EXHIBIT 10.1
EXECUTION COPY
SEVENTH AMENDMENT
Dated as of June 21, 2001
This SEVENTH AMENDMENT (the "Seventh 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 Bank of America, N.A.
(formerly known as 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 Second Amended and
Restated Credit Agreement dated as of January 29, 1998, as amended from time to
time (as so amended, 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) The definition of "Acceptance Termination Date" set forth
in Section 1.01 of the Credit Agreement is amended by deleting such
definition in its entirety and substituting therefor the following:
"'ACCEPTANCE TERMINATION DATE' means the day which is
the earliest of (i) January 31, 2003, provided that
if the LVMH Acquisition is consummated such date will
be August 15, 2001, (ii) the termination of the
Commitments pursuant to SECTION 11.02(a), (iii) the
date of termination in whole of the Domestic
Commitments pursuant to SECTION 3.01(a) and (iv) the
date of the termination of the Acceptance Commitment
pursuant to SECTION 2.04(l)."
(b) The definition of "Applicable Fixed Rate Margin" set forth
in Section 1.01 of the Credit Agreement is amended by deleting such
definition in its entirety and substituting therefor the following:
"'APPLICABLE FIXED RATE MARGIN' means a rate equal to
2.50% per annum."
(c) The definition of "Applicable Floating Rate Margin" set
forth in Section 1.01 of the Credit Agreement is amended by deleting
such definition in its entirety and substituting therefor the
following:
"'APPLICABLE FLOATING RATE MARGIN' means a rate equal
to 1.50% per annum."
(d) The definition of "Borrowing Base" in Section 1.01 of the
Credit Agreement is amended by deleting such definition in its entirety
and substituting therefor the following:
"'BORROWING BASE' means, as of any date of
determination, an amount equal to the sum of (a) up
to ninety percent (90%) of Eligible Receivables that
are Credit Insured Receivables or are backed by a
letter of credit acceptable to the Administrative
Agent (which letter of credit has been assigned to
the Administrative Agent) LESS such reserves as the
Administrative Agent, in its sole discretion, deems
appropriate PLUS (b) up to eighty percent (80%) of
Eligible Receivables (other than those Eligible
Receivables described in clause (a) of this
definition) LESS such reserves as the Administrative
Agent, in its sole discretion, deems appropriate PLUS
(c) 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 PLUS (d) 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
Oldenzaal, Holland shall not exceed $7,000,000 in the
aggregate, LESS such reserves as the Administrative
Agent, in its sole discretion, deems appropriate PLUS
(e) up to thirty percent (30%) of Eligible Raw
Materials LESS such reserves as the Administrative
Agent, in its sole discretion, deems appropriate. The
Administrative Agent, in its sole discretion, based
on such credit and collateral considerations as the
Administrative Agent may deem appropriate, may change
from time to time the advance rates in clauses (a),
(b), (c), (d) and (e) above, PROVIDED that such
advance rates do not at any time exceed the
respective percentages set forth above."
(e) The definition of "Commitment Termination Date" set forth
in Section 1.01 of the Credit Agreement is amended by deleting such
definition in its entirety and substituting therefor the following:
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"'COMMITMENT TERMINATION DATE' means the day which is
the earliest of (A) May 1, 2003, provided that if the
LVMH Acquisition is consummated such date will be
November 15, 2001, (B) the termination of the
Commitments pursuant to SECTION 11.02(a) and (C) the
date of termination in whole of the Commitments
pursuant to SECTION 3.01(a)."
(f) The definition of "Loans" set forth in Section 1.01 of the
Credit Agreement is amended by deleting such definition in its entirety
and substituting therefor the following:
"'LOANS' means all Revolving Loans, Tranche B Loans
and Swing Loans."
(g) Section 1.01 of the Credit Agreement is amended by adding
a new definition after "Lockboxes" and before "Margin Stock" to read as
follows:
"'LVMH ACQUISITION' means the acquisition of Xxxxx
Karan International by LVMH Moet Xxxxxxxxx Xxxxx
Vuitton, Inc. as set forth in the Preliminary Proxy
Statement filed by Xxxxx Karan International with the
SEC on May 17, 2001."
(h) Section 1.01 of the Credit Agreement is amended by adding
a new definition after "Termination Event" and before "Transaction
Costs" to read as follows:
"'TRANCHE B LOAN' has the meaning ascribed to such
term in Section 2.01A(a)."
(i) Section 1.01 of the Credit Agreement is amended by adding
a new definition after "Termination Event" and before "Tranche B
Termination Date" to read as follows:
"'TRANCHE B AMOUNT' means (i) during the month of
June 2001, $15,000,000; (ii) during the month of July
2001, $20,000,000; (iii) during the month of August
2001, $5,000,000."
(j) Section 1.01 of the Credit Agreement is amended by adding
a new definition after "Tranche B Amount" and before "Transaction
Costs" to read as follows:
"'TRANCHE B TERMINATION DATE' means August 31, 2001."
