Exhibit 10.1
AMENDMENT NO. 2 TO
LOAN AND SECURITY AGREEMENT
AMENDMENT NO. 2 TO LOAN AND SECURITY AGREEMENT ("Amendment No. 2") dated
April 4, 2003 by and among J. Crew Operating Corp., a Delaware corporation
("Operating"), J. Crew Inc., a New Jersey corporation ("J. Crew "), Grace
Holmes, Inc., a Delaware corporation doing business as J. Crew Retail
("Retail"), H.F.D. No. 55, Inc., a Delaware corporation doing business as J.
Crew Factory ("Factory", and together with Operating, J. Crew and Retail, each
individually a "Borrower" and collectively, "Borrowers"), J. Crew Group, Inc., a
New York corporation ("Parent") and J. Crew International, Inc. ("JCI" and
together with Parent, each individually a "Guarantor" and collectively,
"Guarantors"), the parties from time to time to the Loan Agreement (as
hereinafter defined) as lenders (each individually, a "Lender" and collectively,
"Lenders") and Congress Financial Corporation, a Delaware corporation, in its
capacity as administrative and collateral agent for Lenders pursuant to the Loan
Agreement (in such capacity, "Agent").
W I T N E S S E T H :
WHEREAS, Agent, Lenders, Borrowers and Guarantors have entered into
financing arrangements pursuant to which Agent and Lenders have made and may
make loans and advances and provide other financial accommodations to Borrowers
as set forth in the Loan and Security Agreement, dated December 23, 2002, by and
among Agent, Lenders, Wachovia Bank, National Association, in its capacity as
arranger pursuant to the Loan Agreement, Borrowers and Guarantors, as amended by
Amendment No. 1 to Loan and Security Agreement, dated February 7, 2003 (as the
same now exists and may hereafter be further amended, modified, supplemented,
extended, renewed, restated or replaced, the "Loan Agreement") and the
agreements, documents and instruments at any time executed and/or delivered in
connection therewith or related thereto (collectively, together with the Loan
Agreement, the "Financing Agreements");
WHEREAS, in connection with the offer to exchange the New Notes (as
hereinafter defined) for the Senior Discount Debentures, Borrowers and
Guarantors have requested that Agent and Lenders (a) consent to the formation of
a wholly-owned, direct subsidiary of parent ("Intermediate", as hereinafter
further defined), (b) include Intermediate as an additional Guarantor, subject
to the provisions set forth herein and in the Loan Agreement, (c) consent to the
New Note Offering (as hereinafter defined), (d) consent to the capitalization of
Intermediate by the contribution to it of the Capital Stock of Operating, and
(e) make certain amendments to the Loan Agreement; and
WHEREAS, Agent and Required Lenders are willing to provide such consents
and to make such amendments to the extent and subject to terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the mutual conditions and agreements
and covenants set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
Section 1. Definitions.
1.1 Additional Definitions. As used herein, the following terms shall have
the respective meanings given to them below and the Loan Agreement shall be
deemed and is hereby amended to include, in addition and not in limitation of,
each of the following definitions:
(a) "Amendment No. 2" shall mean this Amendment No. 2 to Loan and
Security Agreement by and among Agent, Lenders, Borrowers, Guarantors and
Intermediate, as the same now exists and may hereafter be further amended,
modified, supplemented, extended, renewed, restated or replaced.
(b) "Consummation Date" shall mean the date on which the Senior
Discount Debentures shall be exchanged for New Notes pursuant to and in
accordance with the New Note Agreements.
(c) "Contingent Principal" shall mean any principal amounts additional
to the face amount of the New Notes which, under certain circumstances set forth
in the New Note Indenture, may be added to the accreted amount, or principal
amount at maturity, as applicable, of the New Notes.
(d) "Exchange Offer Documents" shall mean, individually and
collectively, each and all of the following (as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced): (i) Confidential Offering Circular and Consent Solicitation Statement
with respect to the Offer to Exchange 16.0% Senior Discount Contingent Principal
Notes due 2008 of J. Crew Intermediate LLC for Outstanding 13 1/8% Senior
Discount Debentures due 2008 of J. Crew Group, Inc. and (ii) all other
agreements, documents and instruments related thereto.
(e) "Existing Guarantors" shall mean, collectively, the following
(together with their respective successors and assigns): (i) J. Crew Group,
Inc., a New York corporation; and (ii) J. Crew International, Inc., a Delaware
corporation; each sometimes being referred to herein individually as a
"Guarantor".
(f) "Intermediate" shall mean J. Crew Intermediate LLC, a Delaware
limited liability company, together with its successors and assigns; sometimes
referred to in Amendment No. 2 as the "New Guarantor".
