EXHIBIT 10.5
AMENDMENT NO. 6 TO THE SIXTH AMENDED AND RESTATED LOAN AND
SECURITY AGREEMENT
This AMENDMENT No. 6 TO THE SIXTH AMENDED AND RESTATED LOAN AND
SECURITY AGREEMENT (this "AMENDMENT") is entered into this 29 day of August,
2002 by and among FLEET CAPITAL CORPORATION, as Administrative Agent and as
Collateral Agent, The CIT GROUP/BUSINESS CREDIT, INC., as Co-Administrative
Agent, the syndicate of lenders identified as the Tranche A Lenders in the Loan
Agreement referred to below (the "LENDERS") and RESTORATION HARDWARE, INC. (the
"LEAD BORROWER" and a "BORROWER"), and THE MICHAELS FURNITURE COMPANY, INC. (a
"BORROWER" and, together with the Lead Borrower, the "BORROWERS") (each, an
"AMENDMENT PARTY" and, collectively, the "AMENDMENT PARTIES"), and is made with
reference to the following facts:
RECITALS
A. WHEREAS, Borrowers, the Administrative Agent, the
Co-Administrative Agent, the Collateral Agent, the Lenders and certain other
lenders (each a "PARTY" and, collectively, the "PARTIES") have previously
entered into that certain Sixth Amended and Restated Loan and Security Agreement
dated as of September 27, 2000 (as amended, modified or supplemented from time
to time, the "LOAN AGREEMENT") and various agreements and instruments collateral
thereto (collectively with the Loan Agreement, the "LOAN DOCUMENTS"). The
Parties also entered into that certain Limited Extension Agreement and Amendment
No. 1 to the Sixth Amended and Restated Loan and Security Agreement, dated as of
February 3, 2001, that certain Amendment No. 2 to the Sixth Amended and Restated
Loan and Security Agreement, dated as of March 2, 2001, that certain Amendment
No. 3 to the Sixth Amended and Restated Loan and Security Agreement, dated as of
March 21, 2001, that certain Amendment No. 4 to the Sixth Amended and Restated
Loan and Security Agreement, dated as of September 27, 2001 and that certain
Amendment No. 5 to the Sixth Amended and Restated Loan and Security Agreement,
dated as of May 1, 2002. All capitalized terms used herein, unless otherwise
defined herein, shall have the meanings set forth in the Loan Documents.
B. WHEREAS, the Amendment Parties desire to amend the Loan
Agreement on the terms and subject to the conditions of this Amendment.
NOW THEREFORE, in consideration of the foregoing recitals and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Amendment Parties agree as follows:
ARTICLE I
AMENDMENTS TO LOAN AGREEMENT
1.1 Article I of the Loan Agreement is hereby amended to add the
following definitions:
"FISCAL YEAR 2003": Defined in Section 5.12(d)(iii).
"SIXTH AMENDMENT DATE": August 29, 2002.
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1.2 Article I of the Loan Agreement is hereby amended by deleting
the definitions of the terms "Loan Documents", "Permissible Overloans",
"Receivables Advance Rate", "Tranche A Ceiling", "Tranche A Dollar Commitment"
and "Tranche A Maturity Date", and inserting the following in lieu thereof:
"LOAN DOCUMENTS": This Agreement, each instrument and document
executed and/or delivered as contemplated by Article III (including without
limitation the fee letters by and between any of the Agents and the Borrowers or
any of the Lenders and the Borrowers, and the Warrant Agreement) and each other
instrument or document from time to time executed and/or delivered in connection
with the arrangements contemplated hereby or in connection with any transaction
with any Agent or any Affiliate of any Agent or, including, without limitation,
any transaction which arises out of any cash management, depository, investment,
letter of credit, interest rate protection, foreign exchange contract, bankers'
acceptances, bankers' acceptance financing facilities or equipment leasing
services provided by any Agent or any Affiliate of any Agent, as each may be
amended from time to time.