(k) Article II of the Credit Agreement is amended by
adding a new Section after Section 2.01 to read as follows:
"2.01A. THE TRANCHE B FACILITY.
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(a) TRANCHE B LOANS. Subject to the terms and conditions set
forth herein, (i) each Lender hereby severally and not jointly agrees
to make loans (each a "TRANCHE B LOAN") to the Borrowers in Dollars
from time to time on any Business Day during the period from the
Closing Date to the Tranche B Termination Date, in an aggregate amount
not to exceed at any time outstanding such Lender's Pro Rata Share of
the Tranche B Amount; PROVIDED, however, in no event shall the
outstanding amount of the Tranche B Loans, when added to 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, exceed the amount of the Commitments. All
Tranche B Loans comprising the same Borrowing hereunder shall be made
by the Lenders simultaneously and proportionately to their then
respective Pro Rata Shares. Subject to the provisions hereof, any
Borrower may repay any out standing Tranche B Loan on any day which is
a Business Day and any amounts so repaid may be reborrowed, up to the
amount available under this SECTION 2.01A(A) at the time of such
Borrowing, until the Tranche B Termination Date. Each Borrowing shall
be denominated in Dollars.
(b) NOTICE OF BORROWING IN RESPECT OF LOANS UNDER THE TRANCHE
B FACILITY. When a Borrower desires to make a Borrowing under this
SECTION 2.01A, it shall deliver to the Administrative Agent a signed
Notice of Borrowing no later than 11:00 a.m. (New York time) on the
proposed Funding Date for such Borrowing. In lieu of delivering such a
Notice of Borrowing, a Borrower may give the Administrative Agent
telephonic notice of any proposed Borrowing by the time required under
this SECTION 2.01A(b) if it confirms such notice by delivery of the
Notice of Borrowing to the Administrative Agent promptly, but in no
event later than 5:00 p.m. (New York time) on the same day. Any Notice
of Borrowing (or telephonic notice in lieu thereof) given pursuant to
this SECTION 2.01A(b) shall be irrevocable. All Loans made under this
SECTION 2.01A shall be Floating Rate Loans.
(c) MAKING OF TRANCHE B LOANS. (i) In the event any portion of
the Loans requested in any Notice of Borrowing delivered to the
Administrative Agent pursuant SECTION 2.01A(b) will be made as Tranche
B Loans, the Administrative Agent shall promptly notify each Lender of
the amount of such Borrowing. Each such Lender shall deposit an amount
equal to its Pro Rata Share of the amount of such Borrowing with the
Administrative Agent in the applicable Payment Account in immediately
available funds, not later than 3:00 p.m. (New York time), on any
Funding Date applicable thereto. Subject to the satisfaction of the
conditions precedent set forth in SECTION 5.02, the Administrative
Agent shall make the proceeds of such amounts received by it
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available to the applicable Borrower at the Administrative Agent's
office in New York, New York, on such Funding Date (or as soon
thereafter as is customarily practicable) and shall disburse such
proceeds to the applicable Disbursement Account.
(ii) The failure of any Lender to deposit the amount
described in CLAUSE (I) above with the Administrative Agent on the
applicable Funding Date shall not relieve any other Lender of its
obligations hereunder to make its Tranche B Loan on such Funding Date.
No Lender shall be responsible for any failure by any other Lender to
perform its obligation to make a Tranche B Loan hereunder nor shall the
Commitment of any Lender be increased or decreased as a result of any
such failure.
(iii) Unless the Administrative Agent shall have been
notified by any Lender prior to 1:00 p.m. (New York time) on any
applicable Funding Date that such Lender does not intend to fund its
Tranche B Loan requested to be made on such Funding Date, the
Administrative Agent may assume that such Lender has funded its Tranche
B Loan and is depositing the proceeds thereof in the applicable Payment
Account on the Funding Date, and the Administrative Agent in its sole
discretion may, but shall not be obligated to, disburse a corresponding
amount to the applicable Borrower on the Funding Date. If the Tranche B
Loan proceeds corresponding to that amount are advanced to such
Borrower by the Administrative Agent but are not in fact deposited with
the Administrative Agent by such Lender on or prior to the applicable
Funding Date, such Lender agrees to pay, and in addition such Borrower
agrees to repay, to the Administrative Agent forthwith on demand such
corresponding amount, together with interest thereon, for each day from
the date such amount is disbursed to or for the benefit of such
Borrower until the date such amount is paid or repaid to the
Administrative Agent, (A) in the case of such Bor rower, at the
interest rate applicable to such Borrowing and (B) in the case of such
Lender, at the Interbank Rate for the first Business Day, and
thereafter at the interest rate applicable to such Borrowing. If such
Lender shall pay to the Administrative Agent the corresponding amount,
the amount so paid shall constitute such Lender's Tranche B Loan, and
if both such Lender and such Borrower shall pay and repay such
corresponding amount, the Administrative Agent shall promptly pay to
such Borrower such corresponding amount (together with any interest
included in such payment). This SECTION 2.01A(C)(III) does not relieve
any Lender of its obligation to make its Tranche B Loan on any Funding
Date.
