EXHIBIT 10.1
THIRD AMENDMENT TO SECOND AMENDED AND RESTATED REVOLVING
CREDIT AND GOLD CONSIGNMENT AGREEMENT
THIS THIRD AMENDMENT TO SECOND AMENDED AND RESTATED REVOLVING CREDIT AND
GOLD CONSIGNMENT AGREEMENT (this "Amendment") is entered into as of the 6th day
of April, 2005 by and among the banks that are or may from time to time become
parties hereto (individually a "Bank" and collectively, the "Banks"), LASALLE
BANK NATIONAL ASSOCIATION, a national banking association, as administrative
agent ("Administrative Agent") and collateral agent, ABN AMRO BANK N.V., as
syndication agent, JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as documentation
agent, BACK BAY CAPITAL FUNDING LLC ("Back Bay"), as an Accommodation Bank, and
WHITEHALL JEWELLERS, INC., a Delaware corporation (the "Borrower").
WITNESSETH:
WHEREAS, the Agents (as defined in the Agreement), the Banks and the
Borrower are parties to that certain Second Amended and Restated Revolving
Credit and Gold Consignment Agreement dated as of July 29, 2003, as amended by
that certain First Amendment to Second Amended and Restated Revolving Credit and
Gold Consignment Agreement dated as of March 23, 2004 and that certain Second
Amendment to Second Amended and Restated Revolving Credit and Gold Consignment
Agreement dated as of January 31, 2005 (collectively, the "Agreement"); and
WHEREAS, the Borrower and the Banks have agreed to further amend the
Agreement in accordance with the terms and conditions of this Amendment.
NOW, THEREFORE, for and in consideration of the premises and mutual
agreements herein contained and for the purposes of setting forth the terms and
conditions of this Amendment, the parties, intending to be bound, hereby agree
as follows:
1. Incorporation of the Agreement. All capitalized terms which are not
defined hereunder shall have the same meanings as set forth in the Agreement,
and the Agreement, to the extent not inconsistent with this Amendment, is
incorporated herein by this reference as though the same were set forth in its
entirety. To the extent any terms and provisions of the Agreement are
inconsistent with the amendments set forth in Paragraph 2 below, such terms and
provisions shall be deemed superseded hereby. Except as specifically set forth
herein, the Agreement shall remain in full force and effect and its provisions
shall be binding on the parties hereto.
2. Amendment of the Agreement.
(i) The definitions of the terms "Accommodation Facility",
"Accommodation Facility Commitment Amount," "Accommodation Bank,"
"Accounts Payable," "Appraised (GOB) Percentage of Eligible Inventories,"
"Effective Percentage," "Eligible Credit Card Receivables," "Field
Examination Reserve," "Minimum Excess Availability," "Non-consenting
Bank," "NRLV," "Required Availability Reserve," and "Revolving Loan
Borrowing Base" are hereby added to Section 1.1 of the Agreement to read
as follows:
ACCOMMODATION FACILITY. AS DEFINED IN SECTION 2.12.
ACCOMMODATION FACILITY COMMITMENT AMOUNT. FIFTEEN MILLION DOLLARS
($15,000,000.00).
ACCOMMODATION BANK. LASALLE AND BACK BAY AND ANY REPLACEMENT BANK PURSUANT
TO SECTION 26 .
ACCOUNTS PAYABLE. AS OF ANY DATE OF DETERMINATION, ALL ACCOUNTS PAYABLE
RECORDED ON THE BOOKS AND RECORDS OF THE BORROWER IN ACCORDANCE WITH GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES, AND IN ACCORDANCE WITH THE BORROWER'S HISTORICAL
PRACTICES.
APPRAISED (GOB) PERCENTAGE OF ELIGIBLE INVENTORIES. THE FOLLOWING
SPECIFIED PERCENTAGES DURING THE CORRESPONDING DESIGNATED PERIODS, BUT IN NO
EVENT GREATER THAN 100% OF THE COST OF THE BORROWER'S ELIGIBLE INVENTORY
MULTIPLIED BY THE NRLV OF ELIGIBLE INVENTORY:
PERIOD PERCENTAGE
- ----------------------------------- ----------
APRIL, 2005 65.0%
MAY, 2005 65.0%
JUNE, 2005 64.0%
JULY, 2005 63.5%
AUGUST, 2005 63.5%
SEPTEMBER 1, 2005-NOVEMBER 30, 2005 65.0%
DECEMBER 1, 2005-DECEMBER 15, 2005 65.0%
DECEMBER 16, 2005-JANUARY 31, 2006 60.0%
FEBRUARY 1, 2006-JULY 31, 2006 65.0%
EFFECTIVE PERCENTAGE. THE FOLLOWING SPECIFIED PERCENTAGES DURING THE
CORRESPONDING DESIGNATED PERIODS:
PERIOD PERCENTAGE
- ------------------------------------------- ----------
APRIL 1, 2005 THROUGH DECEMBER 19, 2005 100%
DECEMBER 20, 2005 THROUGH DECEMBER 30, 2005 90%
DECEMBER 31, 2005 AND THEREAFTER 88%
ELIGIBLE CREDIT CARD RECEIVABLES. ACCOUNTS RECEIVABLE DUE TO THE BORROWER
ON A NON RECOURSE BASIS FROM VISA, MASTERCARD, AMERICAN EXPRESS CO.,
DISCOVERCARD, DINERS
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CLUB, AND OTHER MAJOR CREDIT CARD PROCESSORS, OR FROM DEBIT CARD AND TELECHECK,
IN EACH CASE ACCEPTABLE TO THE ADMINISTRATIVE AGENT, AS ARISE IN THE ORDINARY
COURSE OF BUSINESS, WHICH HAVE BEEN EARNED BY PERFORMANCE AND ARE DEEMED BY THE
ADMINISTRATIVE AGENT IN ITS DISCRETION TO BE ELIGIBLE FOR INCLUSION IN THE
CALCULATION OF THE BORROWING BASE AND THE REVOLVING LOAN BORROWING BASE. WITHOUT
LIMITING THE FOREGOING, NONE OF THE FOLLOWING SHALL BE DEEMED TO BE ELIGIBLE
CREDIT CARD RECEIVABLES:
(a) ACCOUNTS FROM VISA, MASTERCARD, AMERICAN EXPRESS CO., DISCOVERCARD,
DINERS CLUB, AND OTHER MAJOR CREDIT CARD PROCESSORS THAT REMAIN OUTSTANDING PAST
FIVE (5) BUSINESS DAYS FROM THE DATE OF SALE;
(b) ACCOUNTS WITH RESPECT TO WHICH THE BORROWER DOES NOT HAVE GOOD, VALID
AND MARKETABLE TITLE THERETO, FREE AND CLEAR OF ANY ENCUMBRANCE (OTHER THAN
ENCUMBRANCES GRANTED TO THE COLLATERAL AGENT);
(c) ACCOUNTS THAT ARE NOT SUBJECT TO A PERFECTED FIRST PRIORITY SECURITY
INTEREST IN FAVOR OF THE COLLATERAL AGENT;
(d) ACCOUNTS WHICH ARE DISPUTED, ARE WITH RECOURSE, OR WITH RESPECT TO
WHICH A CLAIM, COUNTERCLAIM, OFFSET OR CHARGEBACK HAS BEEN ASSERTED (BUT ONLY TO
THE EXTENT OF SUCH DISPUTE, CLAIM, COUNTERCLAIM, OFFSET OR CHARGEBACK); OR
(e) ACCOUNTS WHICH THE ADMINISTRATIVE AGENT DETERMINES IN ITS REASONABLE
DISCRETION TO BE UNCERTAIN OF COLLECTION.
FIELD EXAMINATION RESERVE. A RESERVE IN THE AMOUNT OF SEVEN MILLION
DOLLARS ($7,000,000.00) WHICH SHALL BE MAINTAINED UNLESS AND UNTIL THE
ACCOMMODATION BANKS APPROVAL OF ANY REDUCTION OR ELIMINATION OF THE FIELD
EXAMINATION RESERVE BASED ON THE SUBSTANCE OF THE FIELD EXAMINATION AND AUDIT
REPORT OF THE BORROWER TO COMMENCE ON OR ABOUT APRIL 4, 2005.
MINIMUM EXCESS AVAILABILITY. TWO MILLION DOLLARS ($2,000,000).
NON-CONSENTING BANK. AS DEFINED IN SECTION 26.
NRLV MEANS THAT PERCENTAGE, AS DETERMINED BY THE ADMINISTRATIVE AGENT FROM
THE THEN MOST RECENT APPRAISAL OF THE BORROWER'S INVENTORY UNDERTAKEN AT THE
REQUEST OF THE ADMINISTRATIVE AGENT, REFLECTING THE ESTIMATE OF THE NET RECOVERY
ON THE BORROWER'S INVENTORY IN THE EVENT OF AN IN-STORE LIQUIDATION OF THAT
INVENTORY.