(g) "New Note Agreements" shall mean: (i) the Exchange Offer Documents,
(ii) the New Notes (iii) the New Note Indenture, and (iv) all other agreements,
documents and instruments now or at any time hereafter executed and/or delivered
by Intermediate or any other
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person in connection with the New Note Offering, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
(h) "New Note Indenture" shall mean the Indenture, dated on or about
the Consummation Date, between Intermediate, as issuer and New Note Trustee,
with respect to the New Notes, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
(i) "New Note Offering" shall mean the offer of Intermediate to
exchange the Senior Discount Debentures for New Notes pursuant to the Exchange
Offer Documents.
(j) "New Notes" shall mean, collectively, the 16.0% Senior Discount
Contingent Principal Notes due 2008 containing such terms as are contemplated by
the Exchange Offer Documents as in effect on the date hereof, to be issued by
Intermediate pursuant to the New Note Indenture in the aggregate initial
principal amount equal to the Senior Discount Debentures exchanged pursuant to
the New Note Offering and accrued and unpaid interest thereon at a rate of 16.0%
per annum from October 15, 2002 through and including the Consummation Date (as
the same shall exist on the Consummation Date or may thereafter be amended,
modified, supplemented, extended, renewed, restated or replaced).
(k) "New Note Trustee" shall mean U.S. Bank National Association, and
its successors and assigns, and any replacement trustee permitted pursuant to
the terms and conditions of the New Note Indenture.
(l) "Securities Laws" shall mean the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and all rules,
regulations and interpretations issued pursuant thereto or in connection
therewith, and all state and local statutes, rules and regulations issued in
connection therewith or related thereto, as the same now exist or may hereafter
be amended, modified, interpreted, recodified or supplemented.
1.2 Amendment to Definitions.
(a) The definition of "EBITDA" is hereby amended such that the
determination thereof for purposes of Section 9.18 of the Loan Agreement shall
be made without giving effect to a one-time charge in respect of non-current
inventory taken by Borrowers as of February 1, 2003, in the aggregate amount of
$9,000,000.
(b) All references to the term "Financing Agreements" in the Loan
Agreement and the other Financing Agreements shall be deemed and each such
reference is hereby amended to include, in addition and not in limitation, this
Amendment No. 2, and all other agreements documents and instruments at any time
executed and/or delivered by any Obligor or any other person in connection with
any of the foregoing.
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(c) The definitions of "Guarantor" and "Guarantors" set forth in the
Loan Agreement are hereby amended to include, in addition and not in limitation,
Intermediate, within such definition.
(d) All references in the Loan Agreement and the other Financing
Agreements to "any or all of Guarantors", "any of Guarantors", "any Guarantor",
"all Guarantors" or any other similar phrase shall be deemed amended so that
Intermediate is included therein, together with JCI and Parent.
1.3 Interpretation. For purposes of this Amendment No. 2, all terms used
herein, including those terms used or defined in the recitals hereto, shall have
the respective meanings assigned thereto in the Loan Agreement.
Section 2. Consent. Notwithstanding anything to the contrary set forth in the
Loan Agreement or any of the other Financing Agreements and subject to the terms
and conditions contained herein, Agent and Required Lenders hereby consent to:
(a) the formation by Parent of Intermediate as a wholly-owned
subsidiary of Parent and the capitalization of Intermediate by the contribution
to it of the Capital Stock of Operating; and
(b) the New Note Offering pursuant to and in accordance with the terms
of the Exchange Offer Documents as in effect on the date hereof.
Section 3. Assumption of Obligations; Amendments to Guarantee and Financing
Agreements.
3.1 Intermediate hereby expressly (a) assumes and agrees to be directly
liable to Agent and Lenders, jointly and severally with the other Borrowers and
Guarantors, for all Obligations under, contained in, or arising pursuant to the
Loan Agreement or any of the other Financing Agreements applicable to any or all
Borrowers or Guarantors and as applied to Intermediate as a Guarantor, (b)
agrees to perform, comply with and be bound by all terms, conditions and
covenants of the Loan Agreement and the other Financing Agreements applicable to
any or all Guarantors and as applied to Intermediate, with the same force and
effect as if Intermediate had originally executed and been an original Guarantor
party signatory to the Loan Agreement and the other Financing Agreements, (c)
Intermediate is deemed to make, and is, in all respects, bound by all
representations and warranties made by the other Borrowers and Guarantors to
Agent and Lenders set forth in the Loan Agreement or in any of the other
Financing Agreements, and (d) agrees that Agent and Lenders shall have all
rights, remedies and interests, including security interests in and to the
Collateral granted pursuant to Section 4 hereof, the Loan Agreement and the
other Financing Agreements, with respect to Intermediate and its properties and
assets with the same force and effect as Agent has, for the benefit of Lenders,
with respect to the other Guarantors and their assets and properties, as if
Intermediate had originally executed and had been an original Guarantor party
signatory to the Loan Agreement and the other Financing Agreements.
