SEVENTH AMENDMENT TO CREDIT AGREEMENT
SEVENTH AMENDMENT TO CREDIT AGREEMENT, dated as of March 27, 1996 (this
"Amendment"), to the Revolving Credit, Factoring and Security Agreement, dated
as of September 20, 1993, as amended by letter agreement Re: Amendment to Credit
Agreement with respect to the Mississippi Property, dated June 14, 1994 (the
"First Amendment") and by letter agreement Re: Amendment to Credit Agreement
with respect to Additional Guarantors, dated August 24, 1994 (the "Second
Amendment"), and by the Third Amendment to Credit Agreement, dated as of
February 28, 1995 (the "Third Amendment"), and by the Fourth Amendment to Credit
Agreement, dated as of March 1, 1995 (the "Fourth Amendment"), and by the Fifth
Amendment to Credit Agreement, dated as of June 28, 1995 (the "Fifth Amendment")
and by the Sixth Amendment to Credit Agreement, dated as of August 15, 1995 (the
"Sixth Amendment") (as so amended, and as further amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"), between THE CIT
GROUP/COMMERCIAL SERVICES, INC. ("Lender") and ▇▇▇▇▇▇ CORPORATION ("Borrower").
W I T N E S S E T H :
WHEREAS, Lender and Borrower are parties to the Credit Agreement;
WHEREAS, Borrower has requested Lender to amend the Credit Agreement to increase
the Maximum Credit and the Revolving Loan Limit as defined therein and to amend
certain financial covenants set forth therein; and
WHEREAS, Lender is willing to make such amendments to the Credit Agreement upon
the terms and subject to the conditions set forth in this Amendment;
NOW, THEREFORE, in consideration of the premises, the parties hereto hereby
agree, effective as of the Effective Date, as defined below, 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. Amendment of Section 3.1(a) (iii). Section 3.1(a) (iii) of the Credit
Agreement is amended in its
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entirety to read as follows:
"(iii) Fifty percent (50%) of the value of Eligible Inventory,
provided, however, that solely for, and at all times during the months
of May, June, July and August of 1996, such advance rate shall be sixty
percent (60%) of the value of Eligible Inventory."
3. Amendment of Section 3.1(c). Section 3.1(c) of the Credit Agreement
is amended in its entirety to read
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as follows:
"(c) Notwithstanding anything to the contrary contained herein or in
any of the other Financing Agreements, except in Lender's discretion,
the aggregate unpaid principal amount of Revolving Loans outstanding at
any time based on the value of all Eligible Inventory shall not exceed
$60,000,000 (the "Inventory Sublimit"), provided, however, that solely
for, and at all times during, the months of May, June, July and August
of 1996, the Inventory Sublimit may equal but shall not exceed
$70,000,000. On or before September 10, 1996, Borrower shall pay in
full to Lender that portion of the Revolving Loans which is equal to
the difference (such amount, the "Inventory Overadvance") between: (i)
the aggregate amount of Revolving Loans then outstanding with respect
to Eligible Inventory, and (ii) the lesser of: (A) the maximum amount
of Revolving Loans with respect to Eligible Inventory to which Borrower
is entitled on September 1, 1996, based on an advance rate of fifty
percent (50%) of the value of Eligible Inventory, and (B) the Inventory
Sublimit as in effect on September 1, 1996. Borrower's failure to pay
the Inventory Overadvance in full on or before September 10, 1996,
shall constitute an Event of Default under Section 8.1(a) of this
Agreement."
4. Amendment of Section 3.3. Section 3.3 of the Credit Agreement is
amended in its entirety to read as follows:
"3.3 Maximum Credit
The aggregate principal amount of the Revolving Loans and Letter of
Credit Accommodations at any time outstanding shall not exceed
$120,000,000, provided, however, that solely for, and at all times
during, the months of March, April, May, June, July, August, September
and October of 1996, such outstanding amount shall not exceed the
amount set forth opposite each such month and provided, further,
however, that during the first twenty (20) days of each month, the
Maximum Credit may equal but shall not exceed the higher of (i) the
Maximum Credit on the last day of the immediately preceding month or
(ii) the amount set forth below opposite such month:
Month (1996) Amount
March $132,000,000
April $135,000,000
May $130,000,000
June $132,000,000
July $130,000,000
August $135,000,000
September $135,000,000
October $130,000,000
Notwithstanding anything to the contrary contained herein, the Maximum Credit as
of November 21, 1996 and thereafter shall not exceed $120,000,000."
5. Amendment of Section 3.6(k). The first sentence of Section 3.6(k) of
the Credit Agreement is amended in its entirety to read as follows:
"From and after September 30, 1996, Borrower shall have the right to
cease factoring the Accounts of any of its divisions or other operating
units upon not less than sixty (60) days prior written notice to
Lender, provided, however, that (x) all Accounts shall at all times
constitute security for all Obligations and (y) if Borrower delivers a
notice to Lender in accordance with this Section 3.6(k) that Borrower
will cease any and all further factoring of its Accounts, the exercise
of such right shall be subject to Borrower's executing and delivering
to Lender all such documents as Lender shall reasonably request in
connection therewith."
6. Amendment of Section 7.18. Section 7.18 of the Credit Agreement is
amended in its entirety to read as follows:
"7.18 Working Capital
Borrower shall not at the end of any fiscal month permit its consolidated
working capital to be less than $80,000,000 during the period from the
Consummation Date through the day before the last day of its 1993 fiscal year,
and $85,000,000 during the period from the last day of its 1993 fiscal year
through the day before the last day of its 1996 fiscal year, and $90,000,000
thereafter."
