Re: Loan Facility Agreement
Exhibit
10.1
February
5, 2009
The
Talbots Inc.
Xxx
Xxxxxxx Xxxxx
Xxxxxxx,
XX 00000
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Re:
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Loan
Facility Agreement
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Gentlemen/Ladies:
We are
pleased to inform The Talbots Inc. (the "Company") that we agree, subject to the
terms and conditions set forth or referred to in this letter agreement, to
provide to the Company a loan facility as more fully described in the attached
summary of terms (the "Summary of Terms"). We are providing this loan
facility to be used by the Company and its subsidiaries to repay and retire all
outstanding indebtedness under the Term Loan Agreement, dated July 24, 2006,
among the Company, each of the lenders party thereto and Mizuho Corporate Bank
Ltd, as agent.
In
addition, our obligation to provide such loan facility shall be subject to (i)
completion of satisfactory confirmatory due diligence, (ii) the negotiation,
execution and delivery of definitive documentation which shall be mutually
satisfactory to the Company and us and consistent with the Summary of Terms and
(iii) satisfaction of the other conditions set forth or referred to in the
Summary of Terms (or such definitive documentation).
This
letter agreement is made solely for the benefit of parties hereto and may not be
relied upon or enforced by any other person. This letter agreement
and all or a portion of the commitment contained herein may be assigned to one
or more of our subsidiaries. This letter agreement may be amended or
modified only by a writing signed by the parties hereto. This letter
agreement may be executed in one or more counterparts, all of which, taken
together, shall constitute one and the same agreement. This letter
agreement shall be governed by and construed in accordance with the laws of the
State of New York.
If the
above is acceptable, please so confirm by signing and returning a copy of this
letter agreement to the undersigned no later than 5:00 p.m., New York City time,
on February 6, 2009, whereupon this letter agreement and each counterpart hereof
will constitute a binding agreement between the Company and us. Our
agreements contain herein and in the Summary of Terms will expire at such time
in the event we have not received such confirmation. Thereafter, our
accepted agreements hereunder will expire on March 31, 2009.
| Very truly yours, | |||
| AEON CO., LTD. | |||
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By:
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/s/ Xxxxxxx Xxxxxxxxx | |
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Name:
Xxxxxxx Xxxxxxxxx
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|||
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Title:
Vice President
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| Chief Financial Officer & CEO, GMS Business | |||
Accepted
and agreed to this 5th
day of
February, 2009:
| THE TALBOTS INC. | ||
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By:
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/s/ Xxxxx X. Xxxxxxxx | |
| Name: Chief Executive Officer and President | ||
| Title: Chief Executive Officer and President | ||
Attachment: Summary
of Terms and Conditions
The
Talbots, Inc.
LOAN
FACILITY AGREEMENT
These
terms are not exhaustive and provide a summary only of the principal terms and
conditions of the Loan Facility Agreement described herein (the “Facility
Agreement”). The parties have agreed that the Facility
Agreement will be based on the Term Loan Agreement, dated as of July 16, 2008,
between The Talbots, Inc. and Aeon (U.S.A.), Inc. (the “Existing
Loan”) except (i) to the extent necessary to reflect the terms below and
(ii) such additional conditions, undertakings, representations and warranties,
events of default and other provisions as may be considered necessary or
appropriate by the Lender for a transaction of this nature and which are
reasonably agreed in final documentation between the Lender and the
Borrower. Each party acknowledges that certain information provided
in connection with the proposed transaction is confidential. Each
party agrees that it will not disclose such information to any other party
except to its legal counsel or tax advisors or as required for the completion of
the transaction described herein.
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Borrower:
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The
Talbots, Inc.
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Lender:
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Aeon
Co., Ltd. or one or more subsidiaries of Aeon Co., Ltd. (the “Lender”).
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Principal
Amount
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U.S.$200
million.
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Purpose:
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Proceeds
of the borrowing under the Facility Agreement (the “Loan”)
will be used by the Borrower and its subsidiaries solely to repay all of
the outstanding indebtedness under the Term Loan Agreement, dated July 24,
2006 (as amended), among the Borrower, each of the lenders party thereto
and Mizuho Corporate Bank Ltd, as agent (the “Acquisition
Loan”).
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Availability:
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The
full amount of the Loan must be drawn in a single drawing on the Closing
Date. Amounts borrowed under the Facility Agreement that are
repaid or prepaid may not be reborrowed.
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Repayment:
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The
entire principal amount of the Loan, less any prepaid amounts, shall be
repaid in U.S. Dollars in full on the Maturity Date (as defined
below).
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Voluntary
Prepayments:
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The
Loan may be prepaid, in whole or in part, at par plus accrued and unpaid
interest and any break funding loss incurred upon not less than three
business days’ in Japan prior written notice, at the option of the
Borrower at any
time.
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Mandatory
Prepayments:
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The
Loan shall be prepaid with (a) 50% of Excess Cash Flow (to be defined),
(b) 75% of the net cash proceeds of all asset sales or other dispositions
of property by the Borrower and its subsidiaries (including 75% of the net
proceeds from the sale of stock of any subsidiary of the Borrower and
insurance and condemnation proceeds, provided, however, that in case of
the sale of J.Xxxx, it should be 100% of the net proceeds from the sale of
J. Xxxx), (c) 100% of the net cash proceeds of issuances, offerings or
placements of debt obligations of the Borrower and its subsidiaries
(subject to exceptions to be agreed upon) and (d) 50% of the net cash
proceeds of issuances of equity securities of the Borrower and its
subsidiaries (subject to exceptions to be agreed upon).