REQUIRED AVAILABILITY RESERVE. SHALL MEAN (i) DURING THE PERIOD COMMENCING
ON THE FUNDING DATE AND ENDING ON JANUARY 31, 2006, FIFTEEN MILLION DOLLARS
($15,000,000) AND (ii) COMMENCING ON FEBRUARY 1, 2006, TWENTY MILLION DOLLARS
($20,000,000).
REVOLVING LOAN BORROWING BASE. AT THE RELEVANT TIME OF REFERENCE THERETO,
AN AMOUNT DETERMINED BY THE ADMINISTRATIVE AGENT BY REFERENCE TO THE MOST RECENT
BORROWING BASE REPORT DELIVERED TO THE BANKS AND THE AGENTS PURSUANT TO SECTION
10.4(f), WHICH IS EQUAL TO (i) THE SUM OF (a) 85% OF ELIGIBLE CREDIT CARD
RECEIVABLES PLUS (b) ELIGIBLE INVENTORY MULTIPLIED BY THE APPLICABLE APPRAISED
(GOB) PERCENTAGE OF ELIGIBLE INVENTORIES MINUS (ii) THE SUM OF (a) THE REQUIRED
AVAILABILITY RESERVE, (b) THE INVENTORY SHRINK RESERVE, (c) THE LAYAWAY RESERVE,
(d) THE FIELD EXAMINATION RESERVE, AND (e) SUCH OTHER RESERVES AS MAY BE
ESTABLISHED BY THE ADMINISTRATIVE AGENT IN ACCORDANCE WITH THE TERMS AND
CONDITIONS OF THIS AGREEMENT.
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(b) The first sentence contained within the definition of the term
"Borrowing Base" is hereby amended and restated to read as follows:
AT THE RELEVANT TIME OF REFERENCE THERETO, AN AMOUNT EQUAL TO THE
LESSER OF (i) $125,000,000, (ii) THE SUM OF THE REVOLVING LOAN
BORROWING BASE PLUS THE PRINCIPAL BALANCE OUTSTANDING OF THE
ACCOMMODATION FACILITY OR (iii) THE SUM OF (a) ELIGIBLE INVENTORY
MULTIPLIED BY THE APPRAISED (GOB) PERCENTAGE OF ELIGIBLE INVENTORIES
MULTIPLIED BY THE EFFECTIVE PERCENTAGE PLUS (b) 85% OF ELIGIBLE
CREDIT CARD RECEIVABLES MINUS (c) THE INVENTORY SHRINK RESERVE,
MINUS (d) THE LAYAWAY RESERVE, MINUS (e) THE FIELD EXAMINATION
RESERVE, MINUS (F) SUCH OTHER RESERVES AS MAY BE ESTABLISHED BY THE
ADMINISTRATIVE AGENT IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF
THIS AGREEMENT.
(c) The Definition of the term "Eligible Accounts Receivable" is
hereby deleted in its entirety.
(d) The definition of the term "Eligible Inventory" is hereby
amended and restated to read as follows:
ELIGIBLE INVENTORY. WITH RESPECT TO THE BORROWER, FINISHED GOODS,
FABRICATED BUT UNFINISHED GOODS, AND PRECIOUS STONE (WHETHER OR NOT
PLACED IN FINDINGS) INVENTORY OWNED BY THE BORROWER, PROVIDED THAT
ELIGIBLE INVENTORY SHALL NOT INCLUDE ANY INVENTORY (i) HELD ON
CONSIGNMENT, OR NOT OTHERWISE OWNED BY THE BORROWER, OR OF A TYPE NO
LONGER SOLD BY THE BORROWER, (ii) WHICH IS DAMAGED OR NOT
IMMEDIATELY SALEABLE OR SUBJECT TO ANY LEGAL ENCUMBRANCE OTHER THAN
PERMITTED LIENS, (iii) WHICH IS NOT IN THE POSSESSION OF THE
BORROWER UNLESS IT IS IN TRANSIT FROM ONE PERMITTED INVENTORY
LOCATION WITHIN THE UNITED STATES OF AMERICA TO ANOTHER PERMITTED
INVENTORY LOCATION WITHIN THE UNITED STATES OF AMERICA, (iv) AS TO
WHICH APPROPRIATE UNIFORM COMMERCIAL CODE FINANCING STATEMENTS
SHOWING THE BORROWER AS DEBTOR AND THE COLLATERAL AGENT AS SECURED
PARTY HAVE NOT BEEN FILED IN THE PROPER FILING OFFICE OR OFFICES IN
ORDER TO PERFECT THE COLLATERAL AGENT'S SECURITY INTEREST THEREIN,
(v) WHICH HAS BEEN SHIPPED TO A CUSTOMER OF THE BORROWER REGARDLESS
OF WHETHER SUCH SHIPMENT IS ON A CONSIGNMENT BASIS, (vi) WHICH IS
NOT EITHER (A) LOCATED AT A PERMITTED INVENTORY LOCATION WITHIN THE
UNITED STATES OF AMERICA OR (B) IN TRANSIT FROM ONE PERMITTED
INVENTORY LOCATION WITHIN THE UNITED STATES OF AMERICA TO ANOTHER
PERMITTED INVENTORY LOCATION WITHIN THE UNITED STATES OF AMERICA,
(vii) WHICH THE ADMINISTRATIVE AGENT REASONABLY DEEMS TO BE OBSOLETE
OR NOT MARKETABLE, OR (viii) WHICH IS DESIGNATED AS
"RETURN-TO-VENDOR" INVENTORY. "ELIGIBLE INVENTORY" MAY INCLUDE
INVENTORY, NOT TO EXCEED $3,500,000.00 IN THE AGGREGATE, LOCATED AT
LOCATIONS OTHER THAN AS SPECIFIED IN CLAUSE (vi) ABOVE, PROVIDED
THAT SUCH INVENTORY IS SUBJECT TO A THIRD PARTY BAILMENT AGREEMENT
ACCEPTABLE TO THE ADMINISTRATIVE AGENT, IN THE ADMINISTRATIVE
AGENT'S SOLE DISCRETION, PURSUANT TO WHICH THE APPLICABLE BAILEE HAS
ACKNOWLEDGED THE EXISTENCE AND PRIORITY (AS AGAINST SUCH BAILEE) OF
THE SECURITY INTEREST OF THE COLLATERAL AGENT IN SUCH INVENTORY AND
HAS WAIVED ANY RIGHT OF SETOFF AGAINST SUCH INVENTORY, SUCH AS, BY
EXAMPLE, INVENTORY LOCATED IN THE POSSESSION OF P & J MANUFACTURING,
INC. FOR REPAIR.
(e) The Borrower acknowledges and agrees that there are presently
existing no Obligations outstanding pursuant to Article 4 of the Loan Agreement.
The commitment of the Gold Fronting Bank to make any Purchase and Consignment of
Precious Metal as set forth in Section 4.1 of the Agreement is hereby
terminated. The several provisions of the Agreement relating to the Purchase and
Consignment of Precious Metal and all related terms and conditions are hereby
deemed modified so as to be not inconsistent with the foregoing modification.
(f) The definition of the term "Reserve" is hereby amended and
restated to read as follows:
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RESERVES. AS DETERMINED BY THE ADMINISTRATIVE AGENT IN ACCORDANCE
WITH ITS REASONABLE CREDIT DISCRETION, INCLUDING SUCH AMOUNTS AS THE
ADMINISTRATIVE AGENT MAY FROM TIME TO TIME ESTABLISH AND REVISE (a)
TO REFLECT EVENTS, CONDITIONS, CONTINGENCIES OR RISKS WHICH DO OR
MAY (i) ADVERSELY AFFECT EITHER (A) ANY COLLATERAL, THE RIGHTS OF
THE COLLATERAL AGENT, ANY OF THE OTHER AGENTS OR ANY OF THE BANKS IN
ANY COLLATERAL OR ITS VALUE OR (B) THE SECURITY INTEREST AND OTHER
RIGHTS OF THE COLLATERAL AGENT, ANY OF THE OTHER AGENTS OR ANY OF
THE BANKS IN THE COLLATERAL (INCLUDING THE ENFORCEABILITY,
PERFECTION AND PRIORITY THEREOF) OR (ii) ADVERSELY AFFECT IN ANY
MATERIAL RESPECT THE ASSETS (OTHER THAN ANY COLLATERAL) OR BUSINESS
OR FINANCIAL CONDITION OF THE BORROWER OR ANY OF ITS SUBSIDIARIES OR
(b) TO REFLECT THE BELIEF OF THE ADMINISTRATIVE AGENT THAT ANY
BORROWING BASE REPORT OR OTHER COLLATERAL REPORT OR FINANCIAL
INFORMATION FURNISHED BY OR ON BEHALF OF THE BORROWER TO ANY OF THE
AGENTS OR ANY OF THE BANKS IS OR MAY HAVE BEEN INCOMPLETE,
INACCURATE OR MISLEADING IN ANY MATERIAL RESPECT.
