AMENDMENT NO. 1 TO CREDIT AGREEMENT
Exhibit
4.10
AMENDMENT
NO. 1 TO CREDIT AGREEMENT
THIS
AMENDMENT NO. 1 TO CREDIT AGREEMENT
(this
“Amendment
Agreement”)
is
made and entered into as of September 1, 2005, by and among KELLWOOD
COMPANY,
a
Delaware corporation (the “Borrower”),
EACH
OF THE GUARANTORS
(as
defined in the Credit Agreement), EACH
LENDER SIGNATORY HERETO,
and
BANK
OF AMERICA, N.A.,
as the
administrative agent for the Lenders (in such capacity, the “Administrative
Agent”)
and an
L/C Issuer.
W
I T N E S S E T H:
WHEREAS,
the
Administrative Agent, the lenders party thereto (collectively, the “Lenders”
and
individually each a “Lender”)
and
the Borrower have entered into that certain Credit Agreement dated as of October
20, 2004 (as hereby and from time to time amended, restated, amended and
restated, extended, supplemented, modified or replaced, the “Credit
Agreement”;
capitalized terms used herein but not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement), pursuant to which
the
Lenders have agreed to make and have made available to the Borrower a revolving
credit facility in an aggregate principal amount of $400,000,000;
and
WHEREAS,
each of
the Guarantors has entered into a Guaranty pursuant to which it has guaranteed
the payment and performance of the obligations of the Borrower under the Credit
Agreement and the other Loan Documents; and
WHEREAS,
the
Borrower has requested, among other things, that certain terms of the Credit
Agreement and the Exhibits thereto be amended, each in the manner set forth
herein, and the Administrative Agent and the Lenders, subject to the terms
and
conditions contained herein, are willing to effect such amendments on the terms
and conditions contained in this Amendment Agreement;
NOW,
THEREFORE,
in
consideration of the premises and further valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1.
Amendments
to Credit Agreement.
Subject
to the terms and conditions set forth herein, the Credit Agreement is hereby
amended as follows:
(a)
Section
1.01
of
the Credit
Agreement is hereby amended to add the following definitions to such Section,
in
alphabetical order:
“Borrowing
Base”
means,
at any time until the Borrower has achieved Debt Ratings of BB+ and Ba1 from
both S&P and Xxxxx’x, respectively, after September 1, 2005, an amount equal
to the sum of (i) eighty-five percent (85%) of the Net Amount of Eligible
Accounts; plus
(ii)
sixty percent (60%) of the
book value
of Eligible Inventory; plus
(iii)
forty percent (40%) of the book value of Eligible Raw Materials Inventory;
it
being understood, however, that the calculation of items
(b),
(c),
(d),
(e),
(f)
and
(i)
under
the definition of “Eligible Accounts” (including the Net Amount of Eligible
Accounts attributable thereto) and items
(f)
and
(g)
under
the definition of “Eligible Inventory” may, where necessary given the
limitations of the operational and accounting practices of the Borrower on
the
Closing Date, be made on the basis of good faith estimates or historical
percentages; provided,
however,
that to
the extent the Administrative Agent at any time has any reasonable basis to
believe that any estimate or percentage is materially incorrect or does not
accurately reflect the quantity to be calculated in any material respect, then
the Administrative Agent may, upon written notice to the Borrower and the
Lenders, (i) adjust the calculation of the Borrowing Base to the extent
necessary render such estimate or percentage correct and accurate in its
reasonable discretion and/or (ii) perform, or cause to be performed, an audit
of
the Accounts and Inventory of the Borrower and its Subsidiaries at the
Borrower’s expense.
“Borrowing
Base Certificate”
means a
certificate by a Responsible Officer of the Borrower, substantially in the
form
of Exhibit
I
(or
another form acceptable to the Administrative Agent) setting forth the
calculation of the Borrowing Base, including a calculation of each component
thereof, all in such detail as shall be reasonably satisfactory to the
Administrative Agent.
“Collateral”
means
all of the working assets of the Loan Parties subject to a Lien in favor of
the
Administrative Agent, for the benefit of the Secured Parties, pursuant to any
Security Instrument.
“Eligible Accounts”
means
the Accounts of the Borrower and its Subsidiaries other than any Account:
(a) with
respect to which more than 90 days have elapsed since the date of the original
invoice therefor or which more than 60 days have elapsed since the original
due
date;
(b) with
respect to which any one or more of the following events has occurred to the
Account Debtor on such Account: the filing by or against the Account Debtor
of a
request or petition for liquidation, reorganization, arrangement, adjustment
of
debts, adjudication as a bankrupt, winding-up, or other relief under the
bankruptcy, insolvency, or similar laws of the United States, any state or
territory thereof, or any foreign jurisdiction, now or hereafter in effect;
the
institution by or against the Account Debtor of any other type of insolvency
proceeding (under the bankruptcy laws of the United States or otherwise) or
of
any formal or informal proceeding for the dissolution or liquidation of,
settlement of claims against, or winding up of affairs of, the Account Debtor;
the sale, assignment, or transfer of all or any material part of the assets
of
the Account Debtor; the nonpayment generally by the Account Debtor of its debts
as they become due; or the cessation of the business of the Account
-
2
-
Debtor
as
a going concern, or fifty percent (50%) or more of the aggregate Dollar amount
of outstanding Accounts owed at such time by the Account Debtor thereon is
classified as ineligible under clause
(a)
above;
(c) owed
by
an Account Debtor which: (i) does not maintain its chief executive office in
the
United States of America
or
Canada (other than the Province of Newfoundland);
or
(ii)
is
not organized under the laws of the United States of America or Canada or any
state or province thereof; or (iii) is the government of any foreign country
or
sovereign state, or of any state, province, municipality, or other political
subdivision thereof, or of any department, agency, public corporation, or other
instrumentality thereof; except to the extent that such Account is secured
or
payable by a letter of credit satisfactory to the Administrative Agent in its
discretion;
(d) owed
by
an Account Debtor which is an Affiliate or employee of the Borrower or any
Subsidiary;
(e) with
respect to which either the perfection, enforceability, or validity of a
security interest in such Account would be governed by or subject to any
federal, state, or local statutory requirements other than those of the UCC;
(f) which
represents a sale on a xxxx-and-hold, guaranteed sale, sale and return, sale
on
approval, consignment, or other repurchase or return basis;
(g) which
is
evidenced by a promissory note or other instrument or by chattel paper;
(h) which
arises out of a sale not made in the ordinary course of the Borrower’s or the
applicable Subsidiary’s business;
(i) with
respect to which the goods giving rise to such Account have not been shipped
and
delivered to and accepted by the Account Debtor or the services giving rise
to
such Account have not been performed by the Borrower or a Subsidiary, and,
if
applicable, accepted by the Account Debtor, or the Account Debtor revokes its
acceptance of such goods or services;
(j) owed
by
an Account Debtor whose debt is not rated or is rated lower than BBB or Baa2
by
S&P or Xxxxx’x, respectively, and which is obligated to the Borrower or any
Subsidiary respecting Accounts the aggregate unpaid balance of which exceeds
fifteen percent (15%) of the aggregate unpaid balance of all Accounts owed
to
the Borrower or any Subsidiary at such time by all of the Borrower’s and its
Subsidiaries’ Account Debtors, but only to the extent of such
excess;
(k) which
is
subject to a security interest in favor of any Person (other than KFR in
connection with the Factoring Program) or which is transferred in connection
with any Permitted Securitization
Transaction;
-
3
-
(l) which,
after the Security Effective Date, is not subject to a first priority perfected
Lien in favor of the Administrative Agent for the benefit of the Secured
Parties; or
(m) which
arises out of a sale by any
discontinued operations (in accordance with GAAP) of any Subsidiary pursuant
to
the Restructuring Plan.
If
any
Account at any time ceases to be an Eligible Account, then such Account shall
promptly be excluded from the calculation of Eligible Accounts.
