Exhibit 10.33

 

AMENDMENT NO. 3 TO

CREDIT AND SECURITY AGREEMENT

 

THIS AMENDMENT NO. 3 TO CREDIT AND SECURITY AGREEMENT (this "Amendment") is
entered into as of March 27, 2018, by and among the lenders identified on the
signature pages hereto (each of such lenders, together with its successors and
permitted assigns, is referred to hereinafter as a "Lender", and collectively,
"Lenders"), TCW ASSET MANAGEMENT COMPANY, as Agent for each of the Lenders (in
such capacity, together with its successors and assigns in such capacity,
"Agent"), DIFFERENTIAL BRANDS GROUP INC., a Delaware corporation ("Parent"), DBG
SUBSIDIARY INC., a Delaware corporation ("DBG"), HUDSON CLOTHING, LLC, a
California limited liability company ("Hudson"), RG PARENT LLC, a Delaware
limited liability company (the "RG Parent"), ROBERT GRAHAM HOLDINGS, LLC, a New
York limited liability company ("RG Holding"), ROBERT GRAHAM DESIGNS, LLC, a New
York limited liability company ("RG Designs"), DFBG SWIMS, LLC, a Delaware
limited liability company ("Swims"), ROBERT GRAHAM RETAIL LLC, a Delaware
limited liability company ("RG Retail" and together with Parent, DBG, Hudson, RG
Parent, RG Holding, RG Designs, and Swims, collectively, the "Borrowers", and
each a  "Borrower"), and the Guarantors party hereto.

WHEREAS, Borrowers, Parent, Guarantors, Agent and Lenders are party to that
certain Credit and Security Agreement, dated as of January 28, 2016 (as amended,
supplemented or otherwise modified from time to time and in effect as of the
date hereof, the "Credit Agreement");

WHEREAS, the parties hereto have agreed to make certain modifications to the
Credit Agreement, as more fully set forth herein;

NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, and subject to the satisfaction of the conditions precedent set
forth in herein, Parent, Borrowers, Guarantors, the Lenders and Agent hereby
agree as follows:

1.   Definitions.  All terms used herein that are defined in the Credit
Agreement and not otherwise defined herein shall have the meanings assigned to
them in the Credit Agreement, as amended hereby.

2.   Amendment.  In reliance upon the representations and warranties of
Borrowers herein, and subject to the satisfaction of the conditions to
effectiveness herein, the Credit Agreement is hereby amended as follows:

(a)   Schedule 1.1 to the Credit Agreement is hereby amended by adding the
following definitions thereto:

"Third Amendment Date" means March 27, 2018.

(b)   Schedule 1.1 to the Credit Agreement is hereby amended by amending and
restating each of the following definitions therein:

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"Applicable Margin" means (a) the applicable rate per annum corresponding to the
applicable Net Senior Leverage Ratio, all as set forth in the following table:

Net Senior Leverage Ratio

Base Rate

LIBOR Rate

≥ 4.50 to 1.00

9.75%

10.75%

≥ 4.00 to 1.00, but
< 4.50 to 1.00

8.75%

9.75%

≥ 3.00 to 1.00, but
< 4.00 to 1.00

8.00%

9.00%

≥ 2.50 to 1.00, but
< 3.00 to 1.00

7.50%

8.50%

<2.50 to 1.00

6.00%

7.00%

 

and (b) with respect to any Incremental Term Loans, a percent per annum set
forth in the applicable Incremental Facility Amendment.

