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EXHIBIT 10.15
AMENDMENT NUMBER ONE
This AMENDMENT TO LOAN AGREEMENT ("Amendment") dated as of this 12th day of
August, 1998, among FLEET CAPITAL CORPORATION, as Agent, the financial
institutions party to the Loan Agreement (as defined below) as Lenders, and
RESTORATION HARDWARE, INC. and THE MICHAELS FURNITURE COMPANY, INC. (each a
"Borrower" and collectively "Borrowers"), is made in reference to the following
facts:
A. Agent, Lenders and Borrowers have previously entered into that certain
Fourth Amended and Restated Loan and Security Agreement dated as of April 30,
1998 ("Loan Agreement") and various agreements and instruments collateral
thereto (collectively with the Loan Agreement, the "Loan Documents"). All
capitalized terms used herein, unless otherwise defined herein, shall have the
meanings set forth in the Loan Documents.
B. Without waiving any of Agent's or Lenders' rights and remedies, Agent
and Lenders are willing to amend the Loan Agreement on the terms and subject to
the conditions set forth in this Amendment. Borrowers are entering into this
Amendment with the understanding and agreement that, except as specifically
provided herein, none of Agent's or Lenders' rights or remedies as set forth in
the Loan Documents is being waived or modified by the terms of this Amendment.
NOW THEREFORE, in consideration of the foregoing agreed upon recitals and
the terms and conditions hereof, the parties do hereby agree as follows:
1. The provisions of subsection 1.1.1(A) of the Loan Agreement are amended
in full to read as follows:
"(A) for Restoration, the amount of the Restoration Commitment of such
Lender for Revolving Credit Loans as in effect from time to time, provided
that in no event shall the aggregate principal amount of all Revolving
Credit Loans to Restoration plus the LC Amount and the aggregate
outstanding principal amount of the Convertible Term Loan at such date
exceed the lesser of (i) the aggregate amount of the Restoration
Commitments for Revolving Credit Loans as in effect from time to time or
(ii) the aggregate Restoration Borrowing Base at such time minus reserves,
if any, that may be established by Agent from time to time in accordance
with this subsection; and"
2. The provisions of subsection 1.1.2(iii) of the Loan Agreement amended by
deleting the reference "Section 1.2" and substituting "Section 1.4."
3. The provisions of Section 1.2 of the Loan Agreement are deleted and
"Intentionally Omitted" is substituted in lieu thereof.
4. The provisions of Section 1.3 of the Loan Agreement are amended by
deleting the reference to $1,500,000" and substituting therefor "$3,000,000."
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5. The provisions of Section 1.4 of the Loan Agreement are deleted in their
entirety and the following is substituted in lieu thereof.
"Lenders agree, ratably in accordance with their respective
Convertible Term Loan Commitments and Acquisition Line Commitments, to make
term loans available to Restoration for the purposes and in the amounts set
forth below:
(a) $10,000,000 term loan facility for use by Restoration, at its
option, once each calendar year, to convert a portion of its
outstanding Revolving Credit Loans into a term loan ("Convertible Term
Loan"). Each Convertible Term Loan shall be for a term of thirteen
months, interest only, payable monthly in arrears, all principal and
unpaid interest to be paid at maturity or, if earlier, upon
termination of this Agreement for any reason. Such conversions from
Revolving Credit Loans to Convertible Term Loans shall be in minimum
increments of $1,000,000 each, and shall occur upon Restoration's
request therefor. Concurrently with any such request, Restoration
shall execute and deliver to Agent a Convertible Term Loan Note in the
form of Exhibit 1.4 hereto, in favor of each Lender, in the face
amount of the Convertible Term Loan owing to such Lender.
(b) $10,000,000 term loan facility for use by Restoration, at its
option, for the purpose of acquiring similar businesses, trademarks
and the like ("Acquisition Line"). Provided no Default or Event of
Default then exists or would be created thereby, draws under the
Acquisition Line may be made, shall be in minimum amounts of
$1,000,000 and shall be for a purpose and upon such terms and
conditions as shall be acceptable to Lender in the exercise of its
reasonable credit judgment."
6. Subsections 2.1.1(i), (ii) and (iii) of the Loan Agreement are deleted
and the following substituted in lieu thereof.