“Eligible
Inventory”
means
all Inventory:
(a) that
is
owned by the Borrower or its Subsidiaries;
(b) with
respect to which the validity, perfection and enforcement of a security interest
would be governed solely by the UCC and which is not subject to any other Lien
whatsoever;
(c) that
consists of finished goods generally made available for sale by the Borrower
and
its Subsidiaries in the ordinary course of business;
(d) that
is
in good condition, is merchantable and is salable at prices approximating at
least cost in the normal course of the Borrower’s and its Subsidiaries’
business;
(e) that
is
located inside the United States of America or Canada;
(f) that,
if
in-transit from vendors or suppliers, has the support of a commercial or
documentary letter of credit issued by an established financial institution
regularly engaged in the issuance of such letters of credit;
(g) that
is
not placed on consignment;
(h) that,
after the Security Effective Date, is subject to a first priority perfected
Lien
in favor of the Administrative Agent for the benefit of the Secured Parties;
and
(i) that
is
not Inventory attributed to any discontinued operations (in accordance with
GAAP) of any Subsidiary pursuant to the Restructuring Plan.
If
any
Inventory at any time ceases to be Eligible Inventory, such Inventory shall
promptly be excluded from the calculation of Eligible Inventory.
“Eligible
Raw Materials Inventory”
means
Inventory consisting of raw materials which would otherwise constitute Eligible
Inventory if it were finished goods. If any Inventory at any time ceases to
be
Eligible Raw Materials Inventory, such Inventory shall promptly be excluded
from
the calculation of Eligible Raw Materials Inventory.
-
4
-
“Net
Amount of Eligible Accounts”
means,
at any time, the gross amount of Eligible Accounts less sales, excise or similar
taxes, and less returns, discounts, claims, credits and allowances accrued
rebates, offsets, deductions, counterclaims, disputes and other defenses of
any
nature at any time issued, owing, granted, outstanding, available or
claimed.
“Pricing
Consolidated Leverage Ratio”
means,
as of any date of determination, the ratio of (a) Consolidated Funded
Indebtedness as of such date
to
(b)
Consolidated EBITDA for the period of the four fiscal quarters most recently
ended.
“Restructuring
Plan”
means
the restructuring plan of the Borrower announced on July 27, 2005.
“Secured
Parties”
means,
collectively, with respect to each of the Security Instruments, the
Administrative Agent, the Lenders and such other Persons for whose benefit
the
Lien thereunder is conferred, as therein provided.
“Security
Agreement”
means
the Security Agreement in form and substance reasonably acceptable to the
Administrative Agent and made by the Borrower and the Guarantors in favor of
the
Administrative Agent for the benefit of the Secured Parties providing for a
lien
on Inventory, Accounts, proceeds (including cash) and deposit accounts into
which collections of Accounts are deposited, as supplemented from time to time
by the execution and delivery of Security Agreement Joinder Agreements pursuant
to Section
6.15,
as the
same may be otherwise supplemented, amended, modified or amended and
restated.
“Security
Effective Date”
has the
meaning specified in Section
6.15.
“Security
Instruments”
means,
collectively or individually as the context may indicate, the Security Agreement
(including the Security Joinder Agreements) and all other agreements (including
control agreements), instruments and other documents, whether now existing
or
hereafter in effect, pursuant to which Borrower or any other Person shall grant
or convey to the Administrative Agent, for the benefit of the Secured Parties,
a
Lien in, or any other Person shall acknowledge any such Lien in, personal
property as security for all or any portion of the Obligations, any other
obligation under any Loan Document, as any of them may be amended, modified
or
supplemented from time to time.
“Security
Joinder Agreement”
means
each Security Joinder Agreement, substantially in the form thereof attached
to
the Security Agreement, executed and delivered by a Guarantor or any other
Person to the Administrative Agent, for the benefit of the Secured Parties,
pursuant to Section
6.15.
“Smart
Shirts Credit Facility”
means
an up to $55,000,000 term and revolving credit facility entered into by, among
others, Smart Shirts Limited, as borrower.
-
5
-
(b) Section
1.01
of
the Credit
Agreement is hereby further amended to restate the definition of “Applicable
Rate” in its entirety to read as follows:
“Applicable
Rate”
means
the following percentages per annum, based upon the Pricing Consolidated
Leverage Ratio as set forth in the most recent Compliance Certificate received
by the Administrative Agent pursuant to Section
6.02(b):
Applicable
Rate
|
Pricing
Level
|
Pricing
Consolidated
Leverage
Ratio
|
Facility
Fee
|
Eurocurrency
Rate
+
Standby
Letters of
Credit
|
Commercial
Letters
of
Credit
|
|
1
|
Less
than or equal to
1.25:1
|
.150%
|
.600%
|
.250%
|
|
2
|
Less
than or equal to
1.75:1
but greater than
1.25:1
|
.175%
|
.825%
|
.250%
|
|
3
|
Less
than or equal to
2.50:1
but greater than
1.75:1
|
.200%
|
1.05%
|
.300%
|
|
4
|
Less
than or equal to
3.25:1
but greater than
2.50:1
|
.250%
|
1.25%
|
.350%
|
|
5
|
Greater
than 3.25:1
|
.300%
|
1.45%
|
.400%
|
Any
increase or decrease in the Applicable Rate resulting from a change in the
Pricing Consolidated Leverage Ratio shall become effective as of the first
Business Day immediately following the date a Compliance Certificate is
delivered pursuant to Section
6.02(b);
provided,
however,
that if
a Compliance Certificate is not delivered when due in accordance with such
Section, then Pricing Level 5 shall apply as of the first Business Day after
the
date on which such Compliance Certificate was required to have been delivered.
Subject to the preceding sentence, the Applicable Rate in effect from September
1, 2005 through the date of delivery of the Compliance Certificate required
by
Section
6.02
for the
fiscal quarter ending July 31, 2005 shall be determined based upon Pricing
Level
5.
(c) Section
1.01
of
the Credit
Agreement is hereby further amended to restate the definition of “Consolidated
Leverage Ratio” in its entirety to read as follows:
“Consolidated
Leverage Ratio”
means,
as of any date of determination, the ratio of (a) for the measuring period
through and including the fiscal quarter of the Borrower ending January 31,
2007, (i)(A) Consolidated Funded Indebtedness as of such date less
(B) all
cash and cash equivalents domiciled in the United States
-
6
-
for
the
account of the Borrower or any of its Material Domestic Subsidiaries in excess
of $100,000,000
to
(ii)
Consolidated EBITDA for the period of the four fiscal quarters most recently
ended, and (b) for the measuring period commencing with the fiscal quarter
of
the Borrower ending April 30, 2007 and continuing thereafter, (i) Consolidated
Funded Indebtedness as of such date
to
(ii)
Consolidated EBITDA for the period of the four fiscal quarters most recently
ended.
(d) Section
1.01
of
the Credit
Agreement is hereby further amended to restate the definition of “Consolidated
Net Income” in its entirety to read as follows:
“Consolidated
Net Income”
means,
for any period of computation thereof, the gross revenues from operations of
the
Borrower and its Subsidiaries (including payments received by the Borrower
and
its Subsidiaries of (i) interest income, and (ii) dividends and distributions
made in the ordinary course of their businesses by Persons in which investment
is permitted pursuant to this Agreement and not related to an extraordinary
event), less
all
operating and non-operating expenses of the Borrower and its Subsidiaries
including taxes on income and actual charges incurred in connection to the
Restructuring Plan in an amount not to exceed in the aggregate either (a)
$225,000,000 as incurred on a pre-tax basis or (b) $155,000,000 as incurred
on
an after-tax basis, all determined on a consolidated basis in accordance with
GAAP and subject to Acquisition Adjustments; but excluding (for all purposes
other than compliance with Section
7.13(a)
hereof)
as income: (i) net gains and net losses on the sale, conversion or other
disposition of capital assets, (ii) net gains and net losses on the
acquisition, retirement, sale or other disposition of capital stock and other
securities of the Borrower or its Subsidiaries, (iii) net gains on the
collection of proceeds of life insurance policies, (iv) any write-up of any
asset, and (v) any other net gain or credit of an extraordinary nature as
determined in accordance with GAAP.
