EXHIBIT NO. 10.43
EXECUTION COPY
FIRST AMENDMENT, dated as of March 27, 2001 (this
"AMENDMENT"), to the CREDIT AGREEMENT, dated as of December 3, 1999 (the "CREDIT
AGREEMENT"), among GUESS ?, INC. (the "BORROWER"), the several banks and other
financial institutions or entities from time to time parties to the Credit
Agreement (the "LENDERS"), the Co-Agent named therein and THE CHASE MANHATTAN
BANK, as Administrative Agent. Terms defined in the Credit Agreement shall be
used in this Amendment with their defined meanings unless otherwise defined
herein.
W I T N E S S E T H :
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WHEREAS, the Borrower has requested the Lenders to enter into
this Amendment on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
I. AMENDMENTS.
1. Section 1.1 of the Credit Agreement is hereby amended
to add the following definitions in the appropriate alphabetical order:
"BORROWING BASE CERTIFICATE": a certificate of a Responsible
Officer of the Borrower setting forth a calculation of the Liquidity Ratio in
form and detail satisfactory to the Administrative Agent.
"ELIGIBLE INVENTORY": any inventory owned by a Loan Party that
(a) is located in the United States, (b) constitutes finished goods and (c) is
subject to a first priority perfected Lien pursuant to the Guarantee and
Collateral Agreement.
"ELIGIBLE RECEIVABLES": any accounts receivable owing to a
Loan Party that (a) result from (i) the sale of inventory or (ii) the licensing
of Intellectual Property, in each case in the ordinary course of business, (b)
in the case of accounts receivable resulting from the sale of inventory, are
owing by a Person domiciled and organized in a jurisdiction within the United
States, (c) have not remained unpaid for 90 days or more from the invoice date
and (d) are subject to a first priority perfected Lien pursuant to the Guarantee
and Collateral Agreement.
"LIQUIDITY RATIO": the ratio of (a) the sum of (i) 100% of
Unencumbered Cash and Cash Equivalents, (ii) 85% of the outstanding balance of
Eligible Receivables (net of reserves), (iii) 50% of the value of Eligible
Inventory (valued at the lower of cost or market value, and determined net of
reserves for obsolescence) and (iv) 50% of the aggregate face amount of all then
outstanding undrawn Documentary Letters of Credit (PROVIDED, that the
percentages referred to in clauses (iii) and (iv) above shall be 60% at all
times on or prior to May 31, 2001) to (b) the Total Revolving Extensions of
Credit at such time.
"UNENCUMBERED CASH AND CASH EQUIVALENTS": any cash or Cash
Equivalents held by a Loan Party that (a) are held in an account located within
the United States and (b) are free and clear of any Lien (other than pursuant to
the Security Documents).
2. The definition of "Basket Amount" contained in
Section 1.1 of the Credit Agreement is hereby amended by (a) changing the phrase
"$75,000,000 on the Closing Date" to the phrase "$25,000,000 on the First
Amendment Effective Date (as defined in the First Amendment to this Agreement)"
and (b) adding the following phrase and new sentence to the end of such
definition: ", in each case to the extent such expenditures are made on or after
the First Amendment Effective Date. It is understood that expenditures of the
type described in this definition made between the Closing Date and the First
Amendment Effective Date in accordance with this Agreement prior to giving
effect to the First Amendment to this Agreement shall be deemed to be permitted
expenditures and shall not count as utilization of the Basket Amount."
3. Section 6.2 of the Credit Agreement is hereby amended
by changing each reference therein to clause (f) to a reference to clause (g)
and by adding a new clause (f) which shall read as follows:
"(f) no later than 10 days after the end of each calendar
month, a Borrowing Base Certificate setting forth a calculation of the Liquidity
Ratio as of the last day of such month;"
4. Section 7.1 of the Credit Agreement is hereby amended
and restated in its entirety as follows:
"7.1 FINANCIAL CONDITION COVENANTS.
