EXHIBIT 10.1
THIRD AMENDMENT
TO
AMENDED AND RESTATED FINANCING AGREEMENT
Third Amendment, dated as of March 15, 1999 to the Amended and
Restated Financing Agreement, dated as of June 18, 1998, as amended through the
date hereof (the "Financing Agreement"), by and among XxXxxxxxxx Apparel Group
Inc., a Delaware corporation and successor by merger to Norton XxXxxxxxxx, Inc.
(the "Company"), Norton XxXxxxxxxx of Xxxxxx, Inc., a New York corporation
("Squire"), Miss Xxxxx, Inc., a Delaware corporation ("Miss Xxxxx"), Xxxx-Xx
Knitwear, Inc., a Delaware corporation formerly known as JJ Acquisition Corp.
("Xxxx-Xx" and together with Squire and Miss Xxxxx, each a "Borrower" and
collectively, the "Borrowers"), the lenders party thereto (each a "Lender" and
collectively, the "Lenders"), NationsBanc Commercial Corporation, as collateral
agent for the Lenders (in such capacity, the "Collateral Agent"), The CIT
Group/Commercial Services, Inc., as administrative agent for the Lenders (in
such capacity, the "Administrative Agent") and Fleet Bank NA, as documentation
agent for the Lenders (in such capacity, the "Documentation Agent" and together
with the Collateral Agent and the Administrative Agent, each an "Agent" and
collectively, the "Agents").
The Company, the Borrowers, the Lenders and the Agents desire to
amend certain terms and conditions in the Financing Agreement as hereafter set
forth.
Accordingly, the Company, the Borrowers, the Agents and the Lenders
hereby agree as follows:
1. Definitions. A11 capitalized terms used herein and not otherwise
-----------
defined herein are used herein as defined in the Financing Agreement.
2. Financial Covenants. Section 7.02(p) of the Financing Agreement
-------------------
is hereby amended to read in its entirety as follows:
"(i) Net Worth. Permit Consolidated Net Worth of the Company
---------
and its Consolidated Subsidiaries at the end of each Fiscal1 Quarter to be
less than the amount set forth below opposite each such Fiscal Quarter end:
Fiscal Minimum
Quarter End Net Worth
-------------- -----------
January 30, 1999 $38,000,000
May 1,1999 $38,000,000
July 31, 1999 $38,000,000
November 6, 1999 $40,000,000
provided that, upon receipt of the financial projections required to be
delivered to the Lenders pursuant to Section 7.01(a)(vi) hereof for each
Fiscal Year, the Company and the Agents shall negotiate in good faith to
determine the Consolidated Net Worth for the Company and its Consolidated
Subsidiaries as of the end of each Fiscal Quarter covered by such financial
projections and, in the event that the Company and the Required Lenders are
unable to agree upon the amounts of such Consolidated Net Worth on or
before the date that is 30 days after the date that the Lenders have
received such financial projections, the Consolidated Net Worth at the end
of each Fiscal Quarter of the Fiscal Year covered by such financial
projections shall not be less than the amount set forth for the last Fiscal
Quarter end set forth above.
(ii) Leverage Ratio. Permit the ratio of Consolidated
--------------
Total Liabilities to Consolidated Net Worth of the Company and its
Consolidated Subsidiaries as of the end of each Fiscal Quarter to be
greater than the amount set forth below opposite each such Fiscal Quarter
end:
Fiscal Maximum
Quarter End Leverage Ratio
---------------- --------------
January 30, 1999 3.8 to 1.0
May 1, 1999 5.0 to 1.0
July 31, 1999 4.7 to 1.0
November 6, 1999 4.0 to 1.0
provided that, upon receipt of the financial projections required to be
delivered to the Lenders pursuant to Section 7.01(a)(vi) hereof for each
Fiscal Year, the Company and the Agents shall negotiate in good faith to
determine the ratio of Consolidated Total Liabilities to Consolidated Net
Worth of the Company and its Consolidated Subsidiaries as of the end of
each Fiscal Quarter covered by such financial projections and, in the
event that the Company and the Required Lenders are unable to agree upon
such ratio on or before the date that is 30 days after the date that the
Lenders have received such projections, such ratio as of the end of each
Fiscal Quarter of the Fiscal Year covered by such financial projections
shall not be greater than the ratio set forth for the last Fiscal Quarter
end set forth above.