(e) Section
1.01
of
the Credit
Agreement is hereby further amended to restate the definition of “Convertible
Debenture Guaranty” in its entirety to read as follows:
“Convertible
Debenture Guaranty”
means
that certain Guaranty Agreement (and including any guaranty joinder agreement
excluded pursuant to the terms thereof) dated as of March 15, 2005 by and among
the Guarantors and Union Bank of California, N.A., as trustee for the holders
of
the Convertible Debentures, as amended or supplemented from time to
time.
(f) Section
1.01
of
the Credit
Agreement is hereby further amended to restate the definition of “Factoring
Program” in its entirety to read as follows:
“Factoring
Program”
collectively means: (i) the purchase of accounts receivable from time to time
by
KFR from the Borrower and/or certain of its Subsidiaries pursuant to various
Receivables Purchase and Sale Agreements dated as of January 31, 2000,
as
amended or modified from time to time, and (ii) the
-
7
-
performance
of collection and other services by Kellwood Financial Services, Inc. (formerly
known as Kellwood Shared Services Inc.), for the benefit of KFR pursuant to
various Receivables Collection and Administrative Services Agreements dated
as
of January 31, 2000, as amended or modified from time to time.
(g) Section
1.01
of
the Credit
Agreement is hereby further amended to restate the definition of “Indenture
Guaranty” in its entirety to read as follows:
“Indenture
Guaranty”
means
those certain Guaranty Agreement(s) (and including any guaranty joinder
agreement executed pursuant to the terms thereof) dated as of March 15, 2005
by
and among the Guarantors and JPMorganChase Bank, as trustee or any successor
trustee, for the holders of those certain debt securities issued pursuant to
the
Indenture, as amended or supplemented from time to time.
(h) Section
1.01
of
the Credit
Agreement is hereby further amended to restate the definition of “Permitted
Securitization Transaction” in its entirety to read as follows:
“Permitted
Securitization Transaction”
means
any Asset Securitization pursuant to Standard Securitization Undertakings
providing working capital financing on terms that are more favorable to the
Borrower and its Subsidiaries than would otherwise be available at that time;
provided,
(i) the
Borrower and/or its Subsidiaries enters into such transaction or series of
transactions with a Lender or an Affiliate thereof or a conduit administered
thereby, and (ii) the obligations owed to third parties (including the net
investment of such third parties in the assets transferred) with respect to
such
transaction shall not exceed $75,000,000 at any one time; and, provided,
however,
that
such Asset Securitization shall be permitted only after the Borrower has
achieved Debt Ratings of BB+ and Ba1 from both S&P and Xxxxx’x after
September 1, 2005 (and provided further
that any
such Asset Securitization may be incurred thereafter without regard to the
Debt
Rating of the Borrower).
(i) Section
1.01
of
the Credit
Agreement is hereby further amended to restate the definition of “Restricted
Payment” in its entirety to read as follows:
“Restricted
Payment”
means
any dividend or other distribution (whether in cash, securities or other
property) with respect to any capital stock or other Equity Interest of the
Borrower or any Subsidiary, or any payment (whether in cash, securities or
other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination
of
any such capital stock or other equity interest or of any option, warrant or
other right to acquire any such capital stock or other equity interest;
provided
that,
actual payments made in connection with the $75,000,000 share repurchase program
of the Borrower announced on July 27, 2005 shall be excluded from the meaning
of
“Restricted Payment”.
-
8
-
(j) Section
2.01
of
the Credit
Agreement is hereby amended to restate such Section in its entirety to read
as
follows:
2.01 Committed
Loans. Subject
to the terms and conditions set forth herein, each Lender severally agrees
to
make loans (each such loan, a “Committed
Loan”)
to the
Borrower in Dollars or in one or more Alternative Currencies from time to time,
on any Business Day during the Availability Period, in an aggregate amount
not
to exceed at any time outstanding the amount of such Lender’s Commitment;
provided,
however,
that
after giving effect to any Committed Borrowing, (i) the Total Outstandings
shall
not exceed the Aggregate Commitments, (ii) the aggregate Outstanding Amount
of
the Committed Loans of any Lender, plus
such
Lender’s Applicable Percentage of the Outstanding Amount of all L/C Obligations
shall not exceed such Lender’s Commitment, (iii) the aggregate Outstanding
Amount of all Committed Loans and of all L/C Obligations denominated in
Alternative Currencies shall not exceed the Alternative Currency Sublimit and
(iv) the Total Outstandings shall not exceed the Borrowing Base, if applicable,
calculated as of the date of the most recently delivered Borrowing Base
Certificate. Within the limits of each Lender’s Commitment, and subject to the
other terms and conditions hereof, the Borrower may borrow under this
Section
2.01,
prepay
under Section
2.04,
and
reborrow under this Section
2.01.
Committed Loans may be Base Rate Loans or Eurocurrency Rate Loans, as further
provided herein.
(k) Section
2.03(a)
of
the Credit
Agreement is hereby amended to restate clause
(i)
thereof
in its entirety to read as follows:
(i) Subject
to the terms and conditions set forth herein, (A) each L/C Issuer agrees, in
reliance upon the agreements of the Lenders set forth in this Section
2.03,
(1)
from time to time on any Business Day during the period from the Closing Date
until the Letter of Credit Expiration Date, to issue Letters of Credit
denominated in Dollars or in one or more Alternative Currencies for the account
of the Borrower or jointly for the account of the Borrower and a Designated
Subsidiary, and to amend or extend Letters of Credit previously issued by it,
in
accordance with subsection
(b)
below,
and (2) to honor drawings under the Letters of Credit; and (B) the Lenders
severally agree to participate in Letters of Credit issued for the account
of
the Borrower or jointly for the account of the Borrower and a Designated
Subsidiary and any drawings thereunder; provided
that
after giving effect to any L/C Credit Extension with respect to any Letter
of
Credit, (u) the Total Outstandings shall not exceed the Aggregate Commitments,
(v) the Total Outstandings shall not exceed the Borrowing Base, if applicable,
calculated as of the date of the most recently delivered Borrowing Base
Certificate, (w) the aggregate Outstanding Amount of all Committed Loans and
of
all L/C Obligations denominated in Alternative Currencies shall not exceed
the
Alternative Currency Sublimit, (x) the aggregate Outstanding Amount of the
Committed Loans of any Lender, plus
such
Lender’s Applicable Percentage of the
-
9
-
Outstanding
Amount of all L/C Obligations shall not exceed such Lender’s Commitment, (y) the
Outstanding Amount of the L/C Obligations with respect to standby Letters of
Credit shall not exceed the Standby L/C Sublimit, and (z) the Outstanding Amount
of the L/C Obligations with respect to commercial Letters of Credit shall not
exceed the Commercial L/C Sublimit. Each request by the Borrower for the
issuance or amendment of a Letter of Credit shall be deemed to be a
representation by the Borrower that the L/C Credit Extension so requested
complies with the conditions set forth in the proviso to the preceding sentence.
Within the foregoing limits, and subject to the terms and conditions hereof,
the
Borrower’s ability to obtain Letters of Credit shall be fully revolving, and
accordingly the Borrower may, during the foregoing period, obtain Letters of
Credit to replace Letters of Credit that have expired or that have been drawn
upon and reimbursed. All Existing Letters of Credit shall be deemed to have
been
issued pursuant hereto, and from and after the Closing Date shall be subject
to
and governed by the terms and conditions hereof.
(l) Section
2.04
of
the Credit
Agreement is hereby amended to restate subsection
(b)
thereof
in its entirety to read as follows:
(b) If
the
Administrative Agent notifies the Borrower at any time that the Total
Outstandings at such time exceed either
the
Aggregate Commitments or Borrowing Base (the Borrowing Base to be calculated
as
of the date of the most recently delivered Borrowing Base Certificate), as
applicable, then, within two Business Days after receipt of such notice, the
Borrower shall prepay Loans and/or the Borrower shall Cash Collateralize the
L/C
Obligations in an aggregate amount sufficient to reduce such Outstanding Amount
as of such date of payment to an amount not to exceed 100% of either the
Aggregate Commitments or the Borrowing Base, as applicable; provided,
however,
that,
subject to the provisions of Section
2.03(g)(ii),
the
Borrower shall not be required to Cash Collateralize the L/C Obligations
pursuant to this Section
2.05(c)
unless
after the prepayment in full of the Loans the Total Outstandings exceed either
the Aggregate Commitments or the Borrowing Base, as applicable.
