EXECUTION COPY
AMENDMENT NO. 2 TO THE FIFTH
AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDMENT NO. 2 TO THE FIFTH AMENDED AND RESTATED LOAN
AGREEMENT, dated as of March 1, 2000 (this "Amendment"), by and among
G-III LEATHER FASHIONS, INC., a New York corporation (the "Borrower"), the
Lenders that have executed the signature pages hereto (individually, a
"Lender" and collectively, the "Lenders"), and FLEET BANK, N.A., a
national banking association as agent for the Lenders (in such capacity,
together with its successors in such capacity, the "Agent"),
W I T N E S S E T H:
WHEREAS:
A. The Borrower, the Lenders and the Agent are parties to the
Fifth Amended and Restated Loan Agreement, dated as of May 31, 1999, as
further amended hereby (as it may be further amended, modified and
supplemented from time to time, the "Loan Agreement"); and
B. The Lenders hereto wish to increase their Commitments under
the Loan Agreement and update certain financial covenants as a result
hereof; and
C. The parties hereto wish to amend the Loan Agreement as
hereinafter provided; and
D. Each capitalized term used but not otherwise defined herein
shall have the meaning ascribed thereto in the Loan Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. AMENDMENT TO LOAN AGREEMENT.
1.1 This Amendment shall be deemed to be a second amendment to
the Fifth Amended and Restated Loan Agreement and shall not be construed
in any way as a replacement or substitution therefor. All of the terms and
conditions of, and terms defined in, this Amendment are hereby
incorporated by reference into the Loan Agreement as if such terms and
provisions were set forth in full therein.
1.2 The definition of "Borrowing Base" in Article 1.1 of the
Loan Agreement is amended by deleting clause (i) of the definition in its
entirety and replacing it with the following:
"(i) Eighty (80%) percent of all Eligible Accounts; plus"
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1.3 The definition of "Commitment" in Article 1.1 of the Loan
Agreement is amended by deleting the existing definition in its entirety
and replacing it with the following:
""COMMITMENT"- (i) Sixty-seven Million ($67,000,000) Dollars
during each period from May 31 (other than the Commitment Termination
Date) through and including October 31 during the term hereof, (ii)
Seventy-two Million ($72,000,000) Dollars from August 1 through and
including August 31 for the year 2000, and (iii) Forty-five Million
($45,000,000) Dollars during each period from November 1 through and
including May 30 during the term hereof (and in the case of 2002, through
and including the Commitment Termination Date), in each case in the
aggregate, allocated among each of the Lenders, respectively, in the
amount set forth opposite such Lender's name on the signature pages hereof
under the caption `Commitment,' as such amount is reduced in accordance
with the terms hereof."
1.4 The definition of "Direct Debt Sublimit" in Article 1.1 of
the Loan Agreement is amended by deleting "Fifty Million ($50,000,000)
Dollars" in clause (i) of such definition and replacing it with "Fifty-two
Million ($52,000,000) Dollars".