The Applicable Margin shall be adjusted quarterly, to the extent applicable, as
of the first Business Day following the date on which financial statements are
required to be delivered pursuant to Section 6.1 (including with respect to the
last Fiscal Quarter of each Fiscal Year) after the end of each related Fiscal
Quarter based on the Net Senior Leverage Ratio as of the last day of such Fiscal
Quarter; provided that, commencing on the Third Amendment Date and ending on the
date on which financial statements are required to be delivered pursuant to
Section 6.1 with respect to the Fiscal Quarter ending March 31, 2018, the
Applicable Margin shall be the rates corresponding to the Net Senior Leverage
Ratio of ≥ 4.50 to 1.00 in the foregoing table.  Notwithstanding the foregoing,
(a) if Borrowers fail to deliver the financial statements and the related
Compliance Certificate required by Section 6.1, by the respective date required
thereunder after the end of any related Fiscal Quarter, if requested in writing
by Agent or Required Lenders, the Applicable Margin, to the extent applicable,
shall be the rates corresponding to the Net Senior Leverage Ratio of ≥ 4.50 to
1.00 in the foregoing table until such financial statements and Compliance
Certificate are delivered (plus, if requested by Agent or Required Lenders, the
default rate of interest as described in Section 2.6(b)), and (b) no reduction
to the Applicable Margin shall become effective at any time when an Event of
Default has occurred and is continuing; provided, that any such reduction shall
occur on the date all such Events of Default have been cured or waived in
accordance with the terms of this Agreement.

If, as a result of any restatement of or other adjustment to the financial
statements of the Loan Parties or for any other reason, Agent determines that
(a)

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the Net Senior Leverage Ratio as calculated by Borrowers as of any applicable
date was inaccurate and (b) a proper calculation of the Net Senior Leverage
Ratio would have resulted in a different Applicable Margin for any period, then
(i) if the proper calculation of the Net Senior Leverage Ratio would have
resulted in a higher Applicable Margin for such period, Borrowers shall
automatically and retroactively be obligated to pay to Agent, for the benefit of
the applicable Lenders, promptly on demand by Agent (accompanied by back-up
calculations relating thereto in accordance with this Agreement), an amount
equal to the excess of the amount of interest and fees that should have been
paid for such period over the amount of interest and fees actually paid for such
period; and (ii) if the proper calculation of the Net Senior Leverage Ratio
would have resulted in a lower Applicable Margin for such period, neither Agent
nor any Lender shall have any obligation to repay any interest  to Borrowers;
provided, such excess shall be credited in a manner reasonably acceptable to
Agent against interest and fees payable hereunder in the next succeeding period,
and provided further, that, if as a result of any restatement or other event a
proper calculation of the Net Senior Leverage Ratio would have resulted in a
higher Applicable Margin for one or more periods and lower pricing for one or
more other periods (due to the shifting of income or expenses from one period to
another period or any similar reason), then (x) the amount payable by Borrowers
pursuant to clause (i) above shall be based upon the excess, if any, of the
amount of interest  that should have been paid for all applicable periods over
the amount of interest and fees paid for all such periods and (y) the amount
credited to Borrowers pursuant to clause (ii) above shall be based upon the
excess, if any, of the amount of interest  paid by Borrowers for all applicable
periods over the amount of interest that should have been paid for all such
periods.

"Net Senior Leverage Ratio" means, with respect to any twelve-month period, the
ratio of (x) (i) the principal amount of Indebtedness outstanding under the
Revolving Credit Facility, the Term Loan, any Factoring Agreement, any Permitted
Purchase Money Indebtedness and any Capital Leases, minus (ii) unrestricted cash
on hand of the Loan Parties, up to an aggregate amount not to exceed $5,000,000
(or, solely for purposes of determining compliance with Section 8(a) for the 4
Fiscal Quarter period ended December 31, 2017, $8,250,000), that is subject to a
Control Agreement in favor of Agent, in each case, as of the last day of such
period to (y) EBITDA for such period.

"Net Senior Rent Adjusted Leverage Ratio" means, with respect to any
twelve-month period, the ratio of (i) (a)(x) the principal amount of
Indebtedness outstanding under the Revolving Credit Facility, the Term Loan, any
Factoring Agreement, any Permitted Purchase Money Indebtedness and any Capital
Leases minus (y) the aggregate amount of unrestricted cash on hand of the Loan
Parties, up to an aggregate amount not to exceed $5,000,000 (or, solely for
purposes of determining compliance with Section 8(b) for the 4 Fiscal Quarter
period ended December 31, 2017, $8,250,000), that is subject to a Control
Agreement in favor of Agent, in each case, as of the last day of such period,
plus (b) Consolidated Rental Expense for such period to (ii) EBITDAR for such
period.