"2.1.1 Interest shall accrue on the principal amount of the Base Rate
Portions of the Loans outstanding at the end of each day at a fluctuating
rate per annum equal to the Base Rate. If either Borrower properly
exercises its LIBOR Option, as provided in Section 2.3, interest shall
accrue on the principal amount of the LIBOR Portions outstanding at the end
of each day at a rate per annum equal to the applicable LIBOR Rate plus the
margin set forth in the chart below for the type of Loan indicated:
Ratio of consolidated total LIBOR Revolving Credit LIBOR Acquisition Line loans
debt to Tangible Net Worth Loans and Convertible Term Loans
--------------------------- ---------------------- -----------------------------
Less than 1.2 to 1.0 125 basis points 175 basis points
1.2 to 1.0 less than 1.5 to 1.0 137.5 basis points 187.5 basis points
1.5 to 1.0 less than 1.9 to 1.0 150 basis points 200 basis points
1.9 to 1.0 and greater 175 basis points 225 basis points
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The ratio of consolidated total debt (determined in accordance with GAAP) to
Tangible Net Worth shall be measured monthly based upon Borrower's internally
prepared financial statements, and the interest rate determined thereby shall be
effective commencing on the first calendar day of the second month after such
financial statement's stated fiscal month."
7. The provisions of subsection 2.1.4 are deleted and the following
substituted in lieu thereof:
"Letters of Credit. Borrower shall pay (a) to Agent, ratably for the
account of each Lender for Letters of Credit, 1.25% per annum of the
average outstanding face amount of such Letters of Credit and (b) to Agent
for its own account for Letters of Credit, 0.25% per annum of the average
outstanding face amount of such Letters of Credit, in each case (X) payable
monthly in arrears, and, (Y) as applicable, upon any automatic renewal,
amendment or extension thereof, inclusive of any indemnity fee charged to
any Lender by the issuer (with a minimum payment of $125) payable upon
issuance, and (c) to Agent for its own account all normal and customary
charges associated with the issuance, processing and administration of
Letters of Credit, including but not limited to amendments and negotiation
of such Letters of Credit, which fees and charges in each case shall be
deemed fully earned upon issuance of each such Letter of Credit or as
otherwise advised by Agent or Bank, shall be due and payable on the first
Business Day of each calendar month or as otherwise advised by Agent or
Bank and shall not be subject to rebate or proration upon the termination
of this Agreement for any reason. Such fees shall include, without
limitation or duplication, (i) $125 upon issuance of a Letter of Credit,
(ii) $75 upon any amendment to the Letter of Credit, (iii) 0.25% (with a
minimum payment of $125) of the value of the documents presented under the
Letter of Credit upon its negotiation or payment, (iv) $25 for each wire
transfer of funds, and (v) all out of pocket expenses of Agent such as
telex charges, postage, courier service and the like. No other fees or
costs in connection with the issuance or guaranty of Letters of Credit
shall be payable by Restoration."
8. The provisions of Subsection 2.3(i) of the Loan Agreement are amended by
deleting subparagraph (5) and substituting therefor the following:
"(5) as of the first day of the LIBOR Period, there are no more than
six (6) outstanding LIBOR Loans including the LIBOR Portion being
requested, then interest on the LIBOR Portion requested during the LIBOR
Period requested will be based on the applicable LIBOR Rate."
9. The provisions of Section 2.3 of the Loan Agreement are amended by
deleting its references to "LIBOR Revolving Credit Portion" and "Base Rate
Revolving Credit Portion" and replacing them with "LIBOR Portion" and "Base Rate
Portion," respectively.
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10. Subsection 2.5.1 of the Loan Agreement is amended in full to read as
follows:
"2.5.1 Restoration. Restoration shall pay to Agent, for the pro rata
benefit of the Lenders, a fee equal to 0.25% per annum of the amount by
which (x) the average Restoration Borrowing Base during such month exceeds
(y) the sum of the average outstanding principal balance of Restoration's
Revolving Credit Loans during such month. Such unused line fee shall be
payable monthly in arrears on the first day of each calendar month
hereafter."
11. The provisions of subsection 2.5.2 of the Loan Agreement are deleted
and "Intentionally Omitted" is substituted in lieu thereof.
12. The provisions of subsection 3.1.1 (ii) of the Loan Agreement are
deleted and "Intentionally Omitted" is substituted in lieu thereof.
