TENTH AMENDMENT AGREEMENT
TENTH AMENDMENT AGREEMENT, dated as of March 31, 1998, to the
Credit Agreement, dated as of June 5, 1995 (as heretofore or hereafter amended,
supplemented or modified from time to time in accordance with its terms, the
"Credit Agreement"), among Donnkenny Apparel, Inc., Xxxxxxx Industries
Corporation and Megaknits, Inc. (collectively, the "Borrowers"), the lenders
named therein (the "Lenders"), the guarantors named therein (the "Guarantors"),
The CIT Group/Commercial Services, Inc., as Administrative Agent, and The Chase
Manhattan Bank, as agent (the "Agent") for Lenders. Terms used herein and not
otherwise defined herein shall have the meanings attributed thereto in the
Credit Agreement.
WHEREAS, the Borrowers have requested that the Lenders amend
certain provisions of the Credit Agreement, and the Lenders, subject to the
terms and conditions set forth herein, are willing to do so.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and subject to the fulfillment of
the conditions set forth below, the parties hereto agree as follows:
SECTION 1. AMENDMENT UNDER CREDIT AGREEMENT
1.1 The definition of "Inventory Amount" in Article I of the
Credit Agreement is hereby amended in its entirety to read as follows:
"`Inventory Amount' shall mean, during any month, the amount
set forth below as corresponds to such month:
Month Inventory Amount
January 1998 $ 13,400,000
February 1998 13,700,000
March 1998 13,300,000
April 1998 12,900,000
May 1998 14,300,000
June 1998 18,700,000
July 1998 20,750,000
August 1998 21,900,000
September 1998 17,300,000
October 1998 13,000,000
November 1998 11,900,000
December 1998 12,700,000
January 1999 13,400,000
February 1999 13,700,000
March 1999 13,300,000"
1.2 The definitions of "Excess Collateral Requirement" and
"Overadvance Amount" in Article I of the Credit Agreement are hereby amended in
their entirety to read as follows:
"Excess Collateral Requirement" shall mean, during any End of
Month Period or Intramonth Period, as applicable, the amounts set forth below
as correspond to the applicable period commencing in the months set forth
below, and zero as to any other date:
------------------------------- --------------------------- ------------------------------
Excess Collateral Excess Collateral
Requirement for End Requirement for Intramonth
Month of Month Period Period
------------------------------- --------------------------- ------------------------------
October 1998 $4,560,000 $ -0-
------------------------------- --------------------------- ------------------------------
November 1998 5,068,000 560,000
------------------------------- --------------------------- ------------------------------
December 1998 4,164,000 1,068,000
------------------------------- --------------------------- ------------------------------
January 1999 2,236,000 164,000
------------------------------- --------------------------- ------------------------------
February 1999 3,784,000 -0-
------------------------------- --------------------------- ------------------------------
March 1999 3,065,000 -0-
------------------------------- --------------------------- ------------------------------
For purposes of this paragraph, the terms "End of Month
Period" and "Intramonth Period" shall have their respective
meanings as set forth in the definition of "Overadvance
Amount."
"`Overadvance Amount' shall mean, during any End of Month
Period and Intramonth Period, the amounts set forth below as correspond to the
End of Month Period and the Intramonth Period during the months set forth
below:
Overadvance
Overadvance Amount
Amount during the during the
Month End of Month Period Intramonth Period
--------------------------------------------------------------------------------------------
January 1998 $ -0- $ 4,200,000
February 1998 -0- 1,764,000
March 1998 -0- 216,000
April 1998 1,828,000 4,000,000
May 1998 3,394,000 5,828,000
June 1998 5,220,000 7,394,000
July 1998 7,347,000 11,000,000
August 1998 5,734,000 11,347,000
September 1998 461,000 9,734,000
October 1998 -0- 4,461,000
November 1998 -0- -0-
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December 0000 -0- -0-
January 0000 -0- -0-
February 1999 -0- 1,764,000
March 1999 -0- 216,000
For purposes of this paragraph, (i) the term "End of Month
Period" shall mean the period commencing on the last Business
Day of a month and ending on the fifth day of the immediately
following month and (ii) the term "Intramonth Period" shall
mean the period commencing on the sixth day of a month and
ending on the day immediately preceding the last Business Day
of the same month."
1.3 Section 2.01(b) of the Credit Agreement is hereby amended by amending
the proviso to the second sentence thereof to read in its entirety as follows:
"provided, however, that in no event shall the aggregate
principal amount of Revolving Credit Loan outstanding at any
time to the Borrowers exceed $60,000,000."
