EXECUTION COPY
SIXTH AMENDMENT TO CREDIT AGREEMENT AND WAIVER
SIXTH AMENDMENT TO CREDIT AGREEMENT AND WAIVER, dated as of November
13, 2000 (this "Amendment"), to the Credit Agreement dated as of June 29, 1999
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement") among DONNKENNY APPAREL, INC. a Delaware corporation ("DKA"),
▇▇▇▇▇▇▇ INDUSTRIES CORPORATION, a Delaware corporation ("BIC"; together with
DKA, and severally, the "Borrowers"), the Guarantors party thereto, the Lenders
party thereto and THE CIT GROUP/COMMERCIAL SERVICES, INC. as agent for the
Lenders (in such capacity, the "Agent").
The Borrowers, the Guarantors, the Lenders and the Agent are parties to
the Credit Agreement.
The Borrowers have requested that the Lenders waive existing Events of
Default under the Credit Agreement and amend certain provisions of the Credit
Agreement.
The Lenders are willing to waive such existing Events of Default and
make such amendments to the Credit Agreement upon the terms and subject to the
conditions set forth in this Amendment.
Accordingly, in consideration of the mutual agreements set forth
herein, and for good and other valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Defined Terms. Initially capitalized terms used and not otherwise
defined herein shall have their respective meanings as defined in the Credit
Agreement.
2. Waiver of Events of Default. The Borrowers have failed to perform
the covenants set forth in Sections 7.11 (EBITDA) and 7.12A (Tangible Net Worth)
of the Credit Agreement for the quarterly period ending September 30, 2000; as a
result of which Events of Default (collectively, the "Subject Defaults") have
occurred and are continuing under Article VIII(d)of the Credit Agreement. In
response to the Borrowers' request for a waiver of the Subject Defaults, Lenders
hereby waive the Subject Defaults, provided, however, that nothing contained in
this Amendment shall be construed to limit, impair or otherwise affect any
rights of Lenders in respect of future noncompliance with any covenant, term or
provision of the Credit Agreement or of any of the other Loan Documents.
3. Amendment of Section 7.10. Section 7.10 of the Credit Agreement is
amended in its entirety to read as follows:
"Section 7.10 Minimum Interest Coverage Ratio. Permit the Interest
Coverage Ratio of the Parent and its Subsidiaries on a Consolidated
basis for each four consecutive fiscal quarter period ending
on the last day of each of the fiscal quarters set forth below to
be less than the ratio set forth below opposite such fiscal quarter:
Quarterly Period Ending Minimum Interest Coverage Ratio
----------------------- -------------------------------
September 30, 2000 N/A
December 31, 2000 0.11 to 1.00"
4. Amendment of Section 7.11. Section 7.11 of the Credit Agreement is
hereby amended in its entirety to read as follows:
"Section 7.11 EBITDA. Permit EBITDA of the Parent and its
Subsidiaries (in each case computed and calculated in accordance with
GAAP) on a Consolidated basis for each four consecutive fiscal quarter
period ending on the last day of each of the fiscal quarters set forth
below to be less than the amount set forth below opposite each such
fiscal quarter:
Quarterly Period Ending EBITDA
----------------------- ------
September 30, 2000 ($395,000)
December 31, 2000 $448,000"
5. Amendment of Section 7.12A. Section 7.12A of the Credit Agreement is
hereby amended in its entirety to read as follows:
"Section 7.12A Tangible Net Worth. Permit the Tangible Net Worth
of the Parent and its Subsidiaries (in each case computed and
calculated in accordance with GAAP) on a Consolidated basis as of the
end of each of the fiscal quarters set forth below to be less than the
amount set forth below opposite each such fiscal quarter:
Quarterly Period Ending Tangible Net Worth
----------------------- ------------------
September 30, 2000 $7,400,000
December 31, 2000 $3,800,000"
6. Waiver and Amendment Fee. In consideration of the waiver of the
Subject Defaults and the amendments to the Credit Agreement as set forth herein,
Borrowers shall pay to Agent, for the benefit of Century Business Credit
Corporation, or Agent, at its option, may charge the account(s) of Borrowers
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maintained by Agent a waiver and amendment fee in the amount of $39,990, which
fee is fully earned and payable as of the date hereof and shall constitute part
of the Obligations.
7. Representations and Warranties. Borrowers hereby represent and
warrant to Lenders that the representations and warranties set forth in Article
IV of the Credit Agreement are true on and as of the date hereof, as if made on
and as of the date hereof, after giving effect to this Amendment, except to the
extent that any such representation or warranty expressly relates to a prior
date, and breach of any of the representations and warranties made in this
paragraph 7 shall constitute and Event of Default under Article VIII(a) of the
Credit Agreement. Borrowers further represent and warrant that, after giving
effect to this Amendment, no Event of Default or event which, with the lapse of
time or the giving of notice or both, would become an Event of Default has
occurred and is continuing.
8. Effectiveness. This Amendment shall become effective on the date
Agent shall have received counterparts of this Amendment duly executed and
delivered by each of the parties hereto.
9. Continuing Effect of Credit Agreement. This Amendment shall not
constitute a waiver or amendment of any provision of the Credit Agreement not
expressly referred to herein and shall not be construed as a consent to any
further or future action on the part of either of the Borrowers that would
require consent of Lenders. Except as expressly amended by this Amendment, the
provisions of the Credit Agreement are and shall remain in full force and
effect.
10. Applicable Law. This Amendment shall be construed in accordance
with and governed by the laws of the State of New York (other than the conflicts
of law principles thereof).
11. Counterparts; Facsimile Signature. This Amendment may be executed
in counterparts, each of which shall constitute and original and all of which
when taken together shall constitute but one contract. Delivery of an executed
counterpart of the signature page of this Amendment by facsimile shall be
effective as delivery of a manually executed signature page hereto.
[SIGNATURE PAGES FOLLOW.]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective authorized officers as of the
day and year first above written.
DONNKENNY APPAREL, INC., as a Borrower and a Guarantor
By:
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Name:
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Title:
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▇▇▇▇▇▇▇ INDUSTRIES CORPORATION, as a Borrower and a
Guarantor
By:
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Name:
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Title:
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CHRISTIANSBURG GARMENT COMPANY, INCORPORATED,
as a Guarantor
By:
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Name:
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Title:
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H SQUARED DISPOSITIONS, INC., as a Guarantor
By:
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Name:
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Title:
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[SIGNATURES CONTINUE ON NEXT PAGE]
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[SIGNATURES CONTINUE FROM PREVIOUS PAGE]
THE CIT GROUP/COMMERCIAL SERVICES, INC., as Agent
By:
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Name:
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Title:
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THE CIT GROUP/COMMERCIAL SERVICES, INC., as a Lender
By:
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Name:
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Title:
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CENTURY BUSINESS CREDIT CORPORATION, as a Lender
By:
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Name:
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Title:
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