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Interest
Rate:
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LIBOR
plus 6.00%. Interest on the Loan will be payable on the last
day of each six month interest period in arrears.
“LIBOR”
means the six month London interbank offer rate expressed as a percentage
rate per annum which appears on the Telerate Page 3750 as of 11:00 a.m.,
London time, on the day that is two business days prior to the proposed
funding date.
All
computations of fees and interest shall be made on the basis of a 365-day
year and actual days elapsed.
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Closing
Date:
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On
the earlier to occur of (i) February 27, 2009 and (ii) three business days
in Japan after satisfaction (or waiver) of all conditions precedent to
borrowing.
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Maturity
Date:
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The
Loan will mature six-months after the Closing Date; provided, that, the Borrower
shall have the option to extend the maturity for additional six-month
periods, up to the third anniversary of the Closing Date (such date, as
extended, the “Maturity
Date”).
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Security;
Ranking:
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The
Loan will be a unsecured general obligation of the Borrower ranking pari passu with all
other unsecured and unsubordinated indebtedness of the
Borrower.
Neither
the Borrower nor any of its subsidiaries may create, assume or suffer to
exist any lien securing indebtedness incurred after the Closing Date
without granting a pari
passu lien to the Lender to secure the Loan made under the Facility
Agreement.
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Guarantees:
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The
obligations under the Facility Agreement will be fully and unconditionally
guaranteed on a senior, joint and several basis (the “Guarantees”),
by all of the existing and future direct and indirect subsidiaries of the
Borrower (collectively, the “Guarantors”).
Each
Guarantee will be the unsecured general obligation of the applicable
Guarantor, ranking pari
passu with all other unsecured and unsubordinated indebtedness of
such
Guarantor.
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Default
Rate:
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Upon
the occurrence and during the continuance of a de-fault, interest will
accrue on any principal or other amount payable under the Loan at a rate
of 15.00% per annum in excess of the applicable interest rate and will be
payable on demand.
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Conditions
Precedent to
Borrowing:
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Substantially
the same as provided under the Existing Loan and usual for facilities of
this type.
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Representations
and
Warranties:
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The
Facility Agreement and the other definitive documentation relating to the
Loan (the “Loan
Documents”) will contain representations and warranties relating to
the Borrower and its subsidiaries that are usual and customary for
transactions of this nature or required by the Lender for this transaction
in particular.
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Covenants:
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The
Loan Documents will contain restrictive covenants relating to the Borrower
and its subsidiaries that are usual and customary for transactions of this
nature, or required by the Lender for this transaction in particular,
including:
Financial
Covenants: None.
Affirmative
Covenants: Payment of obligations, maintenance of existence,
compliance with laws, maintenance of property, insurance, inspection of
property, books and records, notices, use of proceeds, further
assurances.
Negative
Covenants: Written consent of the Lender (in its sole discretion)
shall be required prior to incurrences of indebtedness, liens, fundamental
changes (including mergers, consolidations, etc.), dispositions of
property (including sales of stock of subsidiaries), restricted payments,
investments, transactions with affiliates and other related parties, sale
leaseback transactions, swap agreements, changes in fiscal periods,
negative pledge clauses, clauses restricting subsidiary distributions and
lines of business.
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Reports:
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The Lender shall receive the following reports: | |
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·
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audited
annual financial statements of the Borrower within 120 days after the end
of each fiscal year of the Borrower;
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·
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unaudited quarterly financial statements of the Borrower within 60 days after the end of each fiscal quarter of the Borrower; and | |
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·
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Such
other information and reports as reasonably requested by the Lender from
time to
time.
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Events
of Default:
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Customary
for the type of transactions proposed and others to be reasonably
specified by the Lender relating to the Borrower and its subsidiaries
(subject, where appropriate, to thresholds and grace periods to be agreed
upon), including nonpayment of principal, interest or other amounts,
violation of covenants, incorrectness of representations and warranties in
any material respect, cross default and cross acceleration, bankruptcy,
material judgments or material adverse change.
In
case an event of default shall occur and be continuing, the Lender, by
notice in writing to the Borrower, may declare the principal of, and all
accrued interest on, the Loan to be due and payable
immediately. If a bankruptcy event of the Borrower occurs, the
principal amount of and accrued interest on the Loan will be immediately
due and payable without any notice, declaration or other act on the part
of the Lender.
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Cost
and Yield Protection:
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Usual
for facilities and transactions of this type, including customary
increased costs and tax gross-up provisions.
In
addition, upon any voluntary or mandatory prepayment of the Loan, Borrower
shall reimburse Lender for costs associated with early termination of any
currency hedging arrangements relating to the Loan.
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Expenses
and
Indemnification:
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The
Loan Documents will contain standard indemnification provisions of the
Lender, its affiliates, officers, directors and employees that are usual
and customary for transactions of this nature or required by the Lender
for this transaction in particular.
In
addition, all out-of-pocket expenses (including, legal fees) of the Lender
in connection with the making of the Loan and for the exercise and
enforcement thereof will be paid by the Borrower upon demand from the
Lender.
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Borrower
Account:
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The
Borrower shall open an account at a bank designated by the
Lender.
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Language:
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English.
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Governing
Law:
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[TBD].
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