(g) Section 2.11 of the Agreement is hereby deleted in its entirety.
(h) The proviso at the end of the first sentence of Section 2.1 of
the Agreement is hereby amended and restated to read as follows:
; PROVIDED, THAT THE SUM OF THE OUTSTANDING AMOUNT OF THE REVOLVING
CREDIT LOANS (AFTER GIVING EFFECT TO ALL AMOUNTS REQUESTED AND
EXCLUDING ALL LOANS UNDER THE ACCOMMODATION FACILITY) PLUS THE
MAXIMUM DRAWING AMOUNT AND ALL REIMBURSEMENT OBLIGATIONS SHALL NOT
AT ANY TIME EXCEED THE LESSER OF (i) THE TOTAL REVOLVER COMMITMENT
LESS THE OUTSTANDING PRINCIPAL AMOUNT OF THE ACCOMMODATION FACILITY
AND (ii) THE REVOLVING LOAN BORROWING BASE; AND PROVIDED, FURTHER,
THAT THE SUM OF THE OUTSTANDING AMOUNT OF THE REVOLVING CREDIT LOANS
(AFTER GIVING EFFECT TO ALL AMOUNTS REQUESTED AND INCLUDING ALL
LOANS UNDER THE ACCOMMODATION FACILITY) PLUS THE MAXIMUM DRAWING
AMOUNT AND ALL REIMBURSEMENT OBLIGATIONS SHALL NOT AT ANY TIME
EXCEED THE LESSER OF (i) THE TOTAL REVOLVER COMMITMENT AND (ii) THE
BORROWING BASE.
(i) A new Section 2.12 is hereby inserted, as follows:
2.12 ACCOMMODATION FACILITY. AS A SUBFACILITY WITHIN THE TOTAL
REVOLVER COMMITMENT, THE ACCOMMODATION BANKS HEREBY ESTABLISH AN
"ACCOMMODATION FACILITY" (SO-CALLED) PURSUANT TO WHICH THE
ACCOMMODATION BANKS AGREE TO LEND TO THE BORROWER ON APRIL 6, 2005
(THE "FUNDING DATE"), UPON NOTICE BY THE BORROWER TO THE
ADMINISTRATIVE AGENT, AN AMOUNT EQUAL TO THE ACCOMMODATION FACILITY
COMMITMENT AMOUNT. THE ACCOMMODATION BANKS' COMMITMENT TO LEND UNDER
THE ACCOMMODATION FACILITY IS INCLUDED WITHIN, AND IS NOT IN
ADDITION TO, THE COMMITMENT OF THE ACCOMMODATION BANKS GENERALLY.
(a) THE ACCOMMODATION FACILITY SHALL BE FULLY FUNDED ON THE
FUNDING DATE AND SHALL NOT BE SUBJECT TO THE REVOLVING NATURE OF THE
REVOLVING CREDIT LOANS. UPON THE ADVANCE OF THE ACCOMMODATION
FACILITY ON THE FUNDING DATE, THE COMMITMENT OF THE ACCOMMODATION
BANKS UNDER THE ACCOMMODATION FACILITY SHALL TERMINATE. ONCE REPAID,
LOANS OUTSTANDING UNDER THE ACCOMMODATION FACILITY MAY NOT BE
REBORROWED.
(b) AMOUNTS OUTSTANDING UNDER THE ACCOMMODATION FACILITY
CONSTITUTE OBLIGATIONS, ARE SECURED BY ALL COLLATERAL, CONSTITUTE A
PORTION OF THE REVOLVING CREDIT LOANS, AND THE PRINCIPAL BALANCE OF
THE ACCOMMODATION FACILITY SHALL CONSTITUTE A PORTION OF THE
OUTSTANDING FACILITY AMOUNTS. HOWEVER, AMOUNTS OUTSTANDING UNDER THE
ACCOMMODATION FACILITY SHALL BE REPAID ON A "LAST-OUT" BASIS, IN
ACCORDANCE WITH THE WATERFALL PROVISIONS SET FORTH IN SECTIONS
5.8.3, 5.9(c), AND 5.10 OF THIS CREDIT AGREEMENT.
(c) ALL AMOUNTS OUTSTANDING UNDER THE ACCOMMODATION FACILITY
SHALL BE DUE AND PAYABLE IN FULL, WITHOUT DEMAND, NOTICE, OR
PROTEST, ALL OF WHICH ARE HEREBY EXPRESSLY WAIVED BY THE BORROWER,
ON JULY 31, 2006 (THE "ACCOMMODATION FACILITY MATURITY DATE").
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(d) INTEREST SHALL ACCRUE AND BE PAID BY THE BORROWER ON THE
OUTSTANDING BALANCE OF THE ACCOMMODATION FACILITY FROM THE FUNDING
DATE AND UNTIL THE PRINCIPAL BALANCE THEREOF HAS BEEN PAID IN FULL
AT A PER ANNUM RATE EQUAL TO THE SUM OF THE BASE RATE PLUS EIGHT
PERCENT (8%). INTEREST SHALL BE CALCULATED ON A 360 DAY YEAR, AND
ACTUAL DAY MONTHS. INTEREST SHALL BE PAID ("CURRENT PAY INTEREST")
MONTHLY IN ARREARS ON THE FIRST BUSINESS DAY OF EACH CALENDAR MONTH,
COMMENCING MAY 1, 2005, AND CONTINUING ON THE LIKE DAY OF EACH
CALENDAR MONTH THEREAFTER, AND ON THE ACCOMMODATION FACILITY
MATURITY DATE. AFTER THE OCCURRENCE OF A DEFAULT OR AN EVENT OF
DEFAULT, CURRENT PAY INTEREST SHALL BE INCREASED TO THE AGGREGATE OF
THE THEN PREVAILING RATE, PLUS AN ADDITIONAL TWO PERCENT (2%) PER
ANNUM IN ACCORDANCE WITH SECTION 5.21. ACCRUED INTEREST ON THE
OUTSTANDING PRINCIPAL AMOUNT OF THE ACCOMMODATION FACILITY,
INCLUDING INTEREST ACCRUING AT THE DEFAULT RATE, SHALL CONSTITUTE
OBLIGATIONS. SUCH INTEREST SHALL BE FOR THE SOLE BENEFIT OF THE
ACCOMMODATION BANKS.
(e) THE BORROWER SHALL PAY TO THE ACCOMMODATION BANKS THE
"COMMITMENT FEE," THE "COLLATERAL MONITORING FEE," AND THE "EARLY
TERMINATION FEE" IN ACCORDANCE WITH THAT CERTAIN ACCOMMODATION
FACILITY LETTER AGREEMENT, DATED APRIL 6, 2005 ENTERED INTO BY AND
BETWEEN THE BORROWER AND THE ACCOMMODATION BANKS (AS THE SAME MAY BE
AMENDED FROM TIME TO TIME, THE "ACCOMMODATION FACILITY LETTER
AGREEMENT"). SUCH FEES SHALL BE FOR THE SOLE BENEFIT OF THE
ACCOMMODATION BANKS AND SHALL CONSTITUTE OBLIGATIONS.
(f) LASALLE, IN ITS SOLE DISCRETION, MAY MAKE ADVANCES IN
EXCESS OF THE ACCOMMODATION FACILITY COMMITMENT AMOUNT ("PERMITTED
OVERADVANCE") PROVIDED SUCH PERMITTED OVERADVANCES (i) ARE MADE TO
MAINTAIN, PROTECT OR PRESERVE THE COLLATERAL, (ii) DO NOT EXCEED
$2,000,000 IN AGGREGATE PRINCIPAL AMOUNT OUTSTANDING AT ANY TIME,
(iii) DO NOT REMAIN OUTSTANDING FOR MORE THAN FORTY-FIVE (45)
CONSECUTIVE DAYS WITHOUT THE CONSENT OF THE REQUIRED BANKS AND BACK
BAY AND (iv) ARE ADVANCED NO MORE THAN TWO (2) TIMES ON OR BEFORE
THE MATURITY DATE. THE PERMITTED OVERADVANCES SHALL ACCRUE INTEREST
AT THE RATE OF INTEREST APPLICABLE TO LOANS UNDER THE ACCOMMODATION
FACILITY AND SHALL CONSTITUTE OBLIGATIONS. FOR THE AVOIDANCE OF
DOUBT, THE MAKING OF A PERMITTED OVERADVANCE SHALL CONSTITUTE AN
EVENT OF DEFAULT.