(a) CONSOLIDATED LEVERAGE RATIO. Permit the Consolidated Leverage
Ratio as at the last day of any period of four consecutive fiscal quarters of
the Borrower to be greater than (i) 4.50 to 1.0 in the case of any such period
ending on or prior to the last day of the third fiscal quarter of fiscal year
2001 or (ii) 3.50 to 1.0 in the case of any such period ending thereafter.
(b) CONSOLIDATED FIXED CHARGE COVERAGE RATIO. Permit the
Consolidated Fixed Charge Coverage Ratio for any period of four consecutive
fiscal quarters of the Borrower ending during any period set forth below to be
less than the ratio set forth below opposite such fiscal quarter:
Consolidated Fixed Charge
Fiscal Quarter Coverage Ratio
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Through and including the last day of the
second fiscal quarter of fiscal year 2001 0.50 to 1.0
From and including the first day of the third fiscal quarter
of fiscal year 2001 to and including the day before the
last day of the fourth fiscal quarter of fiscal year 2001 0.75 to 1.0
From and including the last day of the fourth fiscal quarter
of fiscal year 2001 and thereafter 1.50 to 1.0
(c) CONSOLIDATED NET WORTH. Permit Consolidated Net Worth at any
time to be less than $135,000,000.
(d) CONSOLIDATED NET INCOME. Permit Consolidated Net Income for
(i) the second fiscal quarter of fiscal year 2001 of the Borrower, (ii) the
third fiscal quarter of fiscal year 2001 of the Borrower or (iii) any period of
four consecutive fiscal quarters of the Borrower ending thereafter, in each
case, to be less than $1.00.
(e) LIQUIDITY RATIO. Permit the Liquidity Ratio to be less than
1.0 to 1.0. It is understood that verification of compliance with this Section
7.1(e) shall only be required in connection with the delivery of Borrowing Base
Certificates pursuant to Section 6.2(f) and at any other time requested by the
Administrative Agent."
5. Section 7.7 of the Credit Agreement is hereby amended
by deleting the words "and $85,000,000 in any fiscal year thereafter" and
replacing them with the words ", $40,000,000 in fiscal year 2001 and $50,000,000
in any fiscal year thereafter".
6. The Pricing Grid attached as Annex A to the Credit
Agreement is hereby replaced by the Pricing Grid attached as Annex A to this
Amendment.
II. WAIVER.
The Lenders hereby permanently waive any Event of
Default resulting from (a) any misrepresentation made pursuant to Section 4.1 in
respect of the Borrower's financial statements for the third quarter of its 1999
fiscal year prior to their restatement, (b) any misrepresentation made pursuant
to Section 4.2 or 4.18 of the Credit Agreement resulting from the restatement of
the Borrower's financial statements for the third quarter of its 1999 fiscal
year and the first, second and third quarters of its 2000 fiscal year or from
matters expressly disclosed
to the Lenders prior to the First Amendment Effective Date pursuant to such
restated financial statements, (c) noncompliance with the last sentence of
Section 6.1 of the Credit Agreement in respect of the Borrower's financial
statements for the periods referred to in clause (b) above prior to their
restatement and (d) noncompliance with Section 7.1(b) of the Credit Agreement
for the periods ending with the third and fourth fiscal quarters of fiscal year
2000 (as restated).
III. MISCELLANEOUS.
1. REPRESENTATIONS AND WARRANTIES. The Borrower hereby
represents and warrants as of the First Amendment Effective Date that, after
giving effect to this Amendment, (a) no Default or Event of Default has occurred
and is continuing and (b) all representations and warranties of each Loan Party
contained in the Loan Documents (with each reference to the Loan Documents in
such representations and warranties being deemed to include, unless the context
otherwise requires, this Amendment and the Credit Agreement as amended by this
Amendment) are true and correct in all material respects with the same effect as
if made on and as of such date (except for those representations and warranties
which expressly relate to a specific earlier date).
2. EXPENSES. The Borrower agrees to pay or reimburse the
Administrative Agent on demand for all its reasonable out-of-pocket costs and
expenses incurred in connection with the preparation and execution of this
Amendment and the transactions contemplated hereby, including, without
limitation, (a) the reasonable fees and disbursements of counsel to the
Administrative Agent and (b) the expenses of the field examination referred to
in paragraph 4 below.
