ▇▇▇▇▇▇▇ Acquisition Documents shall be true
and correct in all material respects with the same effect as though made on and
as of the ▇▇▇▇▇▇▇ Acquisition Date; (v) all requisite approvals by Governmental
Authorities and regulatory bodies having jurisdiction over the parties to the
▇▇▇▇▇▇▇ Acquisition Agreement in respect of the ▇▇▇▇▇▇▇ Acquisition shall have
been obtained by such parties (other than the completion of any assignments of
record of Intellectual Property being transferred by VF Canada, Inc. to ▇▇▇▇▇▇▇
Apparel or PEI, which assignments PEI shall diligently pursue to completion),
and no such approvals shall impose any unsatisfied conditions to the
consummation of the ▇▇▇▇▇▇▇ Acquisition; (vi) the ▇▇▇▇▇▇▇ Acquisition shall have
been consummated (A) in accordance with all applicable laws and the terms of the
▇▇▇▇▇▇▇ Acquisition Agreement, and (B) pursuant to the ▇▇▇▇▇▇▇ Acquisition
Documents in form consistent with the ▇▇▇▇▇▇▇ Acquisition Agreement and
otherwise satisfactory to the Agent, without any amendment or waiver of any
material provision thereof; (vii) all opinion letters, if any, delivered in
connection with the ▇▇▇▇▇▇▇ Acquisition Documents and the transactions
contemplated thereby shall be addressed to the Agent, for the benefit of the
Lenders, or accompanied by a written authorization from the firm delivering such
opinion letter stating that the Agent, for the benefit of the Lenders, may rely
on such opinion letter as though it were addressed to it; and (viii) the Agent
shall have received the consent and acknowledgment of the Jantzen Sellers with
respect to the ▇▇▇▇▇▇▇ Acquisition Documents Assignment.
(e) The Agent shall have received a certificate from PEI's President or
Financial Officer, together with such other evidence satisfactory to the Agent,
that each of the conditions set forth in clauses (a) through (d) above shall
have been satisfied.
(f) ▇▇▇▇▇▇▇ Apparel shall have become a Borrower hereunder on the ▇▇▇▇▇▇▇
Acquisition Date in accordance with the terms of Section 10.11.
(g) The ▇▇▇▇▇▇▇ Acquisition and the incurrence of the Senior Note Debt
pursuant to the Senior Note Offering shall be consummated in accordance with the
foregoing on or prior to March 30, 2002.
6. On the ▇▇▇▇▇▇▇ Acquisition Date, (a) PEI shall pay to SunTrust Bank,
in immediately available funds, an amount equal to all Secured Obligations owing
to SunTrust Bank under the Loan Agreement, including all outstanding principal,
all accrued interest and all accrued fees, together with an early termination
fee of $30,000, and (b) all of SunTrust Bank's rights and obligations as a
Lender under the Loan Agreement shall terminate, except that SunTrust Bank's
rights under Sections 5.6 and 16.12 of the Loan Agreement, and obligations under
Section 15.7 of the Loan Agreement, shall continue in full force and effect with
respect to all periods prior to the ▇▇▇▇▇▇▇ Acquisition Date. PEI's failure to
make such payments in full on the ▇▇▇▇▇▇▇ Acquisition Date shall constitute an
immediate Event of Default under the Loan Agreement and, notwithstanding
anything to the contrary provided in the Loan Agreement, such
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Event of Default may not be waived, released, or the subject of any amendment or
modification without the written agreement of SunTrust Bank.
7. Subject to the satisfaction of the conditions set forth in Paragraph 5
of this Amendment, the Agent hereby agrees to execute and deliver the Trademark
Intercreditor Agreement to the Senior Note Trustee on the ▇▇▇▇▇▇▇ Acquisition
Date. The Lenders hereby authorize the Agent to execute and deliver the
Trademark Intercreditor Agreement and such other agreements and documents in
connection therewith as the Agent deems necessary or appropriate.
8. The Loan Agreement is hereby amended by deleting the definitions of
"Applicable Margin", "Availability", "Funded Indebtedness", "Guarantor", "Letter
of Credit Facility", "Permitted Indebtedness", "Permitted Liens", "Permitted
Purchase Money Indebtedness" and "Restricted Payment" set forth in Section 1.1
and replacing them with the following:
"Applicable Margin" means, as to (a) Prime Rate Revolving Credit
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Loans, 0.00%, and (b) LIBOR Revolving Credit Loans, 2.75%.
