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Exhibit 10.6G
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
BETWEEN
WILLIAMS-SONOMA, INC.
AND
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
DATED MARCH 29, 1996
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TABLE OF CONTENTS
1. FACILITY NO. 1: LINE OF CREDIT FOR ADVANCES............................ 1
1.1 Line of Credit Amount......................................... 1
1.2 Availability Period........................................... 1
1.3 Interest Rate................................................. 1
1.4 Repayment Terms............................................... 2
1.5 Optional Interest Rates....................................... 2
1.6 Offshore Rate................................................. 2
2. FACILITY NO. 2: LETTER OF CREDIT FACILITY.............................. 4
2.1 Letters of Credit............................................. 4
2.2 Amount........................................................ 4
2.3 Other Terms................................................... 4
3. FEES AND EXPENSES...................................................... 5
3.1 Fees.......................................................... 5
3.2 Expenses...................................................... 5
4. DISBURSEMENTS, PAYMENTS AND COSTS...................................... 6
4.1 Requests for Credit........................................... 6
4.2 Disbursements and Payments.................................... 6
4.3 Telephone Authorization....................................... 6
4.4 Direct Debit.................................................. 6
4.5 Banking Days.................................................. 7
4.6 Taxes......................................................... 7
4.7 Additional Costs.............................................. 7
4.8 Interest Calculation.......................................... 8
4.9 Default Rate.................................................. 8
5. CONDITIONS............................................................. 8
5.1 Authorizations................................................ 8
5.2 Insurance..................................................... 8
5.3 Guaranties.................................................... 8
5.4 Other Items................................................... 8
6. REPRESENTATIONS AND WARRANTIES......................................... 8
6.1 Organization of Borrower...................................... 8
6.2 Authorization................................................. 9
6.3 Enforceable Agreement......................................... 9
6.4 Good Standing................................................. 9
6.5 No Conflicts.................................................. 9
6.6 Financial Information......................................... 9
6.7 Lawsuits...................................................... 9
6.8 Permits, Franchises........................................... 9
6.9 No Event of Default........................................... 9
6.10 ERISA Plans................................................... 10
6.11 Location of Borrower.......................................... 10
7. CONVENANTS............................................................. 10
7.1 Use of Proceeds............................................... 11
7.2 Financial Information......................................... 11
7.3 Adjusted Tangible Net Worth................................... 11
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7.4 Debt to Tangible Net Worth...................................... 12
7.5 Fixed Charge Coverage Ratio..................................... 12
7.6 Additional Subordinated Debt.................................... 13
7.7 Other Debts..................................................... 13
7.8 Other Liens..................................................... 14
7.9 Capital Expenditures............................................ 15
7.10 Dividends....................................................... 17
7.11 Out of Debt Period.............................................. 17
7.12 Notices to Bank................................................. 17
7.13 Books and Records............................................... 17
7.14 Audits.......................................................... 18
7.15 Compliance with Laws............................................ 18
7.16 Preservation of Rights.......................................... 18
7.17 Maintenance of Properties....................................... 18
7.18 Cooperation..................................................... 18
7.19 Insurance....................................................... 18
7.20 Additional Negative Covenants................................... 19
7.21 ERISA Plans..................................................... 19
8. DEFAULT.................................................................. 20
8.1 Failure to Pay.................................................. 20
8.2 False Information............................................... 20
8.3 Bankruptcy...................................................... 20
8.4 Receivers....................................................... 20
8.5 Lawsuits........................................................ 21
8.6 Judgments....................................................... 21
8.7 Government Action............................................... 21
8.8 Material Adverse Change......................................... 21
8.9 Cross-default................................................... 21
8.10 Default under Guaranty or Subordination Agreement............... 21
8.11 Other Bank Agreements........................................... 21
8.12 ERISA Plans..................................................... 21
8.13 Default of Certain Covenants.................................... 22
8.14 Other Breach Under Agreement.................................... 22
9. ENFORCING THIS AGREEMENT; MISCELLANEOUS.................................. 22
9.1 GAAP............................................................ 22
9.2 California Law.................................................. 22
9.3 Successors and Assigns.......................................... 22
9.4 Arbitration..................................................... 23
9.5 Severability; Waivers........................................... 25
9.6 Costs........................................................... 25
9.7 Attorneys' Fees................................................. 25
9.8 One Agreement................................................... 25
9.9 Notices......................................................... 26
9.10 Headings........................................................ 26
9.11 Counterparts.................................................... 26
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
This Agreement dated as of March 29, 1996, is between Bank of America
National Trust and Savings Association (the "Bank") and Williams-Sonoma, Inc.
(the "Borrower"), and amends and restates in its entirety the Amended and
Restated Credit Agreement dated October 13, 1994, as previously amended.
1. FACILITY NO. 1: LINE OF CREDIT FOR ADVANCES
1.1 Line of Credit Amount.
(a) During the availability period described below, the Bank
will provide a line of credit to the Borrower. The maximum amount of
principal which may be outstanding under this Facility 1 at any time
plus the amount of letters of credit and shipside bonds outstanding
under Facility No. 2 (including the drawn and unreimbursed amounts of
the letters of credit) shall not exceed the amounts specified below (the
"Facility 1 Commitment"):
Period Commitment Amount
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From the date of this
Agreement through 05/06/96 $90,000,000
05/07/96 through 07/01/96 $75,000,000
07/02/96 through 12/23/96 $90,000,000
12/24/96 through the Expiration Date $60,000,000
(b) In addition, the principal amount of advances
outstanding under this Facility No. 1 shall not exceed the following:
Period Advances Amount
------ ---------------
From the date of this
Agreement through 05/06/96 $80,000,000
05/07/96 through 07/01/96 $55,000,000
07/02/96 through 12/23/96 $75,000,000
12/24/96 through the Expiration Date $35,000,000
(c) This is a revolving line of credit for advances. During
the availability period, the Borrower may repay principal amounts and
reborrow them.
(d) Each advance must be for at least One Hundred Thousand
Dollars ($100,000), or for the amount of the remaining available line of
credit, if less.
1.2 Availability Period. The line of credit is available between
the date of this Agreement and March 27, 1997 (the "Expiration Date") unless
the Borrower is in default.
1.3 Interest Rate. Unless the Borrower elects an optional interest
rate as described below, the interest rate is
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the Bank's Reference Rate plus seventy-five one-hundredths of one (0.75)
percentage point; provided, however, that upon fulfillment of the requirements
of Paragraph 7.6 below, the interest rate shall be reduced to the Reference
Rate plus twenty-five one-hundredths (0.25) of one percentage point. The
Reference Rate is the rate of interest publicly announced from time to time by
the Bank in San Francisco, California, as its Reference Rate. The Reference
Rate is set by the Bank based on various factors, including the Bank's costs
and desired return, general economic conditions and other factors, and is used
as a reference point for pricing some loans. The Bank may price loans to its
customers at, above, or below the Reference Rate. Any change in the Reference
Rate shall take effect at the opening of business on the day specified in the
public announcement of a change in the Bank's Reference Rate.
1.4 Repayment Terms.
(a) The Borrower will pay interest on the first day of each
month until payment in full of any principal outstanding under this line
of credit.
(b) The Borrower will repay in full all principal and any
unpaid interest or other charges outstanding under this line of credit
no later than the Expiration Date.
1.5 Optional Interest Rates.
(a) Instead of the interest rate based on the Bank's
Reference Rate, the Borrower may elect to have all or portions of the
line of credit bear interest at the following rate during an interest
period agreed to by the Bank and the Borrower: the Offshore Rate plus
one and one-half (1.50) percentage points; provided, however, that upon
fulfillment of the requirements of Paragraph 7.6 below, the interest
rate shall be reduced to the Offshore Rate plus one (1.0) percentage
point.
(b) Each interest rate is a rate per year. Interest will be
paid on the first day of every month and on the last day of each
interest period. At the end of any interest period, the interest rate
will revert to the rate based on the Reference Rate, unless the Borrower
has designated another optional interest rate for the portion.
