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EXHIBIT 10.15
AMENDMENT NUMBER ONE
This AMENDMENT TO LOAN AGREEMENT ("Amendment") dated as of
this 31st day of March 2000, 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 Fifth Amended and Restated Loan and Security Agreement dated as of
February 2, 2000 ("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. Section 2.7 of the Loan Agreement is amended
by deleting "$20,000" and substituting "$30,000" in lieu thereof.
2. Section 8.1.5 of the Loan Agreement is
amended by deleting it in its entirety and replacing it with the following:
"Projections. Not later than 30 days prior to the end
of each fiscal year of Borrowers, deliver to Agent and each
Lender Projections of Borrowers for the forthcoming three
years, year by year, and month by month, in the same form as
that previously delivered to the Agent. Lenders and Agent
recognize that, since Restoration is a public company within
the meaning of the Securities Act of 1933, any projections
provided to Agent and Lenders could be insider information and
agree that in such cases they shall keep such information
confidential in accordance with their usual business
practices."
3. Section 8.1.8 of the Loan Agreement is
amended by deleting it in its entirety and replacing it with the following:
"Borrowing Base Certificate. Not later than 15 days
after the end of every month, Borrower shall certify to Agent
in writing that the outstanding Loans and Letters of Credit
are within the limitations of the Borrowing Base.
Notwithstanding the foregoing, for the initial six months
after the Closing Date, Borrower shall deliver a borrowing
base certificate on the first day of the week for the
preceding week. In addition, a borrowing base certificate
shall be delivered
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by Borrower to Agent on the first day of the week for the preceding week during
any period in which Availability declines below $10,000,000. All borrowing base
certificates shall be in form and substance reasonably acceptable to Agent."
4. A new Section 8.1.11 is added to the Loan
Agreement to read as follows:
" 8.1.11 Lease Payments. Not later than 15 days after
the end of every month, Borrowers shall deliver an Officer's
Certificate to Agent certifying that all real property lease
payments are current except those subject to a good faith
business dispute."
5. A new Section 8.1.12 is added to the Loan
Agreement to read as follows:
"8.1.12 Capital Contributions. Upon the Availability
first being less than $7,500,000, Borrowers shall forthwith
use its best commercial efforts to commence negotiations to
obtain additional capital from third party investors
(including in the form of equity or subordinated debt which
shall be in form and substance reasonably satisfactory to
Agent) in an aggregate amount at least equal to $5,000,000."
6. Section 8.2.8 of the Loan Agreement is
amended by deleting it in its entirety and replacing it with the following:
"Capital Expenditures. Make aggregate Capital
Expenditures gross of landlord allowances (including, without
limitation, by way of capitalized leases) which, in the
aggregate, exceed the amounts set forth below during the
corresponding fiscal year:
Fiscal Year Amount
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Fiscal Year ended January 31, 2001 $29,000,000
Fiscal Year ended January 31, 2002 $43,000,000
Fiscal Year ended January 31, 2003 $58,000,000"
7. Section 8.3.1 of the Loan Agreement is
amended by deleting it in its entirety and replacing it with the following:
"EBITDA. Achieve EBITDA, measured on a rolling four
fiscal quarter basis, of not less than the following
respective amounts as of the end of the following respective
fiscal quarters:
Fiscal Quarter ending Amount
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April 30, 2000 $ 3,800,000
July 31, 2000 $ 2,900,000
October 31, 2000 $ 3,400,000
January 31, 2001 $13,500,000
April 30, 2001 $18,100,000
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Fiscal Quarter ending Amount
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July 31, 2001 $20,500,000
October 31, 2001 $24,500,000
January 31, 2002 $30,000,000
April 30, 2002 $33,600,000
July 31, 2002 $36,300,000
October 31, 2002 $39,800,000
January 31, 2003 and thereafter $50,200,000"
8. Section 8.3.2 of the Loan Agreement is
amended by deleting it in its entirety and replacing it with the following:
"Debt to EBITDA. Have a ratio of consolidated Funded Debt,
including Capitalized Lease Obligations (determined in accordance with
GAAP) to EBITDA of not more than the amount shown below as of the end
of the corresponding fiscal quarter, to be measured on a rolling four
fiscal quarter basis.