13. Subsection 3.1.3 of the Loan Agreement is amended by deleting and
"Seasonal Loans requested pursuant to subsection 3.1.1 (ii)," and substituting
therefor the following: "and Acquisition Line loans requested pursuant to
Section 1.4".
14. Subsection 3.2.1 of the Loan Agreement is amended by deleting its
provisions and substituting the following in lieu thereof:
"Principal. Principal payable on account of Revolving Credit Loans
shall be payable by Borrowers to Agent for the account of Lenders
immediately upon the earliest of (i) the receipt by Agent or Borrowers of
any proceeds in excess of $250,000 for any single transaction or event
concerning any of the Collateral (other than sales in the ordinary course
of each Borrower's business and collection by Restoration of TI Accounts),
to the extent of said proceeds, (ii) the occurrence of an Event of Default
in consequence of which Agent or Required Lenders elect to accelerate the
maturity and payment of the Obligations, or (iii) termination of this
Agreement pursuant to Section 4 hereof; provided, however, that if an
Overadvance shall exist at any time, Borrowers shall, on demand of Agent,
repay the Overadvance. Principal on account of the Convertible Term Loan
and the Acquisition Line loans shall be payable in the manner respectively
set forth in Section 1.4."
15. Section 4.1 of the Loan Agreement is amended by deleting "December 22,
1999" therefrom and substituting "June 30, 2000" in lieu thereof.
16. Subsection 4.2.3 is amended by deleting its provisions and substituting
the following in lieu thereof:
"Termination Charges. At the effective date of termination of this
Agreement by Agent after an Event of Default or by Borrowers for any
reason, Borrowers shall pay to Agent for the account of Lenders (in
addition to the then outstanding principal, accrued interest and other
charges owing under the terms
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of this Agreement and any of the other Loan Documents) as liquidated
damages for the loss of the bargain and not as a penalty, an amount equal
to (i) 0.5% of the Total Credit Facility if such termination occurs prior
to June 30, 1999 and (ii) 0.25% of the Total Credit Facility if such
termination occurs on or after June 30, 1999 but prior to June 30, 2000.
If termination occurs on the last day of the Original Term or any Renewal
Term, no termination charge shall be payable."
17. Subsection 6.1.1 (ii) of the Loan Agreement is amended by deleting at
the end thereof "subsection 6.4.2" and substituting therefore "subsections 6.4.2
and 8.2.9."
18. Subsection 6.2.1 of the Loan Agreement is amended by deleting its
provisions and substituting the following in lieu thereof:
"Records, Schedules and Assignments of Accounts. Restoration shall
keep accurate and complete records of its TI Accounts and all payments and
collections thereon and shall submit to Agent on such periodic basis as
Agent shall reasonably request a report with respect thereto for the
preceding period, in form reasonably satisfactory to Agent. Michael's shall
keep accurate and complete records of its Accounts and all payments and
collections thereon and shall submit to Agent on such periodic basis as
Agent shall reasonably request a sales and collections report for the
preceding period, in form satisfactory to Agent. Upon Agent's request,
Michael's shall deliver to Agent, in form acceptable to Agent, a detailed
aged trial balance of all Accounts existing as of the last day of the
preceding month, specifying the names, addresses, face value, dates of
invoices and due dates for each Account Debtor obligated on an Account so
listed ("Schedule of Accounts"), and, upon Agent's further request
therefor, copies of proof of delivery and the original copy of all
documents, including, without limitation, repayment histories and present
status reports relating to the Accounts so scheduled and such other matters
and information relating to the status of then existing Accounts as Agent
shall reasonably request. In addition, if Accounts in an aggregate face
amount in excess of $50,000 included in the Michael's Borrowing Base become
ineligible because they fall within one of the specified categories of
ineligibility set forth in the definition of Eligible Accounts or otherwise
established by Agent, and Michael's is then reporting to Agent, Michael's
shall notify Agent of such occurrence within one week following such
occurrence and the Michael's Borrowing Base shall thereupon be adjusted to
reflect such occurrence. If requested by Agent, Michael's shall execute and
deliver to Agent formal written assignments of all of its Accounts weekly
or daily, which shall include all Accounts that have been created since the
date of the last assignment, together with copies of invoices or invoice
registers related thereto."