1.6 Offshore Rate. Designation of an Offshore Rate portion is
subject to the following requirements:
(a) The interest period during which the Offshore Rate will
be in effect will be no longer than one year. The last day of the
interest period will be determined by the Bank using the practices of
the offshore dollar inter-bank market.
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(b) Each Offshore Rate portion will be for an amount not
less than Five Hundred Thousand Dollars ($500,000) for interest periods
of 30 days or longer. For shorter maturities, each Offshore Rate portion
will be for an amount which, when multiplied by the number of days in
the applicable interest period, is not less than fifteen million
(15,000,000) dollar-days.
(c) The "Offshore Rate" means the interest rate determined
by the following formula, rounded upward to the nearest 1/100 of one
percent. (All amounts in the calculation will be determined by the Bank
as of the first day of the interest period.)
Grand Cayman Rate
Offshore Rate = ---------------------------
(1.00 - Reserve Percentage)
Where,
(i) "Grand Cayman Rate" means the interest rate
(rounded upward to the nearest 1/16th of one percent) at which
the Bank's Grand Cayman Branch, Grand Cayman, British West
Indies, would offer U.S. dollar deposits for the applicable
interest period to other major banks in the offshore dollar
inter-bank market.
(ii) "Reserve Percentage" means the total of the
maximum reserve percentages for determining the reserves to be
maintained by member banks of the Federal Reserve System for
Eurocurrency Liabilities, as defined in Federal Reserve
Board Regulation D, rounded upward to the nearest 1/100 of one
percent. The percentage will be expressed as a decimal, and will
include, but not be limited to, marginal, emergency,
supplemental, special, and other reserve percentages.
(d) The Borrower may not elect an Offshore Rate with respect
to any portion of the principal balance of the line of credit which is
scheduled to be repaid before the last day of the applicable interest
period.
(e) Any portion of the principal balance of the line of
credit already bearing interest at the Offshore Rate will not be
converted to a different rate during its interest period.
(f) Each prepayment of an Offshore Rate portion, whether
voluntary, by reason of acceleration or otherwise, will be accompanied
by the amount of accrued interest on the amount prepaid, and a
prepayment fee equal to the amount (if any) by which
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(i) the additional interest which would have been
payable on the amount prepaid had it not been paid until the
last day of the interest period, exceeds
(ii) the interest which would have been recoverable
by the Bank by placing the amount prepaid on deposit in the
offshore dollar market for a period starting on the date on
which it was prepaid and ending on the last day of the interest
period for such portion.
(g) The Bank will have no obligation to accept an election
for an Offshore Rate portion if any of the following described events
has occurred and is continuing:
(i) Dollar deposits in the principal amount, and for
periods equal to the interest period, of an Offshore Rate
portion are not available in the offshore Dollar inter-bank
market; or
(ii) the Offshore Rate does not accurately reflect
the cost of an Offshore Rate portion.
2. FACILITY NO. 2: LETTER OF CREDIT FACILITY
2.1 Letters of Credit. At the request of the Borrower, between the
date of this Agreement and the Expiration Date, the Bank will issue for the
account of the Borrower commercial and standby letters of credit and shipside
bonds. Each letter of credit shall have a maximum term no longer than one year.
In addition, each letter of credit shall have a maximum maturity not to extend
beyond March 27, 1998. Each commercial letter of credit will require drafts
payable at sight.
2.2 Amount. In addition to the restrictions stated in paragraph
1.1(a), the amount of the letters of credit and shipside bonds outstanding at
any one time (including the drawn and unreimbursed amounts of the letters of
credit) may not exceed Twenty-Five Million Dollars ($25,000,000) (the "Letter
of Credit Sublimit"). As a further restriction, the amount of standby letters
of credit outstanding at any one time (including the drawn and unreimbursed
amounts of the standby letters of credit) may not exceed Four Million Dollars
($4,000,000). The amount of shipside bonds outstanding at any one time may not
exceed Fifth Thousand Dollars ($50,000).
2.3 Other Terms. The Borrower agrees:
(a) any sum owed to the Bank under a letter of credit or
shipside bond may, at the option of the Bank, be added to the principal
amount outstanding under Facility 1 of this Agreement. The amount will
bear interest and be due as described elsewhere in this Agreement. In
addition, if
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credit is available under Facility 1, the Borrower may request an
advance thereunder to repay the amount owed under the letter of credit,
if the Bank has not theretofore exercised the above-mentioned option.
(b) if the Bank declares an Event of Default under this
Agreement, the Borrower shall, upon demand, prepay and make the Bank
whole for any outstanding letters of credit and shipside bonds.
(c) the issuance of any letter of credit, any amendment to a
letter of credit and any shipside bond is subject to the Bank's written
approval and must be in form and content reasonably satisfactory to the
Bank and in favor of a beneficiary reasonably acceptable to the Bank.
(d) to sign the Bank's application, security agreement and
other standard forms for letters of credit and shipside bonds, and to
pay any issuance and/or other fees that the Bank notifies the Borrower
will be charged for issuing and processing letters of credit and
shipside bonds for the Borrower; provided, however, that certain fees
are set forth on Exhibit A attached hereto.
(e) to allow the Bank to automatically charge its checking
account for applicable fees, discounts, and other charges.
(f) to pay the Bank a non-refundable fee equal to one
percent (1.0%) per annum of the outstanding undrawn amount of each
standby letter of credit, payable annually in advance, calculated on the
basis of the face amount outstanding on the day the fee is calculated.
3. FEES AND EXPENSES
3.1 Fees. Periodic fee. The Borrower agrees to pay a fee, on the
first day of each calendar quarter, equal to fifteen one-hundredths of one
percent (0.15%) per annum of the weighted average, during the quarter, of the
difference of the Facility 1 Commitment minus the Letter of Credit Sublimit,
payable in advance. This fee is due on the first day of each calendar quarter
until the Expiration Date (including any extended Expiration Date).
3.2 Expenses. The Borrower agrees to reimburse the Bank for any
reasonable expenses it incurs in the preparation of this Agreement and any
agreement or instrument required by this Agreement. Expenses include, but are
not limited to, reasonable attorneys' fees, including any allocated costs of
the Bank's in-house counsel.
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4. DISBURSEMENTS, PAYMENTS AND COSTS
4.1 Requests for Credit. Each request for an extension of credit will
be made in writing in a manner acceptable to the Bank, or by another means
acceptable to the Bank.
4.2 Disbursements and Payments. Each disbursement by the Bank and
each payment by the Borrower will be:
(a) made at the Bank's San Francisco Regional Commercial Banking
Office, or other location reasonably selected by the Bank from time to
time after not less than 15 days prior written notice to the Borrower;
(b) made for the account of the Bank's branch selected by the
Bank from time to time;
(c) made in immediately available funds;
(d) evidenced by records kept by the Bank, absent manifest
error. In addition, the Bank may, at its discretion, require the
Borrower to sign one or more promissory notes to evidence the
obligations hereunder, which notes shall be expressly subject to the
terms of this Agreement.
4.3 Telephone Authorization.
(a) The Bank may honor telephone instructions for advances or
repayments or for the designation of optional interest rates given by
any one of the individual signer(s) of this Agreement or a person or
persons authorized by any one of the signer(s) of this Agreement.
(b) Advances will be deposited in and repayments will be
withdrawn from the Borrower's account number 14999-01347, or such other
accounts with the Bank as designated in writing by the Borrower.
(c) The Borrower indemnifies and excuses the Bank (including its
officers, employees, and agents) from all liability, loss, and costs in
connection with any act resulting from telephone instructions it
reasonably believes are made by a signer of this Agreement or a person
authorized by a signer; provided, however, that the Bank shall not be
indemnified for its own gross negligence or willful misconduct. This
indemnity and excuse will survive this Agreement's termination.
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4.4 Direct Debit.