"PERMISSIBLE OVERLOANS": Tranche A Loans which are Overloans,
where such loans (without duplication) are either (a) Protective Advances or (b)
are made when Availability equals zero, made during the period August 1 through
October 31 of any calendar year and are not extant for more than sixty (60)
consecutive days during any such period absent consent of the Combined
SuperMajority Lenders Plus pursuant to Section 16.5 hereof; provided however, in
no event shall (x) the making of any Permissible Overloan cause any Tranche A
Lender to exceed that Tranche A Lender's Tranche A Dollar Commitment, (y) the
aggregate outstanding amount of Permissible Overloans exceed $5,000,000 at any
one time and (z) the aggregate amount of Protective Advances exceed 5% of the
Borrowing Base.
"RECEIVABLES ADVANCE RATE": (i) In the case of Eligible
Receivables of Michaels; Eighty-Five Percent (85%); (ii) in the case of Eligible
Credit Card Receivables of the Lead Borrower, Eighty-Five Percent (85%); and
(iii) in the case of Eligible Credit Card Receivables of the Guarantor,
Seventy-Five Percent (75%).
"TRANCHE A CEILING": The aggregate amount of the Tranche A
commitment of all Tranche A Lenders, which shall equal Seventy-Two Million
Dollars ($72,000,000.00).
"TRANCHE A DOLLAR COMMITMENT": As set forth on Exhibit 2.24(a)
annexed hereto (as such amounts may change in accordance with the provisions of
this Agreement). The aggregate of Tranche A Dollar Commitments shall not exceed
Seventy-Two Million Dollars ($72,000,000.00).
"TRANCHE A MATURITY DATE": June 30, 2004.
1.3 The definition of "AVAILABILITY RESERVES" contained in
Article I of the Loan Agreement is amended by adding the following at the end
thereof:
"(ix) Foreign exchange contracts in an amount established in the
Administrative Agent's discretion."
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1.4 The definition of "PROTECTIVE ADVANCES" contained in Article
I of the Loan Agreement is amended by deleting the phrase "together with other
Permissible Overloans" from the last clause thereof.
1.5 The definition of "STATED AMOUNT" contained in Article I of
the Loan Agreement is amended by adding the following at the end thereof:
"plus the face amount of any outstanding bankers' acceptances
arising out of drawings under such L/Cs without duplication."
1.6 The Margin Pricing Grid set forth in Section 2.11(a)(vi) of
the Loan Agreement is hereby amended to read in full as follows:
Actual EBITDA for the Prior Index Base
Twelve Months Margin Margin
--------------------------- ------ ------
Tier I >$25,000,000 1.75% 1.00%
Tier II > $20,000,000 <= $25,000,000 2.00% 1.00%
Tier III >$17,500,000 <= $20,000,000 2.25% 1.00%
Tier IV > $15,000,000 <= $17,500,000 2.50% 1.25%
Tier V >$12,500,000 <= $15,000,000 2.75% 1.50%
Tier VI >$10,000,000 <= $12,500,000 3.00% 1.75%
Tier VII <= $10,000,000 3.25% 2.00%
1.7 Section 2.11(a)(vi) of the Loan Agreement is hereby amended
by deleting the last sentence and inserting the following in lieu thereof:
"Notwithstanding the foregoing, but subject to Section
2.11(a)(v), interest shall accrue at the rate set pursuant to Tier V of the
foregoing Margin Pricing Grid through February 1, 2003."
1.8 Section 2.20(b)(ii) of the Loan Agreement is hereby amended
to read in full as follows:
"(ii) The expiry of the requested L/C (and the maturity date of
any time drafts drawn under a usance L/C) is not later than the earlier of
thirty (30) days prior to the Tranche A Maturity Date or the following:
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(A) For Standby L/Cs: One (1) year from initial issuance.
(B) For documentary L/Cs: Sixty (60) days from issuance
and if such documentary L/C is a usance L/C, time drafts drawn
thereunder shall be payable no later than sixty (60) days after sight;
and"
1.9 Section 2.20(b) of the Loan Agreement is hereby further
amended by adding the following new clause (iv) at the end thereof:
"(iv) The aggregate outstanding amount of usance L/Cs (giving
effect to the L/C whose issuance is requested) plus the face amount of any
outstanding bankers' acceptances arising out of drawings under L/Cs does not
exceed Fifteen Million Dollars ($15,000,000.00)."
