Exhibit 99.1
AMENDMENT NO. 9
TO
FINANCING
AGREEMENT
THIS AMENDMENT NO. 9 (this
“Amendment”) is entered into as of September 25,
2009, by and among RAFAELLA APPAREL GROUP, INC., a Delaware
corporation (“Borrower”), VERRAZANO, INC., a New York
corporation (“Verrazano”), HSBC BANK USA, NATIONAL
ASSOCIATION (“HSBC”) and the other financial
institutions which are now or which hereafter become a party hereto
(each a “Lender” and collectively, the
“Lenders”) and HSBC, as agent for the Lenders (in such
capacity, the “Agent”).
BACKGROUND
Borrower, Verrazano, Agent and
Lenders are parties to a Financing Agreement dated June 20,
2005 (as amended by Amendment No. 1 to Financing Agreement
dated as of March 31, 2006, Amendment No. 2 to Financing
Agreement effective as of December 31, 2006, Consent and
Amendment No. 3 to Financing Agreement dated as of
March 4, 2008, Amendment No. 4 to Financing Agreement
dated as of March 28, 2008, Amendment No. 5 to Financing
Agreement dated as of May 14, 2008, Amendment No. 6 to
Financing Agreement dated as of September 30, 2008, Amendment
No. 7 to Financing Agreement dated as of December 16,
2008, and Amendment No. 8 to Financing Agreement dated as of
February 10, 2009 and as hereafter further amended, restated,
supplemented or otherwise modified from time to time, the
“Financing Agreement”) pursuant to which Agent and
Lenders provide Borrower with certain financial
accommodations.
Borrower has requested that Agent
and Lenders (a) modify the amount of the Availability Reserve
on the specific dates of June 30, 2009 and July 31, 2009,
(b) modify the Net Income requirement for the fiscal quarters
ending June 30, 2010 and September 30, 2010 and
(c) extend the term of the Financing Agreement from
June 20, 2010 to December 15, 2010, and Agent and Lenders
are willing to do so on the terms and conditions hereafter set
forth including, without limitation, a reduction of the Maximum
Loan Amount from $45,000,000 to $30,000,000.
NOW, THEREFORE, in consideration of
any loan or advance or grant of credit heretofore or hereafter made
to or for the account of Borrower by Agent and Lenders, and for
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree
as follows:
1.
Definitions
. All
capitalized terms not otherwise defined herein shall have the
meanings given to them in the Financing Agreement.
2.
Amendments to
Financing Agreement . Subject to
satisfaction of the conditions precedent set forth in
Section 3 below, the Financing Agreement is hereby amended as
follows:
(a)
The following
defined terms shall be added to Section 1.2 of the Financing
Agreement in their appropriate alphabetical order:
“ Amendment No. 9
” shall mean Amendment No. 9 to this Agreement dated
September 25, 2009 by and among Borrower, Verrazano, Agent and
the Lenders executing such document.
“ Amendment No. 9
Effective Date ” shall mean the date that all conditions
precedent to the effectiveness of Amendment No. 9 have been
satisfied.
“ Cash Collateral
” shall have the meaning set forth in
Section 6.8(c).
“ Maximum Undrawn
Amount ” shall mean with respect to any outstanding
Letter of Credit, the amount of such Letter of Credit that is or
may become available to be drawn, including all automatic increases
provided for in such Letter of Credit, whether or not any such
automatic increase has become effective.
“ Standby Letter of Credit
Sublimit ” shall mean (a) $6,000,000 from the
Amendment No. 9 Effective Date through December 31, 2009,
and (b) $4,010,000 at all times thereafter.
(b)
The definition of
the term “Availability Reserve” appearing in
Section 1.2 of the Financing Agreement is hereby amended and
restated in its entirety as follows:
“ Availability Reserve
” shall mean (a) $5,000,000 from April 1, 2006
through May 31, 2008, (b) $10,000,000 from June 1,
2008 through October 31, 2008, (c) $7,500,000 from
November 1, 2008 through April 30, 2009,
(d) $10,000,000 from May 1, 2009 through May 31,
2009, (e) $5,000,000 from June 1, 2009 through
July 20, 2009, (f) $7,500,000 from July 21, 2009
through July 31, 2009 and (g) $10,000,000 from
August 1, 2009 through December 15, 2010.
(c)
The definition of
the term “Current Liabilities” appearing in
Section 1.2 of the Financing Agreement is hereby amended by
adding the following language at the end thereof:
Notwithstanding the foregoing,
Current Liabilities shall not include the Indebtedness under the
Senior Secured Notes at any time on or after June 30,
2010.
(d)
The definition of
the term “Maximum Loan Amount” appearing in
Section 1.2 of the Financing Agreement is hereby amended and
restated in its entirety as follows:
“ Maximum Loan Amount
” shall mean $30,000,000.
(e)
Section 2.1(b) of
the Financing Agreement is hereby amended and restated in its
entirety as follows:
(b)
All
Advances . The aggregate balance
of Revolving Advances outstanding plus the aggregate amount
of Letters of Credit and Air Releases/Steamship Guarantees
outstanding plus the aggregate principal amount of Swingline
Loans outstanding at any time shall not exceed the lesser of
(x) the Maximum Loan Amount and (y) an amount equal to
the sum of:
2
(i)
the sum subject
to the provisions of Section 2.1(c) (A) 85% (the
“ Receivables Advance Rate ”) of Eligible
Receivables plus (B) Receivables Advance Rate of
Eligible Factored Receivables, plus
(ii)
the lesser of
(A) the sum of (I) subject to the provisions of
Section 2.1(c), 50% (the “ Inventory Advance Rate
”) of Eligible Inventory (including up to $10,000,000 of
Eligible Inventory consisting of in-transit Inventory), plus
(II) the Inventory Advance Rate of outstanding Documentary
Letters of Credit, provided that the foregoing shall include
only Documentary Letters of Credit utilized to purchase finished
goods Inventory, or (B) the Inventory Advance Cap;
plus
(iii)
the amount of Cash Collateral then
on deposit with Agent; minus
(iv)
Reserves
.
The am