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3.2 Each of the Borrowers, in their capacities as guarantors of the payment
and performance of the Obligations of the other Borrowers and Existing
Guarantors hereby agrees that the Guarantee, dated December 23, 2002, by the
Borrowers and Existing Guarantors in favor of Agent, for the benefit of Lenders,
is hereby amended to include Intermediate as an additional guarantor party
signatory thereto, and Intermediate by its execution below hereby agrees that
the Guarantee is hereby amended to include Intermediate as an additional
guarantor party signatory thereto. Intermediate hereby expressly (a) assumes and
agrees to be directly liable to Agent and Lenders, jointly and severally with
the Borrowers and the Existing Guarantors, for payment and performance of all
Obligations, (b) agrees to perform, comply with and be bound by all terms,
conditions and covenants of the Guarantee with the same force and effect as if
Intermediate had originally executed and been an original party signatory to the
Guarantee as a Guarantor, and (c) agrees that Agent and Lenders shall have all
rights, remedies and interests with respect to Intermediate and its property
under the Guarantee with the same force and effect as if Intermediate had
originally executed and been an original party signatory as a Guarantor to the
Guarantee.
3.3 Each Borrower and Guarantor, including without limitation,
Intermediate, in its capacity as a guarantor under the Guarantee, hereby
expressly and specifically ratifies, restates and confirms the terms and
conditions of the Guarantee in favor of Agent, for the benefit of Lender, and
its liability for all of the Obligations, and other obligations, liabilities,
agreements and covenants thereunder.
Section 4. Collateral of Intermediate. Without limiting the provisions of
Section 3 hereof, the Loan Agreement and the other Financing Agreements, as
collateral security for the prompt payment and performance when due of all of
the Obligations of Intermediate to Agent and Lenders, Intermediate hereby grants
to Agent, for the benefit of Lenders, a continuing security interest in, lien
upon, and right of setoff against, and Intermediate hereby pledges and assigns
to Agent, for the benefit of Lenders, all now owned and hereafter acquired and
arising assets and properties of Intermediate, all of which shall be included in
the definition of Collateral as set forth in the Loan Agreement, including
without limitation, the following:
(a) all Accounts;
(b) all general intangibles, including, without limitation, all
Intellectual Property;
(c) all goods, including, without limitation, Inventory and Equipment;
(d) all Real Property subject to the Mortgages and fixtures;
(e) all chattel paper, including, without limitation, all tangible and
electronic chattel paper;
(f) all instruments, including, without limitation, all promissory
notes;
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(g) all documents;
(h) all deposit accounts;
(i) all letters of credit, banker's acceptances and similar
instruments and including all letter-of-credit rights;
(j) all supporting obligations and all present and future liens,
security interests, rights, remedies, title and interest in, to and in respect
of Receivables and other Collateral, including (A) rights and remedies under or
relating to guaranties, contracts of suretyship, letters of credit and credit
and other insurance related to the Collateral, (B) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, (C) goods described in invoices,
documents, contracts or instruments with respect to, or otherwise representing
or evidencing, Receivables or other Collateral, including returned, repossessed
and reclaimed goods, and (D) deposits by and property of account debtors or
other persons securing the obligations of account debtors;
(k) all (A) investment property (including securities, whether
certificated or uncertificated, securities accounts, security entitlements,
commodity contracts or commodity accounts) and (B) monies, credit balances,
deposits and other property of Intermediate now or hereafter held or received by
or in transit to Agent, any Lender or its Affiliates or at any other depository
or other institution from or for the account of Intermediate, whether for
safekeeping, pledge, custody, transmission, collection or otherwise;
(l) all commercial tort claims, including, without limitation, those
identified in the Information Certificate;
(m) to the extent not otherwise described above, all Receivables;
(n) all Records; and
(o) all products and proceeds of the foregoing, in any form, including
insurance proceeds and all claims against third parties for loss or damage to or
destruction of or other involuntary conversion of any kind or nature of any or
all of the other Collateral.
Notwithstanding anything to the contrary set forth above, the types or items of
Collateral described in this Section 4 shall not include any rights or interests
in any contract, lease, permit, license, charter or license agreement covering
real or personal property, as such, if under the terms of such contract, lease,
permit, license, charter or license agreement, or applicable law with respect
thereto, the valid grant of a security interest or lien therein to Agent is
prohibited and such prohibition has not been or is not waived or the consent of
the other party to such contract, lease, permit, license, charter or license
agreement has not been or is not otherwise obtained or under applicable law such
prohibition cannot be waived; provided, that, the foregoing exclusion shall in
no way be construed (i) to apply if any such prohibition is unenforceable under
Sections 9-406, 9-407 or 9-408 of the UCC or other applicable law or (ii) so as
to limit, impair or
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otherwise affect Agent's unconditional continuing security interests in and
liens upon any rights or interests of Intermediate in or to monies due or to
become due under any such contract, lease, permit, license, charter or license
agreement (including any Receivables).
