Exhibit 10.15
EXECUTION COPY
FIRST AMENDMENT
Dated as of March 15, 1997
This FIRST AMENDMENT among The Xxxxx Karan Company, a New York general
partnership, The Xxxxx Karan Company Store, G.P., a New York general
partnership, Xxxxx Karan Studio, a New York general partnership, and DK Footwear
Partners, a New York general partnership (collectively, the "Borrowers"), the
financial institutions from time to time parties thereto as lenders (the
"Lenders"), the financial institutions from time to time parties thereto as
issuing banks (the "Issuing Banks"), Citibank, N.A., in its capacity as
administration agent for the Lenders and the Issuing Banks (the "Administrative
Agent"), The Chase Manhattan Bank and Nationsbank, N.A., in their capacity as
co-agents (the "Co-Agents").
PRELIMINARY STATEMENTS:
(1) The Borrowers, the Lenders, the Issuing Banks, the Co-Agents and
the Administrative Agent have entered into a Credit Agreement dated as of
September 18, 1996 (the "Credit Agreement"). Unless otherwise defined herein,
the terms defined in the Credit Agreement shall be used herein as therein
defined.
(2) The Borrowers and the Lenders have agreed to amend the Credit
Agreement as hereinafter set forth.
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT. The Credit Agreement is,
effective as of the date hereof and subject to the satisfaction of the
conditions precedent set forth in Section 2 hereof, hereby amended as follows:
(a) Section 1.01 of the Credit Agreement is amended by adding two new
definitions after the term "Discount Rate" and before the term "DOL" to
read as follows:
"`DK DIVISIONS' means the following divisions of The Xxxxx Karan
Company:
Xxxxx Karan Collection Clothing
Xxxxx Karan Collection Menswear
Xxxxx Karan Mens Furnishings
DKNY Clothing
DKNY Jeans
Xxxxx Karan Collection Accessories
DKNY Petites
DKNY Accessories
DKNY Menswear
DK Essentials
DK Mens Essentials
DKNY Active
DKNY Clothing Essentials
DK Mens Accessories
DK Mens Essentials Accessories
DKNY Kids
DK Mens Sportswear
Xxxxx Karan Signature
DKNY Classic
DKNY
"D"
DKNY Clothing/Petite Cut-ups
DK Womens Signature Accessories
Xxxxx Karan Shoes
DKNY Womens/Mens Shoes
Xxxxx Karan Beauty"
"`FOOTWEAR DIVISIONS' means the following divisions of DK Footwear
Partners:
Xxxxx Karan Shoes
DKNY Womens/Mens Shoes"
(b) Section 1.03 of the Credit Agreement is amended by adding the
following sentence at the end thereof:
"For purposes of calculating the financial covenants herein, the
leases of the Borrowers with respect to their computer equipment shall
be treated as operating leases in accordance with Borrowers' past
practices."
(c) Section 2.03(c) of the Credit Agreement is amended by adding a
subsection (iii) at the end thereof to read as follows:
"(iii) The Xxxxx Karan Company may request that an Issuing Bank Issue
a Letter of Credit on behalf of one of the DK Divisions. Any such
Letter of Credit that is
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Issued by an Issuing Bank for a DK Division will be Issued for the
account of The Xxxxx Karan Company and constitute an Obligation
hereunder. DK Footwear Partners may request that an Issuing Bank
Issue a Letter of Credit on behalf of one of the Footwear Divisions.
Any such Letter of Credit that is Issued by an Issuing Bank for a
Footwear Division will be Issued for the account of DK Footwear
Partners and constitute an Obligation hereunder."
(d) Section 7.01(a) of the Credit Agreement is amended in full to
read as follows:
"(a) MONTHLY REPORTS. As soon as practicable, and in any event by
March 19, 1997 with respect to the first fiscal month of 1997, and
with respect to each other fiscal month within twenty-five (25) days
after the end of such other fiscal month in each fiscal year, the
consolidated balance sheets of Xxxxx Karan International and its
Subsidiaries as at the end of such fiscal month (and showing the same
period from the previous fiscal year) and the related consolidated
statements of income and cash flow of Xxxxx Karan International and
its Subsidiaries for such fiscal month and for the period commencing
on the first day of such fiscal year and ending the last day of such
fiscal month (and showing the same periods from the previous fiscal
year), certified by the chief financial officer, controller or other
designated executive officer (acceptable to the Administrative Agent)
of Xxxxx Karan International as fairly presenting the consolidated
financial position of Xxxxx Karan International and its Subsidiaries
as at the dates indicated and the results of their operations and cash
flow for the fiscal months indicated in accordance with GAAP, subject
to normal year end adjustments."