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(c)   Sections 8(a) and (b) of the Credit Agreement are amended and restated in
their entirety as follows:

(a)Net Senior Leverage Ratio.  Permit the Net Senior Leverage Ratio for any
period of 4 consecutive Fiscal Quarters of Parent and its Subsidiaries for which
the last Fiscal Quarter ends on a date set forth below to be greater than the
ratio set forth opposite such date:

Fiscal Quarter End

Net Senior Leverage Ratio

June 30, 2016

4.20 to 1.00

September 30, 2016

4.20 to 1.00

December 31, 2016

4.25 to 1.00

March 31, 2017

5.75 to 1.00

June 30, 2017

5.25 to 1.00

September 30, 2017

5.25 to 1.00

December 31, 2017

4.50 to 1.00

March 31, 2018

5.25 to 1.00

June 30, 2018

5.00 to 1.00

September 30, 2018

4.85 to 1.00

December 31, 2018

4.02 to 1.00

March 31, 2019

4.04 to 1.00

June 30, 2019

3.64 to 1.00

September 30, 2019

3.60 to 1.00

December 31, 2019

3.51 to 1.00

March 31, 2020

3.50 to 1.00

June 30, 2020

3.08 to 1.00

September 30, 2020

3.06 to 1.00

December 31, 2020
and each March 31, June 30, September 30 and December 31 thereafter

2.98 to 1.00

 

(b)Net Senior Rent Adjusted Leverage Ratio.  Permit the Net Senior Rent Adjusted
Leverage Ratio for any period of 4 consecutive Fiscal Quarters of

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Parent and its Subsidiaries for which the last Fiscal Quarter ends on a date set
forth below to be greater than the ratio set forth opposite such date:

Fiscal Quarter End

Net Senior Rent
Adjusted Leverage
Ratio

June 30, 2016

5.29 to 1.00

September 30, 2016

5.29 to 1.00

December 31, 2016

5.49 to 1.00

March 31, 2017

6.60 to 1.00

June 30, 2017

6.25 to 1.00

September 30, 2017

6.25 to 1.00

December 31, 2017

5.75 to 1.00

March 31, 2018

6.52 to 1.00

June 30, 2018

6.43 to 1.00

September 30, 2018

6.31 to 1.00

December 31, 2018

5.50 to 1.00

March 31, 2019

5.52 to 1.00

June 30, 2019

5.26 to 1.00

September 30, 2019

5.25 to 1.00

December 31, 2019

5.17 to 1.00

March 31, 2020

5.18 to 1.00

June 30, 2020

4.92 to 1.00

September 30, 2020

4.93 to 1.00

December 31, 2020
and each March 31, June 30, September 30 and December 31 thereafter

4.86 to 1.00

 

3.   Reaffirmation and Confirmation.  Each of Parent, each Borrower and each
Guarantor hereby (a) ratifies, affirms, acknowledges and agrees that the Credit
Agreement and the other Loan Documents represent the valid and binding
obligations of such Loan Party, enforceable against such Loan Party in
accordance with its respective terms, except as enforcement may be limited by
equitable principles or by bankruptcy, insolvency, reorganization, moratorium,
or similar laws relating to or limiting creditors' rights generally, (b) agrees
that this Amendment in

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no way acts as a release or relinquishment of the Liens and rights securing
payments of the Obligations and (c) ratifies, affirms, acknowledges and agrees
to the Liens and rights securing payment of the Obligations in all respects.