(d) REPAYMENT OF TRANCHE B LOANS. Notwithstanding anything
contained in this Agreement to the contrary, any principal payment of
the Loans hereunder shall be applied (i) first, to repay the Tranche B
Loans, until the
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outstanding amount of the Tranche B Loans are repaid in full; (ii)
second, to repay Swing Loans, until the outstanding amount of the Swing
Loans are repaid in full; and (iii) third, to repay Revolving Loans,
until the outstanding amount of the Revolving Loans are repaid in full.
(e) TRANCHE B TERMINATION DATE. The Commitments to make
Tranche B Loans shall terminate, and all outstanding Tranche B Loans
shall be Paid In Full on the Tranche B Termination Date in accordance
with SECTION 3.02(A)."
(l) Subsection (a) of Section 7.02 of the Credit Agreement is
amended by deleting such Subsection in its entirety and substituting
therefor the following:
"(a) 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, controller or
any other officer acceptable to the Administrative
Agent, on the seventh Business Day following the last
day of each fiscal month, or more frequently if
requested by the Administrative Agent, provided that
during the period from the date hereof to November 1,
2001 the Borrowers shall provide to the
Administrative Agent and each Lender such Borrowing
Base Certificate on the seventh Business Day
following the last day of each week. Each subsequent
Borrowing Base Certificate shall be based upon, with
respect to Receivables and Inventory, information as
of the last day of the immediately preceding month or
week, as the case may be. Each such Borrowing Base
Certificate shall set forth Borrowing Base
calculations since the date of the last prior
Borrowing Base Certificate and shall include a weekly
summary aging of Receivables, a weekly schedule of
each category of Eligible Inventory and all Eligible
Inventory that has become ineligible, specifying the
applicable category of ineligibility and such other
information as the Administrative Agent may request
from time to time."
(m) Section 11.01 of the Credit Agreement is amended by
adding a new subsection (q) to read as follows:
"LVMH ACQUISITION. If the LVMH Acquisition has not
been consummated by November 15, 2001."
SECTION 2. CONDITIONS OF EFFECTIVENESS. Section 1 of this
Seventh Amendment shall become effective (i) when the Administrative Agent shall
have received counterparts of this Seventh Amendment executed by the Borrowers
and the Lenders and (ii) the Borrowers shall have paid to the Administrative
Agent, for the ratable benefit of the Lenders, a fee in the amount of seventy
five basis points on $40,000,000.
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SECTION 3. 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 4 hereof, hereby amended as
follows:
(a) The definition of "Change of Control" set forth in Section
1.01 of the Credit Agreement is amended by adding at the end thereof
the following:
"Notwithstanding the foregoing, the definition of
"CHANGE OF CONTROL" shall not include the LVMH
Acquisition."
SECTION 4. CONDITIONS OF EFFECTIVENESS. Section 3 of this
Seventh Amendment shall become effective when the Administrative Agent shall
have received counterparts of this Seventh Amendment executed by the Borrowers
and the Requisite Lenders.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE BORROWERS.
Each Borrower represents and warrants as follows:
(a) After giving effect to this Seventh Amendment, all of the
representations and warranties contained in Section 6.01 of the Credit
Agreement and in the other Loan Documents shall be true in all material
respects.
(b) After giving effect to this Seventh Amendment, no Default
or Event of Default shall have occurred and be continuing.
SECTION 6. REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS. (a)
Upon the effectiveness of Section 1 and/or Section 3 of this Seventh 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.
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(c) The execution, delivery and effectiveness of this Seventh
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 7. EXECUTION IN COUNTERPARTS. This Seventh 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.
SECTION 8. GOVERNING LAW. This Seventh Amendment shall be
governed by, and construed in accordance with, the laws of the State of New
York.
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IN WITNESS WHEREOF, the parties hereto have caused this
Seventh 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: Full Requirements Merchandising,
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
By:______________________________
Title:________________________
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CITIBANK, N.A., as Administrative Agent
and Lender
By:____________________________________
Vice President
THE CHASE MANHATTAN BANK, as Co-Agent
and Lender
By:____________________________________
Title:
BANKAMERICA BUSINESS CREDIT, as
Co-Agent and Lender
By:____________________________________
Title:
PNC BUSINESS CREDIT
By:____________________________________
Title:
THE CIT GROUP/COMMERCIAL SERVICES, INC.
By:____________________________________
Title:
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NATIONAL CITY COMMERCIAL FINANCE, INC.
By:____________________________________
Title:
XXXXXXX NATIONAL LIFE INSURANCE CO.,
By: PPM FINANCE, INC., its
Attorney-in-Fact
By:____________________________________
Title:
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