(e) Section 7.01(e) of the Credit Agreement is amended in full to
read as follows:
"(e) BUDGETS; BUSINESS PLANS; FINANCIAL PROJECTIONS. As soon as
practicable and in any event not later than June 30, 1997 with respect
to Fiscal Year 1997 and with respect to each Fiscal Year thereafter
thirty (30) days
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after the beginning of such Fiscal Year of Xxxxx Karan International
(i) a monthly budget for such Fiscal Year; (ii) an annual business
plan for such Fiscal Year, substantially in the form of the business
plan heretofore delivered to the Administrative Agent and the Lenders,
accompanied by a report reconciling all changes and departures from
the business plan delivered to the Administrative Agent and the
Lenders for the preceding Fiscal Year and (iii) a consolidated and
consolidating plan and financial forecast, prepared in accordance with
Xxxxx Karan International's normal accounting procedures applied on a
consistent basis, for each succeeding Fiscal Year until the Commitment
Termination Date, including, without limitation, (A) a forecasted
consolidated balance sheet, and the related consolidated statements of
income, stockholders' equity and cash flows of Xxxxx Karan
International and its Subsidiaries for and as of the end of such
Fiscal Year, and the forecasted consolidating statements of income of
each Borrower for such Fiscal Year, (B) forecasted consolidated
balance sheets, and the related consolidated statements of income,
stockholders' equity and cash flows of Xxxxx Karan International and
its Subsidiaries for and as of the end of each fiscal month of such
Fiscal Year, and the forecasted consolidating statements of income of
each Borrower for and as of the end of each fiscal month of such
Fiscal Year, (C) the amount of forecasted Capital Expenditures for
such Fiscal Year and (D) forecasted compliance with the provisions of
ARTICLE X."
(f) The first sentence of Section 7.02(a) of the Credit Agreement is
amended in full to read as follows:
"The Borrowers shall provide the Administrative Agent and each Lender
with a Borrowing Base Certificate, certified as being true and correct
by the Borrowers' chief financial officer or controller, on the
seventh Business Day following the last day of each fiscal month, or
more frequently if requested by the Administrative Agent."
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(g) The lead-in language of the first sentence of Section 7.02(b) of
the Credit Agreement is amended in full to read as follows:
"At least once each fiscal month (and more often if so requested by
the Agent), the Borrowers shall provide the Administrative Agent and
the Lenders with a report (a "Monthly Report"), dated the last day of
such fiscal month, and certified by the Borrowers' chief financial
officer or controller, which Monthly Report shall include the
following information for the Borrowers, and shall cover the period
since the last prior Monthly Report delivered to the Administrative
Agent:"
(h) Section 8.12 of the Credit Agreement is amended in full to read
as follows:
"8.12. POST CLOSING MATTERS. The Borrowers shall cause satisfactory
opinions of counsel to be delivered on or before April 4, 1997 and
each of the following requirements to be satisfied on or before May
15, 1997:
(a) Pledge Agreement to be executed and delivered by The Xxxxx
Karan Company evidencing the pledge of 30% of the stock of Xxxxx Karan
Japan K.K., together with the HPL consent, or in the event that HPL
fails to give its consent, such other arrangements which are
satisfactory to the Administrative Agent.
(b) Security Agreement to be executed and delivered by DSTF
Japan Company, together with the HPL consent, or in the event that HPL
fails to give its consent, such other arrangements which are
satisfactory to the Administrative Agent.
(c) A Bailee Letter or Landlord Waiver with respect to each
location required by the Administrative Agent where Inventory is
located, stored, used or held at the premises of third party."
