FIFTH AMENDMENT TO CREDIT AGREEMENT
FIFTH AMENDMENT TO CREDIT AGREEMENT, dated as of July 6, 2000 (this
"Amendment"), to the Credit Agreement dated as of June 29, 1999 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement")
among DONNKENNY APPAREL, INC. a Delaware corporation ("DKA"), XXXXXXX INDUSTRIES
CORPORATION, a Delaware corporation ("BIC"; together with DKA, and severally,
the "Borrowers"), the Guarantors party thereto, the Lenders party thereto and
THE CIT GROUP/COMMERCIAL SERVICES, INC. as agent for the Lenders (in such
capacity, the "Agent").
The Borrowers, the Guarantors, the Lenders and the Agent are parties
to the Credit Agreement.
The Borrowers have requested that the Lenders make additional term
loans to Borrowers under the Credit Agreement in an aggregate amount of
$1,300,000 and amend certain provisions of the Credit Agreement, and the Lenders
are willing to make such additional term loans and make such amendments to the
Credit Agreement upon the terms and subject to the conditions set forth in this
Amendment.
Accordingly, in consideration of the mutual agreements set forth
herein, and for good and other valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Defined Terms.
(a) Existing Definitions. Initially capitalized terms used and not
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otherwise defined herein shall have their respective meanings as defined in the
Credit Agreement.
(b) Additional Definitions. As used herein, the following terms shall
have the respective meanings given to them below and Section 1.01 of the Credit
Agreement is hereby amended to include, in addition, and not in limitation, each
of the following definitions:
"Supplemental Term Loan" shall mean the Supplemental Term Loan made
pursuant to Sections 2.01 and 2.02.
"Supplemental Term Loan Closing Date" shall mean July , 2000.
"Supplemental Term Loan Commitment" shall mean, with respect to any Lender, the
Supplemental Term Loan Commitment of such Lender as set forth in Schedule
2.01(c).
"Supplemental Term Notes" shall mean the Supplemental Term Notes of
Borrowers, executed and delivered as provided in Section 2.04, in substantially
the form of Exhibit A-1 hereto, as amended, modified or supplemented from time
to time.
"Total Supplemental Term Loan Commitment" shall mean the sum of the
Lenders' Supplemental Term Loan Commitments, as the same may be reduced from
time to time pursuant to Section 2.07.
(c) Amendments to Existing Definitions.
(i) Amendment of Definition of Commitment. The defined term
"Commitment" set forth in Section 1.01 of the Credit Agreement is hereby amended
and restated in its entirety to read as follows:
""Commitment" shall mean, with respect to each Lender, the sum of the
Term Loan Commitment of such Lender as set forth in Schedule 2.01 (a) and
the Supplemental Term Loan Commitment of such Lender as set forth in
Schedule 2.01(c), as each maybe adjusted from time to time pursuant to
Section 2.07, and the Revolving Credit Commitment of such Lender as set
forth in Schedule 2.01(12)."
(ii) Amendment of Definition of Loan. The defined term "Loan" set
forth in Section 1.01 of the Credit Agreement is hereby amended and restated in
its entirety to read as follows:
"'Loan" shall mean the Term Loan, the Supplemental Term Loan or any
Revolving Credit Loan."
(iii) Amendment of Definition of Notes. The defined term "Notes" set
forth in Section 1.01 of the Credit Agreement is hereby amended and restated in
its entirety to read as follows:
"'Notes" shall mean, collectively, the Term Notes, the Supplemental
Term Notes and the Revolving Credit Notes."
(iv) Amendment of Definition of Obligations. All references in the
Credit Agreement and in the other Loan Documents to the defined term
"Obligations" are hereby amended in each instance to include in addition, and
not in limitation, the Supplemental Term Loan.
(v) Amendment of Definition of Total Commitment. The defined term
"Total Commitment" set forth in Section 1.01 of the Credit Agreement is hereby
amended and restated in its entirety to read as follows:
"'Total Commitment" shall mean the sum of the Lenders' Total Term Loan
Commitment plus Total Supplemental Term Loan
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Commitment plus Total Revolving Credit Commitment, as the same may be
reduced from time to time pursuant to Section 2.07 hereof."
2. Amendment of Section 2.01(a). Section 2.01(a) of the Credit
Agreement is hereby amended by inserting the following new sentence at the
end of such Section:
"Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, each Lender,
severally and not jointly, agrees to make the Supplemental Term Loan
to the Borrowers on the Supplemental Term Loan Closing Date, in an
aggregate principal amount not to exceed the amount of such Lender's
Supplemental Term Loan Commitment set forth opposite its name in
Schedule 2.01 (c) hereto."