(m) Section
2.05
of
the Credit
Agreement is hereby amended to restate such Section in its entirety to read
as
follows:
2.05 Termination
or Reduction of Commitments. The
Borrower may, upon notice to the Administrative Agent, terminate the Aggregate
Commitments, or from time to time permanently reduce the Aggregate Commitments;
provided
that (i)
any such notice shall be received by the Administrative Agent not later than
11:00 a.m. five Business Days prior to the date of termination or reduction,
(ii) any such partial reduction shall be in an aggregate amount of $10,000,000
or any whole multiple of $1,000,000 in excess thereof, (iii) the Borrower shall
not terminate or reduce the Aggregate Commitments if, after giving effect
thereto and to any concurrent prepayments hereunder, the Total Outstandings
would exceed the Aggregate Commitments,
-
10
-
(iv)
the
Borrower shall not terminate or reduce the Aggregate Commitments if, after
giving effect thereto and to any concurrent prepayments hereunder, the Total
Outstandings would exceed the Borrowing Base, if applicable, calculated as
of
the date of the most recently delivered Borrowing Base Certificate, and (v)
if,
after giving effect to any reduction of the Aggregate Commitments, the
Alternative Currency Sublimit, the Commercial L/C Sublimit or the Standby L/C
Sublimit exceeds the Borrowing Base, if applicable, calculated as of the date
of
the most recently delivered Borrowing Base Certificate, such Sublimit shall
be
automatically reduced by the amount of such excess. The Administrative Agent
will promptly notify the Lenders of any such notice of termination or reduction
of the Aggregate Commitments. The amount of any such Aggregate Commitment
reduction shall not be applied to the Alternative Currency Sublimit, the Standby
L/C Sublimit or the Commercial L/C Sublimit unless otherwise specified by the
Borrower. Any reduction of the Aggregate Commitments shall be applied to the
Commitment of each Lender according to its Applicable Percentage. All fees
accrued until the effective date of any termination of the Aggregate Commitments
shall be paid on the effective date of such termination.
(n) Section
6.02
of
the Credit
Agreement is hereby amended to restate subsection
(b)
thereof
in its entirety to read as follows:
(b) concurrently
with the delivery of the financial statements referred to in Sections
6.01(a)
and
(b),
a duly
completed Compliance Certificate and, if applicable, a duly completed Borrowing
Base Certificate as of the end of the immediately preceding fiscal quarter,
each
signed by a Responsible Officer; provided,
however,
that in
the event that a Default or an Event of Default has occurred and is continuing,
a Borrowing Base Certificate signed by a Responsible Officer shall also be
so
delivered at such additional times as determined by the Administrative
Agent;
(o) Section
6.15
of
the Credit
Agreement is hereby amended to restate such Section in its entirety to read
as
follows:
6.15 Security
Agreement; Additional Subsidiary Guarantors.
(a) At
any
time until the Borrower has achieved Debt Ratings of BB+ and Ba1 from both
S&P and Xxxxx’x, respectively, after September 1, 2005, promptly, but in any
event no later than ten Business
Days, after the earlier to occur of (x) an Event of Default or (y) the Borrower
having received a Debt Rating of BB- or below from S&P or Ba3 or below from
Xxxxx’x (the “Security
Effective Date”),
the
Borrower shall, and shall cause each Guarantor to, deliver to the Administrative
Agent each of the following, regardless if the Borrower has achieved Debt
Ratings of BB+ and Ba1 from both S&P and Xxxxx’x after the Security
Effective Date:
(i) a
Security Agreement duly executed by Borrower and each Guarantor (with all
schedules thereto appropriately completed);
-
11
-
(ii) UCC
financing statements for filing in all places required by applicable law to
perfect the Liens of the Administrative Agent for the benefit of the Secured
Parties under the Security Instruments as a first priority Lien as to items
of
Collateral in which a security interest may be perfected by the filing of
financing statements, and such other documents and/or evidence of other actions
as may be necessary under applicable law to perfect the Liens of the
Administrative Agent for the benefit of the Secured Parties under the Security
Instruments as a first priority Lien in and to such other Collateral as the
Administrative Agent may reasonably require; and
(iii) unless
the Administrative Agent expressly waives such requirement, an opinion or
opinions of counsel to each Loan Party and addressed to the Administrative
Agent
and each Lender as to the matters set forth concerning the Loan Parties and
the
Security Agreement (but excluding priority of the Liens granted therein) in
form
and substance reasonably acceptable to the Administrative Agent.
(b) At
any
time after the Security Effective Date (if applicable), as soon as practicable
but in any event within 30 days following the acquisition or creation of any
Subsidiary that is a Material Domestic Subsidiary, cause to be delivered to
the
Administrative Agent:
(i) a
Security Joinder Agreement duly executed by such Subsidiary (with all schedules
thereto appropriately completed);
(ii) with
respect to any Person that has executed a Security Joinder Agreement hereunder,
Uniform Commercial Code financing statements naming such Person as “Debtor” and
naming the Administrative Agent for the benefit of the Secured Parties as
“Secured Party”, in form, substance and number sufficient in the reasonable
opinion of the Administrative Agent and its special counsel to be filed in
all
Uniform Commercial Code filing offices and in all jurisdictions in which filing
is necessary or advisable to perfect in favor of the Secured Parties the Lien
on
the Collateral conferred under such Security Instrument to the extent such
Lien
may be perfected by Uniform Commercial Code filing; and
(iii) current
copies of the documents of the types referred to in clauses
(iii)
and
(iv)
of
Section
4.01(a)
of each
such Subsidiary, all certified by the applicable Governmental Authority or
appropriate officer as the Administrative Agent may elect, all in form, content
and scope reasonably satisfactory to the Administrative Agent.
(c) Notify
the Administrative Agent at the time that any Person becomes a Material Domestic
Subsidiary (excluding any Securitization Entity), and promptly thereafter (and
in any event within 30 days), cause such Person to
-
12
-
(i)
become a Subsidiary Guarantor by executing and delivering to the Administrative
Agent a Guaranty Joinder Agreement, and (ii) deliver to the Administrative
Agent
documents of the types referred to in clauses
(iii)
and
(iv)
of
Section
4.01(a)
and
favorable opinions of counsel to such Person (which shall cover, among other
things, the legality, validity, binding effect and enforceability of the
documentation referred to in clause
(i)),
all in
form, content and scope reasonably satisfactory to the Administrative Agent.
In
addition, and notwithstanding anything contained above, in the event that any
Person becomes party to the Indenture Guaranty or to the Convertible Debenture
Guaranty and such Person has not at such date executed a Guaranty Joinder
Agreement, the Borrower shall immediately notify the Administrative Agent
thereof and cause such Person to immediately deliver to the Administrative
Agent
all documents required by clauses
(i)
and
(ii)
above.
(p) Article
VI
of the
Credit Agreement is hereby further amended by adding a new Section
6.17
to the
end thereof, to read as follows:
6.17 Further
Assurances.
At any
time after the Security Effective Date, promptly upon request by the
Administrative Agent (and in any event within 30 days of any such request),
execute, acknowledge, deliver, record, re-record, file, re-file, register and
re-register, any and all such further acts, deeds, conveyances, security
agreements, financing statements and continuations thereof, termination
statements, notices of assignment, transfers, certificates, assurances and
other
instruments as may reasonably require from time to time in order (a) to perfect
a Lien on any assets in which a lien has been granted under the Security
Instruments, (b) to carry out more effectively the purposes of this Agreement
or
any other Loan Document, (c) to subject to the Liens created by any of the
Security Instruments any of the properties, rights or interests covered by
any
of the Security Instruments, (d) to perfect and maintain the validity,
effectiveness and first priority of any of the Security Instruments and the
Liens intended to be created thereby, and (e) to better assure, convey, grant,
assign, transfer, preserve, protect and confirm to the Secured Parties the
rights granted or now or hereafter intended to be granted to the Secured Parties
under the Security Instruments or under any other document executed in
connection therewith.