1.10 Section 2.20(e) of the Loan Agreement is hereby amended by
deleting the first two sentences and inserting the following in lieu thereof:
"The Borrowers shall reimburse the Issuer for the amount of any
drawing honored under an L/C on the same day on which such drawing takes place,
or if the applicable L/C is a usance L/C, on the date the time draft drawn and
accepted thereunder is payable. The Administrative Agent, without the request of
the Lead Borrower, may advance under the Revolving Credit (and charge to the
Loan Account) the amount of any honoring of any L/C and other amount for which
the Borrowers, the Issuer, or any Tranche A Lender becomes obligated on account
of, or in respect to, any L/C and drafts drawn thereunder."
1.11 Section 4.6(c)(v) of the Loan Agreement is hereby amended by
adding the following at the end of clause (C) thereof:
"; provided, however, that no Stores shall be opened after August
__, 2002."
1.12 Section 4.6(c)(v) of the Loan Agreement is hereby further
amended by adding the following new clause (D) at the end thereof:
"(D) Fiscal Year 2003: 5 Stores."
1.13 Section 4.19 of the Loan Agreement is hereby amended to read
in full as follows:
"Except as described in EXHIBIT 4.19 hereto, there are no
actions, suits, proceedings or investigations pending, or to the knowledge of
Borrowers, threatened, against or involving Borrowers or any of their
Subsidiaries, or the business, operations, properties, prospects, profits or
condition of Borrowers or any of their Subsidiaries which, singly, on in the
aggregate, would reasonably be expected to have a Material Adverse Effect.
Neither Borrowers nor any of their Subsidiaries are in default with respect to
any order, writ, injunction, judgment, decree or rule of any court, governmental
authority or arbitration board or tribunal, which, singly or in the aggregate,
would reasonably be expected to have a Material Adverse Effect.
1.14 Section 5.12(d) of the Loan Agreement is hereby amended by
deleting clause (iii) thereof and inserting the following in lieu thereof:
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"(iii) For the fiscal year ending February 1, 2004 ("Fiscal Year
2003"): Nineteen Million Dollars ($19,000,000.00)."
1.15 Section 5.12(d) of the Loan Agreement is hereby further
amended by adding the following new clause (iv) at the end thereof:
"(iv) For the period from February 2, 2004 through June 30, 2004:
$7,900,000.00."
1.16 Section 12.4(a) of the Loan Agreement is hereby amended by
adding the phrase "any bankers' acceptances arising out of drawings under L/Cs
and any foreign exchange contracts," after the phrase "payments made by the
Borrowers on account of the Tranche A Loans" in the third line thereof and by
adding the following new clause (iii) at the end thereof:
"(iii) Third: To payments in respect of bankers' acceptances
arising out of drawings under L/Cs then due and payable and payments in respect
of foreign exchange contracts then due and payable pro rata to the full extent
thereof."
1.17 Section 12.4(c) of the Loan Agreement is hereby amended by
adding the following new clause (iv) at the end of the first sentence thereof:
"and (iv) to each Person which has a pro rata share thereof, such
Person's pro rata share of interest payments in respect of bankers' acceptances
arising out of drawings under L/Cs then due and payable and foreign exchange
contracts then due and payable.
1.18 Section 20.17 of the Loan Agreement is hereby amended by
adding the following at the end thereof:
"Notwithstanding the foregoing, Agent and each Lender agrees that
it shall setoff any such deposits or other sums at any time credited by or due
to the Borrowers and any cash, securities, instruments or other property of the
Borrowers in possession of the Agent or any Lender first, against the Tranche A
Debt and amounts owing under L/Cs issued pursuant to Section 2.20(e) for the
benefit of the Tranche A Lenders on a Pro Rata basis and second, against any
outstanding foreign exchange contracts. If at any time or times any Lender shall
receive by payment, foreclosure, setoff or otherwise, any proceeds of
Collateral, except for proceeds received by such Lender from Agent pursuant to
the terms of this Agreement, such Lender shall promptly turn the same over to
the Agent, in kind, or in same day funds, as applicable, for the account of all
Lenders and for application to the Liabilities in accordance with the applicable
provisions of the Agreement."