(g) EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED FOR IN SECTIONS
5.8.3, 5.9(c) AND 5.10 HEREOF AND EXCLUDING CURRENT PAY INTEREST, NO
ACCOMMODATION BANK SHALL ACCEPT OR RECEIVE FROM THE BORROWER
DIRECTLY OR INDIRECTLY BY WAY OF PAYMENT, SETOFF OR OTHERWISE, ANY
SUMS WHICH MAY NOW OR HEREAFTER BE OWING TO ANY ACCOMMODATION BANK
OR ANY OF THEIR SUCCESSORS OR ASSIGNS IN RESPECT OF THE
ACCOMMODATION FACILITY INCLUDING WITHOUT LIMITATION A RECEIVER,
TRUSTEE OR DEBTOR IN POSSESSION UNLESS AND UNTIL THE OBLIGATIONS TO
THE BANKS UNDER THIS CREDIT AGREEMENT (OTHER THAN TO THE
ACCOMMODATION BANKS UNDER THE ACCOMMODATION FACILITY) HAVE BEEN PAID
IN FULL IN CASH OR CASH EQUIVALENT AND THE COMMITMENTS HEREUNDER
HAVE BEEN TERMINATED. IN THE EVENT ANY SUCH PAYMENT SHALL BE
RECEIVED BY AN ACCOMMODATION BANK IN RESPECT OF THE ACCOMMODATION
FACILITY, IT SHALL BE HELD IN TRUST FOR THE BENEFIT OF THE BANKS
(OTHER THAN THE ACCOMMODATION BANKS UNDER THE ACCOMMODATION
FACILITY) UNDER THIS CREDIT AGREEMENT.
(j) The Agreement is hereby amended to delete the option of the
Borrower to select any Type of Revolving Credit Loan, other than Base Rate Loans
on or after the occurrence of a Default or an Event of Default. On or after the
occurrence of a Default or an Event of Default, no LIBOR Loans may be requested
by the Borrower, nor shall any LIBOR Loans be made by the Banks. With respect to
any LIBOR Loans outstanding as of the date of the occurrence of a Default or an
Event of Default, each such LIBOR Loan shall automatically be converted to a
Base Rate Loan upon the expiry of its existing Interest Period. Upon the
occurrence of a Default or an Event of Default, the several provisions of the
Agreement addressing the selection by the Borrower of different Types of
Revolving Credit Loans, the
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conversion of Revolving Credit Loans from one Type to another Type, and all
related terms and conditions shall be deemed modified so as to be not
inconsistent with the foregoing modifications.
(k) Section 5.8.3 of the Agreement is hereby amended and restated as
follows:
5.8.3 APPLICATIONS OF MANDATORY PREPAYMENTS. EACH ASSET DISPOSITION
PREPAYMENT OR NEW ISSUANCE PREPAYMENT (COLLECTIVELY, "MANDATORY
PREPAYMENTS") RECEIVED BY THE ADMINISTRATIVE AGENT SHALL BE APPLIED
TO THE OBLIGATIONS AS FOLLOWS:
(i) FIRST, TO PAY ALL FEES AND EXPENSES THEN DUE AND PAYABLE UNDER
THIS CREDIT AGREEMENT (INCLUDING FEES AND EXPENSES FOR CASH
MANAGEMENT, BUT EXCLUDING THE EARLY TERMINATION FEE);
(ii) SECOND, TO PAY ALL PERMITTED OVERADVANCES, PLUS ALL ACCRUED AND
UNPAID INTEREST THEREON;
(iii) THIRD, TO PAY ALL ACCRUED AND UNPAID INTEREST ON THE REVOLVING
CREDIT LOANS (INCLUDING LOANS UNDER THE ACCOMMODATION FACILITY);
(iv) FOURTH, TO CASH COLLATERALIZE ALL REIMBURSEMENT OBLIGATIONS,
INCLUDING 102% OF THE FACE AMOUNT OF ALL OUTSTANDING LETTERS OF
CREDIT;
(v) FIFTH, TO REPAY THE REVOLVING CREDIT LOANS (OTHER THAN UNDER THE
ACCOMMODATION FACILITY) WHICH ARE BASE RATE LOANS;
(vi) SIXTH, TO REPAY THE REVOLVING CREDIT LOANS (OTHER THAN UNDER
THE ACCOMMODATION FACILITY) WHICH ARE LIBOR LOANS;
(vii) SEVENTH, TO REPAY ALL OTHER OBLIGATIONS DUE AND OWING TO THE
AGENTS AND THE BANKS (OTHER THAN THE ACCOMMODATION BANKS UNDER THE
ACCOMMODATION FACILITY) UNDER THE LOAN DOCUMENTS;
(viii) EIGHTH, TO REPAY THE REVOLVING CREDIT LOANS WHICH ARE
OUTSTANDING UNDER THE ACCOMMODATION FACILITY;
(ix) NINTH, TO PAY ANY EARLY TERMINATION FEE AND ALL OTHER
OBLIGATIONS DUE AND OWING TO THE ACCOMMODATION BANKS UNDER THE LOAN
DOCUMENTS; AND
(ix) TENTH, TO THE BORROWER'S OPERATING ACCOUNTS.
(l) The first paragraph of Section 5.9 (c) of the Agreement is
hereby amended and restated as follows:
(c) PRIOR TO THE OCCURRENCE OF AN EVENT OF DEFAULT, ALL FUNDS
TRANSFERRED TO THE CONCENTRATION ACCOUNTS AND ANY AMOUNTS REQUIRED
TO BE REPAID PURSUANT TO SECTION 5.9(b)(i) SHALL BE APPLIED TO THE
OBLIGATIONS AS FOLLOWS:
(A) FIRST, TO PAY ALL FEES AND EXPENSES THEN DUE AND PAYABLE UNDER
THIS CREDIT AGREEMENT (INCLUDING FEES AND EXPENSES FOR CASH
MANAGEMENT, BUT EXCLUDING ANY EARLY TERMINATION FEE);
(B) SECOND, TO PAY ALL PERMITTED OVERADVANCES, PLUS ALL ACCRUED AND
UNPAID INTEREST THEREON;
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(C) THIRD, TO PAY ALL ACCRUED AND UNPAID INTEREST ON THE REVOLVING
CREDIT LOANS (INCLUDING LOANS UNDER THE ACCOMMODATION FACILITY);
(D) FOURTH, BUT ONLY IN THE CASE OF A REQUIRED REPAYMENT PURSUANT TO
SECTION 5.9(b)(i), TO CASH COLLATERALIZE ALL REIMBURSEMENT
OBLIGATIONS, INCLUDING 102% OF THE FACE AMOUNT OF ALL OUTSTANDING
LETTERS OF CREDIT;
(E) FIFTH, TO REPAY REVOLVING CREDIT LOANS (OTHER THAN UNDER THE
ACCOMMODATION FACILITY) WHICH ARE BASE RATE LOANS;
(F) SIXTH, TO REPAY REVOLVING CREDIT LOANS (OTHER THAN UNDER THE
ACCOMMODATION FACILITY) WHICH ARE LIBOR LOANS;
(G) SEVENTH, TO REPAY ALL OTHER OBLIGATIONS DUE AND OWING TO THE
AGENTS AND THE BANKS (OTHER THAN THE ACCOMMODATION BANKS UNDER THE
ACCOMMODATION FACILITY) UNDER THE LOAN DOCUMENTS;
(H) EIGHTH, TO REPAY REVOLVING CREDIT LOANS WHICH ARE OUTSTANDING
UNDER THE ACCOMMODATION FACILITY;
(I) NINTH, TO PAY ANY EARLY TERMINATION FEE AND ALL OTHER
OBLIGATIONS DUE AND OWING TO THE ACCOMMODATION BANKS UNDER THE LOAN
DOCUMENTS; AND
(J) TENTH, TO THE BORROWER'S OPERATING ACCOUNTS.