3. Amendment of Section 2.01(b). Section 2.01(b) of the Credit
Agreement is hereby amended as follows:
(a) The third sentence of the first paragraph of Section 2.01
(b) is hereby amended by inserting therein, as new clause (ii) thereof, the
phrase " plus (ii) the principal amount of the Supplemental Term Loam
outstanding at any time" and by redesignating the currently existing clause (ii)
thereof as clause (iii) thereof.
(b) As a result of the amendments to Section 2.01(b) made by
clause (a) immediately above, Section 2.01(b) is amended and restated in its
entirety to read as follows:
"(b) Subject to the terms and conditions and relying
upon the representations and warranties herein set forth, each
Lender, severally and not jointly, agrees to make Revolving
Credit Loans to, and through the Agent open Letters of Credit
for the benefit of, the Borrowers, at any time and from time
to time from the date hereof to the Revolving Credit
Termination Date, in an aggregate principal amount at any time
outstanding not to exceed the amount of such Lender's
Revolving Credit Commitment set forth opposite its name in
Schedule 2.01 (b) annexed hereto. Notwithstanding the
foregoing, the aggregate principal amount of Revolving Credit
Loans outstanding at any time to the Borrowers shall not
exceed (1) the lesser of (A) the Total Revolving Credit
Commitment and (B) an amount equal to the total of (i) up to
ninety percent (90%) of the Net Amount of Eligible Receivables
plus (ii) the sum of (I) up to sixty percent (60%) of the Net
Amount of Eligible Inventory plus (II) up to sixty percent
(60%) of the undrawn amount of all outstanding Letters of
Credit for the importation of finished goods inventory
consigned to the Agent as of the date of determination (not to
exceed $37,000,000 at any time) minus (iii) any Availability
Reserves (the amount determined pursuant to this clause (B)
referred to herein as the "Borrowing Base"), minus (2) the
Letter of Credit Usage at such
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time (not to exceed $35,000,000 at any time). In no event,
however, shall the sum of (i) the principal amount of the Term
Loan outstanding at any time plus (ii) the principal amount of
the Supplemental Term Loan outstanding at any time plus (iii)
the aggregate principal amount of Revolving Credit Loans
outstanding at any time exceed $75,000,000. In addition to and
not in limitation of the foregoing limitations with respect to
Revolving Credit Loans outstanding at any time to Borrowers,
and notwithstanding anything to the contrary contained in this
Section 2.01(b), the aggregate principal amount of Revolving
Credit Loans outstanding at any time to Borrowers solely with
respect to Eligible Receivables and Eligible Inventory shall
not exceed an amount equal to the total amount of Revolving
Credit Loans then available based upon the immediately
preceding clauses (B)(i) and (B)(ii)(I). The Borrowing Base
will be computed daily and a compliance certificate from a
Responsible Officer of the Borrowers presenting its
computation will be delivered to the Agent in accordance with
Section 6.05 hereof.
Subject to the foregoing and within the foregoing
limits, the Borrowers may borrow, repay (or, subject to the
provisions of Section 2.09 hereof, prepay) and reborrow
Revolving Credit Loans, on and after the date hereof and prior
to the Revolving Credit Termination Date, subject to the
terms, provisions and limitations set forth herein, including
without limitation, the requirement that, except as set forth
in Section 2.01(c), no Revolving Credit Loan shall be made
hereunder if the amount thereof exceeds the Availability
outstanding at such time."
4. Addition of Schedule 2.01(c). The Credit Agreement is hereby
amended by adding thereto a new Schedule 2.01(c) - Supplemental Term Loan
Commitment in the form of Schedule 2.01 c attached hereto.
5. Amendment of Section 2.02(b). Section 2.02(b) of the Credit
Agreement is hereby amended and restated in its entirety as follows:
"(b) Loans shall be made ratably by the Lenders in
accordance with their respective Term Loan Commitments,
Supplemental Term Loan Commitments or Revolving Credit
Commitments, as the case maybe, provided, however, that the
failure of any Lender to make any Loan shall not in itself
relieve any other Lender of its obligation to lend hereunder."
6. Amendment of Section 2.02(d). Section 2.02(d) of the Credit
Agreement is hereby amended by inserting ",its Supplemental Term Loan" in the
first line thereof immediately after "Term Loan."
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7. Addition of Sections 2.04(f) and 2.04(g). Section 2.04 of the
Credit Agreement is hereby amended by adding thereto new Sections 2.04(f) and
3.04(g) as follows:
"(f) The Supplemental Term Loan made by a Lender
shall be evidenced by a single Supplemental Term Note, duly
executed by the Borrowers, dated as of the Supplemental Term
Loan Closing Date, in substantially the form of Exhibit A-1
annexed hereto, delivered and payable to such Lender in a
principal amount equal to its Supplemental Term Loan
Commitment on such date.