(i) Section 9.14 of the Credit Agreement is amended in full to read
as follows:
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"9.14. CAPITAL EXPENDITURES. No member of the Xxxxx Karan Group
shall make or incur Capital Expenditures (a) during Fiscal Year 1996
if the aggregate amount of Capital Expenditures for the Xxxxx Karan
Group PLUS the aggregate amount of the Investments made pursuant to
SECTION 9.04(III) would exceed Fifteen Million Four Hundred Thousand
Dollars ($15,400,000) for such Fiscal Year, (b) during Fiscal Year
1997 if the aggregate amount of Capital Expenditures for the Xxxxx
Karan Group PLUS the aggregate amount of the Investments made pursuant
to SECTION 9.04(III) would exceed Eight Million Dollars ($8,000,000)
for such Fiscal Year and (c) during any other Fiscal Year if the
aggregate amount of Capital Expenditures for the Xxxxx Karan Group
PLUS the aggregate amount of the Investments made pursuant to SECTION
9.04(III) would exceed Fifteen Million Dollars ($15,000,000) for such
Fiscal Year; PROVIDED, HOWEVER, that the Xxxxx Karan Group may carry
forward from one Fiscal Year to another Fiscal Year any Capital
Expenditures permitted hereunder, but not made or incurred in such
Fiscal Year, in an amount of up to Five Million Dollars ($5,000,000);
PROVIDED, FURTHER, that cost of Equipment purchased to replace
Equipment damaged or destroyed shall not be included in the
calculations for Capital Expenditures under this SECTION 9.14 to the
extent of the amount of insurance proceeds received and applied
against the Obligations."
(j) Article IX of the Credit Agreement is amended by adding a new
Section 9.18 at the end thereof to read as follows:
"9.18. AVAILABILITY. No member of the Xxxxx Karan Group shall
permit, at any time, (a) the amount, at such time, which is the sum of
(i) the Revolving Credit Obligations at such time PLUS (ii) the amount
of the Foreign Exchange Exposure at such time PLUS (iii) the amount of
the Obligations at such time attributable to corporate credit cards or
cash management functions, including Automated Clearing House (ACH)
functions, performed by Citibank TO EXCEED (b) the amount, at such
time, which is the lesser of the Commitments and the sum of (i) up to
eighty-five percent (85%) of Eligible
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Receivables LESS such reserves as the Administrative Agent, in its
sole discretion, deems appropriate PLUS (ii) up to fifty percent (50%)
of Eligible Inventory under Acceptable Documentary Letters of Credit
LESS such reserves as the Administrative Agent, in its sole
discretion, deems appropriate, (iii) up to sixty percent (60%) of
Eligible Finished Goods Inventory, PROVIDED that the amount of the
Borrowing Base allocated to the Eligible Finished Goods Inventory
stored in the warehouses located in Amsterdam shall not exceed
$5,000,000 in the aggregate, LESS such reserves as the Administrative
Agent, in its sole discretion, deems appropriate, and (iv) up to
twenty-five percent (25%) of Eligible Raw Materials LESS such reserves
as the Administrative Agent, in its sole discretion, deems
appropriate."
(k) Section 10.01 of the Credit Agreement is amended by changing the
Minimum Amount for the First Fiscal Quarter of 1997 from "$190,000,000" to
"$180,000,000".
(l) Section 10.02 of the Credit Agreement is amended in full to read
as follows:
"10.02. MINIMUM INTEREST COVERAGE RATIO. The Interest Coverage
Ratio of Xxxxx Karan International and its Subsidiaries on a
consolidated basis at the end of the fourth fiscal quarter of 1996
shall not be less than 1.50 to 1.00, and each fiscal quarter
thereafter commencing with the second fiscal quarter of 1997 shall not
be less than 15.00 to 1.00."
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(m) Section 10.03 of the Credit Agreement is amended by deleting the
Ratio required to be met for the Fourth Fiscal Quarter of 1996 and the
Ratio required to be met for the First Fiscal Quarter of 1997.
(n) Section 10.05 of the Credit Agreement is amended by changing the
Ratio for the Fourth Fiscal Quarter of 1996 from "2.5 to 1.0" to "3.0 to
1.0" and deleting the Ratio required to be met for the First Fiscal Quarter
of 1997.