(q) Section
7.01
of the
Credit Agreement is hereby amended by adding a new clause
(n)
thereof,
with appropriate punctuation changes, to read as follows:
(n) Liens
securing Indebtedness permitted by Section
7.03(n).
(r) Section
7.03
of
the Credit
Agreement is hereby amended to restate subsection
(l)
thereof
in its entirety to read as follows:
(l) other
unsecured Indebtedness of any Loan Party provided
that (A)
such Indebtedness does not contain terms or conditions that are more restrictive
than this Agreement or any other Loan Document, (B) no Default or Event of
Default had occurred or was continuing at the time such Indebtedness
was
-
13
-
incurred,
(C) such Indebtedness is pari
passu
both
structurally and contractually with the Indebtedness under the Loan Documents,
(D) such Indebtedness does not have a maturity date which occurs earlier than
six (6) months following the Maturity Date, (E) such Indebtedness does not
contain any amortization provisions which are more rapid or occur more quickly
than is customary in the marketplace, as reasonably determined by the
Administrative Agent and the Borrower, (F) notice of the incurrence of such
Indebtedness has been given to the Administrative Agent not less than ten (10)
Business Days prior to such incurrence, and such notice includes calculations
demonstrating compliance with the financial covenants in Section
7.13,
substantially in the form of a Compliance Certificate, and (G) such Indebtedness
is incurred (i) prior to July 25, 2005 or (ii) on or after February 1, 2007;
and
(s) Section
7.03
of the
Credit Agreement is hereby further amended by adding a new clause
(n)
thereof,
with appropriate punctuation changes, to read as follows:
(n) Indebtedness
under the Smart Shirts Credit Facility in an amount not to exceed in the
aggregate $55,000,000 at any time outstanding.
(t) Section
7.05
of the
Credit Agreement is hereby amended by adding a new clause
(o)
thereof,
with appropriate punctuation changes, to read as follows:
(o) Dispositions
of property identified in the Restructuring Plan.
(u) Section
7.07
of
the Credit
Agreement is hereby amended to restate such Section in its entirety to read
as
follows:
7.07 Restricted
Payments. Declare
or make, directly or indirectly, any Restricted Payment, or incur any obligation
(contingent or otherwise) to do so, if immediately after giving effect to such
proposed action, a Default or Event of Default would exist;
provided,
however,
that,
at any time through and including the fiscal quarter of the Borrower ending
January 31, 2007 that the Consolidated Leverage Ratio is greater than or equal
to 2.50 to 1.00, such Restricted Payments shall not exceed, in the aggregate,
$75,000,000.
(v) Section
7.11
of
the Credit
Agreement is hereby amended to add a new sentence at the end of such Section
to
read as follows:
For
purposes of this Section
7.11
only,
“Contractual Obligations” shall not include any agreement, instrument or
undertaking pursuant to the Smart Shirts Credit Facility.
(w) Section
7.13
of
the Credit
Agreement is hereby amended to restate such Section
in its entirety to read as follows:
-
14
-
(a) Consolidated
Net Worth. Permit
Consolidated Net Worth at any time to be less than the sum of (i)
$546,500,000.00, (ii) an amount equal to 50% of the Consolidated Net Income
earned in each full fiscal quarter ending after January 31, 2004 (with no
deduction for a net loss in any such fiscal quarter) and (iii) an amount equal
to 50% of the aggregate increases in Shareholders’ Equity of the Borrower and
its Subsidiaries after the date hereof by reason of the issuance and sale of
Equity Interests of the Borrower or any Subsidiary (other than issuances to
the
Borrower or a wholly-owned Subsidiary), including upon any conversion of debt
securities of the Borrower into such Equity Interests and any exercise of
outstanding options or warrants, less
(iv) any
reduction of intangible assets resulting from any impairment charge pursuant
to
FAS 142, which reduction shall not exceed, in the aggregate, $100,000,000 and
less
(v)
actual charges incurred in connection to the Restructuring Plan in an amount
not
to exceed $155,000,000 on an after-tax basis.
(b) Consolidated
Interest Coverage Ratio. Permit
the Consolidated Interest Coverage Ratio to be less than (i) 2.50 to 1.00 at
the
end of each fiscal quarter of the Borrower commencing with the fiscal quarter
ending immediately after the Closing Date and continuing through and including
the fiscal quarter of the Borrower ending January 31, 2007, and (ii) 3.00 to
1.00 at the end of each fiscal quarter of the Borrower commencing with the
fiscal quarter of the Borrower ending April 30, 2007 and continuing
thereafter.
(c) Consolidated
Leverage Ratio.
Permit
the Consolidated Leverage Ratio at any time to be greater than (i) 3.25 to
1.00
for the measuring period commencing with the Closing Date and continuing through
and including the fiscal quarter of the Borrower ending April 30, 2006, (ii)
3.00 to 1.00 for the measuring period commencing with the fiscal quarter of
the
Borrower ending July 31, 2006 through and including the fiscal quarter of the
Borrower ending January 31, 2007, and (iii) 3.25 to 1.00 commencing with the
fiscal quarter of the Borrower ending April 30, 2007 and continuing
thereafter.
(x) Section
7.14
of
the Credit
Agreement is hereby amended to restate such Section in its entirety to read
as
follows:
7.14 Acquisitions.
Enter
into any agreement, contract, binding commitment or other arrangement providing
for any Acquisition, or take any action to solicit the tender of securities
or
proxies in respect thereof in order to effect any Acquisition, other than
Permitted Acquisitions;
provided,
however,
that,
until the Borrower has achieved Debt Ratings of BB+ and Ba1 from both S&P
and Xxxxx’x after September 1, 2005 (and continuing thereafter without regard to
the Debt Rating of the Borrower), after giving effect to such Acquisition,
the
aggregate costs of Permitted Acquisitions incurred in any fiscal year of the
Borrower (on a non-cumulative basis, with the effect that amounts not incurred
in any fiscal year may not be carried forward to a subsequent period) shall
not
exceed (a) $75,000,000 of Non-Equity Consideration at any time that
the
-
15
-
Consolidated
Leverage Ratio (pro forma after giving effect to such Acquisition) is greater
than or equal to 2.50 to 1.00, and (b) $150,000,000 of Non-Equity Consideration
at any time that the Consolidated Leverage Ratio (pro forma after giving effect
to such Acquisition) is less than 2.50 to 1.00.
(y) Section
10.01
of the
Credit Agreement is hereby amended by adding a new clause
(i)
thereof,
with appropriate punctuation changes, to read as follows:
(i) release
all or substantially all of the Collateral without the written consent of each
Lender;
2. Amendments
to Exhibit.
Subject
to the terms and conditions set forth herein:
(a) Exhibit
D of
the
Credit Agreement is hereby amended to restate such Schedule in its entirety
as
set forth on Annex
I
attached
hereto; and
(b) The
Exhibits to the Credit Agreement are hereby amended to add a new Exhibit
I
thereto,
in alphabetical order, as set forth on Annex
II
attached
hereto.
3. Consent
of the Guarantors.
Each
Guarantor hereby consents, acknowledges and agrees to the amendments set forth
herein and hereby confirms, reaffirms and ratifies in all respects the Guaranty
to which such Guarantor is a party (including without limitation the
continuation of such Guarantor’s payment and performance obligations thereunder
upon and after the effectiveness of this Amendment Agreement and the amendments
contemplated hereby) and the enforceability of such Guaranty against such
Guarantor in accordance with its terms.
4. Full
Force and Effect of Credit Agreement.
Except
as hereby specifically amended, modified or supplemented, the Borrower hereby
acknowledges and agrees that the Credit Agreement and all of the other Loan
Documents are hereby confirmed and ratified in all respects and shall remain
in
full force and effect according to their respective terms.
5. Representations
and Warranties.