"Availability" means, as of any date of determination, (a) an amount
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equal to the sum of clauses (b)(i) through (iv) of the definition of
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"Borrowing Base" minus (b) the outstanding principal balance of all
Revolving Credit Loans hereunder as of such date.
"Funded Indebtedness" means, without duplication, (a) all Indebtedness
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under this Agreement, (b) the aggregate amount at any time of outstanding
reimbursement obligations with respect to letters of credit (other than the
Standby Letter of Credit, but including other Letters of Credit) and
banker's acceptances issued by a Permitted Letter of Credit Bank or any
other financial institution which have been drawn upon, (c) all
Indebtedness under the SunTrust Lease, (d) all Senior Note Debt, (e) all
High Yield Debt, and (f) all other Indebtedness for Money Borrowed.
"Guarantor" means each of Supreme International (Mexico) and Supreme
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Canada.
"Letter of Credit Facility" means the aggregate amount of $20,000,000,
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which may be used for documentary Letters of Credit and standby Letters of
Credit.
"Permitted Indebtedness" means: (a) the Loans, (b) letter of credit
----------------------
and steamship guaranty facilities in the aggregate amount of up to
$60,000,000 at any time with Permitted Letter of Credit Banks, (c)
Indebtedness of up to $16,300,000 arising under the SunTrust Lease or any
refinancing thereof on terms satisfactory to the Agent, (d) Permitted
Purchase Money Indebtedness, (e) the High Yield
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Debt in an aggregate principal amount not to exceed $125,000,000, (f) other
Subordinated Indebtedness, (g) Indebtedness of up to $75,000,000 under the
Senior Note Indenture, (h) Permitted Acquisition Debt, and (i) Indebtedness
under Interest Rate Protection Agreements.
"Permitted Liens" means : (a) Liens securing taxes, assessments and
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other governmental charges or levies (excluding any Lien imposed pursuant
to any of the provisions of ERISA) or the claims of materialmen, mechanics,
carriers, warehousemen or landlords for labor, materials, supplies or
rentals incurred in the ordinary course of business, but in all cases, only
if payment shall not at the time be required to be made in accordance with
Section 10.4; (b) Liens consisting of deposits or pledges made in the
ordinary course of business in connection with, or to secure payment of,
obligations under workers' compensation, unemployment insurance or similar
legislation or under surety or performance bonds, in each case arising in
the ordinary course of business; (c) Liens constituting encumbrances in the
nature of zoning restrictions, easements and rights or restrictions of
record on the use of the Real Estate, which in the sole judgment of the
Agent do not materially detract from the value of such Real Estate or
impair the use thereof in the business of the Obligors; (d) Purchase Money
Liens securing Permitted Purchase Money Indebtedness; (e) Liens in favor of
any Permitted Letter of Credit Bank, but only if such Liens shall at all
times be (i) subordinate to the Agent's Liens in all Collateral other than
the Inventory (and related documents and insurance proceeds of such
Inventory) acquired by the Borrowers through letters of credit issued by
such Permitted Letter of Credit Bank, and (ii) subject to an Inventory
Intercreditor Agreement; (f) Liens in favor of (i) SunTrust Bank, Miami,
N.A. as security for PEI's obligations arising under the SunTrust Lease,
provided such Liens are subject to a lien subordination agreement
acceptable to the Agent and the Lenders, and (ii) any Person providing a
loan to refinance the SunTrust Lease, provided that such refinancing is
permitted under clause (c) of the definition of "Permitted Indebtedness",
such Liens are limited to the real estate and fixtures at PEI's
headquarters building located in Miami, Florida, and such Liens do not
secure any other Indebtedness owing to the Person providing such
refinancing loan; (g) Liens of the Agent arising under this Agreement and
the other Loan Documents; (h) Liens arising out of or resulting from any
judgment or award, the time for the appeal or petition for rehearing of
which shall not have expired, or in respect of which the Obligors are fully
protected by insurance or in respect of which the Obligors shall at any
time in good faith be prosecuting an appeal or proceeding for a review and
in respect of which a stay of execution pending such appeal or proceeding
for review shall have been secured, and as to which appropriate reserves
have been established on the books of the Obligors; (i) the interest of the
Factors in factored Receivables, provided Assignments of Factoring Credit
Balances are then effective; and (j) Liens in favor of the Senior Note
Trustee in the "Collateral" as described in the Senior Note Indenture as in
effect on the original date thereof (but excluding any
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"Additional Collateral" as described therein), provided that such Liens
shall at all times be subject to the Trademark Intercreditor Agreement.