(a) The Borrower agrees that interest and any fees
will be deducted automatically on the due date from checking account
number 14999-01347.
(b) The Bank will debit the account on the dates
the payments become due. If a due date does not fall on a banking
day, the Bank will debit the account on the first banking day
following the due date.
(c) The Borrower will maintain sufficient funds in the
account on the dates the Bank enters debits authorized by this
Agreement. If there are insufficient funds in the account on the date
the Bank enters any debit authorized by this Agreement, the debit will
be reversed.
4.5 Banking Days. Unless otherwise provided in this Agreement, a
banking day is a day other than a Saturday or a Sunday on which the Bank is open
for business in California. For amounts bearing interest at an offshore rate (if
any), a banking day is a day other than a Saturday or a Sunday on which the Bank
is open for business in California and dealing in offshore dollars. All payments
and disbursements which would be due on a day which is not a banking day will be
due on the next banking day. All payments received on a day which is not a
banking day will be applied to the credit on the next banking day.
4.6 Taxes. The Borrower will not deduct any taxes from any payments
it makes to the Bank. If any government authority imposes any taxes or charges
on any payments made by the Borrower, the Borrower will pay the taxes or
charges. Upon request by the Bank, the Borrower will confirm that it has paid
the taxes by giving the Bank official tax receipts (or notarized copies) within
30 days after the due date. However, the Borrower will not pay the Bank's net
income taxes.
4.7 Additional Costs. The Borrower will pay the Bank, on written
demand, for the Bank's costs or losses arising from any statute or regulation,
or any request or requirement of a regulatory agency which is applicable to all
national banks or a class of all national banks, including the Bank. The written
demand shall set forth in reasonable detail the basis for the demand and the
calculations used by the Bank. The costs and losses will be allocated to the
loan in a manner determined by the Bank, using any reasonable method. The costs
included the following:
(a) any reserve or deposit requirements; and
(b) any capital requirements relating to the Bank's
assets and commitments for credit.
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4.8 Interest Calculation. Except as otherwise stated in this
Agreement, all interest and fees, if any, will be computed on the basis of a
360-day year and the actual number of days elapsed. This results in more
interest or a higher fee than if a 365-day year is used.
4.9 Default Rate. Upon the occurrence and during the continuation
of any Event of Default under this Agreement, principal amounts outstanding
under this Agreement will at the option of the Bank bear interest at a rate per
annum which is one (1) percentage point higher than the rate of interest
otherwise provided under this Agreement. This will not constitute a waiver of
any default. Installments of principal which are not paid when due under this
Agreement shall continue to bear interest until paid. Any interest, fees or
costs which are not paid when due shall bear interest at the Bank's Reference
Rate plus one (1) percentage point. This may result in compounding of interest.
5. CONDITIONS
The Bank must receive the following items, in form and content
acceptable to the Bank, before it is required to extend any credit to the
Borrower under this Agreement:
5.1 Authorizations. Evidence that the execution, delivery and
performance by the Borrower and each guarantor or subordinating creditor of this
Agreement and any instrument or agreement required under this Agreement have
been duly authorized.
5.2 Insurance. Evidence of insurance coverage, as required in the
"Covenants" section of this Agreement.
5.3 Guaranties. Guaranties signed by Williams-Sonoma Stores, Inc.;
Pottery Barn East, Inc.; Gardener's Eden, Inc.; Chambers Catalog Company, Inc.;
and Hold Everything, Inc., each in the amount of One Hundred Twenty Million
Dollars ($120,000,000).
5.4 Other Items. Any other items that the Bank reasonably
requires.
6. REPRESENTATIONS AND WARRANTIES
The Borrower makes the following representations and warranties. Each
request for an extension of credit constitutes a renewed representation that:
6.1 Organization of Borrower. The Borrower is a corporation duly
formed and existing under the laws of its state of incorporation.
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6.2 Authorization. This Agreement, and any instrument or agreement
required hereunder, are within the Borrower's powers, have been duly
authorized, and do not conflict with any of its organizational papers.
6.3 Enforceable Agreement. This Agreement is a legal, valid and
binding agreement of the Borrower, enforceable against the Borrower in
accordance with its terms, and any instrument or agreement required hereunder,
when executed and delivered, will be similarly legal, valid, binding and
enforceable.
6.4 Good Standing. In each state in which the Borrower does business,
it is properly licensed, in good standing, and, where required, in compliance
with fictitious name statutes, in each instance where failure to comply will
have a material adverse effect on the business of the Borrower and the
guarantors taken as a whole.
6.5 No Conflicts. This Agreement does not conflict with any law,
material agreement or obligation by which the Borrower is bound.
6.6 Financial Information. All financial and other information that
has been or will be supplied to the Bank has been or will be prepared in
accordance with GAAP and presents or will present fairly the financial
condition of the Borrower or any applicable guarantor, subject, however, to
year-end adjustments.
6.7 Lawsuits. The Borrower has no knowledge of any lawsuit, tax claim
or other dispute pending or threatened against the Borrower which, if lost,
would impair the Borrower's financial condition or ability to repay the loan,
except as have been disclosed in writing to the Bank including, without
limitation, disclosure in the financial statements of the Borrower.
6.8 Permits, Franchises. The Borrower possesses all permits,
memberships, franchises, contracts and licenses required and all trademark
rights, trade name rights, patent rights and fictitious name rights necessary
to enable it to conduct the business in which it is now engaged, provided that
any failure by the Borrower to have any of the foregoing rights, licenses
and/or privileges shall not constitute a breach of this representation and
warranty if such failure would not materially impact the ability of Borrower to
repay the credit provided under this Agreement.
6.9 No Event of Default. No event has occurred and is continuing or
would result from the extension of credit under this Agreement which
constitutes or would constitute an Event of Default.
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6.10 ERISA Plans.
(a) The Borrower has fulfilled its obligations, if any, under
the minimum funding standards of ERISA and the Code with respect to
each Plan and is in compliance in all material respects with the
presently applicable provisions of ERISA and the Code, and has not
incurred any liability with respect to any Plan under Title IV of
ERISA.
(b) No reportable event has occurred under Section 4043(c) of
ERISA for which the PBGC requires 30 day notice.
(c) No action by the Borrower to terminate or withdraw from any
Plan has been taken and no notice of intent to terminate a Plan has
been filed under Section 4041 of ERISA.
(d) No proceeding has been commenced with respect to a Plan under
Section 4042 of ERISA, and no event has occurred or condition exists
which might constitute grounds for the commencement of such a
proceeding.
(e) The following terms have the meanings indicated for
purposes of this Agreement:
(i) "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
(ii) "ERISA" means the Employee Retirement Income Act of
1974, as amended from time to time.
(iii) "PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA.
(iv) "Plan" means any employee pension benefit plan
maintained or contributed to by the Borrower and insured by the
Pension Benefit Guaranty Corporation under Title IV of ERISA.
6.11 Location of Borrower. The Borrower's place of business (or, if
the Borrower has more than one place of business, its chief executive office)
is located at the address listed under the Borrower's signature on this
Agreement, unless otherwise indicated by the Borrower in a notice to the Bank
pursuant to paragraph 9.9 of this Agreement.
7. COVENANTS
The Borrower agrees, so long as credit is available under this
Agreement and until the Bank is repaid in full, unless the Bank waives
compliance in writing:
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7.1 Use of Proceeds. To use the credit provided under this Agreement
only to finance seasonal inventory growth and a portion of the Borrower's
capital expenditures program; facilitate the Borrower's merchandise importation
program; and obtain letters of credit in the ordinary course of business.
7.2 Financial Information. To provide the following financial
information and statements and such additional information as requested by the
Bank from time to time:
(a) Within 120 days of the Borrower's fiscal year end, the
Borrower's annual financial statements. The financial statements shall
include at least the Borrower's balance sheet, statement of income and
retained earnings and statement of cash flow. These financial statements
must be audited (with an unqualified opinion) by a Certified Public
Accountant ("CPA") acceptable to the Bank. The statements shall be
prepared on a consolidated basis and shall include operating statements
reflecting the profitability of each of the Borrower's and guarantors'
business divisions, substantially in the form previously supplied by the
Borrower to the Bank (the "Operating Statements"). The statements shall
be accompanied by a copy of the Borrower's Form 10-K as filed with the
Securities and Exchange Commission.