19. Subsection 6.2.3 of the Loan Agreement is amended by deleting its
provisions and substituting the following in lieu thereof:
"Taxes. If during the occurrence and continuance of an Event of
Default, an Account includes a charge for any tax payable to any
governmental taxing
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authority, Agent is authorized, in its sole discretion, to pay the amount
thereof to the proper taxing authority for the account of the applicable
Borrower, unless such Borrower is contesting such tax in good faith and
appropriate reserves have been established therefor and to charge such
Borrower therefor, provided, however, that neither Agent nor any Lender
shall be liable for any taxes to any governmental taxing authority that may
be due by such Borrower and, provided further, that any reserve established
by Agent on account of any such tax shall be released upon payment of such
tax."
20. Subsection 6.2.5 of the Loan Agreement is amended by deleting its
provisions and substituting the following in lieu thereof:
"Maintenance of Dominion Account. Each Borrower shall maintain a
Dominion Account acceptable to Agent with such bank or banks as may be
selected by such Borrower and be acceptable to Agent; provided, however,
that the Dominion Account of Borrowers shall only be utilized, if Agent so
elects in its reasonable credit judgment, during the continuance of an
Event of Default; provided that, if such Event of Default shall be cured
Agent shall be entitled, in the exercise of its reasonable credit judgment,
to maintain such account for up to 60 days following such cure. Agent shall
at all times have a perfected security interest in such Dominion Accounts.
Each of the Borrowers shall issue to any such bank or banks an irrevocable
letter of instruction directing such bank or banks, upon notice from Agent
that an Event of Default has occurred and is then continuing (or during
such 60 day period), to deposit all payments or other remittances to its
Dominion Account for application on account of the Obligations. At all
times prior to the use of the Dominion Account of Borrowers, Borrowers
shall have control over their cash. Once in effect (if ever), until
released, all funds deposited in the Borrowers' Dominion Accounts shall
immediately become the property of Agent, for the account of Lenders, and
Borrowers shall obtain the agreement by such bank or banks in favor of
Agent, for the benefit of Agent and Lenders, to waive any offset rights
against the funds so deposited. Neither Agent nor any Lender assumes any
responsibility for any such arrangement, including, without limitation, any
claim of accord and satisfaction or release with respect to deposits
accepted by any bank or banks thereunder. No waiver or forbearance with
respect to any Event of Default shall act as a cure therefore for purposes
of this subsection 6.2.5."
21. Subsection 6.3.1 of the Loan Agreement is amended by deleting its
provisions and substituting the following in lieu thereof:
"Records and Reports of Inventory. Each Borrower shall keep accurate and
complete records of its Inventory. Each Borrower shall furnish to Agent (who
shall furnish to Lenders) Inventory reports in form and detail satisfactory to
Agent at such times as Agent may request, but at least once each month, not
later than thirty calendar days after the end of the previous month. Each
Borrower shall conduct a physical inventory no less frequently than annually and
shall provide to Agent (who shall furnish to Lenders) a report based on each
such
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physical inventory promptly thereafter, together with such supporting
information as Agent or any Lender shall reasonably request."
22. The provisions of subsection 6.3.2 are deleted and "Intentionally
Omitted" is substituted in lieu thereof.
23. Clause (i) of subsection 6.4.2 of the Loan Agreement is amended by
deleting the references to "$100, 000" and "$50,000" and substituting
therefor "$200,000" and $100,000."
24. The provisions of subsection 8.2.2 of the Loan Agreement are amended by
adding after "Person.":
"If the ratio of Borrowers' consolidated total debt (determined in
accordance with GAAP) to Tangible Net Worth does not exceed 3.0 to 1.0,
Restoration may make Loans to Michael's in an amount not to exceed
$5,000,000 in the aggregate outstanding at any time."
25. Subsection 8.2.3(vii) of the Loan Agreement is amended by deleting
"$500,000" and substituting "$1,000,000" in lieu thereof and by deleting
"$125,000" and substituting "$250,000" in lieu thereof.
26. Subsection 8.2.3(ix) of the Loan Agreement is amended by deleting
"$750,000" and substituting "$1,500,000" in lieu thereof.
27. The proviso in the last sentence of subsection 8.2.4 of the Loan
Agreement is amended in full to read as follows: "provided, in each case that no
Event of Default then exists or would result as a consequence of such payment."
28. The provisions of subsection 8.2.8 of the Loan Agreement are deleted
and "Intentionally Omitted" is substituted in lieu thereof.
29. The provisions of subsection 8.2.13 of the Loan Agreement are deleted
and "Intentionally Omitted" is substituted in lieu thereof.