-2-
(iii) Working Capital. Permit Working Capital at the
---------------
end of each Fiscal Quarter to be less than the amount set forth below
opposite each such Fiscal Quarter:
Fiscal Minimum
Quarter End Working Capital
-------------- ---------------
January 30, 1999 $101,000,000
May 1, 1999 $102,000,000
July 31, 1999 $103,000,000
November 6, 1999 $105,000,000
provided that, upon receipt of the financial projections required to be
delivered to the Lenders pursuant to Section 7.01(a)(vi) hereof for each
Fiscal Year, the Company and the Agents shall negotiate in good faith to
determine the minimum Working Capital as of the end of each Fiscal Quarter
covered by such financial projections and, in the event that the Company
and the Required Lenders are unable to agree upon the amounts of such
Working Capital on or before the date that is 30 days after the date that
the Lenders have received such projections, the Working Capital at the end
of each Fiscal Quarter of the Fiscal Year covered by such financial
projections shall not be less than the amount set forth for the last Fiscal
Quarter end set forth above.
(iv) Fixed Charge Coverage Ratio. Permit the ratio of
---------------------------
Consolidated EBITDA of the Company and its Consolidated Subsidiaries to
Consolidated Fixed Charges of the Company and its Consolidated Subsidiaries
for each Fiscal Quarter to be less than the amount set forth below opposite
each such Fiscal Quarter.
Fiscal Minimum Fixed
Quarter End Charge Coverage Ratio
-------------- ---------------------
January 30, 1999 .25 to 1.0
May 1, 1999 1.30 to 1.0
July 31, 1999 1.07 to 1.0
November 6, 1999 1.35 to 1.0
provided that, upon receipt of the financial projections required to be
delivered to the Lenders pursuant to Section 7.01(a)(vi) hereof for each
Fiscal Year, the Company and the Agents shall negotiate in good faith to
determine the ratio of Consolidated EBITDA of the Company and its
Consolidated Subsidiaries to Consolidated Fixed Charges of the Company
and its Consolidated Subsidiaries as of the end of each Fiscal Quarter
covered by such financial projections and, in the event that the Company
and the Required
-3-
Lenders are unable to agree upon the amounts of such ratio on or before the
date that is 30 days after the date that the Lenders have received such
projections, such ratio for each Fiscal Quarter of the Fiscal Year covered
by such financial projections shall not be less than the ratio set forth
for the last Fiscal Quarter end set forth above.
(v) Cash Flow Ratio. Permit the ratio of
---------------
Consolidated EBIT of the Company and its Consolidated Subsidiaries to
Consolidated Net Interest Expense of the Company and its Consolidated
Subsidiaries at the end of each Fiscal Quarter be less than the amount set
forth below opposite each such Fiscal Quarter:
Fiscal Minimum
Quarter End Cash Flow Ratio
--------------- ---------------
January 30, 1999 10 to 1.0
May 1, 1999 1.33 to 1.0
July 31, 1999 1.06 to 1.0
November 6, 1999 1.68 to 1.0
provided that, upon receipt of the financial projections required to be
delivered to the Lenders pursuant to Section 7.01 (a)(vi) hereof for each
Fiscal Year, the Company and the Agents shall negotiate in good faith to
determine the ratio of Consolidated EBIT of the Company and its
Consolidated Subsidiaries to Consolidated Net Interest Expense of the
Company and its Consolidated Subsidiaries as of the end of each Fiscal
Quarter covered by such financial projections and, in the event that the
Company and the Required Lenders are unable to agree upon such ratio on or
before the date that is 30 days after the date that the Lenders have
received such projections, such ratio at the end of each Fiscal Quarter of
the Fiscal Year covered by such financial projections shall not be less
than the ratio set forth for the last Fiscal Quarter set forth above."
3. Conditions to Effectiveness. This Amendment shall be effective only
---------------------------
upon satisfaction in full of the following conditions precedent (the first date
upon which al1 such conditions have been satisfied in full being herein called
the "Amendment Effective Date")
(i) The representations and warranties contained in this
Amendment and in Article VI of the Financing Agreement shall be true and
correct in all material respects on and as of the Amendment Effective Date
and the date hereof as though made on and as of each of such dates (except
where such representations and warranties relate to an earlier date in
which case such representations and warranties shall be true and correct
as of such earlier date); no Event of Default or Default shall have
occurred and be continuing on the Amendment Effective Date or on the date
hereof, or result from this Amendment becoming, effective in accordance
with its terms.
-4-
(ii) The Agents shall have received counterparts of this
Amendment which bear the signatures of the Company, the Borrowers and each
of the Required Lenders.
(iii) All legal matters incident to this Amendment shall be
satisfactory to the Agents and their counsel.
4. Representations and Warranties. Each of the Company and the
------------------------------
Borrowers represents and warrants to the Lenders as follows:
(a) The Company and each Borrower (i) is duly organized, validly
existing and in good standing under the laws of the state of its organization
and (ii) has all requisite power, authority and legal right to execute, deliver
and perform this Amendment, all other documents executed by it in connection
with this Amendment, and to perform the Financing Agreement, as amended hereby.