Fiscal Quarter ending Amount
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April 30, 2000 8.20
July 31, 2000 13.90
October 31, 2000 16.90
January 31, 2001 2.50
April 30, 2001 2.60
July 31, 2001 2.10
October 31, 2001 2.40
January 31, 2002 2.00
April 30, 2002 2.00
July 31, 2002 2.00
October 31, 2002 2.00
January 31, 2003 and thereafter 2.00
For future periods during the term of this Agreement Agent and
all Lenders may establish financial covenants in their reasonable
credit judgment (based upon similar criteria to those used by Agent for
the existing covenants and the projections previously delivered to
Agent) for those financial covenants contained in subsections 8.2.8,
8.3.1 and 8.3.2."
9. A new Section 11.11 is added to the Loan
Agreement to read as follows::
"11.11 Syndication. Agent and Arranger will manage
all aspect of the syndication, including the selection of
Lenders, the determination of when Agent and Arranger will
approach potential Lenders and the final allocations among the
Lenders. The Borrower agrees to provide reasonable assistance
to Agent and Arranger to actively achieve a timely syndication
that is reasonably satisfactory to Agent and Arranger, such
assistance to include, among other things, (a) direct
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contact during the syndication between the Borrowers' senior
officers, representatives and advisors, on the one hand, and
prospective Lenders, on the other hand, at such times and
places as Agent and Arranger may reasonably request, (b)
providing to Agent and Arranger all financial and other
information with respect to the Borrower and the transactions
contemplated hereby that Agent and Arranger may reasonably
request, including but not limited to financial projections
relating to the foregoing, and (c) assistance in the
preparation of a confidential information memorandum and other
marketing materials to be used in connection with the
syndication. Agent and Arranger shall be entitled, after
consultation with the Borrowers, to change the pricing,
structure, terms and amount of any portion of the credit
facility contemplated hereby if Agent and Arranger determine
that such changes are advisable in order to ensure a
successful syndication or an optimal credit structure for the
credit facility, so long as the aggregate amount of the
Commitment is not reduced. The Borrowers agree that, prior
to and during the syndication of the credit facility, the
Borrowers will not permit any offering, placement or
arrangement of any competing issues of public debt securities
or commercial bank facilities of Restoration and/or any of its
subsidiaries."
10. Appendix A - General Definitions of the Loan Agreement is
amended by adding the following definition in its appropriate alphabetical
order:
"Arranger" - means FleetBoston Xxxxxxxxx Xxxxxxxx Inc.
11. The definition of "Borrowing Base" in Appendix A - General
Definitions of the Loan Agreement is amended by deleting it in its entirety and
replacing it with the following:
"Borrowing Base - as at any date of determination
thereof, an amount equal to the sum of:
(a) up to 85% of the average net liquidation
value of Eligible Inventory of Restoration (based on
an annual weighted average, subject to change based
on the then current appraised value). Provided,
however, if no Event of Default has occurred and is
continuing, such appraisals shall not, unless
requested by Restoration (in which case, the cost
thereof shall not be counted for purposes of Section
2.7 of the Loan Agreement), be more frequently than
quarterly; plus
(b) up to 25% of the cost value of Eligible
Inventory of Michaels; plus
(c) up to 85% of the value of Eligible
Accounts of Michaels.
Provided, not more than $10,000,000 in the aggregate may be
borrowed under (b) and (c) above."
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12. The definition of "Libor Rate" in Appendix A - General
Definitions of the Loan Agreement is amended by deleting "1/16" wherever it
appears therein and substituting "1/8" in lieu thereof.
13. 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, the terms and
provisions of Amendment Number One and the Loan Documents, the terms and
provisions of this Amendment shall govern.
14. 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.
15. This Amendment shall be governed by and construed according to
the laws of the State of California.
16. 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.
17. 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 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.
FLEET CAPITAL CORPORATION,
as Agent and Lender
By: /s/ MATT VAN STEEHUYSE
Its: Senior Vice President
RESTORATION HARDWARE, INC.
By: /s/ XXXXXX XXXXX
Its: Chief Administrative Officer
THE MICHAELS FURNITURE COMPANY, INC.
By: ________________________________
Its: ________________________________
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