1.19 Exhibits 4.6(a), 4.8, 4.9 and 4.11 of the Loan Agreement are
hereby amended by deleting them in their entirety and inserting Exhibits 4.6(a),
4.8, 4.9 and 4.11 attached hereto in lieu thereof.
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ARTICLE II
ADDITIONAL AGREEMENTS
2.1 Borrowers shall pay on the Sixth Amendment Date, $350,000.00
(the "Fees") to the Administrative Agent, for the Pro Rata benefit of the
Tranche A Lenders.
2.2 The Parties to the Loan Agreement and related Loan Documents
hereby agree to redocument such Loan Agreement and related Loan Documents within
sixty (60) days of the Sixth Amendment Date.
ARTICLE III
CONFIRMATION OF LOAN DOCUMENTS
The Guarantor, by its execution and delivery of this Amendment,
irrevocably and unconditionally ratifies and confirms that it consents to the
terms and conditions of the Loan Agreement as it has been amended by this
Amendment and that each Loan Document to which the Guarantor is a party shall
continue in full force and effect in accordance with its terms, and is and shall
continue to be applicable to all of the Guarantor's obligations. The Guarantor
acknowledges and agrees that (i) notwithstanding the conditions to effectiveness
set forth in this Amendment, the Guarantor is not required by the terms of the
Loan Agreement or any other Loan Document to consent to the amendments to the
Loan Agreement effected pursuant to this Amendment and (ii) nothing in the Loan
Agreement, this Amendment or any other Loan Document shall be deemed to require
the consent of the Guarantor to any future amendments to the Loan Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
This Amendment shall become effective upon satisfaction of the
following conditions:
4.1 Execution and delivery to the Administrative Agent of
counterparts hereof by the Borrowers, the Guarantor, the Lenders, the Collateral
Agent, the Administrative Agent and the Co-Administrative Agent.
4.2 The Borrowers shall have paid the Fees.
ARTICLE V
MISCELLANEOUS
5.1 Each of the Borrowers and the Guarantor reaffirms and
restates the representations and warranties set forth in Article IV of the Loan
Agreement, as amended by this Amendment (the "AMENDED AGREEMENT"), and, after
giving effect to the transactions contemplated herein, all such representations
and warranties shall be true and correct in all material respects on and as of
the date hereof (except insofar as such representations and warranties expressly
relate to an earlier date).
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5.2 Each of the Borrowers and the Guarantor warrants and
represents (which warranty and representation shall survive the execution and
delivery hereof) that:
(a) It has the corporate power and authority to execute and
deliver this Amendment, and to carry out the terms and provisions of this
Amendment and the Amended Agreement and the transactions contemplated hereby and
thereby, and has taken or caused to be taken all necessary corporate action to
authorize the execution and delivery of this Amendment and the performance of
this Amendment and the Amended Agreement and the transactions contemplated
hereby and thereby;
(b) No consent of any other person (including, without
limitation, its shareholders or creditors), and no action of, or filing with any
governmental or public body or authority is required to authorize, or is
otherwise required in connection with the execution and delivery of this
Amendment and the performance of this Amendment and the Amended Agreement;
(c) The execution and delivery of this Amendment and the
performance of this Amendment and the Amended Agreement will not violate any
law, statute or regulation, or any order or decree of any court or governmental
instrumentality, or conflict with, or result in the breach of, or constitute a
default under any contractual obligation; and
(d) This Amendment has been duly executed and delivered by a duly
authorized officer, and this Amendment and the Amended Agreement constitute a
legal, valid and binding obligation of it, enforceable in accordance with their
terms, subject to laws affecting the enforcement of creditors' rights generally
and the exercise of judicial discretion in accordance with general principles of
equity.
5.3 The Loan Documents, subject to the foregoing terms and
conditions provided by this Amendment, constitute the complete agreement of the
Parties with respect to the subject matters referred to herein and supersede all
prior or contemporaneous negotiations, promises, agreements, or representations,
all of which have become merged and finally integrated into the Loan Documents
and this Amendment. No agreements or undertakings varying, modifying, amending,
extending, discharging or terminating the same shall be binding upon any Party
unless in writing signed by a duly authorized official or agent thereof. No
waiver by any Party of any breach hereunder shall be deemed a waiver of any
other or subsequent breach.