1.5 The definition of "Overadvance" set forth in Article 1 of
the Loan Agreement shall be amended by deleting the existing definition in
its entirety and replacing it with the following:
"OVERADVANCE" - the amount set forth below for the period indicated:
Period Amount
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3/1/00 to 3/21/00 $9,000,000
3/22/00 to 3/31/00 $14,000,000
4/1/00 to 4/30/00 $17,500,000
5/1/00 to 5/30/00 $26,000,000
5/31/00 $22,000,000
6/1/00 to 6/30/00 $31,000,000
7/1/00 to 7/30/00 $30,000,000
7/31/00 $25,200,000
8/1/00 to 8/30/00 $30,000,000
8/31/00 $28,000,000
9/1/00 to 9/29/00 $30,000,000
9/30/00 $14,500,000
10/1/00 to 10/25/00 $18,000,000
10/26/00 to 10/30/00 $5,000,000
10/31/00 through 1/31/01 0
and the respective periods and amounts for each of Fiscal Year
2002 and the Stub Period shall be as preliminarily determined by the
Lenders and the Borrower based on the Projections and the business plan
(in each case delivered pursuant to Section 5.10(e)) for Fiscal Year 2002
and Fiscal Year 2003, respectively, and the unaudited financial statements
(delivered pursuant to Section 5.10(e)) for Fiscal Year 2001 and Fiscal
Year 2002, respectively, but in no
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event shall the periods be of different durations or the amounts be less
than the amounts for the periods corresponding to the periods set forth
above unless the Lenders determine (in their reasonable discretion) that
such periods and amounts warrant adjustment based upon such Projections,
business plan or unaudited financial statements, which preliminary
determination shall be made within 60 days of receipt by the Lenders of
such Projections, business plan and unaudited financial statements and such
preliminary determination shall become effective after receipt and
satisfactory review by the Lenders of the Financial Statements for the
Fiscal Year 2001 and Fiscal Year 2002, respectively; provided, however,
that with respect to the Overadvance at all times (x) the then applicable
Overadvance amount and all subsequent Overadvance amounts shall be reduced
by (i) 50% of all tax refunds paid to the Borrower or the Parent (or paid
to the Collection Account, in accordance with the terms hereof), (ii) the
proceeds of the sale of any assets other than in the ordinary course of
business, and (iii) 50% of the proceeds of any sale-leaseback, all of such
reductions to be effective immediately upon the Borrower's receipt (or, if
applicable, the Collateral Monitoring Agent's receipt for the account of
the Borrower) of such refunds or proceeds; but there shall be no reduction
to the then applicable Overadvance amount in the case of any sale-leaseback
of newly acquired assets, provided that (A) the sale-leaseback transaction
is closed within 90 days of the acquisition of the assets and (B) both the
acquisition and the closing of the sale-leaseback are completed during the
same fiscal year; and (y) at any time when Outstanding Obligations have
exceeded the Borrowing Base as a result of (A) Accounts or Inventory
believed to be Eligible Accounts or Eligible Inventory, as the case may be,
in fact being or becoming ineligible or (B) the return of uncollected
checks or other items applied to reduce Loans, the Collateral Monitoring
Agent shall have the discretion to continue to advance Loans and to
instruct the Issuing Bank to issue L/Cs, Acceptances, Steamship Guaranties
and Airway Releases, as the case may be, up to an amount which would result
in the relevant Overadvance amount specified above being exceeded by a
factor of 10% (it being understood that the Collateral Monitoring Agent
shall advise the Lenders of all such issuances and advances within 24
hours); and (z) the applicable Overadvance amount shall be increased by the
amount of (a) any cash collateral held by the Collateral Monitoring Agent
for the sole purpose of securing such increases to the applicable
Overadvance amount, and (b) any amounts invested in U.S. government
securities or money market mutual funds backed by U.S. government
securities maintained in an account with Fleet by the Borrower or the
Parent and pledged or assigned to the Agent for the benefit of the Lenders
by the Borrower or the Parent, as the case may be, as collateral security
for the Obligations pursuant to documentation satisfactory to the Lenders.
1.6 The definition of "Standby L/Cs" in Article 1.1 of the
Loan Agreement is amended by deleting the existing definition in its
entirety and replacing it with the following:
""STANDBY L/CS" - as defined in Section 2.1(b)(ii) hereof and
including the Existing Standby L/Cs which continue to be outstanding, all
of which shall provide for an expiration date no later than August 31, 2002
and shall be cash collateralized on and after June 1, 2002 as provided in
Section 2.2(f) hereof."
1.7 Section 2.5(a) of Article II of the Loan Agreement is
amended by replacing "two and one half (2.5%) percent" in clause (ii) with
"two and a quarter (2.25%) percent".
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1.8 Section 2.6(a) of Article II of the Loan Agreement is
amended by deleting such Section in its entirety and replacing it with the
following:
"(a) The Borrower shall pay to the Agent, for the ratable
benefit of the Lenders, a non-refundable advisory fee (the "ADVISORY FEE")
in the amount of $175,000 (subject to adjustment pursuant to this
subsection (a) and subject to Section 2.6(j)) payable as follows:
(i) $75,000 payable on March 10, 2000.