"Permitted Purchase Money Indebtedness" means Purchase Money
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Indebtedness secured only by Purchase Money Liens and Capitalized Lease
Obligations up to an aggregate amount outstanding at any time equal to
$2,750,000.
"Restricted Payment" means (a) any redemption, repurchase or
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prepayment (including any payment made to any Person to defease payment
obligations under the High Yield Debt, the Senior Note Debt or any other
Indebtedness) or other retirement, prior to the stated maturity thereof or
prior to the due date of any regularly scheduled installment or
amortization payment with respect thereto, of any Indebtedness of a Person
(other than the Secured Obligations and trade debt), (b) any redemption,
retirement or payment with respect to the High Yield Debt or any other
Subordinated Indebtedness other than in accordance with the subordination
agreement or provisions applicable thereto, and (c) the payment by any
Person of the principal amount of or interest on any Indebtedness (other
than trade debt) owing to an Affiliate of such Person.
9. Upon the consummation of the ▇▇▇▇▇▇▇ Acquisition on the ▇▇▇▇▇▇▇
Acquisition Date, the Loan Agreement is hereby amended by deleting the
definition of "Revolving Credit Facility" set forth in Section 1.1 and replacing
it with the following:
"Revolving Credit Facility" means the facility for the Revolving
-------------------------
Credit Loans in the principal sum of up to $60,000,000 or such lesser or
greater amount as shall be agreed upon from time to time in writing by the
Agent, the Lenders and the Borrowers.
10. The Loan Agreement is hereby amended by adding the following
definitions to Section 1.1:
"Bank" means Bank of America, N.A., and its successors and assigns.
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"Inventory Intercreditor Agreement" means an intercreditor agreement
---------------------------------
between the Agent and a Permitted Letter of Credit Bank in form and
substance acceptable to the Agent, which shall include subordination and
other provisions acceptable to the Agent with respect to all Collateral
other than the Inventory (and related documents and insurance proceeds of
such Inventory) acquired by the Borrowers through letters of credit issued
by such Permitted Letter of Credit Bank.
"▇▇▇▇▇▇▇ Acquisition" means the Acquisition by PEI from the ▇▇▇▇▇▇▇
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Sellers of the assets contemplated by the ▇▇▇▇▇▇▇ Acquisition Agreement.
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"▇▇▇▇▇▇▇ Acquisition Agreement" means the Asset Purchase Agreement to
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be entered into among the Jantzen Sellers and PEI, together with all
exhibits and schedules thereto.
"▇▇▇▇▇▇▇ Acquisition Date" means the date on which the ▇▇▇▇▇▇▇
------------------------
Acquisition is consummated.
"▇▇▇▇▇▇▇ Acquisition Documents" means, collectively, the ▇▇▇▇▇▇▇
-----------------------------
Acquisition Agreement and all other documents, agreements and certificates
executed in connection with the consummation of the transactions
contemplated by the ▇▇▇▇▇▇▇ Acquisition Agreement.
"▇▇▇▇▇▇▇ Acquisition Documents Assignment" means the Collateral
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Assignment of Asset Purchase Agreement, in form and substance satisfactory
to the Agent, dated the ▇▇▇▇▇▇▇ Acquisition Date, made by PEI in favor of
the Agent, for the benefit of the Lenders.
"▇▇▇▇▇▇▇ Apparel" means ▇▇▇▇▇▇▇ Apparel Corp., a Delaware corporation.
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"Jantzen Sellers" means, collectively, ▇▇▇▇▇▇▇ Inc., a Nevada
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corporation, and VF Canada, Inc., a Canadian corporation.
"PEI" means ▇▇▇▇▇ ▇▇▇▇▇ International, Inc., a Florida corporation.
---
"Permitted Letter of Credit Banks" means Hong Kong Shanghai Bank,
--------------------------------
Ocean Bank, Israeli Discount Bank, Commerce Bank, and any other bank
acceptable to the Agent.
"Senior Note Debt" means Indebtedness incurred by PEI on the terms set
----------------
forth in the Senior Note Offering Memorandum and pursuant to the Senior
Note Indenture.