4.   Conditions to Effectiveness.  This Amendment shall become effective only
upon the satisfaction in full of the following conditions precedent:

(a)   Agent shall have received counterparts hereof, duly executed and delivered
by all the parties hereto;

(b)   no Default or Event of Default shall have occurred and be continuing on
the date hereof after giving effect to this Amendment;

(c)   after giving effect to this Amendment, each of the representations and
warranties made by the Loan Parties in this Amendment and/or in any other Loan
Document shall be true and correct in all material respects on and as of the
date hereof except (i) to the extent that any such representation or warranty
relates to a specific date, in which case such representation and warranty shall
be true and correct in all material respects as of such earlier date and (ii)
that such materiality qualifier shall not be applicable to any representations
and warranties that are already qualified or modified by materiality in the text
thereof; and

(d)   Borrowers shall have paid to Agent, for the account of each Lender, all
fees and all reasonable and documented out-of-pocket expenses under the Credit
Agreement, this Amendment and the other Loan Documents (including the
outstanding fees and expenses of Agent, including without limitation, legal fees
and expenses) to the extent such fees and expenses have been invoiced to
Borrowers at least one (1) Business Day prior to the date hereof.

5.   Representations and Warranties.  Each of Parent and each Borrower
represents, warrants and covenants to Agent and the Lenders as of the date
hereof (and after giving effect to the consent contained herein):

(a)   each of Parent, each Borrower and each Guarantor is duly authorized to
execute and deliver this Amendment to the Lenders and Agent;

(b)   the execution, delivery and performance of this Amendment, (i) has been
duly authorized by all necessary action on the part of each Loan Party party or
any of its Subsidiaries party thereto, (ii) does not violate the Governing
Documents of any Loan Party or any of its Subsidiaries, (iii) does not and will
not require any registration with, consent, or approval of, or notice to, or
other action with or by, any Governmental Authority, other than registrations,
consents, approvals, notices or actions that have been obtained and that are in
force and effect, (iv) does not violate any provision of federal, state,
provincial, foreign or local law or regulation applicable to any Loan Party or
any of its Subsidiaries or any order, judgment, or decree of any court or other
Governmental Authority binding on any Loan Party or any of its Subsidiaries, and
(v) does not conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under any material agreement of any
Loan Party or any of its Subsidiaries; and

(c)   no Default or Event of Default has occurred and is continuing on the date
hereof after giving effect to this Amendment.

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6.   Miscellaneous.

(a)   Costs and Expenses.  Each of Parent and each Borrower agrees to pay on
demand all reasonable and documented fees and out-of-pocket expenses of
designated counsel to Lenders and Agent in connection with this Amendment in
accordance with the Credit Agreement.

(b)   Loan Document.  Each of Parent and each Borrower hereby acknowledges and
agrees that this Amendment constitutes a "Loan Document" under the Credit
Agreement.

(c)   No Waiver; Full Force and Effect.  Except as expressly stated herein,
nothing contained herein shall be deemed to (i) constitute a modification or
alteration of the terms, conditions or covenants of the Credit Agreement or any
other Loan Document or a waiver of compliance with any term or condition
contained in the Credit Agreement or any of the other Loan Documents or (ii)
prejudice any right or rights which the Lenders may now have or may have in the
future under or in connection with any Loan Documents or any of the instruments
or agreements referred to therein, as the same may be amended from time to
time.  Nothing contained herein shall constitute a course of conduct or dealing
among the parties.  Except as expressly stated herein, Agent and the Lenders
reserve all rights, privileges and remedies under the Loan Documents.  Except as
amended hereby, the Credit Agreement and other Loan Documents shall remain
unchanged and shall continue in full force and effect.  All references in the
Loan Documents to the Credit Agreement shall be deemed to be references to the
Credit Agreement as amended or modified hereby.