The
Borrower hereby certifies that after
giving effect to this Amendment Agreement:
(a) The
representations and warranties of (i) the Borrower contained in Article
V
of the
Credit Agreement and (ii) each Loan Party contained in each other Loan Document
or in any document furnished at any time under or in connection with the Credit
Agreement or any other Loan Documents shall be true and correct on and as of
the
date hereof, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they shall be true and
correct as of such earlier date, and except that for purposes of Section
4.02
of the
Credit Agreement, the representations and warranties contained in subsections
(a)
and
(b)
of
Section
5.05
of the
Credit Agreement shall be deemed to refer to the most recent statements
furnished pursuant to clauses
(a)
and
(b),
respectively, of Section
6.01
of the
Credit Agreement;
(b) This
Amendment Agreement has been duly authorized, executed and delivered by the
Borrower and Guarantors party hereto and constitutes a legal, valid
and
-
16
-
binding
obligation of such parties, except as may be limited by general principles
of
equity or by the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors’ rights generally;
and
(c) After
giving effect hereto, no Default or Event of Default exists.
6. Conditions
to Effectiveness.
The
effectiveness of this Amendment Agreement and the amendments to the Credit
Agreement provided herein are subject to the satisfaction of the following
conditions precedent:
(a) twenty
(20) original counterparts of this Amendment Agreement, duly executed by the
Borrower, the Guarantors, the Administrative Agent and the Required
Lenders;
(b) payment
of (i) all reasonable out of pocket fees and expenses to date of counsel to
the
Administrative Agent incurred in connection with the Credit Agreement and the
other Loan Documents and the execution and delivery of this Amendment Agreement
to the extent invoiced prior to the date hereof; (ii) an
upfront fee to each Lender executing this Amendment by 6:00 p.m. (New York,
New
York time) on September 1, 2005, such upfront fee for each such Lender’s own
account, equal to ten basis points (10 “bps”) multiplied by
each
such Lender’s pro-rata portion of the Commitments immediately prior to the
effective date of this Amendment
Agreement; and (iii) all other fees agreed to be paid;
(c) an
initial Borrowing Base Certificate as of April 30, 2005; and
(d) such
other documents, instruments and certificates as reasonably requested by the
Administrative Agent.
Upon
satisfaction of the conditions set forth in this Section
6,
this
Amendment Agreement shall be effective as of the date hereof.
7. Counterparts.
This
Amendment Agreement may be executed in one or more counterparts, each of which
shall be deemed an original but all of which together shall constitute one
and
the same instrument.
8. Governing
Law.
This
Amendment Agreement shall in all respects be governed by, and construed in
accordance with, the laws of the State of New York.
9. Enforceability.
Should
any one or more of the provisions of this Amendment Agreement be determined
to
be illegal or unenforceable as to one or more of the parties hereto, all other
provisions nevertheless shall remain effective and binding on the parties
hereto.
10.
Successors
and Assigns.
This
Amendment Agreement shall be binding upon and inure to the benefit of Borrower,
Administrative Agent and each of the Guarantors and Lenders, and their
respective successors, legal representatives, and assignees to the extent such
assignees are permitted assignees as provided in Section
10.06
of the
Credit Agreement.
-
17
-
11. Expenses.
Without
limiting the provisions of Section
10.04
of the
Credit Agreement, the Borrower agrees to pay all reasonable out of pocket costs
and expenses (including without limitation reasonable legal fees and expenses)
incurred before or after the date hereof by the Administrative Agent and its
Affiliates in connection with the preparation, negotiation, execution, delivery
and administration of this Amendment Agreement.
[Signature
pages follow.]
-
18
-
IN
WITNESS WHEREOF, the
parties hereto have caused this Amendment No. 1 to Credit Agreement to be duly
executed by their duly authorized officers, all as of the day and year first
above written.
BORROWER:
KELLWOOD
COMPANY
| By: | /s/ W. Xxx Xxxxx, III |
| Name: | W. Xxx Xxxxx, III |
|
Title:
|
Chief
Operating Officer and Chief Financial
Officer
|
GUARANTORS:
AMERICAN
RECREATION PRODUCTS, INC.
BIFLEX
INTERNATIONAL, INC.
XXXXXX
NEW YORK, INC.
DORBY
FROCKS, LTD.
HALMODE
APPAREL, INC.
PHAT
FASHIONS LLC
PHAT
LICENSING LLC
SIERRA
DESIGNS ACQUISITION CORPORATION
| By: | /s/ W. Xxx Xxxxx, III |
| Name: | W. Xxx Xxxxx, III |
|
Title:
|
Senior
Vice President Finance
|
COSTURA
DOMINICANA, INC.
GERBER
CHILDRENSWEAR, INC.
| By: | /s/ W. Xxx Xxxxx, III |
| Name: | W. Xxx Xxxxx, III |
|
Title:
|
Senior
Vice President Finance and Chief
Financial
Officer
|
GCI
IP SUB, INC.
KELLWOOD
FINANCIAL RESOURCES, INC.
KWD
HOLDINGS, INC.
| By: | /s/ W. Xxx Xxxxx, III |
| Name: | W. Xxx Xxxxx, III |
|
Title:
|
President
|
GCW
HOLDINGS, INC.
| By: | /s/ Xxxxxx X. Xxxxxxxx |
| Name: | Xxxxxx X. Xxxxxxxx |
|
Title:
|
Vice
President and General
Counsel
|
KORET
OF CALIFORNIA, INC.
NEW
CAMPAIGN, INC.
| By: | /s/ W. Xxx Xxxxx, III |
| Name: | W. Xxx Xxxxx, III |
|
Title:
|
Vice
President
Finance
|
BANK
OF AMERICA, N.A.,
as
Administrative Agent
| By: | /s/ Xxxxxxxx X. Xxxxxxxx |
| Name: | Xxxxxxxx X. Xxxxxxxx |
|
Title:
|
Vice
President
|
BANK
OF AMERICA, N.A., as
a
Lender and L/C Issuer
| By: | /s/ Xxxxxxx X. Xxxx |
| Name: | Xxxxxxx X. Xxxx |
|
Title:
|
Vice
President
|
JPMORGAN
CHASE BANK, as
Syndication Agent and a Lender
| By: | /s/ Xxxxx Xxxxx |
| Name: | Xxxxx Xxxxx |
|
Title:
|
Vice
President
|
THE
BANK OF NOVA SCOTIA, as
Co-Documentation Agent and a Lender
| By: | /s/ X. Xxxx |
| Name: | X. Xxxx |
|
Title:
|
Senior
Manager Loan
Operations
|
SUNTRUST
BANK, as
Co-Documentation Agent and a Lender
| By: | /s/ Xxxxxx Xxxxxx |
| Name: | Xxxxxx Xxxxxx |
|
Title:
|
Director
|
U.S.