"Senior Note Documents" means the Senior Note Indenture, all security
---------------------
agreements relating thereto, and all other documents, agreements and
certificates executed in connection therewith.
"Senior Note Indenture" means the Indenture to be entered into among
---------------------
PEI, as issuer, certain Subsidiaries of PEI, as guarantors, and the Senior
Note Trustee, in connection with the Senior Note Debt.
"Senior Note Offering" means the offering of the Senior Note Debt in
--------------------
accordance with the terms of the Senior Note Offering Memorandum.
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"Senior Note Offering Memorandum" means the Preliminary Offering
-------------------------------
Memorandum with respect to the offering of up to $57,250,000 principal
amount of PEI's Senior Secured Notes due 2009.
"Senior Note Trustee" means State Street Bank and Trust Company, as
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trustee under the Senior Note Indenture.
"Trademark Intercreditor Agreement" has the meaning set forth in the
---------------------------------
Fifth Amendment to this Agreement dated March 14, 2002.
11. The parties hereto acknowledge that, effective upon the consummation
of the ▇▇▇▇▇▇▇ Acquisition on the ▇▇▇▇▇▇▇ Acquisition Date, a reserve shall be
established against the Borrowing Base in an amount equal to (a) all outstanding
Indebtedness under the SunTrust Lease minus (b) the face amount of all
outstanding Letters of Credit issued in the favor of SunTrust Bank, Miami, N.A.
as security for PEI's obligations under the SunTrust Lease (the "SunTrust Lease
Reserve"). Such reserve shall continue until the termination of the SunTrust
Lease and the payment in full of all Indebtedness thereunder.
12. On the ▇▇▇▇▇▇▇ Acquisition Date, Bank of America, N.A. will assign
$3,750,000 of its Commitment to First Union National Bank. In connection
therewith, the parties acknowledge that, after giving effect to such assignment
and the provisions of Paragraph 6 of this Amendment, the Lenders' respective
Commitments will be as set forth on Schedule 1 attached to this Amendment.
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13. The Loan Agreement is hereby amended by deleting all references
therein to the defined term "Supreme" and replacing them with "PEI", and by
deleting all references therein to the defined term "NationsBank" and replacing
them with "Bank".
14. The Loan Agreement is hereby amended by deleting all references
therein to the defined term "Permitted Receivables Disposition", it being the
intent of the parties hereto that such dispositions no longer be permitted
without the consent of the Agent and the Required Lenders.
15. The Loan Agreement is hereby amended by deleting Sections 5.2(b) and
(c) and replacing them with the following:
(b) Letter of Credit Fees.
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(i) The Borrowers agree to pay to the Agent, for the ratable
benefit of the Lenders, a fee equal to 2.75% per annum based on the
average daily outstanding Letter of Credit Amount of each Letter of
Credit. Such fee shall be payable to the Agent, for the ratable
benefit of the Lenders, in accordance with their respective Commitment
Percentages, on the first day
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of each month in arrears, and shall be calculated based on a year of
360 days and the actual number of days elapsed.
(ii) The Borrowers agree to pay to the Agent, for the account
of the Bank, the standard fees and charges of the Bank for issuing,
administering, amending, renewing, paying and canceling Letters of
Credit, as and when assessed.
(c) Commitment Fee. In connection with and as consideration for the
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Lenders' commitments hereunder, subject to the terms hereof, to lend to the
Borrowers under the Revolving Credit Facility, the Borrowers shall pay a
fee to the Agent, for the ratable benefit of the Lenders based on their
respective Commitment Percentages, from the Effective Date until the
Termination Date, in an amount equal to 0.50% per annum of the average
daily unused portion of the Revolving Credit Facility (it being understood
that no such fee shall be due with respect to the amount of the SunTrust
Lease Reserve, as such reserve is described in the Fifth Amendment to this
Agreement), payable monthly in arrears on the first day of each month.
