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EXHIBIT 10.35
SECOND AMENDMENT TO TERM LOAN AND SECURITY AGREEMENT
PREAMBLE: THIS AMENDMENT, dated as of August ____, 2000 (this
"Amendment"), is made and entered into by and among THE GYMBOREE CORPORATION, a
Delaware corporation ("Guarantor One"), GYMBOREE MANUFACTURING, INC., a
California corporation ("Guarantor Two"; Guarantor One and Guarantor Two each,
individually, a "Guarantor" and, collectively, the "Guarantors"), GYMBOREE
LOGISTICS PARTNERSHIP, a California general partnership ("Borrower"), and
TRANSAMERICA BUSINESS CREDIT CORPORATION, a Delaware corporation ("Lender").
RECITALS:
WHEREAS, Guarantors, Borrower and Lender are parties to a certain Term
Loan and Security Agreement, dated as of December 29, 1998 (the "Loan
Agreement"; capitalized terms used herein and not defined herein have the
meanings assigned to them in the Loan Agreement), pursuant to which, as
described therein, Lender has made certain term loans to Borrower; and
WHEREAS, Events of Default have occurred and are continuing under
Section 6.14 of the Loan Agreement, with respect to Guarantor One's fiscal
quarter ending July 31, 2000 (collectively, the "Existing Events of Default");
WHEREAS, Guarantors and Borrower have requested that Lender waive the
Existing Events of Default and amend the provisions of Section 6.14 of the Loan
Agreement in certain respects and, as an inducement to Lender to do so, have
agreed, among other things, to prepay a portion of the Term Loans in the amount
of $750,000 and to pay increased rates of interest on the Term Loans in
accordance with the provisions hereof;
WHEREAS, Guarantors, Borrower and Lender wish to enter into this
Amendment in order to set forth their mutual agreements in regard to the
foregoing matters;
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and conditions herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. PREPAYMENT OF TERM LOANS. On the date hereof, Borrower will prepay
the Term Loans by an amount equal to $750,000. Such prepayment shall be applied
(a) to the extent of the sum of $172,425, in prepayment of Term Loan A, with
such prepayment to be applied to the principal portion of the unpaid
installments of principal and interest on Term Loan A set forth in the
amortization schedule forming a part of Term Note A, in the inverse order of
their respective maturities and (b) to the extent of the sum of $577,575 in
prepayment of Term Loan B, with such prepayment to be applied to the balloon
payment due under Term Note B on January 1, 2009. No prepayment premium will be
payable in connection with such prepayments.
2. INCREASE IN INTEREST RATE.
(a) Commencing on the date hereof and except as provided in
clauses (b) and (d) below, continuing hereafter until the Term Loans are paid in
full, the interest rate payable on
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each Term Loan as set forth in Section 2.3 of the Loan Agreement will be
increased to a simple interest rate equal to one percent (1%) per annum in
excess of the Fixed Rate applicable to such Term Loan, i.e. the interest rate
payable on Term Loan A will be increased from 7.71% per annum to 8.71% per annum
and the interest rate payable on Term Loan B will be increased from 7.93% per
annum to 8.93% per annum.
(b) The interest rate payable on the Term Loans (as increased
hereby) shall be subject to not more than two (2) reductions (to a per annum
rate of not less than the applicable Fixed Rate on each Term Loan) to the extent
that as of any fiscal quarter end of Guarantor One and its consolidated
Subsidiaries, they achieve a Fixed Charge Coverage Ratio corresponding to a
reduced rate of interest as set forth in the table below. Any such reduction in
the interest rate provided for herein shall be effective on the first day of the
first calendar month after receipt by Lender of the applicable financial
statements and corresponding compliance certificate setting forth, among other
things, the calculations necessary to determine that Borrower is entitled to any
such reduction in the interest rate.
FIXED CHARGE INTEREST RATE INTEREST RATE
COVERAGE RATIO ON TERM LOAN A ON TERM LOAN B
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If the Fixed Charge Coverage 8.71% 8.93%
Ratio is less than 1.00:1.00 (applicable Fixed Rate (applicable Fixed Rate
plus 1% per annum) plus 1% per annum)
If the Fixed Charge Coverage 8.21% 8.43%
Ratio is greater than or (applicable Fixed Rate (applicable Fixed Rate
equal to 1.00:1.00 but less plus .50% per annum) plus .50% per annum)
than 1.25:1.00
If the Fixed Charge Coverage 7.71% 7.93%
Ratio is greater than or (applicable Fixed Rate) (applicable Fixed Rate)
equal to 1.25:1.00
(c) For so long as the interest rate payable on the Term Loans
exceeds the Fixed Rate, as provided herein, the combined monthly payments of
principal and interest payable on each Term Loan in accordance with Section 2.2
of the Loan Agreement and the applicable Term Note shall be increased by the
amount by which the accrued interest on each Term Loan at such increased rate
exceeds the amount of interest accrued on such Term Loan at the Fixed Rate.
(d) From and after the date hereof, interest on the Term Loans
shall continue to be payable at the times and in the manner provided in Section
2.3 of the Loan Agreement and to be computed in the manner set forth in such
Section 2.3 of the Loan Agreement, i.e., on the basis of a year consisting of
twelve thirty day months. Further, from and after the occurrence of an Event of
Default and for so long as such Event of Default shall be continuing, Lender
shall continue to have the right to impose interest at the Default Rate in the
manner provided in such Section 2.3, provided that at any time that the Term
Loans bear interest at an increased rate pursuant to the provisions hereof the
Default Rate for each Term Loan shall be computed by
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adding a simple interest rate of four percent (4%) per annum to such increased
rate, rather than to the Fixed Rate.