30. The provisions of subsection 8.2.15 of the Loan Agreement are deleted
and "Intentionally Omitted" is substituted in lieu thereof.
31. The provisions of subsection 8.3.1 of the Loan Agreement are deleted
and "Intentionally Omitted" is substituted in lieu thereof.
32. The provisions of subsection 8.3.2 of the Loan Agreement are deleted
and "Intentionally Omitted" is substituted in lieu thereof.
33. The provisions of subsection 8.3.4 of the Loan Agreement are deleted
and "Intentionally Omitted" is substituted in lieu thereof.
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34. The provisions of subsection 8.3.5 of the Loan Agreement are deleted
and "Intentionally Omitted" is substituted in lieu thereof.
35. Section 8.3 of the Loan Agreement is amended by adding the following
thereto:
"8.3.6 Debt to Tangible Net Worth. With respect to Restoration,
maintain at all times a ratio of consolidated total debt (determined in
accordance with GAAP) to Tangible Net Worth of not more than the amount
shown below for the fiscal month ended on the corresponding date, to be
measured on a monthly basis. Restoration shall deliver a monthly
compliance certificate to Lender in form and substance reasonably
satisfactory to Lender.
Fiscal Month Ended Amount
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July 1998 1.05
August 1998 1.10
September 1998 1.20
October 1998 1.30
November 1998 1.40
December 1998 1.35
January 1999 1.40
February 1999 1.40
March 1999 1.40
April 1999 1.40
May 1999 1.55
June 1999 1.70
July 1999 1.76
August 1999 1.85
September 1999 1.90
October 1999 2.00
November 1999 2.10
December 1999 1.90
January 2000 and 1.80
thereafter
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8.3.7 Minimum Net Income. With respect to Restoration, maintain
consolidated net income before tax (determined in accordance with
GAAP) of not less than the amount shown below for the fiscal quarter
ended on the corresponding date, to be measured on a quarterly basis.
Restoration shall deliver a quarterly compliance certificate to Lender
in form and substance reasonably satisfactory to Lender.
Fiscal Quarter Ended Amount
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July 1998 <$3,000,000>
October 1998 <$2,000,000>
January 1999 $8,000,000
April 1999 <$2,500,000>
July 1999 <$3,500,000>
October 1999 <$1,500,000>
January 2000 $11,500,000
April 2000 <$2,000,000>"
36. Subsection 10.1.7 of the Loan Agreement is amended by deleting the
references to "$250,000" and "$50,000" and substituting therefor "$750,000"
and "$200,000" respectively.
37. The provisions of subsection 10.1.11 (ii) of the Loan Agreement are
deleted and "Intentionally Omitted" is substituted in lieu thereof.
38. Subsection 10.1.15 of the Loan Agreement is amended by deleting the
reference to "$500,000" and "$125,000" and substituting therefor "$750,000" and
"$250,000" respectively.
39. The provisions of Section 12.2 of the Loan Agreement are amended by
adding at the end thereof the following:
"Nothing in this Section shall require the Borrowers to indemnify the
Agent or any Lender against any loss, damage, suit, action or other
liability or expense to the extent that such claims under this indemnity
are the result of the gross negligence or willful misconduct of such Lender
or Agent."
40. Certain definitions set forth in Appendix A - General Definitions of
the Loan Agreement are deleted, added and amended as set forth below:
(a) The definition of "Michael's Borrowing Base" is amended by
deleting its provisions and substituting "$3,000,000" in lieu thereof.
(b) The definition of "Base Rate Loans" is amended by deleting its
provisions and substituting the following in lieu thereof:
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"Revolving Credit Loans, Convertible Term Loans and Acquisition
Line loans that bear interest based upon the Base Rate."
(c) The definition of "Commitment" is amended by deleting "the
Michael's Term Loan Commitment" "therefrom and deleting the last sentence
thereof.
(d) The definition of "LIBOR Loans" is amended by deleting its
provisions and substituting the following in lieu thereof:
"Revolving Credit Loans, the Convertible Term Loan and Acquisition
Line loans that bear interest based upon LIBOR."
(e) The definition of "LIBOR Option" is amended by deleting its
provisions and substituting the following in lieu thereof:
"the option granted pursuant to Section 2.3 to have the interest on
all or any portion of the principal amount of the Revolving Credit Loans,
the Convertible Term Loan and Acquisition Line loans based on a LIBOR
Rate."