(o) Schedule 6.01(C) to the Credit Agreement is amended by adding The
Xxxxx Karan Company Store (UK) Limited, a United Kingdom corporation, as a
wholly-owned Subsidiary of The Xxxxx Karan Company Store, G.P.
SECTION 2. CONDITIONS OF EFFECTIVENESS. This First Amendment shall
become effective when the Administrative Agent shall have received counterparts
of this First Amendment executed by the Borrowers and the Lenders and Section 1
of this First Amendment shall become effective when the Administrative Agent
shall have additionally received all of the following documents:
(a) Pledge of Inventory and Receivables Agreement executed by the
Xxxxx Karan Company, granting a security interest in the inventory and
receivables in The Netherlands, together with a Schedule of Inventory.
(b) Letter Agreement of First National Bank of Chicago.
(c) Pledge Agreement executed by The Xxxxx Karan Company Store, G.P.,
evidencing the pledge of 100% of the stock of The Xxxxx Karan Company Store
(UK) Limited.
(d) Security Agreement executed by The Xxxxx Karan Company Store (UK)
Limited.
(e) Guaranty Agreement executed by The Xxxxx Karan Company Store (UK)
Limited.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE BORROWERS. Each
Borrower represents and warrants as follows:
(a) After giving effect to this First Amendment, all of the
representations and warranties of each Borrower contained in Section 6.01
of the Credit Agreement shall be true in all material respects.
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(b) After giving effect to this First Amendment, no Default or Event
of Default shall have occurred and be continuing.
(c) Except as publicly disclosed prior to the date hereof, no
material adverse change shall have occurred in the condition (financial or
otherwise), performance, properties, operations or prospects of the
Borrowers or Xxxxx Karan International and its Subsidiaries, taken as a
whole, since March 31, 1996, as reflected in the Pro Forma Combined
Financial Statements contained in the Prospectus of Xxxxx Karan
International dated June 27, 1996.
SECTION 4. REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS. (a) Upon
the effectiveness of this First Amendment, on and after the date hereof each
reference in the Credit Agreement to "this Agreement", "hereunder", "hereof" or
words of like import referring to the Credit Agreement, and each reference in
the other Loan Documents to "the Credit Agreement", "thereunder", "thereof" or
words of like import referring to the Credit Agreement, shall mean and be a
reference to the Credit Agreement as amended hereby.
(b) Except as specifically amended above, the Credit Agreement and
all other Loan Documents, are and shall continue to be in full force and effect
and are hereby in all respects ratified and confirmed. Without limiting the
generality of the foregoing, the Loan Documents and all of the Collateral
described therein do and shall continue to secure the payment of all obligations
of the Borrowers under the Credit Agreement, the Notes and the other Loan
Documents, in each case as amended hereby.
(c) The execution, delivery and effectiveness of this First Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of any Lender or the Agent under any of the Loan
Documents, nor constitute a waiver of any provision of any of the Loan
Documents.
SECTION 5. EXECUTION IN COUNTERPARTS. This First 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 taken together shall constitute but
one and the same agreement.
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SECTION 6. GOVERNING LAW. This First Amendment shall be governed by,
and construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be executed as of the date first above written.
THE XXXXX KARAN COMPANY
By: Xxxxx Karan International Inc., a
general partner
By:_________________________________
Title:___________________________
XXXXX KARAN STUDIO
By: Xxxxx Karan International Inc., a
general partner
By:_________________________________
Title:___________________________
THE XXXXX KARAN COMPANY STORE, G.P.
By: Xxxxx Karan International Inc., a
general partner
By:_________________________________
Title:___________________________
DK FOOTWEAR PARTNERS
By: Xxxxx Karan International Inc., a
general partner
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By:_________________________________
Title:___________________________
CITIBANK, N.A., as Administrative Agent
and Lender
By:____________________________________
Vice President
THE CHASE MANHATTAN BANK, N.A., as Co-
Agent and Lender
By:____________________________________
Second Vice President
NATIONSBANK N.A., as Co-Agent and Lender
By:____________________________________
Vice President
FIRST NATIONAL BANK OF BOSTON
By:____________________________________
Vice President
MELLON BANK
By:____________________________________
Vice President
UNION BANK OF CALIFORNIA
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By:____________________________________
Vice President
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