(ii) $100,000 payable on the second anniversary of the date
hereof; provided, however, that if the consolidated net income of the
Parent and its consolidated Subsidiaries for Fiscal Year 2001 as set forth
in its Annual Report on Form 10-K timely filed with the Securities and
Exchange Commission applicable to such fiscal year is $2,000,000 or
greater, then the amount payable pursuant to this clause (iii) shall be
$75,000; provided, further, that in the event that the Borrower shall repay
all Outstanding Obligations and terminate the Commitment at any time after
the first anniversary of the date hereof but prior to the second
anniversary of the date hereof, the Borrower shall not be obligated to pay
the fees provided for in this clause (ii)."
1.09 Section 6.9(a) of Article VI of this Agreement is amended
by deleting such Section in its entirety and replacing it with the
following:
"(a) Have or maintain, with respect to the Parent on
a consolidated basis (excluding BET Studio LLC), EBITDA on a cumulative
basis from the first day of each fiscal year through the date set forth
below at not less than, or, in the case of a loss, not more than, the
respective amounts set forth below opposite each such last day of the
fiscal quarter:
Date EBITDA
---- ------
April 30, 2000 ($7,000,000)
July 31, 2000 ($4,300,000)
October 31, 2000 $9,000,000
January 31, 2001 $7,500,000
and the respective amounts for each of Fiscal Year 2002 and
the Stub Period shall be preliminarily determined by the Lenders and the
Borrower based on the Projections and business plan (in each case delivered
pursuant to Section 5.10(e)) for Fiscal Year 2002 and Fiscal Year 2003,
respectively and the unaudited financial statements (delivered pursuant to
Section 5.10(e)) for Fiscal Year 2001 and Fiscal Year 2002, respectively,
but in no event shall the periods be of different durations or the amounts
be less than (if such amount is negative) or greater than (if such amount
is positive) the amounts for the periods corresponding to the periods set
forth above unless the Lenders determine (in their reasonable discretion)
that such periods and amounts warrant adjustment based on the financial
condition of the Borrower as set forth in the applicable Projections,
business plan or unaudited financial statements, which preliminary
determination shall be made within 60 days of receipt by the Lenders of
such Projections, business plan and unaudited financial statements, and
such determination shall become effective
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after receipt and satisfactory review by the Lenders of the Financial
Statements for Fiscal Year 2001 and Fiscal Year 2002, respectively."
1.10 Section 6.9(b) of Article VI of this Agreement is amended
by deleting such Section in its entirety and replacing it with the
following:
"(b) Have or maintain, with respect to the Parent on
a consolidated basis (excluding BET Studio LLC only with respect to
Tangible Net Worth as of April 30, 2000), Tangible Net Worth as of the
dates set forth below at not less than the respective amounts set forth
opposite each such date:
Minimum Tangible
Date Net Worth
---- ---------
April 30, 2000 $34,200,000
July 31, 2000 $35,000,000
October 31, 2000 $42,000,000
January 31, 2001 $41,100,000
and the respective amounts for each of Fiscal Year 2002 and
the Stub Period shall be determined in the sole discretion of the Lenders
within 60 days of receipt by the Lenders of the Projections and business
plan (in each case delivered pursuant to Section 5.10(e)) for Fiscal Year
2002 and Fiscal Year 2003, respectively and the unaudited financial
statements (delivered pursuant to Section 5.10(e)) for Fiscal Year 2001 and
Fiscal Year 2002, respectively, and such determination shall become
effective after receipt and satisfactory review by the Lenders of the
Financial Statements for Fiscal Year 2001 and Fiscal Year 2002,
respectively."
1.11 Section 7.9(c) of the Loan Agreement is amended by
replacing "$2,300,000" in clause (iii) with "$4,000,000".
1.12 Section 7.9(d) of the Loan Agreement is amended by
deleting such Section in its entirety and replacing it with the following:
"(d) Investments in BET Studio LLC; provided that the amount
of Investments pursuant to this subsection (d) shall not exceed in the
aggregate $3,850,000 including the G-III Standby L/C (to the extent
permitted by this Agreement), which standby letter of credit is an
Investment expressly permitted under this Section 7.9"
1.13 Section 10.9 is amended by (i) replacing all references
to "▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇" with "▇▇▇▇ ▇▇▇▇▇" and (ii) replacing all references
to "▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇" with "▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇".