(f) The definition of "LIBOR Revolving Credit Portion" is amended by
deleting the references to "Revolving Credit" and moving the definition to
its correct alphabetical order.
(g) The definition of "LIBOR Request" is amended by adding after
"Revolving Credit Loans" in the third line thereof: "or the Convertible
Term Loan or Acquisition Line loans" and deleting the reference to "LIBOR
Revolving Credit Portion" in the last line thereof and substituting
therefor "LIBOR Portion".
(h) The definition of "Permitted Purchase Money Indebtedness" is
amended by deleting the references to "$5,000,000" and "$800,000" and
substituting therefor "$10,000,000" and "1,500,000" respectively.
(i) The definition of "Michael's Term Loan Commitment" is deleted.
(j) The definition of "Restoration Borrowing Base" is amended by
deleting its provisions and substituting the following in lieu thereof:
"Restoration Borrowing Base - as at any date of determination thereof,
an amount equal to the lesser of:
(i) $60,000,000; and
(ii) an amount equal to $35,000,000,
PLUS
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(a) 65% of the value of Restoration's Eligible Inventory at such
date in excess of $46,000,000, measured on the basis of the weighted
average cost method,
MINUS
(b) the LC Amount and the aggregate outstanding amount of the
Convertible Term Loan at such date."
(k) The definition of "Total Credit Facility" is amended by deleting
"$58,000,000" and substituting "$70,000,000" in lieu thereof.
(l) The definition of "Restoration Commitment" is amended by deleting
"and Seasonal Loans" therefrom and substituting therefor "the Convertible
Term Loan and Acquisition Line loans," and by deleting the last sentence
thereof.
(m) The definition of "Seasonal Loans" is deleted.
(n) The definitions of "Term Loan" and "Term Note" are deleted.
(o)The following new definitions are added in their appropriate
alphabetical place:
(i) "Acquisition Line - as defined in Section 1.4."
(ii) "Convertible Term Loan - as defined in Section 1.4."
41. Annex 1 to the Loan Agreement is replaced with Annex 1 attached to this
Amendment as Exhibit A.
42. Exhibit 1.4 to the Loan Agreement is replaced with Exhibit 1.4 attached
to this Amendment as Exhibit B.
43. Exhibit 3.1.1 to the Loan Agreement is deleted.
44. Except as amended by the terms herein, the Loan Documents remain in
full force and effect in accordance with their terms. If there is any conflict
between the terms and provisions of this Amendment and the terms and provisions
of the Loan Documents, the terms and provisions of this Amendment shall govern.
45. This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
46. This Amendment shall be governed by and construed according to the laws
of the State of California.
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47. The Loan Documents, subject to the foregoing terms and conditions
provided by this Amendment, constitute the complete agreement of the parties
hereto 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.
48. Borrower agrees to pay, on demand, all attorneys' fees and costs
incurred in connection with the negotiation, documentation and execution of this
Amendment, not to exceed $8,000. If any legal action or proceeding shall be
commenced at any time by any party to this Amendment 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.
49. Except for the fee letter of even date herewith between Agent and
Borrower, and as provided in the preceding paragraph hereof, there shall be no
closing fees or charges payable by Borrower in connection with this Amendment.
FLEET CAPITAL CORPORATION,
as Agent and Lender
By: /s/ Xxxxxxx X. Xxx Xxxxxxxxxx
------------------------------
Its: SVP
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RESTORATION HARDWARE, INC.
By: /s/ Xxxxxx Xxx
------------------------------
Its: CFO
-----------------------------
THE MICHAELS FURNITURE COMPANY, INC.
By: /s/ Xxxxxx Xxx
------------------------------
Its: CFO
-----------------------------
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EXHIBIT A
Annex 1
Addresses for Notices, Payment Accounts and Commitments of Lenders
COMMITMENT
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FLEET CAPITAL CORPORATION $60,000,000 Revolving Credit Loans
(Restoration)
$3,000,000 Revolving Credit Loans*
(Michael's)
$10,000,000 Convertible Term
Loan*
$10,000,000 Acquisition Line
Address for Notices
-------------------
00000 Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Loan Administration Manager
Facsimile No.: (000) 000-0000
Payment Account
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Fleet National Bank, N.A.
000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
ABA: 000000000
Account: 937-001-4304
Re: Restoration Hardware, Inc.