(b) Within 60 days after the end of each fiscal quarter of the
Borrower:
(i) Copies of the Borrower's Form 10-Q Quarterly
Report; and
(ii) A compliance certificate substantially in the
form set forth on Exhibit B attached hereto, executed by any
of the Chief Executive Officer, President, Chief Administrative
Officer or Chief Financial Officer of the Borrower.
(c) Within 30 days of each month's end, the Borrower's monthly
financial statements. These financial statements may be Borrower
prepared. The statements shall be prepared on a consolidated basis and
shall include the Operating Statements.
(d) As soon as available, copies of all management letters or
reports and any other reports submitted to the Borrower by the
Borrower's CPA.
7.3 Adjusted Tangible Net Worth. To maintain on a consolidated basis,
as of each date indicated below, Adjusted Tangible Net Worth, exclusive of the
proceeds of any stock sold by the Borrower after the date of this Agreement and
exclusive of
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the proceeds of the conversion of any debt to stock, equal to at least the
amounts indicated for each date specified below:
Date Amount
---- ------
04/28/96 $115,000,000
07/28/96 113,000,000
10/27/96 113,000,000
12/29/96 133,000,000
"Tangible Net Worth" means the gross book value of the Borrower's assets
(excluding Intangibles and monies due from affiliates, officers, directors or
shareholders of the Borrower) less total liabilities, including but not limited
to accrued and deferred income taxes, and any reserves against assets.
"Intangibles" means goodwill, patents, trademarks, favorable lease rights,
trade names, organization expense, treasury stock, unamortized debt discount
and expense, deferred research and development costs, deferred marketing
expenses (not including any prepaid catalog expenses), and other like
intangibles. "Adjusted Tangible Net Worth" shall be equal to Tangible Net
Worth, except that the amount of Intangibles shall be assumed to be One Million
Five Hundred Thousand Dollars ($1,500,000).
7.4 Debt to Tangible Net Worth. To maintain on a consolidated basis,
as of each date indicated below, a ratio of total liabilities to Tangible Net
Worth, as defined above (exclusive of the proceeds of any stock sold by the
Borrower after the date of this Agreement and exclusive of the proceeds of the
conversion of any debt to stock) not exceeding the amounts indicated for each
date specified below:
Date Ratio
---- -----
04/28/96 1.95:1
07/28/96 2.35:1
10/27/96 2.65:1
12/29/96 1.85:1
"Total liabilities" means the sum of current liabilities plus long term
liabilities, including (a) the amount of tax credits booked by the Borrower as
negative liabilities; (b) deferred lease incentives; and (c) subordinated debt.
7.5 Fixed Charge Coverage Ratio. To maintain on a consolidated basis
as of the end of each fiscal quarter a Fixed Charge Coverage Ratio of at least
the amount indicated below:
Period Ending Ratio
------------- -----
4/28/96 1.15:1
7/28/96 1.15:1
10/27/96 1.25:1
2/2/97 1.25:1
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"Fixed Charge Coverage Ratio" means the ratio of Adjusted EBIT to the sum of
positive income tax expense, interest expense, rent expense and the current
portion of long-term liabilities. "Adjusted EBIT" means the sum of net income,
plus income taxes, plus interest expense, depreciation, amortization (excluding
amortization of deferred lease incentives), and rent expense; provided,
however, that income taxes will be added to net income only to the extent that
they were deducted in determining net income. This ratio will be calculated at
the end of each fiscal quarter, using the results of that quarter and each of
the 3 immediately preceding quarters. The current portion of long term
liabilities will be measured as of the quarter end and will, for the purposes
of this covenant, exclude outstandings under Facility 1. For purposes of this
paragraph, "rent expense" shall include, but not be limited to, operating lease
expense, minimum rent, deferred lease rent, percentage rent, offsite storage,
and other rent and lease expense.
7.6 Additional Subordinated Debt. To obtain, no later than May 6,
1996, not less than Thirty Eight Million Dollars ($38,000,000) net cash
proceeds from the sale of stock or the issuance of a loan subordinated to the
Borrower's obligations to the Bank. The terms and conditions of such loan must
be reasonably acceptable to the Bank.
7.7 Other Debts. Not to have outstanding or incur (and not permit any
guarantor to have outstanding or incur) any direct or contingent debts or
capital lease obligations (excluding real property leases and excluding
obligations to the Bank), or become liable for the debts of others without the
Bank's written consent. This does not prohibit:
(a) Acquiring goods, supplies, or merchandise on normal trade
credit terms.
(b) Endorsing negotiable instruments received in the ordinary
course of business.
(c) Obtaining or executing surety bonds or other similar
undertakings in the ordinary course of business.
(d) Debts, lines of credit and leases in existence on the date
of this Agreement disclosed in writing to the Bank including, without
limitation, any disclosure in the financial statements of the
Borrower; and including the existing privately placed unsecured senior
term loan in the initial principal amount of up to Forty Million
Dollars ($40,000,000), due August 8, 2005 (the "Private Placement").
(e) Guaranties by Williams-Sonoma Stores, Inc.; The Pottery
Barn East, Inc.; Gardener's Eden, Inc.; Hold Everything, Inc.; and
Chambers Catalog
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17
Company, Inc., of the obligations of the Borrower under the Private
Placement.
(f) The subordinated loan referred to in Paragraph 7.6 above.
7.8 Other Liens. Not to create, assume, or allow any security
interest or lien (including judicial liens) on property the Borrower or any
guarantor now or later owns, except:
(a) Liens for taxes not yet delinquent.
(b) Liens outstanding on the date of this Agreement disclosed
in writing to the Bank, including, without limitation, any disclosure
in the financial statements of the Borrower.
(c) Liens in favor of the Bank.
(d) Cash collateral and security deposits provided in
connection with operating lease obligations incurred to finance the
acquisition of fixed assets (excluding real property and excluding
security deposits with utility companies); provided that the amount of
such collateral and security deposits must not exceed Three Million
Dollars ($3,000,000) at any time.
(e) liens for property taxes and assessments or governmental
charges for levies and liens securing claims or demands of mechanics
and materialmen, provided that payment thereof is not at the time
delinquent.
(f) liens of or resulting from any judgment or award, the time
for the appeal or petition for rehearing of which shall not have
expired, or in respect of which Borrower or a guarantor shall at the
time in good faith be prosecuting an appeal or proceeding for a review
and in respect of which a stay of execution pending such appeal or
proceeding for review shall have been secured within 30 days after the
entry of such judgment or award.
(g) liens incidental to the conduct of business or the
ownership of properties and assets (including liens in connection with
worker's compensation, unemployment insurance and other like laws,
warehousemen's and attorneys' liens and statutory landlords' liens) and
liens to secure the performance of bids, tenders or trade contracts, or
to secure statutory obligations, surety or appeal bonds or other liens
of like general nature and not incurred in connection with the borrowing
of money, provided in each case, the obligation secured is not overdue
or, if overdue, is being contested in good faith by appropriate actions
or proceedings.
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(h) survey and title exceptions, encumbrances, easements,
encroachments, covenants or reservations, or rights of others for
rights-of-way, utilities and other similar purposes, or zoning or other
restrictions as to the use of real properties, which do not in any event
materially impair their use in the operation of the business of the
Borrower and the guarantors.
(i) unperfected liens arising by operation of law under Article
2 of the Uniform Commercial Code in favor of unpaid sellers or prepaying
buyers of goods relating to amounts that are not past due in accordance
with their respective terms of sale.