(m) Section 5.10 of the Agreement is hereby amended and restated as
follows:
5.10 REPAYMENTS OF LOANS AND DISTRIBUTION OF COLLATERAL PROCEEDS
AFTER EVENT OF DEFAULT. IN THE EVENT THAT FOLLOWING THE OCCURRENCE
AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, THE COLLATERAL
AGENT, ANY OTHER AGENT OR ANY BANK, AS THE CASE MAY BE, RECEIVES ANY
MONIES, WHETHER PURSUANT TO SECTION 4.4(c), SECTION 8.14 OR SECTION
13.4 OR OTHERWISE WITH RESPECT TO THE REALIZATION UPON ANY OF THE
COLLATERAL, SUCH MONIES SHALL BE DISTRIBUTED FOR APPLICATION AS
FOLLOWS (THE BORROWER HEREBY AUTHORIZING AND CONSENTING TO SUCH
APPLICATION):
(a) FIRST, TO THE PAYMENT OF, OR (AS THE CASE MAY BE) THE
REIMBURSEMENT OF THE AGENTS FOR OR IN RESPECT OF ALL REASONABLE
COSTS, EXPENSES, DISBURSEMENTS AND LOSSES WHICH SHALL HAVE BEEN
INCURRED OR SUSTAINED BY THE AGENTS IN CONNECTION WITH THE
COLLECTION OF SUCH MONIES BY THE AGENTS, FOR THE EXERCISE,
PROTECTION OR ENFORCEMENT BY THE COLLATERAL AGENT OF ALL OR ANY OF
THE RIGHTS, REMEDIES, POWERS AND PRIVILEGES OF THE COLLATERAL AGENT,
FOR THE BENEFIT OF THE AGENTS AND THE BANKS, UNDER THIS CREDIT
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR IN RESPECT OF THE
COLLATERAL, INCLUDING, WITHOUT LIMITATION, THE FEES AND EXPENSES OF
COUNSEL TO THE AGENTS AND SPECIAL COUNSEL TO ANY ACCOMMODATION BANK
THAT IS NOT ITSELF THE AGENT, OR IN SUPPORT OF ANY PROVISION OF
ADEQUATE INDEMNITY TO THE AGENTS AGAINST ANY TAXES OR LIENS WHICH BY
LAW SHALL HAVE, OR MAY HAVE, PRIORITY OVER THE RIGHTS OF THE AGENTS
TO SUCH MONIES;
(b) SECOND, TO PAY ALL PERMITTED OVERADVANCES, PLUS ALL ACCRUED AND
UNPAID INTEREST THEREON;
(c) THIRD, TO PAY ALL ACCRUED AND UNPAID INTEREST ON THE REVOLVING
CREDIT LOANS (INCLUDING LOANS UNDER THE ACCOMMODATION FACILITY);
(d) FOURTH, TO CASH COLLATERALIZE ALL REIMBURSEMENT OBLIGATIONS,
INCLUDING 102% OF THE FACE AMOUNT OF ALL OUTSTANDING LETTERS OF
CREDIT;
8
(e) FIFTH, TO REPAY THE REVOLVING CREDIT LOANS (OTHER THAN UNDER THE
ACCOMMODATION FACILITY) WHICH ARE BASE RATE LOANS;
(f) SIXTH, TO REPAY THE REVOLVING CREDIT LOANS (OTHER THAN UNDER THE
ACCOMMODATION FACILITY) WHICH ARE LIBOR LOANS;
(g) SEVENTH, TO REPAY ALL OTHER OBLIGATIONS DUE AND OWING TO THE
AGENTS AND THE BANKS (OTHER THAN THE ACCOMMODATION BANKS UNDER THE
ACCOMMODATION FACILITY) UNDER THE LOAN DOCUMENTS;
(h) EIGHTH, TO REPAY THE REVOLVING CREDIT LOANS WHICH ARE
OUTSTANDING UNDER THE ACCOMMODATION FACILITY;
(i) NINTH, TO PAY ANY EARLY TERMINATION FEE AND ANY OTHER
OBLIGATIONS DUE AND OWING TO THE ACCOMMODATION BANKS UNDER THE LOAN
DOCUMENTS;
(j) TENTH, UPON PAYMENT AND SATISFACTION IN FULL OR OTHER PROVISIONS
FOR PAYMENT IN FULL SATISFACTORY TO EACH OF THE BANKS AND THE AGENTS
OF ALL OF THE OBLIGATIONS, TO THE PAYMENT OF ANY UNPAID OBLIGATIONS
REQUIRED TO BE PAID PURSUANT TO SECTION 9-615(a) OF THE UNIFORM
COMMERCIAL CODE OF THE STATE OF ILLINOIS; AND
(k) ELEVENTH, THE EXCESS, IF ANY, SHALL BE RETURNED TO THE BORROWER
OR TO SUCH OTHER PERSONS AS ARE ENTITLED THERETO.
ALL DISTRIBUTIONS IN RESPECT OF (i) SUCH OBLIGATIONS SHALL BE MADE
PARI PASSU AMONG OBLIGATIONS WITH RESPECT TO THE AGENTS' FEES
PAYABLE PURSUANT TO SECTION 5.12, AND ALL OTHER OBLIGATIONS AND (ii)
OBLIGATIONS OWING TO THE BANKS WITH RESPECT TO EACH TYPE OF
OBLIGATION UNDER EACH OF THE CATEGORIES SPECIFIED ABOVE SUCH AS
INTEREST, PRINCIPAL, FEES AND EXPENSES, SHALL BE MADE AMONG THE
BANKS ENTITLED THERETO PRO RATA, IN ACCORDANCE WITH THEIR RESPECTIVE
COMMITMENT PERCENTAGES (OR IN THE CASE OF THE ACCOMMODATION BANKS,
IN ACCORDANCE WITH THEIR RESPECTIVE SHARE OF THE ACCOMMODATION
FACILITY COMMITMENT AMOUNT); AND PROVIDED, FURTHER, THAT THE AGENTS
MAY IN THEIR DISCRETION MAKE PROPER ALLOWANCE TO TAKE INTO ACCOUNT
ANY OBLIGATIONS NOT THEN DUE AND PAYABLE.
(n) The clause "No more frequently than once each calendar year or
more frequently as determined by the Agents if an Event of Default shall have
occurred and be continuing," in the first sentence of Section 8.9.2 of the
Agreement is hereby deleted. The clause "the Borrower will obtain and deliver to
the Administrative Agent " contained in the first sentences of Sections 8.9.2
and 8.9.3 of the Agreement is hereby deleted and replaced with the clause "the
Administrative Agent shall obtain."
(o) Section 10.1 of the Agreement is hereby amended and restated to
read as follows:
10.1 FIXED CHARGE COVERAGE RATIO. THE BORROWER SHALL NOT PERMIT ITS
FIXED CHARGE COVERAGE RATIO (AS DEFINED BELOW), FOR THE TRAILING TWELVE
MONTH PERIOD TESTED AS OF THE LAST DAY OF EACH OF THE MONTHS LISTED BELOW,
TO BE LOWER THAN THE CORRESPONDING "MINIMUM RATIO" SET FORTH IN THE CHART
BELOW. FOR PURPOSES HEREIN, "FIXED CHARGE COVERAGE RATIO" IS DEFINED AS
THE RATIO OF (a) THE SUM OF (i) CONSOLIDATED EBITDA FOR SUCH PERIOD PLUS
(ii) CONSOLIDATED MINIMUM STORE RENT FOR SUCH PERIOD TO (b) THE SUM OF (i)
CONSOLIDATED MINIMUM STORE RENT FOR SUCH PERIOD PLUS (ii) CONSOLIDATED
CASH INTEREST EXPENSE FOR SUCH PERIOD. NOTWITHSTANDING THE FOREGOING,
SOLELY FOR PURPOSES OF CALCULATING CONSOLIDATED EBITDA IN THE FIXED CHARGE
COVERAGE RATIO, THE BORROWER MAY EXCLUDE (i) ANY CASH OR NON-CASH CHARGES
ARISING FROM THE APPLICATION OF THE FINANCIAL ACCOUNTING
9
STANDARD BOARD'S STATEMENT NO. 5, (ii) UPON WRITTEN APPROVAL OF THE
ADMINISTRATIVE AGENT, A DEDUCTION FOR CASH AND NON-CASH EXPENSES INCURRED
BY THE BORROWER FOR LEGAL, ACCOUNTING AND CONSULTANT'S FEES AND EXPENSES
ARISING FROM THE CAPITAL FACTORS LAWSUIT AND THE RESULTING SEC INQUIRY AND
THE U.S. ATTORNEY INVESTIGATION ASSOCIATED THEREWITH, AND (iii) INCLUDE
ANY STATE OR FEDERAL INCOME TAX REFUND RECEIVED IN CASH BY THE BORROWER
DURING THE SUBJECT PERIOD.
MONTH MINIMUM RATIO
- ----- -------------
APRIL 2005 - OCTOBER 2005 0.75:1.00
NOVEMBER 2005 0.80:1.00
DECEMBER 2005 AND AT ALL TIMES THEREAFTER 1.00:1.00
(p) Section 10.2 of the Agreement is hereby amended and restated to
read as follows:
10.2 MINIMUM ACCOUNTS PAYABLE. THE BORROWER SHALL HAVE
ACCOUNTS PAYABLE FOR THE MONTHS SET FORTH BELOW, CALCULATED ON A MONTHLY
BASIS COMMENCING APRIL 2005, AND TESTED AS OF THE LAST DAY OF THE MONTH
AND REPORTED ON THE MONTHLY BORROWING BASE REPORT, OF AT LEAST THE
CORRESPONDING AMOUNTS SET FORTH IN THE CHART BELOW:
END OF MONTH MINIMUM ACCOUNTS PAYABLE
- --------------- ------------------------
APRIL, 2005 $45,800,000
MAY, 2005 $43,200,000
JUNE, 2005 $39,200,000
JULY, 2005 $38,700,000
AUGUST, 2005 $39,000,000
SEPTEMBER, 2005 $40,900,000
OCTOBER, 2005 $51,300,000
NOVEMBER, 2005 $52,100,000
DECEMBER, 2005 $36,400,000
JANUARY, 2006 AND AT ALL TIMES $39,400,000
THEREAFTER
(q) A new Section 10.3 and a new Section 10.4 are hereby added to
the Agreement to read as follows:
10.3 CAPITAL EXPENDITURES. THE BORROWER SHALL NOT PERMIT ITS
CAPITAL EXPENDITURES TO BE MORE THAN $5,500,000 FOR ANY FISCAL YEAR.