1.4 Section 2.09(d) of the Credit Agreement is hereby amended by deleting
the phrase "in excess of $2,000,000 in the aggregate" from the second sentence
thereof, by substituting "1997" for "1996" in such sentence and by adding the
following additional sentences to such subsection to read in their entirety as
follows:
"Within one (1) Business Day of the sale or other disposition
of any assets of the Parent and/or any of its subsidiaries
(excluding sales of inventory in the ordinary course of
business), the Borrowers shall make a mandatory prepayment of
the Term Loans in an amount equal to 100% of the proceeds
received (net of taxes due and any reasonable expenses of
sale) which proceeds shall be applied as set forth in
paragraph (f) below. Nothing contained in this paragraph (d)
shall be or be deemed to be a consent to the sale of any
assets."
1.5 Section 2.17(c) of the Credit Agreement is hereby amended by deleting
the reference to "$70,000,000" at the end of the second sentence thereof and
substituting therefore a reference to "$60,000,000."
1.6 A new Section numbered Section 4.23 shall be added to the Credit
Agreement to read in its entirety as follows:
"Section 4.23. Year 2000. The Cost to the Borrowers
of reprogramming and testing of the Borrowers' computer
systems and related equipment to permit proper functioning in
and following the year 2000 and of the reasonably foreseeable
consequences of year 2000 to the Borrowers (including,
without limitation, reprogramming errors and the failure of
others' systems or equipment) will not result in a Default or
have a Material Adverse Effect."
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1.7 Subsection (b) of Section 6.03 (Insurance) of the Credit Agreement is
hereby amended by adding thereto the following additional proviso:
"and provided, further, that at all times the Borrowers shall
keep in full force and effect the directors and officers
liability insurance presently being maintained, and in the
amounts presently being maintained,"
1.8 Subsections (a) and (b) of Section 6.05 of the Credit Agreement are
hereby amended in their entirety to read as follows:
"(a) within 90 days after the end of each Fiscal
year, (i) a Consolidated balance sheet and income statement
showing the financial condition of the Parent and it
subsidiaries as of the close of such Fiscal Year and the
results of their operations during such year, and (ii) a
Consolidated statement of shareholders' equity and a
Consolidated statement of cash flow, as of the close of such
Fiscal Year, all the foregoing Consolidated financial
statements to be audited by independent public accountants
acceptable to the Administrative Agent (which report shall
not contain any qualification except with respect to new
accounting principles mandated by the Financial Accounting
Standards Board) and to be in form and substance acceptable
to the Administrative Agent.
(b) within 45 days after the end of each of the
first three fiscal quarters, (i) an unaudited Consolidated
balance sheet and income statement showing the financial
condition and results of operations of the Parent and its
subsidiaries as of the end of each such quarter and (ii) a
Consolidated statement of cash flow for the fiscal quarter
just ended and prepared and certified by the Financial
Officer of the Parent as presenting fairly the financial
condition and results of operations of the Parent and its
subsidiaries and as having been prepared in accordance with
GAAP, subject to normal year-end audit adjustments."
1.9 A new Section numbered 6.16 shall be added to the Credit Agreement to
read in its entirety as follows:
"Section 6.16. Year 2000. Take all actions necessary
to complete by January 1, 1999 any reprogramming required to
permit the proper functioning, in and following the year
2000, of (i) the Borrowers' computer systems and (ii)
equipment containing embedded microchips (including systems
and equipment supplied by others or with which Borrowers'
systems interface) and the testing of all such systems and
equipment, as so programmed."
1.10 Sections 7.07, 7.11 and 7.12 of the Credit Agreement are hereby
amended in their entirety to read as follows:
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"SECTION 7.07. Capital Expenditures. Permit the
aggregate amount of payments made for capital expenditures,
including Capitalized Lease Obligations and Indebtedness
secured by Liens permitted under Section 7.01(e) hereof, in
Fiscal Year 1998 to exceed $3,500,000 for the Parent and its
subsidiaries on a Consolidated basis.
SECTION 7.11. Pre-Tax Income. Permit Net Income of
the Parent and its Subsidiaries (in each case computed and
calculated in accordance with GAAP) on a Consolidated basis
in any Fiscal Year to be less than $750,000.
SECTION 7.12. Tangible Net Worth. Permit the
Tangible Net Worth of the Parent and its Subsidiaries on a
Consolidated basis to be less than (a) $17,500,000 at any
time through August 31, 1998 and (b) $19,500,000 at any
time thereafter."
1.11 Subparagraph (j) of Article VIII is hereby amended in its entirety to
read as follows:
"(j) (x) a judgment (not reimbursed by insurance
policies of any Loan Party) or decree for the payment of
money, a fine or penalty which when taken together with all
other such judgments, decrees, fines and penalties shall
exceed $325,000 shall be rendered by a court or other
tribunal against any Loan Party and (i) shall remain
undischarged or unbonded for a period of 30 consecutive days
during which the execution of such judgment, decree, fine or
penalty shall not have been stayed effectively or (ii) any
judgment creditor or other person shall legally commence
actions to collect on or enforce such judgment, decree, fine
or penalty, or (y) Borrowers' directors and officers
liability insurance carriers at any time for any reason shall
either deny liability to pay or fail to pay any judgment,
award or settlement amount arising from or in connection with
the shareholders' litigation pending against the Borrowers
and certain Affiliates."