3. NO CHANGE. Except as expressly provided herein, no
term or provision of the Credit Agreement shall be amended, modified or
supplemented, and each term and provision of the Credit Agreement shall remain
in full force and effect.
4. EFFECTIVENESS. This Amendment shall become effective
on the date (the "FIRST AMENDMENT EFFECTIVE DATE") on which (a) the
Administrative Agent shall have received counterparts hereof duly executed by
the Borrower and the Required Lenders, (b) the Administrative Agent shall have
received a field examination in form, scope and substance satisfactory to it and
(c) the Borrower shall have paid to the Administrative Agent for the account of
the relevant Lenders an amendment fee equal to 0.20% of the Commitment of each
Lender that submits an executed signature page to the Administrative Agent or
its counsel (including by facsimile transmission) no later than 5:00 p.m., New
York City time, on March 27, 2001.
5. COUNTERPARTS. This Amendment may be executed by the
parties hereto in any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
6. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their proper and duly authorized
officers as of the date first above written.
GUESS ?, INC.
By:
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Name:
Title:
THE CHASE MANHATTAN BANK,
as Administrative Agent, as Issuing Lender
and as a Lender
By:
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Name:
Title:
SANWA BANK CALIFORNIA,
as Co-Agent and as a Lender
By:
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Name:
Title:
GMAC COMMERCIAL CREDIT LLC
By:
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Name:
Title:
ISRAEL DISCOUNT BANK OF NEW YORK
By:
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Name:
Title:
By:
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Name:
Title:
MERCANTILE BANK NATIONAL ASSOCIATION
By:
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Name:
Title:
BANK LEUMI USA
By:
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Name:
Title:
By:
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Name:
Title:
ATLANTIC BANK OF NEW YORK
By:
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Name:
Title:
SUMMIT BANK
By:
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Name:
Title:
ANNEX A
Consolidated Leverage Applicable Margin Applicable Applicable
Ratio for Eurodollar Loans Margin for Commitment Fee Documentary L/C
ABR Loans Rate Fee Rate
Greater than or equal to 2.25% 1.25% 0.625% 0.300%
4.00 to 1.0
Greater than or equal to 2.00% 1.00% 0.5625% 0.275%
3.50 to 1.0 but less than
4.0 to 1.0
Greater than or equal to 3.00 to 1.75% 0.75% 0.500% 0.250%
1.0 but less than
3.50 to 1.0
Greater than or equal to 2.75 to 1.50% 0.50% 0.375% 0.225%
1.0 but less than 3.00 to 1.0
Greater than or equal to 2.50 to 1.25% 0.25% 0.375% 0.200%
1.0 but less than 2.75 to 1.0
Greater than or equal to 2.25 to 1.125% 0.125% 0.300% 0.175%
1.0 but less than 2.50 to 1.0
Less than 2.25 to 1.0 1.000% 0.000% 0.250% 0.150%
Changes in the Applicable Margin resulting from changes in the Consolidated
Leverage Ratio shall become effective on the date (the "ADJUSTMENT DATE") on
which financial statements are delivered to the Lenders pursuant to Section 6.1
(but in any event not later than the 45th day after the end of each of the first
three quarterly periods of each fiscal year or the 90th day after the end of
each fiscal year, as the case may be) and shall remain in effect until the next
change to be effected pursuant to this paragraph. If any financial statements
referred to above are not delivered within the time periods specified above,
then, until such financial statements are delivered, the Consolidated Leverage
Ratio as at the end of the fiscal period that would have been covered thereby
shall for the purposes of this definition be deemed to be greater than 4.00 to
1.0. In addition, at all times while an Event of Default shall have occurred and
be continuing, the Consolidated Leverage Ratio shall for the purposes of this
definition be deemed to be greater than 4.00 to 1.0. Each determination of the
Consolidated Leverage Ratio pursuant to this pricing grid shall be made with
respect to (or, in the case of Consolidated Total Debt, as at the end of) the
period of four consecutive fiscal quarters of the Borrower ending at the end of
the period covered by the relevant financial statements.