Section 5. Indebtedness.
(a) Section 9.9 of the Loan Agreement is hereby amended by adding the
following new subsection (q) at the end thereof:
"(q) Indebtedness of Intermediate evidenced by the New Notes as in
effect on the Consummation Date or as permitted to be amended pursuant
to the terms hereof, provided, that:
(i) the aggregate amount of such Indebtedness shall not exceed
$154,500,000, plus Contingent Principal, less the aggregate amount of
all repayments or redemptions, whether optional or mandatory, in
respect thereof, plus interest thereon at the rate provided for in the
New Note Agreements as in effect on the Consummation Date,
(ii) the Credit Facility is and shall at all times continue to
be the "New Credit Facility" as such term is defined in the New Note
Indenture as in effect on the date hereof and is and shall be entitled
to all of the rights and benefits thereof, if any, under the New Note
Indenture as in effect on the Consummation Date,
(iii) Borrowers and Guarantors shall not, directly or indirectly,
make any payments in respect of such Indebtedness, except that they
may make regularly scheduled payments of interest by capitalizing such
interest and adding such capitalized amount to the outstanding
principal amount of such Indebtedness, and fees, if any, in respect of
such Indebtedness when due in accordance with the terms of the New
Notes and the New Note Indenture, in each case in accordance with the
terms of the Exchange Offer Documents as in effect on the date hereof
and any reasonable and customary fees required to be paid to holders
of the New Notes in connection with a consent solicitation, it being
understood and agreed that in no event shall the provisions of the New
Notes and the New Note Indenture with respect thereto, vary from the
provisions of the Exchange Offer Documents,
(iv) Borrowers and Guarantors shall not, directly or indirectly,
amend, modify, alter or change, in each case, in any material respect
any terms of such Indebtedness or any of the New Notes, the New Note
Indenture or any related agreements, documents and instruments, except
that Borrowers and Guarantors may, after prior written notice to
Agent, amend, modify, alter or change the terms thereof so as to
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extend the maturity thereof or defer the timing of any payments in
respect thereof, or to forgive or cancel any portion of such
Indebtedness other than pursuant to payments thereof, or to reduce the
interest rate or any fees in connection therewith, or to eliminate any
covenants contained therein, or make any such covenants less
restrictive or otherwise more favorable to any Borrower or Guarantor,
and
(v) Borrowers and Guarantors shall not, directly or indirectly,
redeem, retire, defease, purchase or otherwise acquire all or any part
of such Indebtedness other than at maturity (as set forth in the New
Note Indenture as in effect on the Consummation Date or as extended
after such date), or set aside or otherwise deposit or invest any sums
for such purpose, except that
(A) Borrowers or Guarantors may redeem, retire, defease,
purchase or otherwise acquire all or any part of such Indebtedness
with Refinancing Indebtedness with respect thereto to the extent
permitted under Section 9.9(o) hereof,
(B) Borrowers or Guarantors may redeem, retire, defease,
purchase or otherwise acquire all or any portion of such Indebtedness
with the net proceeds of the issuance and sale of Capital Stock of
Parent or Operating permitted hereunder received by such Borrower or
Guarantor in cash or other immediately available funds; provided,
that, as of the date of any such redemption or purchase or any payment
in respect thereof and after giving effect thereto, (1) Borrowers and
Guarantors shall have complied with all of the requirements of
Sections 9.7(b)(iii)(A), (B), (C) and (E) with respect to such
issuance and sale of Capital Stock and in addition to such
requirements, the notice provided to Agent pursuant thereto shall
specify that the proceeds are to be used for the redemption,
retirement, defeasance, purchase or acquisition of all or any part all
of such Indebtedness (and shall specify which of the foregoing is
intended), the maximum amount that Borrowers and Guarantors will pay
in respect thereof and the range of the principal amount of the New
Notes that Borrowers and Guarantors anticipate will be so redeemed,
retired, defeased, purchased or otherwise acquired, (2) the
redemption, retirement, defeasance, repurchase or acquisition of all
or any part of such Indebtedness shall be substantially
contemporaneous with the issuance and sale of the Capital Stock of
Parent or Operating subject to such notice provided to Agent, (3) as
of the date of any such payment and after giving effect thereto, there
shall be Excess Availability, and (4) as of the date of any such
payment and after giving effect thereto, no Default or Event of
Default shall exist or have occurred and be continuing, and
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(C) Borrowers or Guarantors may redeem or repurchase such
Indebtedness in cash or other immediately available funds (other than
with proceeds of the issuance and sale of Capital Stock of Parent or
Operating as provided in clause (B) above); provided, that, (1)
Borrower Agent shall have provided to Agent not less than ten (10)
Business Days' notice of the intention of such Borrower or Guarantor
to redeem or purchase such Indebtedness (specifying the amount to be
paid by Borrowers or Guarantors and the principal amount of the New
Notes that Borrowers and Guarantors anticipate will be so redeemed or
repurchased), (2) for each of the immediately preceding thirty (30)
consecutive days, Excess Availability shall have been not less than
$50,000,000 and as of the date of any such payment and after giving
effect thereto, Excess Availability shall be not less than $50,000,000
and (3) as of the date of such payment and after giving effect
thereto, no Default or Event of Default shall exist or have occurred
and be continuing;"
(b) Section 9.9(o) of the Loan Agreement is hereby amended by adding
the clause "and Section 9.9(g)" after the reference therein to "Section 9.9 (j)
and 9.9(k)".