7.9 Capital Expenditures. Not to exceed the following limits with
regard to Capital Expenditures, measured in the aggregate for the Borrower and
all guarantors. "Capital Expenditures" means amounts spent or obligations
incurred to acquire fixed assets consisting of either real or personal
property. If a fixed asset consisting of personal property is obtained through
an operating lease or capital lease, then the purchase price of the fixed asset
shall be considered a Capital Expenditure in the accounting period in which the
asset is first acquired. Leases of real property and capitalized interest shall
not be included as Capital Expenditures. "Landlord Allowance" means a cash
payment received or to be received from a landlord for leasehold improvements.
The limits are as follows:
(a) Capital Expenditures to be made during the fiscal year
ending February 2, 1997, with respect to capital projects that will be
completed during the fiscal year ending February 2, 1997 shall not
exceed Thirty Million Dollars ($30,000,000) in the aggregate. In
calculating the amount of Capital Expenditures for this subparagraph (a)
only, the following shall apply:
(i) There will be excluded from the amount of Capital
Expenditures an amount up to Five Million Dollars ($5,000,000)
with respect to fixed assets acquired through operating leases.
(ii) Amounts expended on or before January 28, 1996
(not exceeding Six Million Four Hundred Thousand Dollars
($6,400,000) will not be included in the calculation of Capital
Expenditures.
(iii) The amount of the Capital Expenditure for a
particular net fixed asset which is replacing an existing asset
will be reduced by the amount which is realized by the Borrower
from disposing of the old asset (including the amount of the
original stated value of the old asset, if the asset was
obtained through an operating lease which is being cancelled);
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provided that the Capital Expenditure shall not be reduced to
less than zero.
(iv) The amount of Landlord Allowances with respect to
a particular fixed asset will be deducted from the amount of the
Capital Expenditure for such asset.
(v) A limit on Capital Expenditures to be made during
the fiscal year ending January 31, 1998, has not yet been agreed
upon between the Bank and the Borrower. However, it is the
intention of the parties that if the Borrower does not use the
entire Thirty Million Dollars ($30,000,000) of Capital
Expenditures permitted by this paragraph (a) for the fiscal year
ending February 2, 1997, then up to Four Million Dollars
($4,000,000) of the unused portion will be carried forward into
the next fiscal year, and the limitation for that fiscal year to
be agreed between the Bank and the Borrower is intended to
reflect such amount carried forward. Nothing in this paragraph
shall be deemed to be a commitment to renew this Agreement past
the Expiration Date.
(b) During the two fiscal quarters ending July 28, 1996, the
Borrower shall not commit to Capital Expenditures to be incurred during
the fiscal year ending January 31, 1998 that exceed Eleven Million
Dollars ($11,000,000) in the aggregate. In calculating the amount of
Capital Expenditures for this subparagraph (b) only, the following shall
apply:
(i) The amount of the Capital Expenditure will not be
reduced by the amount received on disposing of an old asset.
(ii) The amount of Landlord Allowances with respect to
a particular fixed asset will be deducted from the amount of the
Capital Expenditure for such asset.
(c) Capital Expenditures to be made during the fiscal year
ending February 2, 1997, with respect to capital projects that will be
completed during the fiscal year ending January 31, 1998, shall not
exceed Eleven Million Dollars ($11,000,000) in the aggregate. In
calculating the amount of Capital Expenditures for this subparagraph (c)
only, the following shall apply:
(i) The amount of the Capital Expenditure will not be
reduced by the amount received on disposing of an old asset.
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(ii) The amount of Landlord Allowances with respect
to a particular fixed asset will not be deducted from the amount
of the Capital Expenditure for such asset.
7.10 Dividends. Not to declare or pay any dividends on any of its
shares, and not to purchase, redeem or otherwise acquire for value any of its
shares, except:
(a) dividends payable in its capital stock; and
(b) the Borrower may purchase stock from its employees for a
consideration not exceeding Two Million Dollars ($2,000,000) in the
aggregate during any fiscal year.
7.11 Out of Debt Period. The Borrower shall have no advances
(excluding the undrawn amount of letters of credit) outstanding under Facility
1 for a period of at least 30 consecutive days during the 75 day period from
December 16 through February 28 of each year.
7.12 Notices to Bank. To promptly notify the Bank in writing upon
becoming aware of:
(a) the commencement of any lawsuit where the amount
claimed is over One Million Dollars ($1,000,000) against the
Borrower or any guarantor.
(b) any substantial dispute between the Borrower or any
guarantor and any government authority, the adverse determination of
which would materially impair the Borrower's or any guarantor's
financial condition or ability to repay its obligations under this
Agreement or any guaranty pursuant hereto.
(c) any Event of Default or an event which with notice or
lapse of time, or both, would become an Event of Default.
(d) any material adverse change in the Borrower's or any
guarantor's financial condition or operations.
(e) any change in the Borrower's name, legal structure,
place of business, or chief executive office if the Borrower has more
than one place of business;
(f) any default under any obligation for borrowed money, any
purchase money obligation or any other material lease, commitment,
contract, instrument or obligation.
7.13 Books and Records. To maintain adequate books and records for
the Borrower and guarantors on a consolidated basis.
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7.14 Audits. To allow the Bank and its agents to inspect the
Borrower's and each guarantor's property and examine, audit and make copies of
books and records at any reasonable time during normal business hours and upon
reasonable prior written notice. If any of the Borrower's or guarantor's
properties, books or records are in the possession of a third party, the
Borrower authorizes that third party (not including Borrower's or guarantor's
attorneys) to permit the Bank or its agents to have access to perform
inspections or audits and to respond to the Bank's requests for information
concerning such properties, books and records, provided the Bank notifies the
Borrower before any such inspections and offers the Borrower an opportunity to
be present at such inspections.
7.15 Compliance with Laws. To comply (and cause each guarantor to
comply) with the laws (including any fictitious name statute), regulations, and
orders of any government body with authority over the Borrower's or such
guarantor's business and which are applicable to the Borrower's or such
guarantor's business, and where failure to comply would result in a material
adverse change in Borrower's and the guarantor's financial condition, operations
or ability to repay the obligations under this Agreement.
7.16 Preservation of Rights. To maintain and preserve all rights,
privileges, and franchises the Borrower and each guarantor now has which are
necessary for the conduct of Borrower's or guarantor's business; provided that
any failure by the Borrower or any guarantor to have any of the foregoing
rights, licenses and/or privileges shall not constitute a breach of this
representation and warranty if such failure would not materially impact the
collective ability of Borrower and the guarantors to repay the credit provided
under this Agreement.
7.17 Maintenance of Properties. To make any repairs, renewals, or
replacements to keep the Borrower's and each guarantor's properties in good
working condition subject, however, to the limitations on Capital Expenditures
in this Agreement.
7.18 Cooperation. To take any action reasonably requested by the
Bank to carry out the provisions of this Agreement.
7.19 Insurance.
(a) General Business Insurance. To maintain (and cause
each guarantor to maintain) insurance as is usual for the business it
is in.
(b) Evidence of Insurance. Upon the request of the Bank,
to deliver to the Bank a copy of each insurance
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policy, or, if permitted by the Bank, a certificate of insurance
listing all insurance in force.
7.20 Additional Negative Covenants. Not to, (and not permit any
guarantor to), without the Bank's written consent:
(a) engage in any business activities substantially
different from the Borrower's or any guarantor's present business.
(b) liquidate or dissolve the Borrower's or any guarantor's
business.
(c) enter into any consolidation, merger, pool, joint
venture, syndicate, or other combination, except within the consolidated
group of the Borrower and the guarantors, provided that with respect to
any such consolidation or merger involving the Borrower, the Borrower
shall be the surviving entity.
(d) lease, dispose of all or a substantial part of the
Borrower's or any guarantor's business or the Borrower's or any
guarantor's assets except (i) in the ordinary course of business; (ii)
obsolete or worn out assets or assets no longer used or useful in the
business of the Borrower or any guarantor; and (iii) an additional
aggregate amount not exceeding One Million Dollars ($1,000,000) per
fiscal year in the aggregate for the Borrower and all guarantors
disposed in arm's length transactions.