(d)   Release.  In consideration of the agreements of Agent and Lenders
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Loan Party, on behalf of
itself and its successors and assigns, and its present and former members,
shareholders, affiliates, subsidiaries, divisions, predecessors, directors,
officers, attorneys, employees, agents, legal representatives and other
representatives (each Loan Party and all such other Persons being hereinafter
referred to collectively as the "Releasing Parties" and individually as a
"Releasing Party"), hereby absolutely, unconditionally and irrevocably releases,
remises and forever discharges Agent, each Lender and their respective
successors and assigns, and their present and former shareholders, affiliates,
subsidiaries, divisions, predecessors, directors, officers, attorneys,
employees, agents, legal representatives and other representatives (all such
Persons being hereinafter referred to collectively as the "Releasees" and
individually as a "Releasee"), of and from all demands, actions, causes of
action, suits, covenants, contracts, controversies, agreements, promises, sums
of money, accounts, bills, reckonings, damages and any and all other claims,
counterclaims, defenses, rights of set‑off, demands and liabilities whatsoever
(individually, a "Claim" and collectively, "Claims") of every kind and nature,
at law or in equity, which any Releasing Party now owns, holds, has or claims to
have against the Releasees or any of them and which are actually known by such
Releasing Party, for, upon, or by reason of any circumstance, action, cause or
thing whatsoever which arises at any time on or prior to the date of this
Amendment for or on account of, or in relation to, or in any way in connection
with this Amendment, the Credit Agreement, or any of the other Loan Documents or
any of the transactions hereunder or thereunder.  Each Loan Party understands,
acknowledges and agrees that the release set forth above may be pleaded as a
full and complete defense to any

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Claim released thereby, and may be used as a basis for an injunction against any
action, suit or other proceeding which may be instituted, prosecuted or
attempted in breach of the provisions of such release.  Each Loan Party agrees
that no fact, event, circumstance, evidence or transaction which could now be
asserted shall affect in any manner the final, absolute and unconditional nature
of the release set forth above.  Each of the Releasing Parties hereby
absolutely, unconditionally and irrevocably, covenants and agrees with, and in
favor of, each Releasee that it will not sue (at law, in equity, in any
regulatory proceeding or otherwise) any Releasee on the basis of any Claim
expressly released, remised and discharged by any Releasing Party pursuant to
this Section 6(d).  If any Releasing Party violates the foregoing covenant, each
Loan Party, for itself and its successors and assigns, and its present and
former members, shareholders, affiliates, subsidiaries, divisions, predecessors,
directors, officers, attorneys, employees, agents, legal representatives and
other representatives, jointly and severally agrees to pay, in addition to such
other damages as any Releasee may sustain as a result of such violation, all
reasonable attorneys' fees and costs incurred by any Releasee as a result of
such violation.

(e)   Counterparts.  This Amendment may be executed in any number of
counterparts, and by the parties hereto on the same or separate counterparts,
and each such counterpart, when executed and delivered, shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
Amendment.  Delivery of an executed counterpart of this Amendment by facsimile
or other electronic delivery (including ".pdf") shall be equally effective as
delivery of an original executed counterpart of this Amendment.

(f)   Governing Law.  This Amendment shall be a contract made under and governed
by the internal laws of the State of New York.  The choice of law and venue,
jury trial waiver and judicial reference provisions set forth in Section 13 of
the Credit Agreement are incorporated herein by reference and shall apply in all
respects to this Amendment.

(g)   No Third Party Beneficiaries.  This Amendment shall be binding upon and
inure to the benefit of the respective successors and permitted assignees of the
parties hereto. The terms and provisions of this Amendment are for the purpose
of defining the relative rights and obligations of the parties hereto with
respect to the transactions contemplated hereby and no Person shall be a third
party beneficiary of any of the terms and provisions of this Amendment.

(h)   Headings.  Section and paragraph headings herein are included for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.

(i)   Severability.  Any provision of this Amendment that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining portions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.

[Remainder of page intentionally left blank.]

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.

 

 

BORROWERS:

 

 

 

DIFFERENTIAL BRANDS GROUP INC., a Delaware corporation

 

 

 

By:

/s/ Bob Ross

 

Name:

Bob Ross

 

Title:

Chief Financial Officer

 

 

 

 

 

 

DBG SUBSIDIARY INC., a Delaware corporation

 

 

 

By:

/s/ Bob Ross

 

Name:

Bob Ross

 

Title:

Chief Financial Officer

 

 

 

 

 

 

HUDSON CLOTHING, LLC, a California limited liability company

 

 

 

By:

/s/ Bob Ross

 

Name:

Bob Ross

 