16. The Loan Agreement is hereby amended by deleting Sections 5.9(a) and
(b) and replacing it with the following:
(a) Prepayments from Asset Dispositions. Immediately upon receipt
-----------------------------------
by a Borrower or any of its Subsidiaries of the Net Proceeds of any Asset
Disposition, the Borrowers shall apply such Net Proceeds in prepayment of
the Loans as provided in Section 5.9(d); provided, however, that the
Borrowers shall not be required to make such prepayment to the extent that
(i) the Net Proceeds from Asset Dispositions of Intellectual Property
during any fiscal year of the Borrowers do not exceed, in the aggregate,
$1,000,000, and (ii) the Net Proceeds from all Asset Dispositions during
any fiscal year of the Borrowers do not exceed, in the aggregate,
$3,000,000; provided further, however, that the Borrowers shall not be
required to make any such prepayment from an Asset Disposition of
Intellectual Property that is subject to a first priority Lien in favor of
the Senior Note Trustee in accordance with the terms of the Trademark
Intercreditor Agreement. Concurrently with the making of any such payment,
the Borrowers' Agent shall deliver to the Agent a certificate of the
Financial Officer demonstrating the calculations of the amount required to
be paid.
(b) Prepayments from Equity Offerings. In the event that, at any
---------------------------------
time after the Effective Date, any Borrower or any of its Subsidiaries
issues capital stock or other securities or receives an additional capital
contribution in respect of existing capital stock or other securities
(excluding any such issuance to, or receipt from, another Borrower or a
consolidated Subsidiary of a Borrower), no later than the third Business
Day following the date of receipt of the proceeds
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from such issuance, the Borrowers shall notify the Agent in writing whether
they intend to apply such proceeds, net of underwriting discounts and
commissions and other reasonable costs associated therewith to the
redemption or repurchase of outstanding High Yield Debt or Senior Note Debt
or in prepayment of the Loans as provided in Section 5.9(d); provided any
such redemption or repurchase of outstanding High Yield Debt or Senior Note
Debt may be made only to the extent permitted under Section 12.6. In the
event the Borrowers fail to apply such net proceeds to the redemption or
repurchase of outstanding High Yield Debt or Senior Note Debt within 60
days after the Borrowers' receipt thereof, the Borrowers shall immediately
apply such net proceeds as provided in Section 5.9(d).
17. The Loan Agreement is hereby amended by adding the following new
Section 9.17:
Section 9.17 Jurisdiction of Organization. No Borrower shall change
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its jurisdiction of organization without the prior consent of the Agent.
18. The Agent and the Lenders acknowledge and agree that (a) the
provisions of Section 10.12 of the Loan Agreement shall not apply to a wholly
owned Subsidiary of PEI that is not organized under the laws of the United
States of America and to which license agreements or the right to receive
royalties or payments under such license agreements are transferred or assigned
(a "License Subsidiary"), provided, that the aggregate payments due under all
the license agreements or rights so transferred each fiscal year shall not, in
the aggregate, exceed 30% of the total payment due under the all the licenses of
PEI and its Subsidiaries in such fiscal year, and (b) notwithstanding anything
to the contrary set forth in the Loan Agreement, so long as no Event of Default
exists, PEI and its Subsidiaries may transfer or assign license agreements or
the right to receive royalties or payments under such license agreements to a
License Subsidiary, free and clear of the Agent's Lien hereunder, provided, that
the aggregate payments due under all the license agreements or rights so
transferred each fiscal year shall not, in the aggregate, exceed 30% of the
total payment due under the all the licenses of PEI and its Subsidiaries in such
fiscal year. The Agent hereby agrees to execute and deliver (and the Lenders
authorize the Agent to execute and deliver) such Lien releases as may be
reasonably requested by PEI to evidence the foregoing.
19. The Loan Agreement is hereby amended by deleting Section 11.5(d) and
replacing it with the following:
(d) any (i) Default or Event of Default, or (ii) event that
constitutes or that, with the passage of time or giving of notice or both,
would constitute a default or event of default by any Borrower or any of
its Subsidiaries under any material agreement (other than this Agreement)
to which such Borrower or Subsidiary is a party or by which such Borrower
or Subsidiary or any of their respective property may be bound (including
without limitation any agreement
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relating to the High Yield Debt, the Senior Note Debt, the SunTrust Lease,
the factoring arrangements with the Factors, and any letter of credit
facility with a Permitted Letter of Credit Bank).
20. Upon the consummation of the ▇▇▇▇▇▇▇ Acquisition on the ▇▇▇▇▇▇▇
Acquisition Date (and the incurrence of the Senior Note Debt), the Loan
Agreement is hereby amended by deleting clauses (a) and (c) of Section 12.1 and
replacing such clauses with the following:
(a) Maximum Funded Indebtedness to EBITDA Ratio. Permit the ratio of
-------------------------------------------
Funded Indebtedness to its EBITDA (measured for the preceding four fiscal
quarters), in each case measured on a consolidated basis for PEI and its
consolidated Subsidiaries, to be greater than 6.0 to 1 as of any fiscal
quarter ending after January 31, 2002.