(e) acquire or purchase a business or its assets.
(f) enter into any sale and leaseback agreement covering any
of its fixed or capital assets; provided, however, that Borrower and
guarantors may enter into sale and leaseback transactions with an
aggregate consideration not exceeding One Million Dollars ($1,000,000)
per fiscal year.
(g) voluntarily suspend its business for more than 4 days
in any 30-day period.
(h) make any prepayment under any subordinated indebtedness
or the Private Placement except with the consent of the Bank; or agree
to any material amendment of any such subordinated indebtedness or the
Private Placement.
7.21 ERISA Plans. To give prompt written notice to the Bank of:
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(a) The occurrence of any reportable event under Section
4043(c) of ERISA for which the PBGC requires 30 day notice.
(b) Any action by the Borrower to terminate or withdraw from
a Plan or the filing of any notice of intent to terminate under Section
4041 of ERISA.
(c) Any notice of noncompliance made with respect to a Plan
under Section 4041(b) of ERISA.
(d) The commencement of any proceeding with respect to a
Plan under Section 4042 of ERISA.
8. DEFAULT
If any of the following events (each an "Event of Default") occurs and
is continuing, the Bank may do one or more of the following: declare the
Borrower in default, stop making any additional credit available to the
Borrower, and require the Borrower to repay its entire debt immediately and
without prior notice. If a bankruptcy petition is filed with respect to the
Borrower, the entire debt outstanding under this Agreement will automatically be
due immediately.
8.1 Failure to Pay. The Borrower fails to pay: (i) within three
(3) banking days of the date due, any interest on the principal amount of loans
made hereunder; (ii) when due, any installment of principal, or (iii) within
five (5) banking days after written demand, any other sum due under this
Agreement in accordance with the terms of this Agreement.
8.2 False Information. The Borrower or any guarantor has delivered
to the Bank information or representation which proves to be false or
misleading in any material respect as of when delivered.
8.3 Bankruptcy. The Borrower or any guarantor files a bankruptcy
petition, a bankruptcy petition is filed against the Borrower or any guarantor
(unless any such petition is dismissed within a period of 60 days after the
filing thereof, and Borrower or such guarantor shall not have consented thereto
prior to the expiration of such 60-day period), or the Borrower or any
guarantor makes a general assignment for the benefit of creditors.
8.4 Receivers. A receiver or similar official is appointed for the
Borrower's or any guarantor's business (unless such appointment is set aside or
withdrawn or ceases to be in effect within 60 days after the filing or
appointment), or the business is terminated.
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8.5 Lawsuits. Any lawsuit or lawsuits are filed on behalf of one
or more trade creditors against the Borrower or any guarantor in an aggregate
amount of Eight Million Dollars ($8,000,000) or more in excess of any insurance
coverage.
8.6 Judgments. Any judgments or arbitration awards are entered
against the Borrower or any guarantor, or the Borrower or any guarantor enters
into any settlement agreements with respect to any litigation or arbitration,
in an aggregate amount of One Million Dollars ($1,000,000) or more in excess of
any insurance coverage, and such judgment or judgments shall not have been
vacated or discharged, or stayed or bonded pending appeal within 60 days of its
entry; provided, however, that if at any time the judgment is executable, then
an immediate Event of Default shall occur.
8.7 Government Action. Any government authority takes action that
the Bank reasonably believes materially impairs the Borrower's and any
guarantor's financial condition or their collective ability to repay.
8.8 Material Adverse Change. A material adverse change occurs in
the financial condition, properties or prospects, of the Borrower and the
guarantors and which impairs their collective ability to repay the loan.
8.9 Cross-default. Any default occurs under any agreement in
connection with any indebtedness for borrowed money the Borrower or any
guarantor has obtained from anyone else or which the Borrower (or any
guarantor) has guaranteed if the default consists of failing to make a payment
when due or gives the other lender the right to accelerate the obligation after
the expiration of any applicable notice, grace or cure periods.
8.10 Default under Guaranty or Subordination Agreement. Any
guaranty or subordination required by this Agreement is violated, revoked or no
longer in effect.
8.11 Other Bank Agreements. The Borrower or any guarantor fails to
meet the conditions of, or fails to perform any obligation under any other
agreement the Borrower or any guarantor has with the Bank or any affiliate of
the Bank; provided, however, that if the agreement in question is of a type
other than an agreement for borrowed money or an interest rate swap or other
interest rate protection agreement, then there shall be no Event of Default
under this Agreement unless the failure to comply with the other agreement
continues without cure for 15 calendar days after the Borrower or any guarantor
becomes aware of such failure.
8.12 ERISA Plans. The occurrence of any one or more of the
following events with respect to the Borrower, provided such event or events
could reasonably be expected, in the judgment of
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the Bank, to subject the Borrower to any tax, penalty or liability (or any
combination of the foregoing) which, in the aggregate, could have a material
adverse effect on the financial condition of the Borrower with respect to a
Plan:
(a) A reportable event shall occur with respect to a Plan which
is, in the reasonable judgment of the Bank likely to result in the
termination of such Plan for purposes of Title IV of ERISA.
(b) Any Plan termination (or commencement of proceedings to
terminate a Plan) or the Borrower's full or partial withdrawal from a
Plan.
8.13 Default of Certain Covenants. The Borrower or any guarantor
defaults under any of the provisions of Paragraphs 7.1, 7.3 through 7.11, or
7.20 of this Agreement.
8.14 Other Breach Under Agreement. The Borrower fails to meet the
conditions of, or fails to perform any obligation under, any term of this
Agreement not specifically referred to in this Article; provided, however, that
there shall be no Event of Default under this Paragraph unless the failure to
comply continues without cure for 15 calendar days after the Borrower or any
guarantor becomes aware of such failure.
9. ENFORCING THIS AGREEMENT; MISCELLANEOUS
9.1 GAAP. Except as otherwise stated in this Agreement, all financial
information provided to the Bank and all financial covenants will be made under
generally accepted accounting principles, consistently applied; provided,
however, that if there shall be a change in GAAP so as to affect the premises
on which the financial covenants are predicated, then in addition to the
financial statements prepared in accordance with GAAP, the Borrower will
provide a reconciliation calculating the financial covenants under the
provisions of GAAP as in effect on the date of this Agreement, and the
Borrower's compliance with the financial covenants will be measured based on
such unchanged provisions of GAAP.
9.2 California Law. This Agreement is governed by California law.
9.3 Successors and Assigns. This Agreement is binding on the
Borrower's and the Bank's successors and assignees. The Borrower agrees that it
may not assign this Agreement without the Bank's prior consent. The Bank may
sell participation in or assign this loan, and may exchange financial
information about the Borrower with actual or potential participants or
assignees provided such actual or potential participants or assignees shall
agree in writing to treat all non-public financial information exchanged as
confidential. If a participation is sold or the
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loan is assigned and the Bank shall have provided Borrower with written notice
thereof and the identity of the purchaser, the purchaser will have the right of
set-off against the Borrower. The Bank acknowledges and agrees that it will
nevertheless remain liable to fund loans and issue letters of credit hereunder
notwithstanding any participation/assignment of its interest hereunder.
9.4 Arbitration.
(a) This paragraph concerns the resolution of any
controversies or claims between the Borrower and the Bank, including but
not limited to those that arise from:
(i) This Agreement (including any renewals,
extensions or modifications of this Agreement);
(ii) Any document, agreement or procedure related to
or delivered in connection with this Agreement;
(iii) Any violation of this Agreement; or
(iv) Any claims for damages resulting from any
business conducted between the Borrower and the Bank, including
claims for injury to persons, property or business interests
(torts), which arise out of the transactions contemplated by
this Agreement.
(b) At the request of the Borrower or the Bank, any such
controversies or claims will be settled by arbitration in accordance
with the United States Arbitration Act. The United States Arbitration
Act will apply even though this Agreement provides that it is governed
by California law.