Section 6. Loans, Investments, Etc.
(a) Section 9.10(g) of the Loan Agreement is hereby deleted in its
entirety and the following is substituted therefor:
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"(g) loans by Operating to any Subsidiary of Operating (other
than an Inactive Subsidiary) or by Intermediate or any Subsidiary of
Operating to Operating or any other Subsidiary of Operating (other
than an Inactive Subsidiary); provided, that, as to all of such loans,
the Indebtedness arising pursuant to any such loan shall not be
evidenced by a promissory note or other instrument, unless the single
original of such note or other instrument is promptly delivered to
Agent upon its request to hold as part of the Collateral, with such
endorsement and/or assignment by the payee of such note or other
instrument as Agent may require,"
(b) 9.10 of the Loan Agreement is hereby amended by adding the
following new subsection (k) at the end thereof:
"(k) the formation by Parent of Intermediate in connection with the
New Note Offering; provided, that, each of the following conditions is
satisfied: (i) the only assets of Intermediate upon its initial
capitalization shall be Capital Stock of Operating and Intermediate shall
not engage in any business or commercial activity other than the making of
loans to Operating in accordance with Section 9.10(g) hereof or own or hold
any other assets or properties other than: (A) such Capital Stock, (B) an
initial capital contribution by Parent of a cash amount not to exceed
$25,000 and (C) Senior Discount Debentures, and (ii) Parent shall (A)
execute and deliver to Agent, a pledge and security agreement, in form and
substance satisfactory to Agent, granting to Agent a first pledge of and
lien on all of the issued and outstanding membership interests in
Intermediate, and (B) deliver the share certificates, if any, evidencing
such membership interests, or such other evidence as may be issued,
together with all transfer documents or otherwise take such actions as
Agent shall require with respect to Agent's security interest therein."
Section 7. Restricted Payments.
Section 9.11(f) of the Loan Agreement is hereby deleted in its
entirety and the following is substituted therefor:
"(f) Operating may declare and pay a dividend to Parent (directly, or
by payment of such dividend to Intermediate), and Intermediate may declare
and pay a dividend to Parent, from time to time, in each case, in the
amount equal to any payment by Parent of cash interest permitted to be made
by Parent pursuant to Section 9.9(j) hereof in respect of the Senior
Discount Debentures, the proceeds of which shall be used by Parent only to
make a payment of the interest then due payable in accordance with the
terms of the Senior Discount Debentures as in effect on the date hereof;
provided, that, any such dividend shall not be paid more than ninety (90)
days prior to the date such payment of interest is due and payable and if
such dividend is paid by Operating to Parent or Intermediate prior to the
date that such interest is due and payable, all such funds shall be held in
an investment account subject to an Investment Property Control Agreement
in favor of Agent, ad duly authorized, executed and delivered by the
financial intermediary where such funds are held, Parent and Agent."
Section 8. Minimum EBITDA.
(a) Provided that as of the Consummation Date not less than an
aggregate principal amount of $94,500,000 of Senior Discount Debentures shall
have been tendered pursuant to the Exchange Offer and such tender not withdrawn
("Exchanged"), then Schedule 9.18 to the Loan Agreement shall be deleted in its
entirety and the revised Schedule 9.18 appended hereto as Exhibit A substituted
therefor.