5.4 Each Borrower agrees to pay, on demand, all attorneys' fees
and costs incurred in connection with the negotiation, documentation, and
execution of this Amendment. If any legal action or proceeding shall be
commenced at any time by any Party in connection with its interpretation or
enforcement, the prevailing Party or Parties in such action or proceeding shall
be entitled to reimbursement of its reasonable attorneys' fees and costs in
connection therewith, in addition to all other relief to which the prevailing
Party or Parties may be entitled. Each of the Amendment Parties waives its right
to a trial by jury in any action to enforce, defend, or interpret, or otherwise
concerning this Amendment.
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5.5 Except as herein expressly amended, the Loan Agreement is
ratified and confirmed in all respects and shall remain in full force and effect
in accordance with its terms.
5.6 This Amendment and all rights and obligations hereunder,
including matters of construction, validity, and performance, shall be governed
by and construed under the laws of the Commonwealth of Massachusetts and shall
inure to the benefit of and binding upon the successors, heirs and assigns of
the Parties.
5.7 All references to the Loan Agreement contained in the Loan
Agreement and the other Loan Documents and the other documents and instruments
delivered pursuant to or in connection therewith shall mean the Loan Agreement,
as amended hereby and as may in the future be amended, restated, supplemented or
modified from time to time.
5.8 This Amendment may be executed in counterparts, each of which
shall be deemed an original and all of which together shall constitute one and
the same instrument.
5.9 Delivery of an executed counterpart of a signature page to
this Amendment by telecopier shall be effective as delivery of a manually
executed counterpart of this Amendment.
(remainder of page intentionally left blank)
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IN WITNESS WHEREOF, the parties hereto have executed this
Amendment as of the date first above written.
RESTORATION HARDWARE, INC. THE MICHAELS FURNITURE COMPANY,
(the "Lead Borrower" and a "Borrower") INC. (a "Borrower")
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------- --------------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxxx X. Xxxxxxx
-------------------------------- ------------------------------
Title: VP/CFO Title: EVP; COO
------------------------------- -----------------------------
FLEET CAPITAL CORPORATION THE CIT GROUP/BUSINESS CREDIT, INC.
(the "Administrative Agent") (the "Co-Administrative Agent")
By: /s/ Xxxxxxx X. Xxx Xxxxxxxxxx By: /s/ Xxxxx X. Xxxxxxxxx
---------------------------------- --------------------------------
Name: Xxxxxxx X. Xxx Xxxxxxxxxx Name: Xxxxx X. Xxxxxxxxx
-------------------------------- ------------------------------
Title: Senior Vice President Title: V.P.
------------------------------- -----------------------------
FLEET CAPITAL CORPORATION FLEET CAPITAL CORPORATION
(a "Collateral Agent") (a "Lender")
By: /s/ Xxxxxxx X. Xxx Xxxxxxxxxx By: /s/ Xxxxxxx X. Xxx Xxxxxxxxxx
---------------------------------- --------------------------------
Name: Xxxxxxx X. Xxx Xxxxxxxxxx Name: Xxxxxxx X. Xxx Xxxxxxxxxx
-------------------------------- ------------------------------
Title: Senior Vice President Title: Senior Vice President
------------------------------- -----------------------------
THE CIT GROUP/BUSINESS CREDIT, INC.
(a "Lender")
By: /s/ Xxxxx X. Xxxxxxxxx
----------------------
Name: Xxxxx X. Xxxxxxxxx
------------------
Title: V.P.
-----------------
Signature Pages to Amendment No. 6 to the Sixth Amended and Restated
Loan and Security Agreement
Acknowledged and Agreed:
RESTORATION HARDWARE CANADA, INCORPORATED
(the "Guarantor")
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: Secretary
----------------------------
Signature Pages to Amendment No. 6 to the Sixth Amended and Restated
Loan and Security Agreement