1.12 Schedule 2.01(b) annexed to the Credit Agreement is hereby amended in
its entirety to read as Schedule 2.01(b) annexed hereto.
1.13 Except for the specific amendments set forth in Sections 1.1 through
1.12, nothing herein shall be deemed to be an amendment of any covenant or
agreement contained in the Credit Agreement, and the Borrowers and Guarantors
hereby agree that all of the covenants and agreements contained in the Credit
Agreement, are hereby ratified and confirmed in all respects.
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SECTION 2. CONDITIONS PRECEDENT
Section 1 of this Tenth Amendment Agreement shall become
effective upon the execution and delivery of counterparts hereof by the parties
listed below and the fulfillment of the following conditions:
(1) The representations and warranties contained in
Article V of the Credit Agreement shall be
true and correct in all material respects.
(1) No unwaived event has occurred and is continuing
which constitutes an Event of Default under the
Credit Agreement or would constitute such an Event
of Default but for the requirement that notice be
given or time elapse or both.
(2) The Agent shall have received for the ratable
benefit of the Lenders a waiver and amendment fee in
the amount of $100,000.
SECTION 3. MISCELLANEOUS
3.1 The Borrowers reaffirm and restate the representations
and warranties set forth in Article V of the Credit Agreement and all such
representations and warranties shall be true and correct in all material
respects on the date hereof with the same force and effect as if made on such
date, except as they may specifically refer to an earlier date.
3.2 Except as herein expressly amended, the Credit Agreement
is ratified and confirmed in all respects and shall remain in full force and
effect in accordance with its terms.
3.3 This Tenth Amendment Agreement may be executed by the
parties hereto individually or in combination, in one or more counterparts,
each of which shall be an original and all of which shall constitute one and
the same agreement. Delivery of an executed counterpart of a signature page by
telecopier shall be effective as delivery of a manually executed counterpart.
3.4 THIS TENTH AMENDMENT AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK.
3.5 The parties hereto shall, at any time and from time to
time following the execution of this Tenth Amendment Agreement, execute and
deliver all such further instruments.
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and take all such further action as may be reasonably necessary or appropriate
in order to carry out the provisions of this First Amendment Agreement.
THE CHASE MANHATTAN BANK
as Agent and Lender
By: /s/Xxx Xxxxx
---------------------------------
Name: Xxx Xxxxx
Title: Vice President
THE CIT GROUP/COMMERCIAL SERVICES,
INC., as Administrative Agent and Lender
By: /s/Xxxx Xxxxxx
---------------------------------
Name: Xxxx Xxxxxx
Title: Associate Vice President
THE BANK OF NEW YORK,
as Lender
By:
---------------------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President
FLEET BANK N.A., as a Lender
By: /s/Xxx X. Xxxxxxx
---------------------------------
Name: Xxx X. Xxxxxxx
Title: Vice President
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DONNKENNY APPAREL, INC.,
as a Borrower
By: /s/ Xxxxxx X. Xxxx
---------------------------------
Name: Xxxxxx X. Xxxx
Title: Vice President of Finance
XXXXXXX INDUSTRIES CORPORATION,
as a Borrower
By: /s/ Xxxxxx X. Xxxx
---------------------------------
Name: Xxxxxx X. Xxxx
Title: Vice President of Finance
MEGAKNITS, INC., as a Borrower
By: /s/ Xxxxxx X. Xxxx
---------------------------------
Name: Xxxxxx X. Xxxx
Title: Vice President of Finance
DONNKENNY, INC., as a Guarantor
By: /s/ Xxxxxx X. Xxxx
---------------------------------
Name: Xxxxxx X. Xxxx
Title: Vice President of Finance
CHRISTIANSBURG GARMENT COMPANY,
INCORPORATED, as a Guarantor
By: /s/ Xxxxxx X. Xxxx
---------------------------------
Name: Xxxxxx X. Xxxx
Title: Vice President of Finance
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SCHEDULE 2.01(b)
Revolving Credit Commitments
Approximate
Revolving Percentage of
Credit Total Revolving
Lender Commitment Credit Commitment
------ ---------- -----------------
The Chase Manhattan Bank $29,814,770 35.0762%
0000 Xxxxxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxx X. Xxxxx
The Bank of New York $21,296,325 25.0545%
Xxx Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
Fleet Bank N.A. $21,296,325 25.0545%
000 Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xx Xxxxx
The CIT Group/Commercial Services, Inc. $12,592,580 14.8148%
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxx
Sublimit for Revolving Credit Loans
-----------------------------------
Approximate
Lender Sublimit Percentage
------ -------- -----------
The Chase Manhattan Bank $21,045,720 35.0762%
The Bank of New York $15,032,700 25.0545%
Fleet Bank $15,032,700 25.0545%
The CIT Group/Commercial Services, Inc. $ 8,888,880 14.8148%
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