(b) In the event, however, that less than $94,500,000 of Senior
Discount Debentures shall have been Exchanged as of the Consummation Date, then
Schedule 9.18 of the Loan Agreement shall be deleted in its entirety and the
revised Schedule 9.18 appended hereto as Exhibit A substituted therefor;
provided, however, that the dollar amount indicated in the "EBITDA" column
thereon shall be deemed increased and shall be revised to reflect the increase
thereof by an amount equal to one-twelfth (1/12) of thirteen and one-eighth
(13 1/8%) percent of the Shortfall (as hereinafter defined), with respect to the
first month indicated on such revised
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Schedule (such amount being hereinafter referred to as the "Increase"). In each
succeeding month, the dollar amount indicated in the "EBIDTA" column of Schedule
9.18 shall be increased by an amount equal to the sum of (i) the Increase, plus
(ii) each Increase previously applied with respect to each prior month on such
Schedule. For purposes hereof, the "Shortfall" shall mean the positive
difference, if any, between $94,500,000 and the aggregate principal amount of
the Senior Discount Debentures which are Exchanged as of the Consummation Date.
Section 9. Supplemental Loans. Notwithstanding anything to the contrary set
forth in the Loan Agreement or any of the other Financing Agreements, no
Borrower or Guarantor shall request, and no Lender shall make, any Supplemental
Loans during the Supplemental Loan Period occurring in 2003.
Section 10. Representations, Warranties and Covenants. In addition to the
continuing representations, warranties and covenants heretofore or hereafter
made by Borrowers and Guarantors to Agent and Lenders pursuant to the other
Financing Agreements, each of Borrowers and Guarantors (including Intermediate),
jointly and severally, hereby represents, warrants and covenants with and to
Agent and Lenders as follows (which representations, warranties and covenants
are continuing and shall survive the execution and delivery hereof and shall be
incorporated into and made a part of the Financing Agreements):
10.1 This Amendment No. 2 has been duly executed and delivered by all
necessary action on the part of Borrowers and Guarantors (including
Intermediate) and, if necessary, their respective stockholders, and is in full
force and effect as of the date hereof and the agreements and obligations of
Borrowers and Guarantors (including Intermediate) contained herein constitute
legal, valid and binding obligations of Borrowers and Guarantors (including
Intermediate) enforceable against Borrowers and Guarantors (including
Intermediate) in accordance with their respective terms.
10.2 No Default or Event of Default exists or has occurred and is
continuing.
10.3 No action of, or filing with, or consent of any governmental
authority, and no approval or consent of any other party, is required to
authorize, or is otherwise required in connection with, the execution, delivery
and performance of this Amendment No. 2.
10.4 All of the representations and warranties set forth in the Loan
Agreement and the other Financing Agreements, each as amended hereby, are true
and correct on and as of the date hereof.
10.5 Intermediate is a Delaware limited liability company, duly organized
and validly existing in good standing under the laws of the State of Delaware
and has all requisite power and authority to own, lease and operate its
properties, if any, and to carry on its business as it is now being conducted
and will be conducted in the future.
10.6 All of the outstanding membership interests in Intermediate have been
duly authorized, validly issued and are fully paid and non-assessable, free and
clear of all claims,
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liens, pledges and encumbrances of any kind. Prior to or on the Consummation
Date, Parent shall be the beneficial and direct owner of record of one hundred
(100%) percent of the issued and outstanding membership interests in
Intermediate. There is no debt outstanding that is convertible into such
membership interests in Intermediate, and there are no outstanding rights,
options or warrants to acquire any membership interests in or debt convertible
into membership interests in Intermediate.
10.7 Neither the execution or delivery of the New Notes or any of the other
New Note Agreements, nor the consummation of the transactions contemplated by
the New Note Agreements, nor compliance with the provisions thereof, shall
result in the creation nor imposition of any lien, charge or incumbrance upon
any of the Collateral as amended hereby.
10.8 On or prior to the Consummation Date, the New Notes shall have been
duly authorized, issued and delivered by Intermediate pursuant to the Note
Indenture and the other New Note Agreements, and the transactions contemplated
thereunder shall have been performed in accordance with their terms by the
respective parties thereto in all respects, including the fulfillment (not
merely the waiver) of all conditions precedent set forth therein.
10.9 On or prior to the Consummation Date, all actions and proceedings
required by the New Notes and the other New Note Agreements, applicable law or
regulations, including, without limitation, all Securities Laws, shall have been
taken, and the transactions required thereunder shall have been (or will be when
required to under the New Note Agreements or applicable law) duly and validly
taken and consummated.
10.10 Neither the execution and delivery of the New Notes or any of the
other New Note Agreements nor the consummation of the transactions therein
contemplated, nor compliance with the provisions thereof (a) has violated or
will violate any of the Securities Laws or any other law or regulation or any
order or decree of any court or governmental instrumentality in any respect, or
(b) after giving effect to the consents hereunder, does or shall conflict with
or result in the breach of, or constitute a default in any respect under, any
indenture, mortgage, deed of trust, security agreement, agreement or instrument
to which any Borrower or Guarantor is a party or by which it or any of its
assets may be bound, or (c) violate any provision of the Certificate of
Incorporation, By-Laws, Articles of Formation or Operating Agreement of any
Borrower or Guarantor.