(c) Maximum Senior Funded Indebtedness to EBITDA Ratio. Permit the
--------------------------------------------------
ratio of (i) Funded Indebtedness minus Subordinated Indebtedness to (ii)
EBITDA (measured for the preceding four fiscal quarters), in each case
measured on a consolidated basis for PEI and its consolidated Subsidiaries,
to be greater than 3.0 to 1 as of any fiscal quarter ending after January
31, 2002.
21. The Loan Agreement is hereby amended by deleting Section 12.3 and
replacing it with the following:
Section 12.3 Guaranties. Become or remain liable with respect to any
----------
Guaranty of any obligation of any other Person, excluding (a) the Guaranty
by PEI of Sunny Industries' obligations for $600,000, (b) the Guaranty
Agreements, (c) the Guarantees by the Guarantors of the High Yield Debt,
and (d) the Guarantees by the Guarantors of the Senior Note Debt.
22. The Loan Agreement is hereby amended by deleting Section 12.5 and
replacing it with the following:
Section 12.5 Capital Expenditures. Make or incur any Capital
--------------------
Expenditures, except that the Borrowers and their Subsidiaries may make or
incur Capital Expenditures during any fiscal year in an amount not to
exceed, in the aggregate, $6,000,000.
23. The Loan Agreement is hereby amended by deleting Section 12.6 and
replacing it with the following:
Section 12.6 Restricted Distributions and Payments, Etc. Declare or
------------------------------------------
make any Restricted Distribution or Restricted Payment; provided that, the
Borrowers shall be permitted to redeem or repurchase outstanding High Yield
Debt and the Senior Note Debt from the proceeds of an equity offering made
in
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accordance with Section 5.9(b) provided (a) no Default or Event of Default
exists before or after giving effect to such redemption or repurchase, (b)
the Borrowers are in compliance with the covenants set forth in Section
12.1 on a pro forma basis after giving effect to such redemption or
repurchase, and (c) prior to such redemption or repurchase the Borrowers'
Agent shall deliver to the Agent a certificate of the Financial Officer (i)
setting forth the calculations required to establish the Borrowers' pro
forma compliance with the requirements of Section 12.1 after giving effect
to such redemption or repurchase, and (ii) stating that no Default or Event
of Default exists before or after giving effect to such redemption or
repurchase; provided further, that to the extent that any Asset Disposition
of Intellectual Property that is subject to a first priority Lien in favor
of the Senior Note Trustee in accordance with the terms of the Trademark
Intercreditor Agreement is permitted under this Agreement, the Borrowers
shall be permitted to redeem or repurchase outstanding Senior Note Debt
from the Net Proceeds of such Asset Disposition. Notwithstanding the above,
the Borrowers shall also be permitted at any time to repurchase or redeem
capital stock or other equity securities issued by such Borrowers, provided
(a) the consideration paid by such Borrowers shall not exceed $7,000,000 in
the aggregate during the term of this Loan Agreement, (b) no Default or
Event of Default exists before or after giving effect to such repurchase,
and (c) the Borrowers are in compliance with the covenants set forth in
Section 12.1 on a pro forma basis after giving effect to such redemption or
repurchase.
24. The Loan Agreement is hereby amended by deleting Section 12.13 and
replacing it with the following:
Section 12.13 Amendments of Other Agreements. Amend in any way (a)
------------------------------
the interest rate or principal amount or schedule of payments of principal
and interest with respect to any Indebtedness (other than the Secured
Obligations) other than to reduce the interest rate or extend the schedule
of payments with respect thereto, (b) the subordination provisions
applicable to the High Yield Debt or any other Subordinated Indebtedness,
or (c) any of the other terms and conditions applicable to the High Yield
Debt or the Senior Note Debt.
25. The Loan Agreement is hereby amended by deleting Section 12.14 and
replacing it with the following:
Section 12.14 Minimum Availability. Permit Availability to be less
--------------------
than $15,000,000 at any time.
26. The Loan Agreement is hereby amended by deleting Section 12.15 and
replacing it with the following:
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Section 12.15 Limitation on Certain Restrictions on Subsidiaries.