BANK NATIONAL ASSOCIATION, as
Co-Documentation Agent and a Lender
| By: | /s/ Xxxxxxxx Xxxxxxxxxxx |
| Name: | Xxxxxxxx Xxxxxxxxxxx |
|
Title:
|
Vice
President
|
WACHOVIA
BANK NATIONAL ASSOCIATION, as
Co-Documentation Agent and a Lender
| By: | /s/ Xxxxx X. Xxxxxxxxx |
| Name: | Xxxxx X. Xxxxxxxxx |
|
Title:
|
Vice
President
|
THE
BANK OF NEW YORK, as
a
Lender
| By: | /s/ Xxxxxxxx X.X. Xxxxxxx |
| Name: | Xxxxxxxx X.X. Xxxxxxx |
|
Title:
|
Vice
President
|
HSBC
BANK USA, NATIONAL ASSOCIATION, as
a
Lender
| By: | /s/ Xxxxxxxx X. Xxxxxxx |
| Name: | Xxxxxxxx X. Xxxxxxx |
|
Title:
|
First
Vice
President
|
MIZUHO
CORPORATE BANK, LTD., as
a
Lender
| By: | /s/ Xxxxxxx Xxxxxxx |
| Name: | Xxxxxxx Xxxxxxx |
|
Title:
|
Senior
Vice
President
|
STANDARD
CHARTERED BANK, as
a
Lender
| By: | /s/ Xxxxxx X. Xxxxxxxxxx |
| Name: | Xxxxxx X. Xxxxxxxxxx |
|
Title:
|
AVP/Credit
Documentation
|
UMB
BANK, NATIONAL ASSOCIATION, as
a
Lender
| By: | /s/ Xxxxx X. Xxxx |
| Name: | Xxxxx X. Xxxx |
|
Title:
|
Executive
Vice
President
|
UNION
BANK OF CALIFORNIA, N.A., as
a
Lender
| By: | /s/ Xxxxxxx X. Xxxxxxxx |
| Name: | Xxxxxxx X. Xxxxxxxx |
|
Title:
|
Assistant
Vice
President
|
NATIONAL
CITY BANK OF THE MIDWEST, as
a
Lender
| By: | /s/ Xxxx Xxxxxxx |
| Name: | Xxxx Xxxxxxx |
|
Title:
|
Vice
President
|
FIRST
BANK, as
a
Lender
| By: | /s/ Xxxxx X. Xxxxxx |
| Name: | Xxxxx X. Xxxxxx |
|
Title:
|
Vice
President
|
CITIBANK,
NA, as
a
Lender
| By: | /s/ Xxxxxxx X. Xxxx |
| Name: | Xxxxxxx X. Xxxx |
|
Title:
|
Director
|
ISRAEL
DISCOUNT BANK OF NEW YORK, as
a
Lender
| By: | /s/ Xxxxxxx Xxxxx |
| Name: | Xxxxxxx Xxxxx |
|
Title:
|
First
Vice
President
|
| By: | /s/ Xxxxxx Xxxxxxxx |
| Name: | Xxxxxx Xxxxxxxx |
|
Title:
|
Senior
Vice President
I
|
ANNEX
I
[see
attached]
EXHIBIT
D
FORM
OF COMPLIANCE CERTIFICATE
Financial
Statement Date: _______________, _____
To: Bank
of
America, N.A., as Administrative Agent
Ladies
and Gentlemen:
Reference
is made to that certain Credit Agreement dated as of October 20, 2004 (as
amended by Amendment No. 1 to Credit Agreement dated as of September 1, 2005
and
as amended, restated, extended, supplemented or otherwise modified in writing
from time to time, the “Agreement”;
the
terms defined therein being used herein as therein defined), among KELLWOOD
COMPANY, a Delaware corporation (the “Borrower”),
the
Lenders from time to time party thereto, and BANK OF AMERICA, N.A., as
Administrative Agent and L/C Issuer.
The
undersigned Responsible Officer hereby certifies as of the date hereof that
he/she is the _____________________________________________ of the Borrower,
and
that, as such, he/she is authorized to execute and deliver this Certificate
to
the Administrative Agent on the behalf of the Borrower, and that:
[Use
following paragraph 1 for fiscal year-end
financial statements]
1. Attached
hereto as Schedule
1
are the
year-end audited financial statements required by Section
6.01(a)
of the
Agreement for the fiscal year of the Borrower ended as of the above date,
together with the report and opinion of an independent certified public
accountant required by such section.
[Use
following paragraph 1 for fiscal quarter-end
financial statements]
1. Attached
hereto as Schedule
1
are the
unaudited financial statements required by Section
6.01(b)
of the
Agreement for the fiscal quarter of the Borrower ended as of the above date.
Such financial statements fairly present the financial condition, results of
operations and cash flows of the Borrower and its Subsidiaries in accordance
with GAAP as at such date and for such period, subject only to normal year-end
audit adjustments and the absence of footnotes.
2. The
undersigned has reviewed and is familiar with the terms of the Agreement and
has
made, or has caused to be made under his/her supervision, a detailed review
of
the transactions and condition (financial or otherwise) of the Borrower during
the accounting period covered by the attached financial statements.
3. A
review
of the activities of the Borrower during such fiscal period has been made under
the supervision of the undersigned with a view to determining whether during
such fiscal period the Borrower performed and observed all its Obligations
under
the Loan Documents, and
D-1
Form of Compliance Certificate
[select
one:]
[to
the best knowledge of the undersigned during such fiscal period, the Borrower
performed and observed each covenant and condition of the Loan Documents
applicable to it.]
--or--
[the
following covenants or conditions have not been performed or observed and the
following is a list of each such Default and its nature and
status:]
4. The
representations and warranties of (i) the Borrower contained in Article
V
of the
Agreement and (ii) each Loan Party contained in each other Loan Document or
in
any document furnished at any time under or in connection with the Loan
Documents, are true and correct on and as of the date hereof, except to the
extent that such representations and warranties specifically refer to an earlier
date, in which case they are true and correct as of such earlier date, and
except that for purposes of this Compliance Certificate, the representations
and
warranties contained in subsections (a) and (b) of Section
5.05
of the
Agreement shall be deemed to refer to the most recent statements furnished
pursuant to clauses (a) and (b), respectively, of Section
6.01
of the
Agreement, including the statements in connection with which this Compliance
Certificate is delivered.
5. The
financial covenant analyses and information set forth on Schedule
2
attached
hereto are true and accurate on and as of the date of this
Certificate.
IN
WITNESS WHEREOF,
the
undersigned has executed this Certificate as of _______________,
________
KELLWOOD
COMPANY
By:_________________________________________
Name:_______________________________________
Title:________________________________________
D-2
Form of Compliance Certificate
For
the
Quarter/Year ended ___________________ (“Statement
Date”)
SCHEDULE
2
to
the
Compliance Certificate
($
in
000’s)
| I. | Section 7.13(a) - Consolidated Net Worth. | |||
|
A.
|
Consolidated
Net Worth at Statement Date
|
$____________ | ||
|
B.
|
50%
of Consolidated Net Income for each full fiscal quarter ending
after
January 31, 2004 (no deduction for net losses):
|
$____________
|
||
|
C.
|
50%
of increases in Shareholders’ Equity after date of Agreement from issuance
and sale of Equity Interests (other than issuances to the Borrower
or a
wholly-owned Subsidiary):
|
$____________
|
||
|
D.
|
Any
reduction of intangible assets resulting from any impairment
charge
pursuant to FAS 142 (which reduction shall not exceed
$100,000,000):
|
$____________
|
||
|
E.
|
Charges
incurred in connection to the Restructuring (not to exceed
$155,000,000):
|
$____________
|
||
|
F.
|
$546,500,000
+ Line I.B + I.C - I.D - I.E:
|
$____________
|
||
|
G.
|
Excess
(deficient) for covenant compliance (Line I.A - I.F):
|
$____________ | ||
| II. |
Section
7.13(b) - Consolidated Interest Coverage Ratio.
|
|||
|
A.
|
Consolidated
EBIT for any period ending on above date (“Subject
Period”):
|
|
||
|
1.
Consolidated Net Income for Subject Period:
|
$____________
|
|||
|
2.
Consolidated Interest Charges for Subject Period:
|
$____________
|
|||
|
3.
Provision for income taxes for Subject Period:
|
$____________
|
|||
|
4.
Consolidated EBIT (Lines II.A.1 + 2 + 3):
|
$____________
|
|||
|
B.
|
Consolidated
Interest Charges for Subject Period:
|
$____________ | ||
D-3
Form of Compliance Certificate
|
C.
|
Consolidated
Interest Coverage Ratio (Line II.A.8 ÷ Line II.B):
|
__________to
1
|
||
|
Minimum
Permitted:
|
||||
|
Each
Statement Date through and including the fiscal quarter ending
January 31,
2007:
|
2.50
to 1
|
|||
|
Each
Statement Date for each fiscal quarter ending April 30, 2007
and
continuing thereafter:
|
3.00
to 1
|
|||
| III. | Section 7.13 (c) - Consolidated Leverage Ratio. | |||
|
A.
|
Consolidated
Funded Indebtedness at Statement Date:
|
$____________
|
||
|
1.