*NOTE: The Michael's Revolving Credit Commitment and Convertible Term Loan
Commitment are sublines of the $60,000,000 Restoration Revolving Credit
Commitment.
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EXHIBIT B
SECURED PROMISSORY NOTE
(CONVERTIBLE TERM NOTE)
[DATE]
Los Angeles, California
$___________
FOR VALUE RECEIVED, the undersigned (hereinafter "Borrower"), hereby
promises to pay to the order of ________________ ("Lender"), at the offices of
Agent located at 00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx Xxxx, Xxxxxxxxxx
00000, in such coin or currency of the United States which shall be legal tender
in payment of all debts and dues, public and private, at the time of payment,
the principal sum of $_______ at the times and in the manner provided below,
together with interest from and after the date hereof on the unpaid principal
balance outstanding at the rate obtained pursuant to subsection 2.1.1 of the
Loan Agreement (defined below), subject to the application of the Default Rate
as provided in subsection 2.1.3 of the Loan Agreement.
This Secured Promissory Note (the "Note") is a Convertible Term Note
referred to in, and is issued pursuant to, that certain Fourth Amended and
Restated Loan and Security Agreement among Borrower, the lenders therein and
Agent dated as of April 30, 1998, as amended (hereinafter, as further amended
from time to time, the "Loan Agreement"), and is entitled to all of the benefits
and security of the Loan Agreement. All of the terms, covenants and conditions
of the Loan Agreement and the Security Documents are hereby made a part of this
Note and are deemed incorporated herein in full. All capitalized terms used
herein, unless otherwise specifically defined in this Note, shall have the
meanings ascribed to them in the Loan Agreement.
With respect to any Base Rate Portions hereof, the rate of interest in
effect hereunder shall increase or decrease by an amount equal to any increase
or decrease in the Base Rate, effective as of the opening of business on the
date that any such change in the Base Rate occurs. Interest shall be computed in
the manner provided in Section 2.2 of the Loan Agreement.
For so long as no Event of Default shall have occurred, the principal
amount and accrued interest of this Note shall be due and payable on the dates
and in the manner hereinafter set forth:
(a) Interest shall be due and payable monthly, in arrears, on the first day of
each month, commencing on the first day of the first month hereafter, and
continuing until such time as the full principal balance, together with all
other amounts owing hereunder, shall have been paid in full;
(b) The entire principal amount then outstanding, together with all accrued but
unpaid interest and any and all other amounts due hereunder, shall be due and
payable in full thirteen (13) months from the date hereof or, if earlier,
immediately upon any termination of the Loan Agreement pursuant to Section 4
thereof.
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15
This Note shall be subject to mandatory prepayment in accordance with
the provisions of the Loan Agreement. Borrower may also terminate the Loan
Agreement and, in connection with such termination, prepay this Note in the
manner provided in Section 4 of the Loan Agreement.
Upon the occurrence of an Event of Default, Agent shall have all of the
rights and remedies set forth in Section 10 of the Loan Agreement.
Time is of the essence of this Note. To the fullest extent permitted by
applicable law, Borrower, for itself and its legal representatives, successors
and assigns, expressly waives presentment, demand, protest, notice of dishonor,
notice of non-payment, notice of maturity, notice of protest, presentment for
the purpose of accelerating maturity, diligence in collection, and the benefit
of any exemption or insolvency laws.
Wherever possible, each provision of this Note shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or remaining provisions of
this Note. No delay or failure on the part of Agent in the exercise of any right
or remedy hereunder shall operate as a waiver thereof, nor as an acquiescence in
any default, nor shall any single or partial exercise by Agent of any right or
remedy preclude any other right or remedy. Agent, at its option, may enforce its
rights against any collateral securing this Note without enforcing its rights
against Borrower, any guarantor of the indebtedness evidenced hereby or any
other property or indebtedness due or to become due to Borrower. Borrower agrees
that, without releasing or impairing Borrower's liability hereunder, Agent may
at any time release, surrender, substitute or exchange any collateral securing
this Note and may at any time release any party primarily or secondarily liable
for the indebtedness evidenced by this Note.
This Note shall be governed by, and construed and enforced in
accordance with, the laws of the State of California.
IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed
and delivered in Los Angeles, California, on the date first above written.
RESTORATION HARDWARE, INC.
By: _________________________
Title: ______________________
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