10.4. MINIMUM BORROWING AVAILABILITY. THE BORROWER SHALL NOT
PERMIT ITS BORROWING AVAILABILITY UNDER THE BORROWING BASE TO BE LESS THAN
THE MINIMUM EXCESS AVAILABILITY AT ANY TIME.
(r) Section 16 of the Agreement is hereby amended by the addition of
the following sentence before the last sentence thereof :
"THE FOREGOING SHALL ALSO BE FOR THE BENEFIT OF EACH
ACCOMMODATION BANKS AND THE BORROWER AGREES TO PAY ALL SUCH COSTS
AND EXPENSES OF EACH OF THE ACCOMMODATION BANKS, INCLUDING THE FEES
AND EXPENSES OF ONE SPECIAL COUNSEL TO ANY ACCOMMODATION BANK THAT
IS NOT ITSELF THE AGENT."
(s) Article 19 of the Agreement is hereby amended by the addition of
a new Section 19.10 to read as follows:
10
19.10 THE INITIAL ACCOMMODATION BANKS (LASALLE AND BACK BAY)
AGREE THAT, EXCEPT IN THE CASE OF A BUYOUT AND REPLACEMENT OF A
"NON-CONSENTING BANK" PURSUANT TO SECTION 26 OF THIS AGREEMENT: SO LONG AS
BACK BAY HOLDS ITS ENTIRE INITIAL INTEREST IN THE LOANS UNDER THE
ACCOMMODATION FACILITY FOR ITS OWN ACCOUNT, LASALLE (OR AN AFFILIATE OF
LASALLE) SHALL AT ALL TIMES CONTINUE TO HOLD ITS ENTIRE INITIAL INTEREST
IN THE LOANS UNDER THE ACCOMMODATION FACILITY FOR ITS OWN ACCOUNT; SO LONG
AS LASALLE HOLDS ITS ENTIRE INITIAL INTEREST IN THE LOANS UNDER THE
ACCOMMODATION FACILITY FOR ITS OWN ACCOUNT, BACK BAY (OR AN AFFILIATE OF
BACK BAY) SHALL AT ALL TIMES CONTINUE TO HOLD ITS ENTIRE INITIAL INTEREST
IN THE LOANS UNDER THE ACCOMMODATION FACILITY FOR ITS OWN ACCOUNT.
(t) The second sentence of Section 26 is hereby amended by adding
the following at the end thereof.
"(g) THE DEFINITIONS OF "RESERVES" AND SECTIONS 2.12, 8.9.2,
8.9.3, 10.1, 10.2, 10.3, 15.9, 16 AND ARTICLE 13 OF THE LOAN
AGREEMENT MAY NOT BE AMENDED OR WAIVED WITHOUT THE CONSENT OF THE
REQUIRED BANKS AND EACH ACCOMMODATION BANK, (h) SECTION 19.10 OF THE
LOAN AGREEMENT MAY NOT BE AMENDED OR WAIVED WITHOUT THE CONSENT OF
EACH ACCOMMODATION BANK, (i) THE DEFINITIONS OF "APPRAISED (GOB)
PERCENTAGE OF ELIGIBLE INVENTORIES," "BORROWING AVAILABILITY,"
"BORROWING BASE," "MINIMUM EXCESS AVAILABILITY," "REQUIRED
AVAILABILITY RESERVE," "REVOLVING LOAN BORROWING BASE," "TOTAL
COMMITMENT" AND "TOTAL REVOLVER COMMITMENT" (AND ALL OTHER COMPONENT
TERMS OF THE FOREGOING) AND SECTIONS 2.1, 5.8, 5.9, 5.10 AND 10.4 OF
THE LOAN AGREEMENT MAY NOT BE AMENDED OR WAIVED WITHOUT THE CONSENT
OF ALL OF THE BANKS AND EACH OF THE ACCOMMODATION BANKS, (j) NO
RESERVE ESTABLISHED BY THE ADMINISTRATIVE AGENT MAY BE REDUCED OR
ELIMINATED WITHOUT THE CONSENT OF ALL OF THE BANKS AND EACH OF THE
ACCOMMODATION BANKS (OTHER THAN THE FIELD EXAMINATION RESERVE WHICH
MAY ONLY BE REDUCED OR ELIMINATED WITH THE CONSENT OF EACH
ACCOMMODATION BANK) AND (k) THIS SECTION 26 OF THE LOAN AGREEMENT
MAY NOT BE AMENDED OR WAIVED WITHOUT THE CONSENT OF THE REQUIRED
BANKS AND EACH ACCOMMODATION BANK, PROVIDED, THAT PROVISIONS OF THIS
SECTION 26 PROVIDING FOR THE CONSENT OF ALL BANKS AND EACH OF THE
ACCOMMODATION BANKS MAY NOT BE AMENDED OR WAIVED WITHOUT THE CONSENT
OF ALL BANKS AND EACH OF THE ACCOMMODATION BANKS AND PROVIDED,
FURTHER THAT , PARAGRAPH (h) OF THIS SECTION 26 PROVIDING FOR THE
CONSENT OF EACH OF THE ACCOMMODATION BANKS MAY NOT BE AMENDED OR
WAIVED WITHOUT THE CONSENT OF EACH OF THE ACCOMMODATION BANKS."
(u) Section 26 of the Agreement is hereby amended by adding the
following two paragraphs at the end thereof:
IF ANY ACTION TO BE TAKEN HEREUNDER REQUIRES THE CONSENT,
AUTHORIZATION, OR AGREEMENT OF EACH ACCOMMODATION BANK, AND AN
ACCOMMODATION BANK (THE "NON-CONSENTING BANK") FAILS TO GIVE ITS
CONSENT, AUTHORIZATION, OR AGREEMENT AND BUT FOR SUCH FAILURE TO
GIVE SUCH CONSENT, AUTHORIZATION OR AGREEMENT, THE ACTION WOULD BE
HAVE BEEN APPROVED TO BE TAKEN, THEN THE ADMINISTRATIVE AGENT, UPON
AT LEAST 5 BUSINESS DAYS PRIOR IRREVOCABLE NOTICE TO THE
NON-CONSENTING BANK, MAY PERMANENTLY REPLACE THE NON-CONSENTING BANK
WITH ONE OR MORE SUBSTITUTE ACCOMMODATION BANKS (EACH, A
"REPLACEMENT BANK"), AND THE NON-CONSENTING BANK SHALL HAVE NO RIGHT
TO REFUSE TO BE REPLACED HEREUNDER. SUCH NOTICE TO REPLACE THE
NON-CONSENTING BANK SHALL SPECIFY AN EFFECTIVE DATE FOR SUCH
REPLACEMENT, WHICH DATE SHALL NOT BE LATER THAN 12 BUSINESS DAYS
AFTER THE DATE SUCH NOTICE IS GIVEN. NOTWITHSTANDING THE DELIVERY BY
THE ADMINISTRATIVE AGENT OF NOTICE TO THE NON-CONSENTING BANK THAT A
REPLACEMENT BANK IS TO BE SUBSTITUTED IN THE PLACE OF THE
NON-CONSENTING BANK, IF THE NON-CONSENTING BANK DOES IN FACT
THEREAFTER PROVIDE ITS EXPRESS WRITTEN CONSENT TO THE SUBJECT ACTION
PRIOR TO THE DATE THAT THE NON-CONSENTING BANK HAS ACTUALLY BEEN
REPLACED BY A REPLACEMENT BANK, THEN THE NOTICE TO REPLACE THE
NON-CONSENTING BANK SHALL BE DEEMED OF NO FURTHER FORCE AND EFFECT
AND THE PREVIOUSLY DESIGNATED NON-CONSENTING BANK SHALL REMAIN AS AN
ACCOMMODATION BANK.