10.11 Borrower Agent has delivered to Agent true, complete and correct
copies of each of the Exchange Offer Documents.
Section 11. Conditions. The effectiveness of the consents, terms and conditions
contained herein shall be subject to the satisfaction of each of the following
conditions, in form and substance satisfactory to Agent:
11.1 Agent shall have received a true, complete and correct copy of each of
the Exchange Offer Documents;
12
11.2 Agent shall have received from Parent a first pledge of and lien on
all of the issued and outstanding membership interests in Intermediate, pursuant
to a pledge and security agreement, in form and substance satisfactory to Agent,
duly executed and delivered by Parent, together with share certificates or such
other evidence as may be issued with respect thereto and will transfer documents
as may be required with respect to Agents security interest therein;
11.3 Agent shall have received evidence that all corporate and limited
liability company proceedings with respect to the New Note Offering have been
taken by Borrowers, Guarantors and their Affiliates, as appropriate;
11.4 Agent shall have received, in form and substance satisfactory to
Agent, from Intermediate, Manager's Certificate of Members' and Managers'
Resolutions, Incumbency and Members' Consent evidencing the adoption and
subsistence of the limited liability company resolutions approving the
execution, delivery and performance by Intermediate of this Amendment No. 2 and
the agreements, documents and instruments to be delivered pursuant to this
Amendment including the transactions contemplated by the New Note Agreements;
11.5 Agent shall have received original good standing certificates (or its
equivalent) from the Secretary of State (or comparable official) from each
jurisdiction where Intermediate conducts business;
11.6 Agent shall have received UCC, Federal and State tax lien and judgment
searches against Intermediate in all relevant jurisdictions, as determined by
Agent;
11.7 Agent shall have received a revised Information Certificate of
Borrowers and Guarantors, including revised schedules thereto, reflecting the
addition of Intermediate as a Guarantor;
11.8 Agent shall have received evidence of insurance and loss payee
endorsements required under the Loan Agreement and under the other Financing
Agreements with respect to Intermediate, in form and substance satisfactory to
Agent, and certificates of insurance policies and/or endorsements naming Agent
as loss payee;
11.9 Agent shall have received and original of this Amendment No. 2, duly
authorized, executed and delivered by Borrowers and Guarantors;
11.10 Agent shall have received all consents of Lenders required for the
amendments provided for herein;
11.11 the Consummation Date shall be not later than May 14, 2003;and
11.12 as of the Consummation Date, holders of not less than fifty-one (51%)
percent of the Senior Discount Debentures shall have tendered such Senior
Discount Debentures in exchange for New Notes pursuant to the New Note Offering
in accordance with the Exchange Offer Documents as in effect on the date hereof,
and not withdrawn such tender.
13
11.13 not less than ten (10) days prior to the Consummation Date, Lender
shall have received true, complete and correct copies of the New Note Agreements
not delivered on the date hereof.
Section 12. Registration Rights Agreement. In the event that any Obligor
registers the New Notes pursuant to a Registration Rights Agreement in
accordance with the Securities Laws, Borrowers shall deliver to Agent any
registration statement, notice or other filing with the Securities and Exchange
Commission related thereto and shall enter into an amendment to the Loan
Agreement providing for, among other things, the agreement by Borrowers to
deliver to Agent all filings, notices or other documents required by Borrowers
to be delivered to the Securities and Exchange Commission pursuant to the
Securities Laws upon the effective date of the transactions contemplated by such
Registration Rights Agreement.
Section 13. Amendment Fee. In consideration of the amendments set forth herein,
Borrowers shall pay to Agent for the ratable account of Lenders, and Agent may,
at its option, charge the account of Borrowers maintained by Agent, a fee in the
amount of $450,000, which fee shall constitute part of the Obligations and is
fully earned as of the date hereof and which shall be payable $225,000 on the
date hereof and $225,000 on the first anniversary of the date hereof.
Section 14. Miscellaneous.
14.1 Effect of this Amendment. Except as modified pursuant hereto, no other
changes or modifications to the Financing Agreements are intended or implied,
and in all other respects, the Financing Agreements are hereby specifically
ratified, restated and confirmed by all parties hereto as of effective date
hereof. The Loan Agreement and this Amendment No. 2 shall be read and construed
as one agreement. To the extent of conflict between the terms of this Amendment
and the other Financing Agreements, the terms of this Amendment No. 2 shall
control.