For
each Statement Date through and including the fiscal quarter
ending
January 31, 2007, all cash and cash equivalents domiciled in
the
United
States for the account of the Borrower or any of its Material
Domestic
Subsidiaries in excess of $100,000,000:
|
$____________
|
|||
| 2. For each Statement Date through and including the fiscal quarter ending January 31, 2007, Line III.A - Line III.A.1: |
$____________
|
|||
| B. |
Consolidated
EBITDA for any period ending on above date (“Subject
Period”):
|
|||
|
1.
Consolidated Net Income for Subject Period:
|
$____________
|
|||
|
2.
Consolidated Interest Charges for Subject Period:
|
$____________
|
|||
|
3.
Provision for income taxes for Subject Period:
|
$____________
|
|||
|
4.
Depreciation expenses for Subject Period:
|
$____________
|
|||
|
5.
Amortization expenses for Subject Period:
|
$____________
|
|||
|
C.
|
Consolidated
EBITDA (Lines III.B.1 + 2 + 3 + 4 + 5):
|
$____________
|
||
|
[select
one:]
|
||||
|
[D.
|
Consolidated
Leverage Ratio for each Statement Date through and including
the fiscal
quarter ending January 31, 2007 (Line III.A.2 ÷ Line
III.C):
|
________to
1]
|
||
|
[D.
|
Consolidated
Leverage Ratio for each Statement Date commending with the
fiscal quarter
ending April 30, 2007 and continuing thereafter (Line III.A
÷ Line
III.C):
|
_______to 1] | ||
|
Maximum
Permitted:
|
||||
|
Each
Statement Date through and including the fiscal quarter ending
April 30,
2006:
|
3.25
to 1
|
|||
D-4
Form of Compliance Certificate
|
Each
Statement Date for each fiscal quarter commencing with the
fiscal quarter
July 31, 2006 through and including January 31, 2007:
|
3.00
to 1
|
|||
|
Each
Statement Date for each fiscal quarter ending April 30, 2007
and
continuing thereafter:
|
3.25
to 1
|
|||
D-5
Form of Compliance Certificate
ANNEX
II
[see
attached]
EXHIBIT
I
FORM
OF BORROWING BASE CERTIFICATE
BORROWING
BASE REPORT
| For the Fiscal Quarter ending __________________: | |||
|
[Note:
All amount are shown in thousands of U.S. dollars unless otherwise
indicated.]
|
|||
|
I,
__________________, [office title] of
Kellwood Company, hereby certify that, to the best of my knowledge
and
belief, with respect to that certain Credit Agreement date as
of October
20, 2004 among the Borrower, the Lenders and Bank of America,
as
Administrative Agent (as amended by Amendment No. 1 to Credit
Agreement
dated as of September 1, 2005, as may be further amended, amended
and
restated, modified, or supplemented from time to time, the “Credit
Agreement”; all of the defined terms in the Credit Agreement are
incorporated herein by reference), the figures set forth below
are true
and correct.
The amounts reported herein are from the consolidated financial statements of Kellwood Company and its Subsidiaries for the fiscal quarter ending on the date set forth above. |
|||
|
Accounts
|
|||
|
1.
|
Accounts
net
of any reserves for doubtful or uncollectable accounts and less
sales,
excise or similar taxes, returns, discounts, claims, credits
and
allowances, accrued rebates, offsets and deductions
|
$____________ | |
|
2.
|
(i)
Accounts
subject to any Lien
|
$____________
|
|
|
(ii)
Accounts
which more than 90 days have elapsed since the date of the original
invoice therefor or which more than 60 days have elapsed since
the
original due date.
|
$____________ | ||
|
(iii)
Accounts owing by an account debtor which is not solvent of is
subject to
any bankruptcy or insolvency proceeding or any kind, unless account
debtor
is classified as a debtor in possession or with respect to which
50% or
more of the aggregate amount of outstanding Accounts owing by
such account
debtor are ineligible under 2(ii) above
|
$____________
|
||
|
(iv)
Accounts
excluded from Eligible Accounts under clauses (d) through (i)
of the
definition of "Eligible Accounts" in Section 1.01 of the Credit
Agreement.
|
$____________
|
||
|
(v)
Accounts
over the 15% concentration limitation for account debtors who
are unrated
or are rated lower than BBB or Baa2 by S&P or Xxxxx’x,
respectively.
|
$____________
|
||
|
(vi)
Sum of
Lines 2(i) through 2(v)
|
$____________
|
||
|
3.
|
Net
Eligible
Accounts
|
||
|
(Line
1
less Line 2(vi))
|
$____________
|
||
I-1
|
4.
|
Borrowing
Base Accounts
|
||
|
(85%
of Net
Eligible Accounts)
|
$____________
|
||
|
Raw
Materials Inventory*
|
|||
|
5.
|
Raw
materials
Inventory (based on a FIFO valuation, consistently applied)
owned by the
Borrower and its Subsidiaries less appropriate reserves determined
in
accordance with GAAP.
|
$____________
|
|
|
6.
|
(i)
Raw
Materials Inventory subject to any Lien or as to which perfection
of a
security interest would not be governed by the UCC;
|
$____________
|
|
|
(ii)
Raw
Materials Inventory outside North America;
|
$____________
|
||
|
(iii)
Raw
Materials Inventory that is not in good condition, is not merchantable
or
is not salable at prices approximating at least cost in the
normal course
of business;
|
$____________
|
||
|
(iv)
Raw
Materials Inventory in-transit from vendors or suppliers, that
is not
supported by a commercial or documentary letter of credit;
|
$____________
|
||
|
(v)
Raw
Materials Inventory that is placed on consignment
|
$____________
|
||
|
(vi)
Total
|
$____________
|
||
|
7.
|
Eligible
Raw
Materials Inventory
|
||
|
(Line
5
less Line 6(vi))
|
$____________
|
||
|
8.
|
Borrowing
Base Raw Materials Inventory
|
||
|
(40%
of
Eligible Raw Materials Inventory )
|
$____________
|
||
|
*
Without duplication
|
|||
|
Finished
Goods Inventory*
|
|||
|
9.
|
Inventory
(based on a FIFO valuation, consistently applied) consisting
of all
finished goods inventory owned by the Borrower and its Subsidiaries
less
appropriate reserves determined in accordance with GAAP.
|
$____________
|
|
|
(i)
Inventory
subject to any Lien or as to which perfection of a security
interest would
not be governed by the UCC;
|
$____________
|
||
|
(ii)
Inventory outside North America;
|
$____________
|
||
|
(iii)
Inventory that is not in good condition, is not merchantable
or is not
salable at prices approximating at least cost in the normal
course of the
Loan Parties' business;
|
$____________
|
||
|
(iv)
Inventory in-transit from vendors or suppliers, that is supported
by a
commercial or documentary letter of credit;
|
$____________
|
||
|
(v)
Inventory
that is placed on consignment
|
$____________
|
||
|
(vi)
Total
|
$____________
|
||
I-2
|
10.
|
Eligible
Inventory
|
||
|
(Line
9
less Line 10(vi))
|
$____________
|
||
|
11.
|
Borrowing
Base Inventory
|
||
|
(60%
of
Eligible Inventory)
|
$____________
|
||
|
*
Without duplication
|
|||
|
Borrowing
Base
|
|||
|
12.
|
Borrowing
Base assets
|
||
|
(Line
4
plus Line 8 plus Line 11)
|
$____________
|
||
|
13.
|
(i)
Aggregate
amount of outstanding Revolving Loans
|
$____________
|
|
|
(ii)
Aggregate amount of outstanding Uncommitted Loans
|
$____________
|
||
|
(iii)
Aggregate amount of outstanding L/C Obligations
|
$____________
|
||
|
14.
|
Total
deductions from the Borrowing Base assets
|
||
|
(sum
of Line
13(i) through 13(iii))
|
$____________
|
||
|
15.
|
Remaining
availability (but not exceeding unused Aggregate Commitments):
The
difference of Line 12 minus Line 14.
|
$____________
|
|
IN
WITNESS WHEREOF, the undersigned has executed this Borrowing Base Certificate
as
of
_________________ , ____________.
KELLWOOD
COMPANY
By:
_____________________________
Name:
___________________________
Title:
____________________________
I-3