11
PRIOR TO THE EFFECTIVE DATE OF SUCH REPLACEMENT, THE NON-CONSENTING
BANK AND EACH REPLACEMENT BANK SHALL EXECUTE AND DELIVER AN
ASSIGNMENT AND ACCEPTANCE AGREEMENT, SUBJECT ONLY TO THE
NON-CONSENTING BANK BEING REPAID ITS SHARE OF THE OUTSTANDING
ACCOMMODATION FACILITY OBLIGATIONS (INCLUDING AN ALLOCABLE PORTION
(SUCH PORTION TO BE DETERMINED BASED ON THE RELATIVE PORTION OF THE
ACCOMMODATION FACILITY COMMITMENT AMOUNT ADVANCED BY THE
NON-CONSENTING BANK) OF THE EARLY TERMINATION FEE TO THE EXTENT IT
IS RECEIVED BY THE ACCOMMODATION BANKS) WITHOUT ANY PREMIUM OR
PENALTY OF ANY KIND WHATSOEVER. IN THE EVENT THE CONDITIONS TO THE
PAYMENT OF THE EARLY TERMINATION FEE ARE SATISFIED, THE REPLACEMENT
BANK SHALL USE REASONABLE EFFORTS TO COLLECT SUCH EARLY TERMINATION
FEE. IF THE NON-CONSENTING BANK SHALL REFUSE OR FAIL TO EXECUTE AND
DELIVER ANY SUCH ASSIGNMENT AND ACCEPTANCE AGREEMENT PRIOR TO THE
EFFECTIVE DATE OF SUCH REPLACEMENT, THE NON-CONSENTING BANK SHALL BE
DEEMED TO HAVE EXECUTED AND DELIVERED SUCH ASSIGNMENT AND ACCEPTANCE
AGREEMENT. THE REPLACEMENT OF ANY NON-CONSENTING BANK SHALL BE MADE
IN ACCORDANCE WITH THE TERMS OF SECTION 19.
(v) Schedule 1 to the Agreement setting forth the Commitments and
Commitment Percentages with respect to the Banks is hereby deleted and replaced
with the Schedule attached hereto as Schedule 1. All references in the Agreement
to the terms "Commitment" and "Commitment Percentage" shall refer to such terms
as modified to give effect to the loans advanced under the Accommodation
Facility.
(w) The definition of the term "Borrowing Availability" is hereby
amended and restated to read as follows:
""BORROWING AVAILABILITY." FOR ANY PERIOD OF DETERMINATION, AN
AMOUNT EQUAL TO THE BORROWING BASE MINUS THE OUTSTANDING FACILITY
AMOUNTS."
(x) Section 2.5 of the Agreement is hereby amended and restated to
read as follows:
""INTEREST ON REVOLVING CREDIT LOANS." EXCEPT AS OTHERWISE PROVIDED
IN SECTIONS 5.21 AND 2.12, THE REVOLVING CREDIT LOANS SHALL BEAR
INTEREST IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.1 HEREOF."
(y) The lead-in clause of Section 5.1 of the Agreement is hereby
amended and restated to read as follows:
"INTEREST ON LOANS. EXCEPT AS OTHERWISE PROVIDED IN SECTIONS 5.21
AND 2.12,"
(z) Section 5.7(a) of the Agreement is hereby amended (i) by the
addition of the clause "Except as provided in Section 2.12," at the beginning of
the first sentence thereof and (ii) by the addition of the clause "Subject to
Sections 5.8.3, 5.9(c) and 5.10 hereof," at the beginning of the last sentence
thereof.
(aa) Section 2.10 of the Agreement is hereby amended by deleting the
reference to "Section 7.7 hereof" therein and replacing it with "Section 5.7
hereof."
(bb) The definition of the term "Maturity Date" in the Agreement is
hereby amended and restated to read as follows:
""MATURITY DATE." JULY 31, 2006."
12
(cc) The definition of the term "LIBOR Applicable Margin" is hereby
amended and restated to read as follows:
""LIBOR APPLICABLE MARGIN." AT ALL TIMES, THREE PERCENT (3.00%).
(dd) Schedule A to the Agreement (Borrowing Base Report) is hereby
deleted and replaced with the Schedule attached hereto as Schedule A (Borrowing
Base Report).
(ee) Section 13.1 of the Agreement is amended by the addition of the
following sentence at the end thereof:
"EACH ACCOMMODATION BANK SHALL HAVE THE RIGHT, EXERCISABLE AT ANY
TIME AFTER 60 DAYS FOLLOWING AN EVENT OF DEFAULT ARISING FROM THE BREACH BY THE
BORROWER OF THE COVENANT CONTAINED IN SECTION 10.4 BY NOTICE TO THE
ADMINISTRATIVE AGENT, TO DIRECT THE ADMINISTRATIVE AGENT TO DECLARE ALL AMOUNTS
OWING WITH RESPECT TO THIS CREDIT AGREEMENT, THE NOTES AND THE OTHER LOAN
DOCUMENTS AND ALL REIMBURSEMENT OBLIGATIONS IMMEDIATELY DUE AND PAYABLE."
(ff) Section 13.2 of the Agreement is amended by the addition of the
following sentence at the end thereof:
"EACH ACCOMMODATION BANK SHALL HAVE THE RIGHT, EXERCISABLE AT ANY
TIME AFTER 60 DAYS FOLLOWING AN EVENT OF DEFAULT ARISING FROM THE BREACH BY THE
BORROWER OF THE COVENANT CONTAINED IN SECTION 10.4 BY NOTICE TO THE
ADMINISTRATIVE AGENT, TO DIRECT THE ADMINISTRATIVE AGENT TO NOTIFY THE BORROWER
TO TERMINATE THE UNUSED PORTION OF THE CREDIT UNDER THIS CREDIT AGREEMENT."
(gg) Section 13.3 of the Agreement is amended by the addition of the
following sentence at the end thereof:
"EACH ACCOMMODATION BANK SHALL HAVE THE RIGHT, EXERCISABLE AT ANY
TIME AFTER (i) 60 DAYS FOLLOWING AN EVENT OF DEFAULT ARISING FROM THE BREACH BY
THE BORROWER OF THE COVENANT CONTAINED IN SECTION 10.4 OR (ii) THE OCCURRENCE OF
AN EVENT OF DEFAULT SPECIFIED IN SECTIONS 13.1(g) OR 13.1 (h), TO PROCEED (OR BY
NOTICE TO THE ADMINISTRATIVE AGENT TO DIRECT THE ADMINISTRATIVE AGENT TO SO
PROCEED) TO PROTECT AND ENFORCE ITS RIGHTS BY SUIT IN EQUITY, ACTION AT LAW, OR
OTHER APPROPRIATE PROCEEDING , WHETHER FOR THE SPECIFIC PERFORMANCE OF ANY
COVENANT OR AGREEMENT CONTAINED IN THIS CREDIT AGREEMENT AND THE OTHER LOAN
DOCUMENTS OR ANY INSTRUMENT PURSUANT TO WHICH THE OBLIGATIONS ARE EVIDENCED,
INCLUDING AS PERMITTED BY APPLICABLE LAW THE OBTAINING OF THE EX PARTE
APPOINTMENT OF A RECEIVER, AND IF SUCH AMOUNT SHALL HAVE BECOME DUE, BY
DECLARATION OR OTHERWISE, PROCEED TO ENFORCE THE PAYMENT THEREOF OR ANY OTHER
LEGAL OR EQUITABLE RIGHT OF AGENTS AND BANKS."
3. Assignments. Effective as of April 6, 2005, (i) ABN AMRO Bank N.V.
is selling and assigning to LaSalle a $1,875,000 interest in and to the rights,
benefits, indemnities and obligations of ABN AMRO Bank N.V. under the Agreement
equaling one and one half percent (1.5%) of the Total Revolver Commitment, (ii)
JPMorgan Chase Bank, N.A. is selling and assigning to LaSalle a $1,875,000
interest in and to the rights, benefits, indemnities and obligations of JPMorgan
Chase Bank, N.A. under the Agreement equaling one and one half percent (1.5%) of
the Total Revolver Commitment, (iii) Fleet Retail Group, Inc. is selling and
assigning to LaSalle a $1,875,000 interest in and to the rights, benefits,
indemnities and obligations of Fleet Retail Group, Inc. under the Agreement
equaling one and one half percent (1.5%) of the Total Revolver Commitment, (iv)
Sovereign Bank is selling and assigning to LaSalle a $1,875,000 interest in and
to the rights, benefits, indemnities and obligations of Sovereign Bank under the
Agreement equaling one and one half percent (1.5%) of the Total
13
Revolver Commitment, and (v) LaSalle is selling and assigning to Back Bay a
$7,500,000 interest in and to the rights, benefits, indemnities and obligations
of LaSalle under the Agreement equaling six percent (6.0%) of the Total Revolver
Commitment (the foregoing, collectively, the "Assignments"). Each of the Banks,
the Agents and the Borrower hereby (i) consents to the Assignments, (ii) waives
with respect to the Assignments the requirements of Section 19 of the Agreement
requiring assignments to be in an amount of at least $5,000,000, (iii) agrees
that notwithstanding the provisions of Section 19, the Assignments shall be
effective as of April 6, 2005 and (iv) agrees that notwithstanding the
provisions of the Agreement, Back Bay shall be deemed an "Eligible Assignee" for
purposes of the Agreement.