14.2 Further Assurances. The parties hereto shall execute and deliver such
additional documents and take such additional actions as may be necessary to
effectuate the provisions and purposes of this Amendment No. 2.
14.3 Governing Law. The rights and obligations hereunder of each of the
parties hereto shall be governed by and interpreted and determined in accordance
with the laws of the State of New York without regard to principals of conflicts
of law or other rule of law that would result in the application of the law of
any jurisdiction other than the laws of the State of New York.
14.4 Binding Effect. This Amendment No. 2 shall be binding upon and inure
to the benefit of each of the parties hereto and their respective successors and
assigns.
14.5 Counterparts. This Amendment No. 2 may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment No. 2, it shall not be
necessary to produce or account for more than one counterpart thereof signed by
each of the parties thereto. This Amendment No. 2 may be executed in any number
of counterparts, but all of such counterparts
14
shall together constitute but one and the same agreement. In making proof of
this Amendment, it shall not be necessary to produce or account for more than
one counterpart thereof signed by each of the parties hereto. Delivery of an
executed counterpart of this Amendment No. 2 by telefacsimile shall have the
same force and effect as delivery of an original executed counterpart of this
Amendment No. 2. Any party delivering an executed counterpart of this Amendment
No. 2 by telefacsimile also shall deliver an original executed counterpart of
this Amendment No. 2, but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Amendment No. 2 as to such party or any other party.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
15
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to
be duly executed and delivered by their authorized officers as of the date and
year first above written.
CONGRESS FINANCIAL CORPORATION,
as Agent and as Lender
By: /s/ Carmen Caporrino
--------------------------
Title: Vice President
-----------------------
J. CREW OPERATING CORP.
By: /s/ Nicholas Lamberti
--------------------------
Title: VP, Controller
-----------------------
J. CREW INC.
By: /s/ Nicholas Lamberti
--------------------------
Title: VP, Controller
-----------------------
GRACE HOLMES, INC. d/b/a J. CREW RETAIL
By: /s/ Nicholas Lamberti
--------------------------
Title: VP, Controller
-----------------------
H.F.D. NO. 55, INC. d/b/a J. CREW
FACTORY
By: /s/ Nicholas Lamberti
--------------------------
Title: VP, Controller
-----------------------
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
16
[SIGNATURES CONTINUED FROM PRIOR PAGE]
J. CREW GROUP, INC.
By: /s/ Nicholas Lamberti
--------------------------
Title: VP, Controller
-----------------------
J. CREW INTERNATIONAL, INC.
By: /s/ Nicholas Lamberti
--------------------------
Title: VP, Controller
-----------------------
J. CREW INTERMEDIATE LLC
By: /s/ Nicholas Lamberti
--------------------------
Title: VP, Controller
-----------------------
17
EXHIBIT A
SCHEDULE 9.18
TO
LOAN AND SECURITY AGREEMENT
Minimum EBITDA
Month Ending On Or About EBITDA/1/
------------------------ ---------
January 31, 2003 $ 42,300,000
February 28, 2003 40,000,000
March 31, 2003 37,000,000
April 30, 2003 36,000,000
May 31, 2003 36,000,000
June 30, 2003 35,000,000
July 31, 2003 34,000,000
August 31, 2003 29,000,000
September 30, 2003 24,000,000
October 31, 2003 21,000,000
November 30, 2003 19,000,000
December 31, 2003 16,000,000
January 31, 2004 15,000,000
February 29, 2004 15,000,000
March 31, 2004 15,000,000
April 30, 2004 15,000,000
May 31, 2004 17,000,000
June 30, 2004 20,000,000
July 31, 2004 22,000,000
August 31, 2004 27,000,000
Schedule 9.18-1
Month Ending On Or About EBITDA/1/
------------------------ ---------
September 30, 2004 29,000,000
October 31, 2004 31,000,000
November 30, 2004 34,000,000
December 31, 2004 45,000,000
January 31, 2005 45,000,000
February 28, 2005 45,000,000
March 31, 2005 46,000,000
April 30, 2005 47,000,000
May 31, 2005 48,000,000
June 30, 2005 49,000,000
July 31, 2005 50,000,000
August 31, 2005 51,000,000
September 30, 2005 53,000,000
October 31, 2005 55,000,000
November 30, 2005 58,000,000
December 31, 2005 64,000,000
January 31, 2006 63,000,000
1. EBITDA with respect to twelve (12) month periods ending on January 31 of any
fiscal year of Parent and its Subsidiaries will be determined using the audited
financial statements of Parent and its Subsidiaries for the applicable period;
with respect to twelve (12) month periods ending on the last day of other
months, EBITDA will be determined using the most recent internal financial
statements of Parent and its Subsidiaries for the applicable period.
Schedule 9.18-2