(g) The entire aggregate principal amount of the
Supplemental Term Loan (plus all accrued and unpaid interest
thereon), as evidenced by the Supplemental Term Notes, shall
be payable in thirty-six (36) consecutive monthly installments
commencing on January 1, 2001 and continuing on the first day
of each calendar month thereafter, of which the initial
thirty-five (35) monthly installments shall each be in an
amount equal to one-thirtyfifth (1/35th) of the original
principal amount of the Supplemental Term Loan and the
thirty-sixth (36th) and final installment shall be in the
amount of the entire remaining balance of the Supplemental
Term Loan together with all interest accrued thereon, provided
that, the entire unpaid balance of the Supplemental Term Loan,
together with all interest accrued thereon, shall be due and
payable no later than the earlier to occur of the Revolving
Credit Termination Date and the Final Maturity Date. All such
payments shall be distributed ratably among the Lenders in
accordance with their respective Supplemental Term Loan
Commitments. Each Supplemental Term Note shall bear interest
from its date on the outstanding principal balance thereof, as
provided in Section 2.05. All principal payments in respect of
the Supplemental Term Loan shall be accompanied by accrued
interest on the principal amount being repaid to the date of
payment. No scheduled payment of principal in respect of the
Supplemental Term Loan shall be made to the extent that a
lesser principal payment would result in the payment in full
of the outstanding amount of the Supplemental Term Loan, and
such lesser amount is paid."
8. Amendment of Section 2.06(a).
(a) The first sentence of Section 2.06(a) of the Credit Agreement is
hereby amended by inserting " plus the outstanding principal amount of such
Lender's Supplemental Term Loan" immediately after "Lenders' Term Loan" and
immediately prior to "during the quarter."
(b) As a result of the amendments to Section 2.06(a) made by clause
(a) immediately above, Section 2.06(a) is amended and restated in its entirety
to read as follows:
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"(a) The Borrowers shall pay each Lender, through the
Agent, (i) on the first Business Day of each October, January,
April and July, commencing October 1, 1999, and (ii) on the
Revolving Credit Termination Date, in immediately available
funds, a commitment fee (the "Revolving Credit Commitment
Fee") of one-quarter of one percent (1 /4 of 1%) perannum on
the amount by which the average daily unused amount of the
Revolving Credit Commitment of such Lender exceeds the sum of
the outstanding principal amount of such Lender's Term Loan
plus the outstanding principal amount of such Lender's
Supplemental Term Loan during the quarter (or shorter period
commencing with the date hereof or ending with the Revolving
Credit Termination Date) ending on such date."
9. Amendment of Section 2.07(b). Section 2.07(b) of the Credit
Agreement is hereby amended and restated in its entirety to read as follows:
"(b) The Total Term Loan Commitment and the Total
Supplemental Term Loan Commitment shall each be permanently
reduced by the amount of any repayment or prepayment of the
outstanding principal amount of the Term Loans or the
Supplemental Term Loans (as the case may be) on the date of
any such repayment or prepayment. In any event, all amounts
due and owing under the Total Term Loan Commitment and under
the Total Supplemental Term Loan Commitment shall be due and
payable on the earlier to occur of the Revolving Credit
Termination Date and the Final Maturity Date."
10. Amendment of Section 7.10. Section 7.10 of the Credit Agreement
is amended in its entirety to read as follows:
"Section 7.10 Minimum Interest Coverage Ratio. Permit
the Interest Coverage Ratio of the Parent and its Subsidiaries
on a Consolidated basis for each four consecutive fiscal
quarter period ending on the last day of each of the fiscal
quarters set forth below to be less than the ratio set forth
below opposite such fiscal quarter:
Quarterly Period Ending Minimum Interest Coverage Ratio
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June 30, 2000 N/A
September 30, 2000 N/A
December 31, 2000 1.14 to 1.00"
11. Amendment of Section 7.11. Section 7.11 of the Credit Agreement
is hereby amended in its entirety to read as follows:
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"Section 7.11 EBITDA. Permit EBITDA of the Parent and
its Subsidiaries (in each case computed and calculated in
accordance with GAAP) on a Consolidated basis for each four
consecutive fiscal quarter period ending on the last day of
each of the fiscal quarters set forth below to be less than
the amount set forth below opposite each such fiscal quarter:
Quarterly Period Ending EBITDA
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June 30, 2000 ($1,650,000)
September 30, 2000 $395,000)
December 31, 2000 $3,882,000
12. Amendment of Section 7.12A. Section 7.12A of the Credit
Agreement is hereby amended in its entirety to read as follows:
"Section 7.12A Tanizible Net Worth. Permit the
Tangible Net Worth of the Parent and its Subsidiaries (in each
case computed and calculated in accordance with GAAP) on a
Consolidated basis as of the end of each of the fiscal
quarters set forth below to be less than the amount set forth
below opposite each such fiscal quarter:
Quarterly Period Ending Tangible Net Worth
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June 30, 2000 $6,000,000
September 30, 2000 $7,400,000
December 31, 2000 $9,500,000
13 . Organization and Amendment Fee. In consideration of the making
of the Supplemental Term Loan and the amendments to the Credit Agreement as set
forth herein, Borrowers shall pay to Agent, for the benefit of Lenders, or
Agent, at its option, may charge the account(s) of Borrowers maintained by Agent
an origination and amendment fee in the amount of $100,000, which fee is fully
earned and payable as of the date hereof and shall constitute part of the
Obligations.