(c) Arbitration proceedings will be administered by the
American Arbitration Association and will be subject to its commercial
rules of arbitration.
(d) For purposes of the application of the statute of
limitations, the filing of an arbitration pursuant to this paragraph is
the equivalent of the filing of a lawsuit, and any claim or controversy
which may be arbitrated under this paragraph is subject to any
applicable statute of limitations. The arbitrators will have the
authority to decide whether any such claim or controversy is barred by
the statute of limitations and, if so, to dismiss the arbitration on
that basis.
(e) If there is a dispute as to whether an issue is
arbitrable, the arbitrators will have the authority to resolve any such
dispute.
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(f) The decision that results from an arbitration proceeding
may be submitted to any authorized court of law to be confirmed and
enforced.
(g) The procedure described above will not apply if the
controversy or claim, at the time of the proposed submission to
arbitration, arises from or relates to an obligation to the Bank
secured by real property located in California. In this case, both the
Borrower and the Bank must consent to submission of the claim or
controversy to arbitration. If both parties do not consent to
arbitration, the controversy or claim will be settled as follows:
(i) The Borrower and the Bank will designate a
referee (or a panel of referees) selected under the auspices of
the American Arbitration Association in the same manner as
arbitrators are selected in Association-sponsored proceedings;
(ii) The designated referee (or the panel of
referees) will be appointed by a court as provided in California
Code of Civil Procedure Section 638 and the following related
sections;
(iii) The referee (or the presiding referee of the
panel) will be an active attorney or a retired judge; and
(iv) The award that results from the decision of the
referee (or the panel) will be entered as a judgment in the
court that appointed the referee, in accordance with the
provisions of California Code of Civil Procedure Sections 644
and 645.
(h) This provision does not limit the right of the Borrower
or the Bank to:
(i) exercise self-help remedies such as setoff;
(ii) foreclose against or sell any real or personal
property collateral; or
(iii) act in a court of law, before, during or after
the arbitration proceeding to obtain:
(A) an interim remedy; and/or
(B) additional or supplementary remedies.
(i) The pursuit of or a successful action for interim,
additional or supplementary remedies, or the filing
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of a court action, does not constitute a waiver of the right of the
Borrower or the Bank, including the suing party, to submit the
controversy or claim to arbitration if the other party contests the
lawsuit. However, if the controversy or claim arises from or relates to
an obligation to the Bank which is secured by real property located in
California at the time of the proposed submission to arbitration, this
right is limited according to the provision above requiring the consent
of both the Borrower and the Bank to seek resolution through
arbitration.
(j) If the Bank forecloses against any real property
securing this Agreement, the Bank has the option to exercise the power
of sale under the deed of trust or mortgage, or to proceed by judicial
foreclosure.
9.5 Severability; Waivers. If any part of this Agreement is not
enforceable, the rest of the Agreement may be enforced. The Bank retains all
rights, even if it makes a loan after default. If the Bank waives a default, it
may enforce a later default. Any consent or waiver under this Agreement must be
in writing.
9.6 Costs. If the Bank incurs any expenses in connection with
administering or enforcing this Agreement, or if the Bank takes collection
action under this Agreement, it is entitled to costs and reasonable attorneys'
fees, including any allocated costs of in-house counsel.
9.7 Attorneys' Fees. In the event of a lawsuit or arbitration
proceeding, the prevailing party is entitled to recover costs and reasonable
attorneys' fees incurred in connection with the lawsuit or arbitration
proceeding, as determined by the court or arbitrator. In the event that any
case is commenced by or against the Borrower under the Bankruptcy Code (Title
11, United States Code) or any similar or successor statute, the Bank is
entitled to recover costs and reasonable attorneys' fees incurred by the Bank
related to the preservation, protection, or enforcement of any rights of the
Bank in such a case. As used in this paragraph, "attorneys' fees" includes the
allocated costs of the Bank's in-house counsel.
9.8 One Agreement. This Agreement and any related security or
other agreements required by this Agreement, collectively:
(a) represent the sum of the understandings and agreements
between the Bank and the Borrower concerning this credit;
(b) replace any prior oral or written agreements between
the Bank and the Borrower concerning this credit; and
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(c) are intended by the Bank and the Borrower as the final,
complete and exclusive statement of the terms agreed to by them.
In the event of any conflict between this Agreement and any other agreements
required by this Agreement, this Agreement will prevail.
9.9 Notices. All notices required under this Agreement shall be
personally delivered, faxed or sent by first class mail, postage prepaid, to
the addresses on the signature page of this Agreement, or to such other
addresses as the Bank and the Borrower may specify from time to time in
writing. Notice shall be effective upon receipt if personally delivered or
faxed, or three (3) banking days after deposited in first class mail, postage
prepaid.
9.10 Headings. Article and paragraph headings are for reference
only and shall not affect the interpretation or meaning of any provisions of
this Agreement.
9.11 Counterparts. This Agreement may be executed in as many
counterparts as necessary or convenient, and by the different parties on
separate counterparts each of which, when so
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executed, shall be deemed an original but all such counterparts shall
constitute but one and the same agreement.
This Agreement is executed as of the date stated at the top of the first page.
Bank of America National Williams-Sonoma, Inc.
Trust and Savings Association
By /s/ Hagop V. Bouldoukian By /s/ W. Howard Lester
---------------------------- -----------------------------
Hagop V. Bouldoukian W. Howard Lester
Vice President Chairman and Chief Executive
Officer
By ______________________________
Typed Name ______________________
Title ___________________________
Address where notices to Address where notices to
the Bank are to be sent: the Borrower are to be sent:
San Francisco Commercial 3250 Van Ness Avenue
Banking #1499 San Francisco, CA 94109
345 Montgomery Street Attn: Chief Financial Officer
San Francisco, CA 94104 Fax: (415) 616-8359
Attn: Hagop V. Bouldoukian
Fax: (415) 622-1878
[Attach Exhibit A - Commercial L/C and Shipside Bonds fees]
[Attach Exhibit B - Compliance Certificate]
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EXHIBIT "A"
Section 2.3(d): Letter of Credit Fees:
- Issuance: 1/16%, $50 minimum
- Amendment: 1/8th%, $50 minimum
- Negotiations: 3/16%, $75 minimum
- Discrepancy: $40
- Shipside bonds: Standard.
32
EXHIBIT "B"
Williams-Sonoma, Inc.
Compliance Certificate
----------------------
[Financial Statement]
Date: ____________, 199__
Reference is made to that certain Second Amended and Restated Credit Agreement,
dated as of March 29, 1996 (as extended, renewed, amended, or restated from time
to time, the "Credit Agreement") between Williams-Sonoma, Inc. ("Borrower") and
Bank of America National Trust and Savings Association ("Bank"). Unless
otherwise defined herein, capitalized terms used herein have the respective
meanings assigned to them in the Credit Agreement. This Compliance Certificate
is being delivered in accordance with Paragraph 7.2(c) of the Credit Agreement
to certify as to compliance with the terms and provisions thereof as of [insert
date of financial statements as referenced above].
The undersigned hereby certifies as follows:
1. To the best of the undersigned's knowledge, Borrower has, as of the
date of this Compliance Certificate, observed, performed, or satisfied
all of the covenants and other agreements, and satisfied every condition
of the Credit Agreement to be observed, performed, or satisfied by
Borrower, and the undersigned has no knowledge of any Event of Default.
Each representation and warranty of Borrower contained in the Credit
Agreement is true and correct as of the date of this Compliance
Certificate.
2. The Tangible Net Worth, Leverage, Fixed Charge Coverage and Capital
Expenditures calculations set forth on Schedule 1 hereto are true and
accurate on and as of the date of the financial statements noted above.
IN WITNESS WHEREOF, the undersigned have executed this Compliance Certificate
as of ________________, 199__.
WILLIAMS-SONOMA, INC.
