AMENDED AND RESTATED CREDIT
AGREEMENT AND GUARANTY
This AMENDMENT NO. 2 dated as of
August 4, 2008 (this “ Amendment ”), is by
and among HAMPSHIRE GROUP, LIMITED (the “ Borrower
”), HAMPSHIRE DESIGNERS, INC., ITEM-EYES, INC., SHANE HUNTER,
INC., SB CORPORATION (“ SB ”), the Banks party
hereto and HSBC Bank USA, National Association, as Agent for the
Banks.
A. The Borrower, the Guarantors, SB, the Banks
and the Agent have entered into an Amended and Restated Credit
Agreement and Guaranty dated as of February 15, 2008, as
amended by Amendment No. 1 dated as of April 15, 2008 (as
amended, the “ Credit Agreement ”).
B. The Borrower has informed the Banks and the
Agent that the Borrower desires to enter into a settlement
arrangement with Ludwig Kuttner (“ Kuttner ”),
with respect to which the Borrower shall repurchase approximately
2,442,340 shares of its common stock from Kuttner and certain of
his family members and affiliates for a net price of not more than
$29,000,000, after taking into account the settlement of certain
claims made by the Borrower against Kuttner and by Kuttner against
the Borrower.
C. The Borrower requested, and the Banks agreed,
to amend Sections 2.10 (Use of Proceeds), 9.05 (Transactions
with Affiliates), 9.10 (Restricted Payments) and 10.01
(Consolidated Tangible Net Worth) of the Credit Agreement to avoid
any violation of such representations and/or covenants caused by
the Kuttner Repurchase, all upon the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the
foregoing and for other good and valuable consideration whose
receipt and sufficiency are acknowledged, the Borrower, the
Guarantors, SB, the Banks and the Agent hereby agree as
follows:
Section 1. Definitions . Each
capitalized term used but not defined in this Amendment shall have
the meaning ascribed to such term in the Credit
Agreement.
Section 2. Amendment of Credit
Agreement .
2.01 New definitions of “Kuttner”
and “Kuttner Repurchase” are hereby added to
Section 1.01 of the Credit Agreement to read as
follows:
“
Kuttner ” means Ludwig Kuttner.
“ Kuttner Repurchase ” means
the repurchase by the Borrower of approximately 2,442,340 shares of
its common stock from Kuttner and certain of his family members and
affiliates for a net price of not more than Twenty Nine Million
Dollars ($29,000,000), after taking into account the settlement of
certain claims made by the Borrower against Kuttner and by Kuttner
against the Borrower.
2.02 The first sentence of Section 2.10 of
the Credit Agreement is hereby amended in its entirety to read as
follows:
On and after the date hereof, the proceeds of
the Revolving Credit Loans and the Term Loan will be used by
Borrower (a) to provide working capital for Borrower and its
Restricted Subsidiaries and (b) for the Kuttner
Repurchase.
2.03 Section 9.05 of the Credit Agreement
is hereby amended by adding “the Kuttner Repurchase,”
after “except for” in the fourth line
thereof.
2.04 Section 9.10 of the Credit Agreement
is hereby amended by deleting the reference “repurchase
treasury stock in an aggregate amount not to exceed Seven Million
Five Hundred Thousand Dollars ($7,500,000) per Fiscal Year”
appearing in clause (i) thereof, and substituting
“repurchase treasury stock (A) in connection with the
Kuttner Repurchase and (B) in an aggregate amount not to
exceed (x) Seven Million Five Hundred Thousand Dollars
($7,500,000) per Fiscal Year or (y) Five Million Dollars
($5,000,000) per Fiscal Year following the consummation of the
Kuttner Repurchase,” therefor.
2.05 Section 10.01 of the Credit Agreement
is hereby amended by deleting the reference “Eighty Five
Million Dollars ($85,000,000)”, and substituting “Fifty
Million Dollars ($50
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