Exhibit 10.32
[BANK OF AMERICA logo]
BANC OF AMERICA
SECURITIES ASIA LIMITED G.P.O. Box No. 799
A Subsidiary of Bank of America, N.A. Hong Kong
Tel (000) 0000 0000
To: Smart Shirts Limited (the Company)
For the attention of: Xxxxxxx Xxxx / Xxxxx Xx
August 3, 2006
Dear Sirs
US$50,000,000 CREDIT AGREEMENT (THE AGREEMENT) DATED 21 DECEMBER 2005 FOR
THE COMPANY WITH BANC OF AMERICA SECURITIES ASIA LIMITED AS FACILITY
AGENT
1. BACKGROUND
(a) This letter is supplemental to and amends the Agreement.
(b) All the Lenders have consented to the amendments to the Agreement
contemplated by this letter. Accordingly, pursuant to Clause 26.1
(Amendments and waivers), we are authorised to execute this letter
on behalf of the Finance Parties.
2. INTERPRETATION
(a) Capitalised terms defined in the Agreement have the same meaning
when used in this letter.
(b) The provisions of clause 1.2 (Construction) of the Agreement apply
to this letter as though they were set out in full in this letter
except that references to the Agreement are to be construed as
references to this letter.
(c) EFFECTIVE DATE means the date of this letter.
3. AMENDMENTS
(a) Subject to sub-paragraph (b) below, the Agreement will be amended
from the Effective Date in accordance with sub-paragraph (c) below.
(b) The Agreement will not be amended by this letter unless the Facility
Agent notifies the Company and the Lenders that it has received a
copy of this letter countersigned by the Company and each of the
Guarantors.
The Facility Agent must give this notification as soon as reasonably
practicable.
(c) The Agreement will be amended as follows:
(i) Clause 5.1(b) of the Agreement shall be deleted and replaced
with the following:
"Unless the Facility Agent otherwise agrees, the latest time
for receipt by the Facility Agent of a duly completed
Request is:
[BANK OF AMERICA logo]
BANC OF AMERICA
SECURITIES ASIA LIMITED G.P.O. Box No. 799
A Subsidiary of Bank of America, N.A. Hong Kong
Tel (000) 0000 0000
(i) for a Term Loan, 10:00 a.m. one Business Day before
the Rate Fixing Day; and
(ii) for a Revolving Credit Loan, 10:00 a.m. on the Rate
Fixing Day,
for the proposed borrowing";
(ii) Clause 5.2(c)(i) of the Agreement shall be deleted and
replaced with the following:
"(A) for a Term Loan, a minimum of US$5,000,000 and an
integral multiple of US$1,000,000 and (B) for a Revolving
Credit Loan, a minimum of US$500,000 and an integral
multiple of US$100,000; or";
(iii) Clause 9.2(c)(i) of the Agreement shall be deleted and
replaced with the following:
"one week, two weeks, or one, two or three month(s); or";
(iv) Clause 17.1(a)(ii) of the Agreement shall be deleted and
replaced with the following:
"in the case of KAL only:
(A) its audited consolidated financial statements for
each year ended 31 December;
(B) its unaudited consolidated financial statements for
each of its financial years; and
(C) its unaudited consolidated financial statements for
each quarter of each of its financial years.";
(v) Clause 17.1(a)(iii) of this Agreement shall be deleted;
(vi) Clause 17.1 of this Agreement shall be amended by:
(A) inserting in sub-paragraph (c), "signed by a
director of KAL" after "a reconciliation statement"
and before "reconciling such material
discrepancies"; and
(B) inserting the following new sub-paragraph (d):
"For each unaudited consolidated financial
statements of KAL for any financial year, KAL must
deliver to the Facility Agent a reconciliation
statement signed by a director of KAL reconciling
all discrepancies and changes from those set out in
the audited consolidated financial statement for
the year ending the immediately preceding 31
December, and including all
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[BANK OF AMERICA logo]
BANC OF AMERICA
SECURITIES ASIA LIMITED G.P.O. Box No. 799
A Subsidiary of Bank of America, N.A. Hong Kong
Tel (000) 0000 0000
information required by the Facility Agent acting
reasonably, in form and substance satisfactory to
the Facility Agent acting reasonably.";
(vii) Clause 17.3(a) of the Agreement shall be amended by deleting
"(other than its unaudited annual consolidated financial
statements)"; and
(viii) Clause 18.4 of the Agreement shall be deleted and replaced
with the following:
"KAL must ensure that for each year ending on each of the
dates specified below, the ratio of Consolidated Funded Debt
to Consolidated EBITDA for that year must not exceed the
ratio set opposite that date. The required ratio of
Consolidated Funded Debt to Consolidated EBITDA shall be
complied with by KAL at all times during each such year but
shall only be calculated on each Calculation Date. However,
if KAL reasonably believes that, at any time between the
last Calculation Date and the next Calculation Date, it is
not in compliance with the required ratio, it will notify
the Facility Agent within 10 Business Days.