4. Representations, Warranties and Covenants. The representations and
warranties set forth in Section 7 and all covenants set forth in Sections 8, 9
and 10 of the Agreement shall be deemed remade and affirmed as of the date
hereof by the Borrower, except any and all references to the Agreement in such
representations, warranties and covenants shall be deemed to include this
Amendment.
5. Payment of Fee; Delivery of Documents/Information. Prior to entering
into this Amendment, the Administrative Agent shall have received from the
Borrower (i) an amendment fee in the amount of $100,000.00 for the ratable
benefit of the Banks (excluding those Banks that are Accommodation Banks)(the
Administrative Agent being hereby authorized by the Borrower to make a Revolving
Credit Loan to pay such fee), and (ii) each of the following fully executed
documents, in form and substance satisfactory to Administrative Agent and each
Bank, and all of the transactions contemplated by each such document shall have
been consummated or each condition contemplated by each such document shall have
been satisfied:
(a) This Amendment;
(b) Secretary's Certificate of the Borrower with resolutions and
incumbency; and
(c) A Borrowing Base report dated April 1, 2005 confirming that the
Borrower had Borrowing Availability as of such date in an amount not less than
$20,000,000.00;
(d) The duly executed Accommodation Facility Letter Agreement, along
with the Commitment Fee and the Collateral Monitoring Fee specified therein;
(e) The Borrower's February, 2005 month end financial statements and
financial reporting, as required pursuant to the Loan Agreement, and
(f) Such other documents, certificates and opinions as
Administrative Agent may request.
6. On or before April 22, 2005, the Borrower shall deliver to the
Administrative Agent the annual financial statements of the Borrower required by
Section 8.4(a) of the Agreement for the fiscal year ended January 31, 2005,
certified without qualification by the Borrower's independent public
accountants.
7. Reference to the Effect on the Agreement.
14
(a) References. Upon the date of this Amendment and on and after the
date hereof, each reference in the Agreement to "this Agreement," "hereunder,"
"hereof," "herein" or words of like import shall mean and be a reference to the
Agreement, as amended hereby.
(b) Ratification. As specifically modified above, the Agreement and
all other documents, instruments and agreements executed and/or delivered in
connection therewith shall remain in full force and effect, and are hereby
ratified and confirmed.
8. Representations and Warranties of the Borrower. The Borrower hereby
represents and warrants to Administrative Agent and the Banks as of the date
hereof as follows:
(a) The execution and delivery of this Amendment and the performance
by Borrower of its obligations hereunder are within the Borrower's powers and
authority, have been duly authorized by all necessary corporate action and do
not and will not contravene or conflict with the Certificate of Incorporation or
By-laws of the Borrower;
(b) The Agreement (as amended by this Amendment) and the other Loan
Documents constitute legal, valid and binding obligations enforceable in
accordance with their terms by the Administrative Agent and the Banks against
the Borrower, and the Borrower expressly reaffirms each of its obligations under
the Agreement (as amended by this Amendment) and each of the other Loan
Documents, including, without limitation, the Borrower's Obligations. The
Borrower further expressly acknowledges and agrees that Administrative Agent has
a valid, duly perfected, first priority and fully enforceable security interest
in and lien against each item of Collateral except as otherwise set forth in the
Agreement. The Borrower agrees that it shall not dispute the validity or
enforceability of the Agreement (as it was stated before and after this
Amendment) or any of the other Loan Documents or any of its respective
obligations thereunder, or the validity, priority, enforceability or extent of
Administrative Agent's security interest in or lien against any item of
Collateral, in any judicial, administrative or other proceeding;
(c) No consent, order, qualification, validation, license, approval
or authorization of, or filing, recording, registration or declaration with, or
other action in respect of, any governmental body, authority, bureau or agency
or other Person is required in connection with the execution, delivery or
performance of, or the legality, validity, binding effect or enforceability of,
this Amendment; and
(d) The execution, delivery and performance of this Amendment by the
Borrower does not and will not violate any law, governmental regulation,
judgment, order or decree applicable to the Borrower and does not and will not
violate the provisions of, or constitute a default or any event of default
under, or result in the creation of any security interest or lien upon any
property of the Borrower pursuant to, any indenture, mortgage, instrument,
contract, agreement or other undertaking to which the Borrower is a party or is
subject or by which the Borrower or any of its real or personal property may be
bound.
(e) The Borrower hereby acknowledges and agrees that there is no
basis nor set of facts on which any amount (or any portion thereof) owed by the
Borrower under the Loan Documents could be reduced, offset, waived, or forgiven,
by rescission or otherwise; nor is there
15
any claim, counterclaim, offset, or defense (or other right, remedy, or basis
having a similar effect) available to the Borrower with regard thereto; nor is
there any basis on which the terms and conditions of any of the Obligations
could be claimed to be other than as stated on the written instruments which
evidence such Obligations.
(f) The Borrower hereby acknowledges and agrees that it has no
offsets, defenses, claims, or counterclaims against the Administrative Agent or
the Banks, or their respective parents, affiliates, predecessors, successors, or
assigns, or their respective officers, directors, employees, attorneys, or
representatives, with respect to the Obligations, or otherwise, and that if the
Borrower now has, or ever did have, any offsets, defenses, claims, or
counterclaims against the Administrative Agent or the Banks, or their respective
parents, affiliates, predecessors, successors, or assigns, or their respective
officers, directors, employees, attorneys, or representatives, whether known or
unknown, at law or in equity, from the beginning of the world through this date
and through the time of execution of this Amendment, all of them are hereby
expressly WAIVED, and the Borrower hereby RELEASES the Administrative Agent and
the Banks, and their respective officers, directors, employees, attorneys,
representatives, affiliates, predecessors, successors, and assigns from any
liability therefor.
9. Fees and Expenses. (a) The Borrower agrees to pay on demand all
costs, fees and expenses of or incurred by the Administrative Agent in
connection with the evaluation, negotiation, preparation, execution and delivery
of this Amendment and the other instruments and documents executed and delivered
in connection with the transactions described herein (including the filing or
recording thereof), including, but not limited to, the reasonable fees and
expenses of counsel for the Administrative Agent, search fees, the reasonable
fees and expenses of counsel to Back Bay and taxes payable in connection with
this Amendment and any future amendments to the Agreement.
(b) In the event that after the date of this Amendment, the Banks (other
than the Accommodation Banks) become entitled to any increase in the interest
rate payable on the Revolving Loans held by such Banks or any additional or
increased fees payable to such Banks, the Accommodation Banks shall be entitled
to a corresponding proportional (based on the total amount of all Revolving
Loans outstanding) increase in the interest rate or additional fee or increased
fee payable to the Accommodation Banks, as the case may be.
10. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
16
(THIRD AMENDMENT TO SECOND AMENDED AND RESTATED REVOLVING CREDIT AND
GOLD CONSIGNMENT AGREEMENT SIGNATURE PAGE)
IN WITNESS WHEREOF, the parties hereto have duly executed this Third
Amendment to Second Amended and Restated Revolving Credit and Gold Consignment
Agreement as of the date first above written.
WHITEHALL JEWELLERS, INC.
By: /s/ John R. Desjardins
------------------------------------
Name: John R. Desjardins
Title: Chief Financial Officer
LASALLE BANK NATIONAL
ASSOCIATION, for itself as a Bank and an
Accommodation Bank and as
Administrative Agent for the Banks
By: /s/ Robert Barnhard
------------------------------------
Name: Robert Barnhard
Title: Senior Vice President, Group Head
JPMORGAN CHASE BANK, NATIONAL
ASSOCIATION, individually and as
Documentation Agent
By: /s/ Irene B. Spector
------------------------------------
Name: Irene B. Spector
Title: Vice President
ABN AMRO BANK N.V., individually and
as Syndication Agent
By: /s/ Jeffrey Sarfaty
------------------------------------
Name: Jeffrey Sarfaty
Title: Vice President
By: /s/ Frederick G. Jennings
------------------------------------
Name: Frederick Jennings
Title: Vice President
(THIRD AMENDMENT TO SECOND AMENDED AND RESTATED REVOLVING CREDIT AND
GOLD CONSIGNMENT AGREEMENT SIGNATURE PAGE, CONTINUED)
FLEET RETAIL GROUP, INC., as a Bank
By: /s/ Christine Hutchinson
----------------------------
Name: Christine Hutchinson
Title: Vice President
SOVEREIGN BANK, as a Bank
By: /s/ Irene A. Ogarek
----------------------------
Name: Irene A. Ogarek
Title: Vice President
BACK BAY CAPITAL FUNDING LLC, as
a Bank and an Accommodation Bank
By: /s/ Kristan O'Connor
----------------------------
Name: Kristan O'Connor
Title: Managing Director