(b) The execution, delivery and performance by the Company and
the Borrowers of this Amendment and all other documents executed by it in
connection with this Amendment and the performance by the Company and the
Borrowers of the Financing Agreement as amended hereby (i) have been duly
authorized by all necessary action, (ii) do not and will not violate or create
a default under the Company's or any Borrower's organizational documents, any
applicable law or any contractual restriction binding on or otherwise affecting
the Company or any Borrower or any of the Company's or such Borrower's
properties, and (iii) except as provided in the Loan Documents, do not and will
not result in or require the creation of any Lien upon or with respect to the
Company's or any Borrower's property.
(c) No authorization or approval or other action by, and no
notice to or filing with, any Governmental Authority or other regulatory body is
required in connection with the due execution, delivery and performance by the
Company or any of the Borrowers of this Amendment and all other documents
executed by it in connection with this Amendment and the performance by the
Company and the Borrowers of the Financing Agreement as amended hereby.
(d) This Amendment and the Financing Agreement, as amended
hereby, and all other documents executed in connection with this Amendment
constitute the legal, valid and binding obligations of the Company and the
Borrowers party thereto, enforceable against such Persons in accordance with
their terms except to the extent the enforceability thereof may be limited by
any applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws from time to time in effect affecting generally the enforcement of
creditors' rights and remedies and by general principles of equity.
(e) The representations and warranties contained in Article VI
of the Financing Agreement are true and correct on and as of the Amendment
Effective Date and as of the date hereof though made on and as of the
Amendment Effective Date and the date hereof (except to the extent such
representations and warranties expressly relate to an earlier date), and
-5-
no Event of Default or Default has occurred and is continuing on and as of the
Amendment Effective Date or on the date hereof.
5. Continued Effectiveness of Financing Agreement. Each of the
----------------------------------------------
Company and the Borrowers hereby (i) confirms and agrees that each Loan Document
to which it is a party is, and shall continue to be, in full force and effect
and is hereby ratified and confirmed in all respects except that on and after
the Agreement Effective Date of this Amendment all references in any such Loan
Document to "the Financing Agreement", "thereto", "thereof', "thereunder" or
words of like import referring to the Financing Agreement shall mean the
Financing Agreement as amended by this Amendment, and (ii) confirms and agrees
that to the extent that any such Loan Document purports to assign or pledge to
the Collateral Agent, or to grant to the Collateral Agent a Lien on any
collateral as security for the Obligations of the Company and the Borrowers from
time to time existing in respect of the Financing AGreement and the Loan
Documents, such pledge, assignment and/or grant of a Lien is hereby ratified and
confirmed in all respects.
6. Miscellaneous.
-------------
(a) This Amendment may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which shall be
deemed to be an original, but all of which taken together shall constitute one
and the same agreement.
(b) Section and paragraph headings herein are included for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
(c) This Amendment shall be governed by, and construed in
accordance with, the laws of the State of New York.
(d) The Borrowers will pay on demand all reasonable out-of-
pocket costs and expenses of the Agents in connection with the preparation,
execution and delivery of this Amendment, including, without limitation, the
reasonable fees, disbursements and other charges of Xxxxxxx Xxxx & Xxxxx LLP,
counsel to the Agents.
-6-
IN WITNESS WHEREOF, tbe parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized as of the
day and year first above written.
XXXXXXXXXX APPAREL GROUP INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Title: VP, CFO, Secretary & Treasurer
---------------------------------
NORTON XXXXXXXXXX OF XXXXXX, INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Title: VP, CFO, Secretary & Treasurer
---------------------------------
MISS XXXXX, INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Title: VP, CFO, Secretary & Treasurer
---------------------------------
XXXX-XX KNITWEAR, INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Title: VP, CFO, Secretary & Treasurer
---------------------------------
AGENTS AND LENDERS
------------------
THE CIT GROUP/COMMERCIAL SERVICES,
INC., as Administrative Agent
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------------
Title: VP
----------------------------------
NATIONSBANC COMMERCIAL
CORPORATION, as Collateral Agent
By: /s/ Xxxx Xxxxxxxxx
-------------------------------------
Title: Sr. VP
----------------------------------
-7-
FLEET BANK NA, as Documentation Agent
By: /s/ Xxxxxxx Xxxxxxxxxxx
-----------------------------------------
Title: _____________________________________
SANWA BUSINESS CREDIT CORPORATION
By:_________________________________________
Title:______________________________________
ISRAEL DISCOUNT BANK OF NEW YORK
By:__________________________________________
Title:_______________________________________
SUNROCK CAPITAL CORP.
By: /s/ Xxxxxxx Xxxxxx
-----------------------------------------
Title: V.P.
--------------------------------------
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxxxx Xxxx
-----------------------------------------
Title: Asst. V.P.
--------------------------------------
XXXXXX FINANCIAL CORPORATION
By: /s/ Xxxxxx Xxxxxxx
-----------------------------------------
Title: V.P.
--------------------------------------
-8-