---------------------------------------------------------------
YEAR ENDING ON RATIO
---------------------------------------------------------------
31 December 2005 3:1
---------------------------------------------------------------
31 January 2006 3:1
---------------------------------------------------------------
31 December 2006 3:1
---------------------------------------------------------------
31 January 2007 3:1
---------------------------------------------------------------
31 December 2007 or thereafter 2.5:1
---------------------------------------------------------------
31 January 2008 or thereafter 2.5:1
---------------------------------------------------------------
(ix) Clause 18.6 of the Agreement shall be deleted and replaced
with the following:
"(a) KAL must ensure that Capital Expenditure during any
financial year of KAL or calendar year does not
exceed the Maximum Capex Amount.
(b) If Capital Expenditure in a financial year of KAL
is less than the Maximum Capex Amount (such
difference being the UNUSED FINANCIAL YEAR CAPEX
AMOUNT), the Maximum Capex Amount applicable to the
next financial year of KAL will be increased by an
amount equal to the lower of (i) the Unused
Financial Year Capex Amount and (ii) US$10,000,000.
(c) If Capital Expenditure in a calendar year is less
than the Maximum Capex Amount (such difference
being the UNUSED CALENDAR YEAR CAPEX AMOUNT), the
Maximum Capex Amount applicable to the next
calendar year
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[BANK OF AMERICA logo]
BANC OF AMERICA
SECURITIES ASIA LIMITED G.P.O. Box No. 799
A Subsidiary of Bank of America, N.A. Hong Kong
Tel (000) 0000 0000
will be increased by an amount equal to the lower
of (i) the Unused Calendar Year Capex Amount and
(ii) US$10,000,000.".
(x) Clause 19.14(b) of the Agreement shall be amended by:
(A) adding "or" to the end of sub-clause (i);
(B) replacing "; or" with "," in sub-clause (ii); and
(C) deleting sub-clause (iii).
(xi) Paragraph 2(d) of Schedule 6 to the Agreement shall be
deleted and replaced with "[Capital Expenditure for the
[calendar year/financial year] ended [ ] was [ ]; and]".
4. CONFIRMATION
Each of the Company and the Guarantors agrees, acknowledges and confirms
that, notwithstanding the amendments to the Agreement effected by this
letter:
(a) its obligations, liabilities and covenants under each of the Finance
Documents to which it is a party shall remain valid, binding and
subsisting and enforceable against it; and
(b) the rights, powers and remedies of the Finance Parties under the
Finance Documents to which it is a party shall remain in full force
and effect.
(c) without limiting the generality of sub-paragraphs (a) and (b) above,
the guarantee under the Agreement:
(i) shall extend to guarantee the prompt repayment of all
amounts outstanding from time to time under the Agreement,
as amended by this letter, and
(ii) shall not be in any way discharged, released, reduced,
diminished, prejudiced or otherwise adversely affected by
the execution of this letter and the transaction
contemplated by it.
5. REPRESENTATIONS
The Company confirms to each Finance Party that on the date of this
letter and on the Effective Date the Repeating Representations set forth
in clauses 16.2 to 16.16 of the Agreement would be true if references to
the Agreement are construed as references to the Agreement as amended by
this letter.
Such Repeating Representations are applied to the circumstances existing
at the time such Repeating Representations are made.
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[BANK OF AMERICA logo]
BANC OF AMERICA
SECURITIES ASIA LIMITED G.P.O. Box No. 799
A Subsidiary of Bank of America, N.A. Hong Kong
Tel (000) 0000 0000
6. MISCELLANEOUS
(a) This letter is a Finance Document.
(b) Subject to the terms of this letter, the Agreement will remain in full
force and effect and the Agreement and this letter will be read and
construed as one document.
(c) This letter may be executed in any number of counterparts. This has the
same effect as if the signature on the counterparts were on a single copy
of this letter.
7. GOVERNING LAW
This letter is governed by Hong Kong law.
/s/ Xxxxxx Xxx
---------------
Xxxxxx Xxx
For
Banc of America Securities Asia Limited
as Facility Agent
We agree with the terms of this letter.
/s/ Xxxxx Xxx /s/ Xxxxx Xxx
------------------- --------------------
Xxxxx Xxx Xxxxx Xxx
/s/ Xxxxxx X. Xxxxxx /s/ Xxxxxx X. Xxxxxx
--------------------- ---------------------
Xxxxxx X. Xxxxxx Xxxxxx X. Xxxxxx
/s/ W. Xxx Xxxxx III /s/ W. Xxx Xxxxx III
--------------------- ---------------------
W. Xxx Xxxxx III W. Xxx Xxxxx III
For For
Smart Shirts Limited Kellwood Asia Limited
as the Company as Guarantor
Date: Date:
/s/ Xxxxx Xxx
-------------------
Xxxxx Xxx
/s/ Xxxxxx X. Xxxxxx
---------------------
Xxxxxx X. Xxxxxx
/s/ W. Xxx Xxxxx III
---------------------
W. Xxx Xxxxx III
For
Smart Shirts Manufacturers, Limited
as Guarantor
Date:
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