14. Representations and Warranties. Borrowers hereby represent and
warrant to Lenders that the representations and warranties set forth in Article
IV of the Credit Agreement are true on and as of the date hereof, as if made on
and as of the date hereof, after giving effect to this Amendment, except to the
extent that any such representation or warranty expressly relates to a prior
date, and breach of any of the representations and warranties made in this
paragraph 14 shall constitute and Event of Default under Article VIII(a) of the
Credit Agreement. Borrowers further represent and warrant that, after giving
effect to this Amendment, no Event of Default or event which, with the lapse of
time or the giving of notice or both, would become an Event of Default has
occurred and is continuing.
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15. Effectiveness. This Amendment shall become effective on the date
Agent shall have received counterparts of this Amendment duly executed and
delivered by each of the parties hereto.
16. Continuing Effect of Credit Agreement. This Amendment shall not
constitute a waiver or amendment of any provision of the Credit Agreement not
expressly referred to herein and shall not be construed as a consent to any
further or future action on the part of either of the Borrowers that would
require consent of Lenders. Except as expressly amended by this Amendment, the
provisions of the Credit Agreement are and shall remain in full force and
effect.
17. Applicable Law. This Amendment shall be construed in accordance
with and governed by the laws of the State of New York (other than the conflicts
of law principles thereof).
18. Counterparts; Facsimile Sign. This Amendment may be executed in
counterparts, each of which shall constitute and original and all of which when
taken together shall constitute but one contract. Delivery of an executed
counterpart of the signature page of this Amendment by facsimile shall be
effective as delivery of a manually executed signature page hereto.
[Signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective authorized officers as of the
day and year first above written.
DONNKENNY APPAREL, INC.,
as a Borrower and a Guarantor
By: /s/ Xxxxxxx Xxxxxx
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Name: Xxxxxxx Xxxxxx
Title: Executive Vice President,
Chief Financial Officer
XXXXXXX INDUSTRIES CORPORATION,
as a Borrower and a Guarantor
By: /s/ Xxxxxxx Xxxxxx
---------------------------
Name: Xxxxxxx Xxxxxx
Title: Executive Vice President,
Chief Financial Officer
DONNKENNY, INC.,
as a Guarantor
By: /s/ Xxxxxxx Xxxxxx
---------------------------
Name: Xxxxxxx Xxxxxx
Title: Executive Vice President,
Chief Financial Officer
CHRISTIANSBURG GARMENT COMPANY,
INCORPORATED, as a Guarantor
By: /s/ Xxxxxxx Xxxxxx
---------------------------
Name: Xxxxxxx Xxxxxx
Title: Executive Vice President,
Chief Financial Officer
H SQUARED DISPOSITIONS, INC., as a Guarantor
By: /s/ Xxxxxxx Xxxxxx
---------------------------
Name: Xxxxxxx Xxxxxx
Title: Executive Vice President,
Chief Financial Officer
[SIGNATURES CONTINUE ON NEXT PAGE]
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THE CIT GROUP/COMMERCIAL SERVICES, INC.,
as Agent
By: /s/ Xxxx Xxxxxxxx
---------------------------
Name: Xxxx Xxxxxxxx
Title: Vice President
THE CIT GROUP/COMMERCIAL SERVICES, INC.,
as a Lender
By: /s/ Xxxx Xxxxxxxx
---------------------------
Name: Xxxx Xxxxxxxx
Title: Vice President
CENTURY BUSINESS CREDIT CORPORATION,
as a Lender
By: /s/
---------------------------
Name:
Title:
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SCHEDULE 2.01(c)
Supplemental Term Loan Commitments
Supplemental Percentage of Total
Term Loan Supplemental Term
Lender Commitment1 Loan Commitment
------ ---------- ---------------
The CIT Group/Commercial Services, Inc. $953,290 73.33%
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxxxx
Century Business Credit Corporation 119 West $346,710 26.66%
00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxx
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1 Based on the original principal amount of the Supplemental Term Loan
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