1.14 The Loan Agreement, the Loan Documents and all
agreements, instruments and documents executed and delivered in connection
with any of the foregoing, shall each be deemed to be amended hereby to the
extent necessary, if any, to give effect to the provisions of this
Amendment. Except as so amended hereby, the Loan Agreement and the Loan
Documents shall remain in full force and effect in accordance with their
respective terms.
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SECTION 2. REPRESENTATIONS AND WARRANTIES.
The Borrower hereby represents and warrants to the Agent and
the Lenders that:
2.1 After giving effect to the amendment of the Loan Agreement
pursuant to this Amendment: (i) each of the representations and warranties
set forth in Article 3 of the Loan Agreement is true and correct in all
respects as if made on the date hereof and (ii) there exists no Default or
Event of Default under the Loan Agreement after giving effect to this
Amendment.
2.2 The Borrower has full corporate power and authority to
execute and deliver this Amendment and to perform the obligations on its
part to be performed thereunder and under the Loan Agreement as amended
hereby.
SECTION 3. CONDITIONS PRECEDENT TO AMENDMENTS.
The effectiveness of the amendments contained in Section 1 of
this Amendment, are each and all subject to the satisfaction, in form and
substance satisfactory to the Agent, of each of the following conditions
precedent:
3.1 The Borrower shall have duly executed and delivered this
Amendment.
3.2 Each of the conditions precedent set forth in Section 4.1
and Section 4.2 of the Loan Agreement shall have been satisfied or waived
in accordance with the terms of the Loan Agreement.
3.3 The representations and warranties set forth in Section 2
hereof shall be true, correct and complete on and as of the closing date of
this Amendment as though made on such date.
3.4 The Agent shall have received such approvals, opinions or
documents as any Lender through the Agent may reasonably request, the
Borrower and the Guarantors shall have taken all such other actions as any
Lender through the Agent may reasonably request, and all legal matters
incident to the foregoing shall be satisfactory to the Agent.
SECTION 4. REFERENCE TO AND EFFECT UPON THE LOAN AGREEMENT AND OTHER
LOAN DOCUMENTS.
4.1 Except as specifically amended in Section 1 above, the
Loan Agreement and each of the other Loan Documents shall remain in full
force and effect and each is hereby ratified and confirmed.
4.2 The execution, delivery and effect of this Amendment shall
be limited precisely as written and shall not be deemed to (i) be a consent
to any waiver of any term or condition or to any amendment or modification
of any term or condition of the Loan Agreement or any other Loan Document,
except, upon the effectiveness, if any, of this Amendment, as specifically
amended in Section 1 above, or (ii) prejudice any right, power or remedy
which the Agent or any Lender now has or may have in the future under or in
connection with the Loan Agreement or any other Loan Document. Upon the
effectiveness of this Amendment, each
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reference in the Loan Agreement to "this Agreement", "hereunder",
"hereof", "herein" or any other word or words of similar import shall mean
and be a reference to the Loan Agreement as amended hereby, and each
reference in any other Loan Document to the Loan Agreement or any word or
words of similar import shall mean and be a reference to the Loan Agreement
as amended hereby.
SECTION 5. MISCELLANEOUS
5.1 This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed an original,
but all such counterparts shall constitute one and the same instrument.
5.2 The Borrower shall pay on demand all reasonable fees, costs and
expenses incurred by Agent in connection with the preparation, execution and
delivery of this Amendment (including, without limitation, all reasonable
attorneys' fees).
5.3 GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF
LAW PROVISIONS) OF THE STATE OF NEW YORK.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed on the date first above written.
G-III LEATHER FASHIONS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇
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Title: CFO
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FLEET BANK, N.A., AS LENDER
By: /s/ ▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇
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Title: Assistant Vice President
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THE CHASE MANHATTAN BANK,
AS LENDER
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇
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Title: Vice President
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THE CIT GROUP/COMMERCIAL
SERVICES, NC., AS LENDER
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
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Title: Vice President
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FLEET BANK, N. A., AS AGENT
By: /s/ ▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇
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Title: Assistant Vice President
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