Title:

Chief Financial Officer

 

 

 

 

 

 

RG PARENT LLC, a Delaware limited liability company

 

 

 

By:

/s/ Bob Ross

 

Name:

Bob Ross

 

Title:

Chief Financial Officer

 

 

 

 

 

 

ROBERT GRAHAM RETAIL LLC a Delaware limited liability company

 

 

 

By:

/s/ Bob Ross

 

Name:

Bob Ross

 

Title:

Chief Financial Officer

 

 

 

 

 

 

ROBERT GRAHAM DESIGNS, LLC, a New York limited liability company

 

 

 

By:

/s/ Bob Ross

 

Name:

Bob Ross

 

Title:

Chief Financial Officer

 

 

 

 

Signature Page to Amendment No. 3 to Credit and Security Agreement

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ROBERT GRAHAM HOLDINGS, LLC, a New York limited liability company

 

 

 

By:

/s/ Bob Ross

 

Name:

Bob Ross

 

Title:

Chief Financial Officer

 

 

 

 

 

 

DFBG SWIMS, LLC, a Delaware limited liability company

 

 

 

By:

/s/ Bob Ross

 

Name:

Bob Ross

 

Title:

Chief Financial Officer

 

Signature Page to Amendment No. 3 to Credit and Security Agreement

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GUARANTORS:

 

 

 

INNOVO WEST SALES, INC., a Texas corporation

 

 

 

 

 

By:

/s/ Bob Ross

 

Name:

Bob Ross

 

Title:

Chief Financial Officer

 

 

 

 

 

 

DBG HOLDINGS SUBSIDIARY INC., a California corporation

 

 

 

 

 

By:

/s/ Bob Ross

 

Name:

Bob Ross

 

Title:

Chief Financial Officer

 

 

 

 

 

 

HUDSON CLOTHING HOLDINGS, INC., a Delaware corporation

 

 

 

 

 

By:

/s/ Bob Ross

 

Name:

Bob Ross

 

Title:

Chief Financial Officer

 

 

 

 

 

 

HC ACQUISITION HOLDINGS, INC., a Delaware corporation

 

 

 

 

 

By:

/s/ Bob Ross

 

Name:

Bob Ross

 

Title:

Chief Financial Officer

 

Signature Page to Amendment No. 3 to Credit and Security Agreement

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RGH GROUP LLC, a Delaware limited liability company

 

 

 

By:

/s/ Bob Ross

 

Name:

Bob Ross

 

Title:

Chief Financial Officer

 

 

 

 

 

 

MARCO BRUNELLI IP, LLC, a Delaware limited liability company

 

 

 

By:

/s/ Bob Ross

 

Name:

Bob Ross

 

Title:

Chief Financial Officer

 

Signature Page to Amendment No. 3 to Credit and Security Agreement

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AGENT:

 

 

 

TCW ASSET MANAGEMENT COMPANY

 

 

 

By:

/s/ Suzanne Grosso

 

Name:

Suzanne Grosso

 

Title:

Managing Director

 

Signature Page to Amendment No. 3 to Credit and Security Agreement

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LENDERS:

 

 

 

TCW DIRECT LENDING LLC

 

By TCW Asset Management Company LLC

 

Its Investment Advisor,

 

as a Lender

 

 

 

By:

/s/ Suzanne Grosso

 

Name:

Suzanne Grosso

 

Title:

Managing Director

 

 

 

 

 

 

TCW DIRECT LENDING STRATEGIC VENTURES LLC,

 

as a Lender

 

 

 

By:

/s/ Suzanne Grosso

 

Name:

Suzanne Grosso

 

Title:

Managing Director

 

 

 

 

 

 

WEST VIRGINIA DIRECT LENDING LLC

 

By TCW Asset Management Company LLC

 

Its Investment Advisor,

 

as a Lender

 

 

 

By:

/s/ Suzanne Grosso

 

Name:

Suzanne Grosso

 

Title:

Managing Director

 

Signature Page to Amendment No. 3 to Credit and Security Agreement

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