Exhibit 10.5
EXECUTION COPY
NINTH AMENDMENT
Dated as of October 23, 2001
This NINTH AMENDMENT (the "Ninth 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 Requisite 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 "Availability" in Section 1.01 of the
Credit Agreement is amended by deleting such definition in its entirety and
substituting therefor a new definition to read as follows:
"'AVAILABILITY' means, at any particular time, the amount by
which the Maximum Revolving Credit Amount at such time exceeds
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 (the obligations and liabilities
referred to in clauses (i), (ii) and (iii) shall be
collectively referred to as "Outstanding Obligations");
PROVIDED, HOWEVER, that, after giving effect to the requested
Borrowing, the Outstanding Obligations shall not exceed (a)
$102,000,000 during the period from November 1, 2001 to and
including November 30, 2001, (b) $90,000,000 during the period
from December 1, 2001 to and including December 14, 2001, and
(c) $85,000,000 during the period from December 15, 2001 and
for all times thereafter."
(b) Subsection (v) of Section 3.01(b) of the Credit Agreement
is amended by adding the phrase "or the Availability" after the term "Maximum
Revolving Credit Amount" in the fifth line thereof.
(c) 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 fifth Business Day following the
last day of each week, or more frequently if requested by the
Administrative Agent. 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."
(d) Article VIII of the Credit Agreement is amended by adding
a new Section 8.12 at the end thereof to read as follows:
"SECTION 8.12. INVENTORY APPRAISAL. In the event that the LVMH
Acquisition has not occurred on or prior to December 15, 2001,
the Borrowers shall promptly commence an appraisal of all of
the Inventory of the Borrowers by an appraisal firm acceptable
to the Administrative Agent."
(e) Section 9.18 of the Credit Agreement is amended by
deleting such Section in its entirety and substituting therefor a new Section to
read as follows:
"Section 9.18. EXCESS AVAILABILITY. Before and after giving
effect to any requested Borrowing hereunder, the Borrowers
shall have Availability of at least (i) $4,000,000 for all
times during the period from and including October __, 2001 to
and including October 31, 2001; (ii) $8,000,000 for all times
during the period from and including November 1, 2001 to and
including November 14, 2001; (iii) $11,000,000 for all times
during the period from and including November 15, 2001 to and
including December 14, 2001; and (iv) $20,000,000 from and
including December 15, 2001 and for all times thereafter."
2
(f) Section 10.01 of the Credit Agreement is amended by
deleting compliance with the Minimum Adjusted Net Worth covenant for the Third
Fiscal Quarter of 2001.
(g) Section 10.03 of the Credit Agreement is amended by
deleting compliance with the Minimum Fixed Charge Coverage Ratio covenant for
the Third Fiscal Quarter of 2001.
(h) Section 10.04 of the Credit Agreement is amended by
deleting compliance with the Minimum Working Capital Ratio covenant for the
Third Fiscal Quarter of 2001.
SECTION 2. CONDITIONS OF EFFECTIVENESS. This Ninth Amendment
shall become effective (the "Effective Date") as of the first day written above
when the following conditions have been satisfied: (i) the Administrative Agent
shall have received counterparts of this Ninth Amendment executed by the
Borrowers and the Requisite Lenders, and (ii) there shall have been paid to the
Administrative Agent all expenses (including, without limitation, the reasonable
legal fees and expenses of counsel to the Administrative Agent) due and payable
on or before the Effective Date.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE BORROWERS.
Each Borrower represents and warrants as follows:
(a) After giving effect to this Ninth 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 Ninth Amendment, no Default or
Event of Default shall have occurred and be continuing.
SECTION 4. REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS. (a)
Upon the effectiveness of Section 1 of this Ninth Amendment, on and after the
date hereof each reference in the Credit Agreement to "this Agreement",
"hereunder", "hereof" or words of like import referring to the Credit Agreement,
and each reference in the other Loan Documents to "the Credit Agreement",
"thereunder", "thereof" or words of like import referring to the Credit
Agreement, shall mean and be a reference to the Credit Agreement as amended
hereby.
(b) Except as specifically amended above, the Credit Agreement
and all other Loan Documents, are and shall continue to be in full force and
effect and are hereby in all respects ratified and confirmed. Without limiting
the generality of the foregoing, the Loan Documents and all of the Collateral
described therein do and shall continue to secure the payment of all obligations
of the Borrowers under the Credit Agreement, the Notes and the other Loan
Documents, in each case as amended hereby.
(c) The execution, delivery and effectiveness of this Ninth
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.
3
SECTION 5. EXECUTION IN COUNTERPARTS. This Ninth 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 6. GOVERNING LAW. This Ninth Amendment shall be
governed by, and construed in accordance with, the laws of the State of New
York.
4
IN WITNESS WHEREOF, the parties hereto have caused this Ninth
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:________________________________________
5
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:________________________________________
6
NATIONAL CITY COMMERCIAL FINANCE, INC.
By:___________________________________________
Title:________________________________________
XXXXXXX NATIONAL LIFE INSURANCE CO.,
By: PPM FINANCE, INC., its Attorney-in-Fact
By:___________________________________________
Title:________________________________________
7