--------------------------------------------------
Create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any Subsidiary to (a) pay
dividends or make any other distributions on its capital stock or any other
interest or participation in its profits owned by a Borrower or any
Subsidiary of a Borrower, or pay any Indebtedness owed to a Borrower or a
Subsidiary of a Borrower, (b) make loans or advances to a Borrower or any
of a Borrower's Subsidiaries, or (c) transfer any of its properties or
assets to a Borrower, except for such encumbrances or restrictions existing
under or by reason of (i) applicable laws, (ii) the indenture and other
agreements applicable to the High Yield Debt, (iii) the Senior Note
Documents, and (iv) this Agreement and the other Loan Documents.
27. The Loan Agreement is hereby amended by deleting Section 13.1(o) and
replacing it with the following:
(o) Change in Control. At any time after the Agreement Date, (i) any
-----------------
"person" or "group" (as such terms are used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended, and the rules promulgated
thereunder (collectively, the "Exchange Act")), other than Permitted
Holders, is or becomes the "beneficial owner" (as defined in Rules 13d-3
and 13d-5 under the Exchange Act, except that a Person shall be deemed to
have "beneficial ownership" of all securities that such Person has the
right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of more than 35% of the
total voting power of all outstanding capital voting stock of PEI, and
either (A) the Permitted Holders beneficially own, directly or indirectly,
in the aggregate capital voting stock of PEI that represents a lesser
percentage of the aggregate ordinary voting power of all classes of the
capital voting stock of PEI, voting together as a single class, than such
other person or group and are not entitled (by voting power, contract or
otherwise) to elect directors of PEI having a majority of the total voting
power of the Board of Directors of PEI, or (B) such other person or group
is entitled to elect directors of PEI having a majority of the total voting
power of the Board of Directors of PEI; or (ii) during any consecutive two-
year period, individuals who at the beginning of such period constituted
the Board of Directors of PEI (together with any new directors whose
election by the Board of Directors of PEI, or whose nomination for election
by the shareholders of PEI, as the case may be, was approved by a vote of
66 2/3% of the directors then still in office who either were directors at
the beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a majority
of the directors of PEI then in office; or (iii) PEI ceases to own,
directly or indirectly, 100% of the capital stock of each other Obligor, or
such ownership shall cease to vest in PEI voting control over any such
Obligor; or (iv) a "Change of Control" as defined in the Notes Description
of the High Yield Debt Offering Memorandum, or
-14-
any indenture issued in connection therewith, occurs; or (v) a "Change of
Control" as defined in the Senior Note Indenture occurs.
28. The Loan Agreement is hereby amended by adding the following new
Section 15.11:
Section 15.11 Authorization re Intercreditor Agreements. Without
-----------------------------------------
limiting any of the other provisions of this Article 15, each of the
Lenders hereby authorizes the Agent to execute and deliver, on behalf of
itself and all the Lenders, any Inventory Intercreditor Agreement and
Trademark Intercreditor Agreement, and to take all actions thereunder,
including any actions relating to the Lien subordinations and releases
contemplated thereby.
29. The Agent and the Lenders waive the requirements set forth in Section
10.12 of the Loan Agreement with respect to PEI's French subsidiary, ▇▇▇▇▇ ▇▇▇▇▇
International Europe.
30. As consideration for the accommodations set forth herein, PEI shall
pay to the Agent, for the Ratable benefit of the Lenders (other than SunTrust
Bank), a fee of $225,000 on the date hereof. Such fee shall constitute a
payment for the structuring and approving of the accommodations set forth
herein, and not interest or a charge for the use of money.
31. The effectiveness of this Amendment shall be conditioned upon the
satisfaction of the following conditions precedent in a manner acceptable to the
Agent and the Lenders:
(a) The receipt by the Agent of an Acknowledgment of the terms of this
Amendment from each Guarantor, which Acknowledgments shall be in form and
substance satisfactory to the Agent and the Lenders; and
(b) The payment of all fees due by PEI in connection with this
Amendment.
32. PEI hereby restates, ratifies, and reaffirms each and every term,
condition, representation and warranty heretofore made by it under or in
connection with the execution and delivery of the Loan Agreement, as amended
hereby, and the other Loan Documents, as fully as though such representations
and warranties had been made on the date hereof and with specific reference to
this Amendment.