3. AMENDMENTS TO SECTION 6.14 OF THE LOAN. Section 6.14 of the Loan
Agreement (as previously amended) is hereby further amended by deleting clauses
(a) and (b) thereof in their entireties and substituting in lieu thereof the
following revised clauses (a) and (b):
(a) If Guarantor One's Net Worth (as defined below and measured
quarterly) shall be less than (i) $127,500,000 at any time from May 1, 2000
through July 31, 2000, (ii) $125,500,000 at any time from August 1, 2000 through
October 31, 2000, (iii) $128,000,000 at any time from November 1, 2000 through
April 30, 2001, (iv) $129,000,000 at any time from May 1, 2001 through July 31,
2001, (v) $131,000,000 at any time from August 1, 2001 through October 31, 2001
or (vi) $135,000,000 at any time from and after November 1, 2001.
(b) If Guarantor One's Fixed Charge Coverage Ratio (as defined
below) shall be less than .40:1.00 for Guarantor's One's fiscal quarters ending
on or about July 31, 2000 and October 31, 2000, (ii) .50:1.00 for Guarantor
One's fiscal quarter ending on or about January 31, 2001, (iii) .65:1.00 for
Guarantor One's fiscal quarter ending on or about April 30, 2001, (iv) .80:1.00
for Guarantor One's fiscal quarter ending on or about July 31, 2001, (v)
.90:1.00 for Guarantor One's fiscal quarter ending on or about October 31, 2001
and (vi) 1.05:1.00 for Guarantor One's Fiscal quarter ending on or about January
31, 2002 and each fiscal quarter of Guarantor One thereafter.
4. WAIVER OF EXISTING EVENTS OF DEFAULT. Lender hereby waives the
Existing Events of Default; provided that such waiver is expressly limited to
the Existing Events of Default and shall not be deemed to be a waiver of any
other Default Condition or Event of Default presently or hereafter existing.
5. AMENDMENT FEE. Borrower shall pay to Lender an amendment fee of
$25,000 in connection with the execution of this Amendment.
6. REAFFIRMATION OF GUARANTY. Each Guarantor hereby consents to the
amendments and waivers set forth hereinabove and agrees that its guaranty of the
Obligations, set forth in Section 2.10 of the Loan Agreement, shall continue in
full force and effect from and after the date of execution of this Amendment,
without modification, diminution or impairment.
7. MISCELLANEOUS
(a) Effect of Amendment. All terms of the Loan Agreement and the
other Loan Documents, as amended hereby, shall continue and remain in full force
and effect from and after the execution and delivery of this Amendment and shall
constitute the legal, valid, binding and enforceable obligations of Guarantors
and Borrower to Lender. To the extent any terms and conditions in any of the
Loan Documents shall contradict or be in conflict with any terms or conditions
of the Loan Agreement, after giving effect to this Amendment, such terms and
conditions are hereby deemed modified and amended accordingly to reflect the
terms and conditions of the Loan Agreement as modified and amended hereby.
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(b) Reaffirmation of Representations and Warranties. Guarantors
and Borrower hereby ratify and reaffirm all of the representations and
warranties set forth in the Loan Agreement and the other Loan Documents,
including without limitation, in Sections 3 and 4 of the Loan Agreement, except
to the extent that such representation and warranties relate to an earlier date
or may be untrue or incorrect solely as a result of occurrences permitted under
the Loan Agreement.
(c) Ratification. Guarantors and Borrower hereby restate, ratify
and reaffirm each and every term and condition set forth in the Loan Agreement,
as amended hereby, and the Loan Documents effective as of the date hereof.
(d) Estoppel. To induce Lender to enter into this Amendment,
Guarantors and Borrower hereby acknowledge and agree that, as of the date
hereof, no Default Condition or Event of Default has occurred and is continuing
and, in addition, there exists no right of offset, defense, counterclaim or
objection in favor of either Guarantor or Borrower with respect to the
Obligations.
(e) Governing Law. This Amendment shall be governed by, and
construed in accordance with, the internal laws (and not the laws of conflicts)
of the State of Illinois and all applicable federal laws of the United States of
America.
(f) Costs and Expenses. Guarantors and Borrower agree, jointly
and severally, to pay on demand all costs and expenses of Lender actually
incurred in connection with the preparation, execution, delivery and enforcement
of this Amendment and all other Loan Documents executed in connection herewith,
the closing hereof, and any other transactions contemplated hereby, including
the reasonable fees and out-of-pocket expenses of Lender's counsel.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be executed under seal by their respective officer or officers thereunto duly
authorized, as of the date first above written.
"GUARANTOR ONE"
(SEAL) THE GYMBOREE CORPORATION
By:
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Name:
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Title:
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Attest:
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Name:
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Title:
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"GUARANTOR TWO"
(SEAL) GYMBOREE MANUFACTURING, INC.
By:
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Name:
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Title:
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Attest:
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Name:
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Title:
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"BORROWER"
GYMBOREE LOGISTICS (SEAL)
PARTNERSHIP
By: Gymboree Retail Stores, Inc., Partner
By:
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Name:
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Title:
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By: The Gymboree Stores, Inc., Partner
By:
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Name:
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Title:
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"LENDER"
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By:
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Name:
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Title:
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(SEAL)
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