By __________________________
Title _______________________
33
[Sample]
SCHEDULE 1
to the Compliance Certificate
1. TANGIBLE NET WORTH (Section 7.3):
Date: ____________
Covenant: ____________
Actual: ____________
2. DEBT TO TANGIBLE NET WORTH (Section 7.4):
Date: ____________
Covenant: ____________
Actual: ____________
3. FIXED CHARGE COVERAGE (Section 7.5): Rolling four-quarter detailed
calculations, including components of definition, per attached example
("Fixed Charge Coverage Appendix").
Date: ____________
Covenant: ____________
Actual: ____________
4. CAPITAL EXPENDITURES (Section 7.9):
Section 7.9(a): Capital Expenditures not to exceed $30,000,000 for
the fiscal year ending February 2, 1997.
Reporting Period: January 29, 1996 through __________________ (date of
attached financial statements)
Actual: ___________
Section 7.9(a)(i): Operating leases for the acquisition of up to
$5,000,000 in fixed assets to be excluded from
calculation of the $30,000,000 Capital Expenditures
covenant (Section 7.9[a]).
Reporting Period: January 29, 1996 through __________________ (date of
attached financial statements)
Actual: ___________
Section 7.9(b): During the two fiscal quarters ending July 28, 1996,
Borrower shall not commit to Capital Expenditures, to
be incurred during the fiscal year ending January 31,
1998, in excess of $11,000,000.
Reporting Period: January 29, 1996 through __________________ (date of
attached financial statements)
Actual: ___________
Section 7.9(c): Capital Expenditures to be made during the fiscal
year ending February 2, 1997, with respect to capital
projects that will be completed during the fiscal
year ending January 31, 1998, shall not exceed
$11,000,000.
Reporting Period: January 29, 1996 through __________________ (date of
attached financial statements)
Actual: ___________
34
FIXED CHARGE COVERAGE APPENDIX
- --------------------------------------------------------------------------------
IQ Q Q Q TOTALS
(the most recent
fiscal quarter)
- --------------------------------------------------------------------------------
THE SUM OF:
net income
income taxes*
interest expense
depreciation
amortization**
rent expense***
- --------------------------------------------------------------------------------
(A) numerator SUM OF ADJUSTED
totals EBIT FIGURES
(4 QUARTERS)
- --------------------------------------------------------------------------------
DIVIDED BY THE
SUM OF:
positive income
tax expense
interest expense
rent expense***
current portion
long term debt
- --------------------------------------------------------------------------------
(B) denominator SUM OF FIXED
totals CHARGES
(4 QUARTERS)
- --------------------------------------------------------------------------------
(A) DIVIDED BY (B) ROLLING 4
QUARTER FCC
RATIO
- --------------------------------------------------------------------------------
* Added only to the extent that they were deducted in determining net
income
** Amortization expense, as defined for purposes of calculating this
covenant in Paragraph 7.5 of the Credit Agreement, excludes
amortization of Deferred Lease Incentives.
*** Rent expense shall include, but not be limited to:
* minimum rent
* deferred lease rent
* percentage rent
* offsite storage
* other rent and lease expense
* operating lease expense
35
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[LOGO] BANK OF AMERICA CORPORATE RESOLUTIONS TO OBTAIN CREDIT
- --------------------------------------------------------------------------------
RESOLVED, that this corporation, Williams-Sonoma, Inc., may:
1. borrow money from BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION ("Bank");
2. obtain for the account of this corporation commercial and
standby letters of credit issued by Bank;
3. obtain for the account of this corporation Bank's acceptance of
drafts and other instruments; and
4. discount with or sell to Bank notes, acceptances, drafts,
receivables and other evidences of indebtedness, and assign or
otherwise transfer to Bank any security interest or lien for
such obligations;
from time to time, in such amount or amounts as in the judgement of the
Authorized Officers (as hereinafter defined) this corporation may require (the
credit facilities described in the first part of this resolution are
collectively referred to herein as the "Credit Facilities"), provided, however,
that the aggregate principal amount outstanding at any one time under the
Credit Facilities authorized by this resolution shall not exceed sum of One
Hundred Million Dollars ($100,000,000), which sum shall be in addition to such
other amount or amounts as otherwise may be authorized.
RESOLVED FURTHER, that the Authorized Officers are hereby authorized
and directed, as security for any obligation or obligations of this corporation
to Bank, whether arising pursuant to these Resolutions or otherwise, to grant
in favor of Bank a security interest in or lien on any real or personal
property belonging to or under the control of this corporation.
RESOLVED FURTHER, that
1. If only one signature is obtained, any one of the
following:
a.
b.
c.
d.
e.
f.
2. If two signature are obtained, any one of the following:
a.
b.
c.
d.
e.
f.
together with any one of the following:
g.
h.
i.
j.
k.
l.
of this corporation, acting individually or in any combination as may be set
forth above (the "Authorized Officers"), are hereby authorized and directed, in
the name of this corporation, to execute and deliver to Bank, and Bank is
requested to accept:
a. the notes, credit agreements, advance account agreements,
acceptance agreements, letter of credit applications and agreements, purchase
agreements or other instruments, agreements and documents which evidence the
obligations of this corporation under the Credit Facilities obtained or to be
obtained pursuant to these resolutions;
b. any and all security agreements, deeds of trust, mortgages,
financing statements, fixture filings or other instruments, agreements and
documents with respect to any security interest or lien authorized to be given
pursuant to these resolutions; and
c. any other instruments, agreements and documents as Bank may
require and the Authorized Officers may approve.
- --------------------------------------------------------------------------------
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36
- --------------------------------------------------------------------------------
RESOLVED FURTHER, that the Authorized Officers are hereby authorized
and directed, in the name of this corporation, to endorse, assign to Bank, and
deliver to Bank, any and all notes, acceptances, drafts, receivables and other
evidences of indebtedness discounted with or sold to Bank, together with any
security interest or lien for such obligations, and to guarantee the payment of
the same to Bank.
RESOLVED FURTHER, that any and all of the instruments, agreements and
documents referred to above may contain such recitals, covenants, agreements
and other provisions as Bank may require and the Authorized Officers may
approve, and the execution of such instruments, agreements and documents by the
Authorized Officers shall be conclusive evidence of such approval, and that the
Authorized Officers are authorized from time to time to execute renewals or
extensions of any and all such instruments, agreements and documents.
RESOLVED FURTHER, that Bank is authorized to act upon the foregoing
resolutions until written notice of revocation is received by Bank, and that
the authority hereby granted shall apply with equal force and effect to the
successors in office of the Authorized Officers.
CORPORATE SECRETARY'S CERTIFICATE
I, Dennis A. Chantland, Secretary of Williams-Sonoma, Inc., a
corporation organized and existing under the laws of the State of California
(the "Corporation"), hereby certify that the foregoing is a full, true and
correct copy of resolutions of the Board of Directors of the Corporation, duly
and regularly adopted by the Board of Directors of the Corporation in all
respects as required by law and the by-laws of the Corporation on
__________________, at a meeting at which a quorum of the Board of Directors of
the Corporation was present and the requisite number of such directors voted in
favor of said resolutions, or by the unanimous consent in writing of all
members of the Board of Directors of the Corporation to the adoption of said
resolutions.
I further certify that said resolutions are still in full force and
effect and have not been amended or revoked, and that the specimen signatures
appearing below are the signatures of the officers authorized to sign for the
Corporation by virtue of such resolutions.
IN WITNESS WHEREOF, I have hereunto set my hand as Secretary of the
Corporation, and affixed the corporate seal of the Corporation, on
________________.
AUTHORIZED SIGNATURES:
X X
- ------------------------------ ------------------------------
Dennis A. Chantland, Secretary
of Williams-Sonoma, Inc.
X a California Corporation
- ------------------------------
X Affix Corporate Seal Here.
- ------------------------------
X
- ------------------------------
X
- ------------------------------
X
- ------------------------------
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