33. As amended hereby, the Loan Agreement shall be and remain in full
force and effect, and shall constitute the legal, valid, binding and enforceable
obligations of PEI to the Agent and the Lenders.
34. In addition to the fee set forth in Paragraph 29 of this Amendment,
PEI agrees to pay on demand all costs and expenses of the Agent in connection
with the preparation, execution, delivery and enforcement of this Amendment and
all other Loan Documents and any other
-15-
transactions contemplated hereby, including, without limitation, the fees and
out-of-pocket expenses of legal counsel to the Agent.
35. PEI agrees to take such further action as the Agent or any Lender
shall reasonably request in connection herewith to evidence the amendments
herein contained to the Loan Agreement.
36. This Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which, when so
executed and delivered, shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same instrument.
37. This Amendment shall be binding upon and inure to the benefit of the
successors and permitted assigns of the parties hereto.
38. This Amendment shall be governed by, and construed in accordance with,
the laws of the State of Georgia, other than its laws respecting choice of law.
-16-
IN WITNESS WHEREOF, PEI, the Agent and each Lender have caused this
Amendment to be duly executed by their authorized officers in several
counterparts, all as of the date first above written.
BORROWERS:
▇▇▇▇▇ ▇▇▇▇▇ INTERNATIONAL, INC., formerly
Supreme International Corporation
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Vice President, Finance
LENDERS:
BANK OF AMERICA, N.A., formerly
NationsBank, N.A.
By:____________________________________
Name:_______________________________
Title:______________________________
FIRST UNION NATIONAL BANK
By:____________________________________
Name:_______________________________
Title:______________________________
FLEET CAPITAL CORPORATION
By:____________________________________
Name:_______________________________
Title:______________________________
SUNTRUST BANK, formerly SunTrust Bank, N.A.
By:____________________________________
Name:_______________________________
Title:______________________________
AGENT:
BANK OF AMERICA, N.A., formerly
NationsBank, N.A.
By:____________________________________
Name:_______________________________
Title:______________________________
NOTARY JURAT FOR EXECUTION OF
NOTES AND OTHER
WRITTEN OBLIGATIONS TO PAY MONEY
BY FLORIDA BORROWERS
On this the ____ day of March, 2002, before me, the undersigned, a Notary
Public in and for the State of __________, County of __________, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ personally appeared, personally known to me or proved to me on the basis
of satisfactory evidence to be the Vice President, Finance of ▇▇▇▇▇ ▇▇▇▇▇
International, Inc., who executed the foregoing Fifth Amendment to Amended and
Restated Loan and Security Agreement on behalf of such corporation and
acknowledged to me that such corporation executed the foregoing pursuant to its
by-laws or a resolution of its board of directors, said execution taking place
in the State of __________, County of __________.
__________________________________
Notary Signature
My Commission Expires:
__________________________________
[Affix Notarial Seal]
AFFIDAVIT REGARDING DELIVERY
I, ________________________________ hereby certify that I am a _________________
___________ of Bank of America, N.A., as Agent for the Lenders, and that the
foregoing was delivered to me as a representative of Bank of America, N.A., as
Agent for the Lenders, in the State of Georgia, County of ▇▇▇▇▇▇.
_____________________________________________
Signature of Officer or Agent of Lender
On this the __ day of March, 2002, before me, the undersigned, a Notary
Public in and for the State of Georgia, County of ▇▇▇▇▇▇, ____________________,
personally appeared, personally known to me or proved to me on the basis of
satisfactory evidence to be a _______________ of Bank of America, N.A., a
national banking association, as Agent for the Lenders, who executed the
foregoing affidavit on behalf of such national banking association and
acknowledged to me that such national banking association executed the foregoing
pursuant to its by-laws or a resolution of its board of directors, said
execution taking place in the State of Georgia, County of ▇▇▇▇▇▇.
_______________________________
Notary Signature
SCHEDULE 1
----------
COMMITMENTS
-----------
------------------------------------------------------------
Name of Lender Commitment Commitment
Amount Percentage
------------------------------------------------------------
Bank of America, N.A. $22,500,000 37.5%
------------------------------------------------------------
Fleet Capital Corporation $22,500,000 37.5%
------------------------------------------------------------
First Union National Bank $15,000,000 25.0%
------------------------------------------------------------
EXHIBIT A
---------
[attach form of Trademark Intercreditor Agreement]