7. Amendment of Section 7.19. Section 7.19 of the Credit Agreement is
amended in its entirety to read as follows:
"7.19 Stockholders' Equity
Borrower shall not permit its consolidated stockholders' equity to be less than
$55,000,000 at any time during the period from the Consummation Date through the
day before the last day of its 1993 fiscal year, $60,000,000 at any time during
the period from the last day of its 1993 fiscal year through the day before the
last day of its 1996 fiscal year, and $70,000,000 thereafter. Notwithstanding
anything to the contrary contained herein, write-offs for goodwill,
restructuring expense or other unusual or non-recurring expense arising during
Borrower's 1996 fiscal year in connection with or pursuant to a restructuring
and which Borrower would otherwise be required to include in the determination
of Borrower's consolidated stockholders' equity, shall, in an aggregate amount
not to exceed $5,000,000, be excluded from such determination of Borrower's
consolidated stockholders' equity from and after December 28, 1996."
8. Amendment of Section 7.21. Section 7.21 of the Credit Agreement is
amended in its entirety to read as follows:
"7.21 Fixed Charge Coverage Ratio
Borrower shall not permit the ratio of (a) the sum of (i) the
consolidated net income (including royalty income) from continuing
operations (excluding any unusual or non-recurring items of income or
expense) before interest and taxes of Borrower and its Subsidiaries
during any computation period and (ii) the consolidated depreciation
and amortization expenses of Borrower and its Subsidiaries for such
computation period to (b) the sum of (I) the consolidated interest
expense (including all imputed interest on capital lease obligations)
of Borrower and its Subsidiaries and (II) the aggregate amount of all
scheduled repayments of Indebtedness (other than the Obligations) by
Borrower and its Subsidiaries during the computation period, to be less
than 1.5:1.0 at the end of its 1993, 1994, 1995 and 1996 fiscal years."
9. Amendment of Section 10.1(a). Section 10.1(a) of the Credit Agreement
is amended in its entirety to read as follows:
"10.1 Term.
(a) This Agreement and the other Financing Agreements shall become
effective as of the date hereof and shall continue in full force and
effect for a term ending on March 31, 1997 (the "Renewal Date") and
from year to year thereafter, unless sooner terminated pursuant to the
terms hereof."
10. Representations and Warranties. Borrower hereby represents and warrants to
Lender that the representations and warranties set forth in Section 6 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 any
such representation or warranty expressly relates to a prior date, and breach of
any of the representations and warranties made in this paragraph 8 shall
constitute an Event of Default under Section 8.1(b) or 8.1(c) of the Credit
Agreement, as applicable. Borrower further represents and warrants 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.
11. Effectiveness. This Amendment shall become effective on the date
(the "Effective Date") Lender shall have received each of the following:
a. The written consent of all Participants to
the execution and delivery of this
Amendment by Lender.
b. Counterparts of this Amendment, duly
executed and delivered by Borrower and
Lender.
c. A duly executed copy of the Consent of
Guarantors substantially in the form of
Exhibit A hereto.
12. 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 Borrower that would require consent of Lender.
Except as expressly amended, the provisions of the Credit Agreement are and
shall remain in full force and effect.
13. Counterparts. This Amendment may be executed in counterparts,
and all of such counterparts taken
together shall be deemed to constitute one and the same instrument.
14. Governing Law. This Amendment shall be governed by, and construed
and interpreted in accordance with,the laws of the state of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered in New York, New York by their proper and duly authorized
officers as of the day and year first above written.
THE CIT GROUP/COMMERCIAL
SERVICES, INC.
By:
Title:
▇▇▇▇▇▇ CORPORATION
By:
Title:
EXHIBIT A
CONSENT OF GUARANTORS
Each of the undersigned, CLANTEXPORT, INC., ▇▇▇▇▇▇ ▇▇▇▇▇, INC., FROST BROS.
ENTERPRISES, INC., SLT SOURCING, INC., each a Guarantor under its respective
Guarantee, each dated as of September 20, 1993, and ▇▇▇▇▇▇ CANADA INC. and JJ.
▇▇▇▇▇▇ CLOTHING INC., each a guarantor under its respective Guaranty (Unlimited
Liability), each dated as of September 20, 1994 (individually, in the case of
each of the foregoing Guarantors, its "Guarantee"), made in favor of the CIT
Group/Commercial Services, Inc. ("Lender"), pursuant to the Credit Agreement as
defined in the Seventh Amendment to Credit Agreement, dated as of March __, 1996
between Lender and ▇▇▇▇▇▇ Corporation (the "Amendment"), to which this Consent
is attached, hereby consents to the Amendment and the matters contemplated
thereby, and hereby confirms and agrees that its Guarantee is, and shall
continue to be, in full force and effect and is hereby ratified and confirmed in
all respects except that, on and after the effective date of the Amendment, each
reference in its Guarantee 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 by the Amendment.
IN WITNESS WHEREOF, each of the undersigned has caused this Consent of
Guarantors to be duly executed and delivered by its authorized officer this __
day of March, 1996.
CLANTEXPORT, INC. FROST BROS. ENTERPRISES, INC.
By: By:
Title: Title:
▇▇▇▇▇▇ ▇▇▇▇▇, INC. SLT SOURCING, INC.
By: By:
Title: Title:
▇▇▇▇ LICENSING, INC. ▇▇▇▇▇▇ CANADA INC.
By: By:
Title: Title:
JJ. ▇▇▇▇▇▇ CLOTHING, INC.
By:
Title: