THIRD AMENDMENT TO CREDIT AGREEMENT
Exhibit 10.1
EXECUTION COPY
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated February 23, 2009, is
entered into by and among TWEEN BRANDS, INC., a Delaware corporation (the “Borrower”), each of the
GUARANTORS (as hereinafter defined), the REVOLVING CREDIT LENDERS (as hereinafter defined), the
TERM LOAN LENDERS (as hereinafter defined), and BANK OF AMERICA, N.A., a national banking
association, in its capacity as administrative agent for the Secured Parties (as defined below)
under this Agreement (hereinafter referred to in such capacity as the “Agent”).
BACKGROUND
WHEREAS, reference is made to that certain Credit Agreement dated as of September 12, 2007 (as
same has been amended prior to the date hereof, the “Credit Agreement”) by, among others, the
Borrower, each of the Guarantors from time to time party thereto (collectively, the “Guarantors”
and, together with the Borrower, the “Loan Parties”), the Revolving Credit Lenders and the Term
Loan Lenders from time to time party thereto (collectively, the “Lenders”) the Agent, for its own
benefit and the benefit of the other Secured Parties (as defined therein), National City Bank, as
Syndication Agent, Fifth Third Bank, as Documentation Agent, Citicorp North America, Inc., as
Managing Agent, Banc of America Securities LLC, as sole book runner, and Banc of America Securities
LLC and National City Bank, as co-lead arrangers. Capitalized terms used herein and not defined
herein shall have the meanings assigned to such terms in the Credit Agreement; and
WHEREAS, the Loan Parties have requested that the Lenders further amend certain provisions of
the Credit Agreement, and the Lenders have agreed to do so, but only on the terms and conditions
set forth herein.
NOW, THEREFORE, intending to be legally bound hereby, in consideration of the foregoing and
for other good and valuable consideration received, the parties hereto covenant and agree as
follows:
1. Definitions. Terms which are defined in the Credit Agreement and not otherwise defined
herein shall have the meanings given to them in the Credit Agreement.
2. Amendments to Article I of Credit Agreement. The provisions of Article I of the Credit
Agreement are hereby amended as follows:
(a) By deleting the definition of “Applicable Margin” in its entirety and substituting
the following in its stead::
Applicable Margin shall mean, as applicable:
(A) the percentage spread, to be added to Base Rate under the Base Rate Option
equal to 3.75% per annum, or
(B) the percentage spread, to be added to LIBO-Rate under the LIBOR Option
equal to 3.50% per annum
(b) By deleting the definition of “Augmenting Revolving Credit Lender” in its entirety.
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(c) By deleting the definition of “Consolidated EBITDAR” in its entirety and
substituting the following in its stead:
Consolidated EBITDAR shall mean, for any period of determination, consolidated net
income for such period plus, without duplication and to the extent deducted in
determining such consolidated net income, the sum of Consolidated Interest Expense,
income tax expense, depreciation expense, amortization expense, Consolidated Minimum
Rent and other non-cash charges, the transaction costs, fees and expenses incurred
in connection with this Agreement and the overnight share repurchase transaction to
be consummated on or promptly after the Closing Date (but for the purposes of
calculating Consolidated EBITDAR such transaction costs, fees and expenses shall not
exceed $500,000), one-time restructuring charges, and the transaction costs, fees
and expenses incurred in connection with the Third Amendment and minus consolidated
interest income and non-cash credits, in each case of the Borrower and its
Subsidiaries for such period determined and consolidated in accordance with GAAP.
(d) By adding the words “and Section 7.02(o)” after the words “Section 7.02(n)” in the
definition of “Consolidated Tangible Net Worth Limit”.
(e) By deleting the definition of “Expiration Date” in its entirety and substituting
the following in its stead:
Expiration Date shall mean the Initial Expiration Date.
(f) By deleting the definition of “Extended Expiration Date” in its entirety.
(g) By deleting the definition of “Increasing Revolving Credit Lender” in its entirety.
(h) By deleting the definition of “Leverage Ratio” in its entirety and substituting the
following in its stead:
Leverage Ratio shall mean the ratio of (a) Consolidated Senior Debt as of
the end of the most recently ended fiscal quarter to (b) Consolidated
EBITDAR for the period of four (4) consecutive fiscal quarters then ended.
(i) By deleting the definition of “Permitted Acquisition” in its entirety.
(j) By deleting the definition of “Release Event” in its entirety.
(k) By deleting the last sentence of the definition of “Revolving Credit Commitment” in
its entirety and substituting the following in its stead:
As of the Third Amendment Effective Date, the aggregate of all Revolving
Credit Commitments is $50,000,000.
(l) By deleting the definition of “Security Documents” in its entirety and substituting
the following in its stead:
Security Documents shall mean the Security Agreement, the Ancillary Security
Documents, all mortgages, deeds of trust and all other documents, instruments, and
agreements sufficient to provide the Agent for the benefit of the Lenders with a
first
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priority perfected Lien, subject only to Permitted Liens having priority over the
Lien of the Agent under applicable law, on all of the assets of the Loan Parties,
including, without limitation, (a) all inventory, accounts, documents of title,
deposit accounts, investment accounts, instruments, general intangibles, furniture,
fixtures, equipment, chattel paper and commercial tort claims and the proceeds
thereof, and (b) all real estate owned by the Loan Parties and the proceeds thereof,
but excluding (i) any trademarks and trade names other than those trademarks and
trade names set forth on Schedule 1 hereto, (ii) all leasehold interests, (iii) any
assets of a foreign Subsidiary of the Loan Parties or assets in which perfection of
Lien is governed by the laws of a jurisdiction other than the United States of
America, its states and territories, (iv) the Designated Escrow Accounts, and (e)
any voting equity interests in any direct or indirect foreign Subsidiary of the
Borrower in excess of 65% of such equity interests.
(m) By deleting the definition of “Specified Default” in its entirety and substituting
the following in its stead:
Specified Default shall mean the occurrence of any Event of Default under any of (i)
Section 8.01(a), (ii) Section 8.01(b) (but only with respect any financial
statements or financial information delivered under this Agreement or with respect
to representations concerning Solvency), (iii) Section 8.01(c) (but only with
respect to Section 7.02(m) or Section 7.02(n) and not any other provisions covered
by Section 8.01(c)), (iv) Section 8.01(d) (but only with respect to Section 7.01(a),
Section 7.01(b), Section 7.01(c) and Section 7.01(d) and not any other provisions
covered by Section 8.01(d)), (v) Section 8.01(g), (vi) Section 8.01(j), (vii)
Section 8.01(l), (viii) Section 8.01(m), (ix) Section 8.01(n), or (x) Section
8.01(o).
(n) By deleting the definition of “Triggering Event” in its entirety.
(o) By adding the following definitions in appropriate alphabetical order:
(i) Borrower’s Operating Account shall mean a deposit account maintained by the
Borrower with Agent or another financial institution reasonably acceptable to Agent
for the purpose of paying business expenses in the ordinary course and any other
working capital needs in the ordinary course of business.
(ii) Borrowing Base shall mean, at any time of calculation, an amount
equal to
(A) eighty percent (80%) multiplied by the net book value of the
Borrower’s accounts receivable, plus
(B) Sixty percent (60%) multiplied by the net book value of the
Borrower’s inventory.
(iii) Borrowing Base Certificate shall mean a certificate reflecting the
calculation of the Borrowing Base in reasonable detail and certified by the Chief
Executive Officer, President or Chief Financial Officer of the Borrower as being
true and accurate in all material respects.
(iv) Borrowing Base Testing Period shall mean any time (i) when an Event of
Default exists and is continuing, or (ii) when the Revolving Facility Usage exceeds,
or
after giving effect to the making of a Revolving Credit Loan or Swing Loan or
issuance of a Letter of Credit would exceed, the Revolving Loan Threshold.
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(v) Capital Expenditures shall mean with respect to the Borrower and its
Subsidiaries on a consolidated basis for any period, (a) all expenditures made
(whether made in the form of cash or other property) or costs incurred for the
acquisition or improvement of fixed or capital assets, in each case that are set
forth as capital expenditures in a consolidated statement of cash flows of such
Person for such period, in each case prepared in accordance with GAAP, and (b)
Capital Lease Obligations incurred by the Borrower or any of its Subsidiaries during
such period. For purposes of this definition, the purchase price of equipment that
is purchased simultaneously with the trade-in of existing equipment or with
insurance proceeds shall be included in Capital Expenditures only to the extent of
the gross amount of such purchase price less the credit granted by the seller of
such equipment for the equipment being traded in at such time or the amount of such
proceeds, as the case may be.
(vi) Capital Lease Obligations shall mean, with respect to the Borrower and its
Subsidiaries on a consolidated basis for any period, the obligations of the Borrower
and its Subsidiaries to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a combination
thereof, which obligations are required to be classified and accounted for as
liabilities on a balance sheet of the Borrower and its Subsidiaries under GAAP and
the amount of which obligations shall be the capitalized amount thereof determined
in accordance with GAAP.
(vii) Cash Dominion Event shall mean either (i) the occurrence and continuance
of any Specified Default, or (ii) the acceleration of the time for payment of the
Obligations as a result of the occurrence of an Event of Default and the
commencement of the exercise of remedies against any of the property upon which the
Agent has been granted a Lien under the Security Documents, or (iii) the outstanding
Revolving Credit Loans exceed the Revolving Loan Threshold at any time. For
purposes of this Agreement, the occurrence of a Cash Dominion Event shall be deemed
continuing (i) until such Specified Default has been waived or any cure has not been
rejected, (ii) such acceleration and exercise of remedies has been rescinded, and/or
(iii) if the Cash Dominion Event arises as a result of the Revolving Credit Loans
exceeding the Revolving Loan Threshold, until the outstanding Revolving Credit Loans
have been less than the Revolving Loan Threshold for thirty (30) consecutive days,
in which case a Cash Dominion Event shall no longer be deemed to be continuing for
purposes of this Agreement; provided that a Cash Dominion Event shall be deemed
continuing (even if a Specified Default is no longer continuing, acceleration and
exercise of remedies has been rescinded, and/or the outstanding Revolving Credit
Loans are less than the Revolving Loan Threshold for thirty (30) consecutive days)
at all times after a Cash Dominion Event has occurred and been discontinued on four
(4) occasions during any consecutive twelve month period. For purposes of this
definition, the term “Revolving Credit Loans” shall mean and include Swing Loans.
(viii) Consolidated Senior Debt shall mean, at any time of calculation, the sum
of the principal amount then outstanding of all Loans under this Agreement plus six
(6) times the Forward Minimum Rent Commitments of the Borrower and its Subsidiaries.
In calculating Consolidated Senior Debt, adjustment shall be made on a quarterly
basis to give effect to the actual amount of Forward Minimum Rent Commitments (and
solely for purposes of calculating Consolidated Senior Debt and notwithstanding
anything to the
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contrary in the definition of Forward Minimum Rent Commitments, Forward Minimum
Rent Commitments shall be calculated quarterly for the four fiscal quarter period
following the Borrower’s most recently ended fiscal quarter, as reported or to be
reported in the Borrower’s quarterly reports filed on Form 10-Q or annual report
filed on Form 10-K, as applicable, with the Securities and Exchange Commission).
(ix) Designated Asset Transaction means with respect to of any real property,
trademarks or trade names owned by any Loan Party (whether or not the Agent has been
granted a Lien in such property to secure the Obligations), any of the following:
(a) the sale, transfer, license, lease or other disposition (including any Sale
Leaseback transaction), (whether in one transaction or in a series of transactions)
of any of such assets; (b) any insurance payment, condemnation award, or other
recovery event with respect to any such assets, or (c) the incurrence of
Indebtedness (other than the Obligations) secured by any such assets.
Notwithstanding the foregoing, (i) the exclusive license by a Loan Party of
trademarks or trade names owned by such Loan Party in the ordinary course of
business shall not constitute a Designated Asset Transaction to the extent that the
arrangement relates solely to a territory or territories outside the United States,
and/or to a specified product category sold inside or outside the United States, and
(ii) the non-exclusive license by a Loan Party of trademarks or trade names owned by
such Loan Party in the ordinary course of business shall not constitute a Designated
Asset Transaction; as long as no more than thirty percent (30%) of consolidated
revenue of the Borrower and its Subsidiaries in any Fiscal Year shall be
attributable to sales pursuant to all such exclusive and non-exclusive licenses in
the aggregate.
(x) Designated Escrow Accounts means collectively, the Tax Escrow Account and
the Equity Proceeds Escrow Account.
(xi) Equity Proceeds Escrow Account means a deposit account of the Borrower
maintained with the Agent into which solely net proceeds from the issuance of equity
interests by the Borrower shall be deposited.
(xii) Excess Cash means all cash and cash equivalents of the Borrower
(excluding amounts in the Designated Escrow Accounts) in excess of the Minimum Cash
Amount.
(xiii) Fiscal Year shall mean the fiscal year of the Borrower and the other
Loan Parties ending on the Saturday nearest to the last business day of January of
each calendar year. For purposes of this Agreement, any particular Fiscal Year
shall be designated by reference to the calendar year in which such Fiscal Year
begins.
(xiv) Minimum Cash Amount means $20,000,000 (excluding amounts in the
Designated Escrow Accounts).
(xv) Net Proceeds shall mean (a) with respect to any sale, transfer or other
disposition (including any Sale-Leaseback Transaction, whether in one transaction or
in a series of transactions, of any property by the Borrower or any of its
Subsidiaries, the excess, if any, of (i) the sum of cash and cash equivalents
received in connection with such transaction (including any cash or cash equivalents
received by way of deferred payment pursuant to, or by monetization of, a note
receivable or otherwise, but only as and when so received) over (ii) the sum of (A)
the principal amount of any Indebtedness that is secured by the applicable asset by
a Lien permitted hereunder which is senior to
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the Agent’s Lien on such asset and that is required to be repaid (or to
establish an escrow for the future repayment thereof) in connection with such
transaction, (B) the reasonable and customary out-of-pocket fees, costs and expenses
incurred by the Borrower or such Subsidiary in connection with such transaction
(including, without limitation, brokerage, legal, title and recording or transfer
tax expenses and commissions) paid by the Borrower or any such Subsidiary to third
parties (other than Affiliates)) and (C) income taxes reasonably estimated to be
actually payable within one year of the date of such sale, transfer or other
disposition as a result of any gain recognized in connection with such sale,
transfer or other disposition; and (b) with respect to the incurrence or issuance of
any Indebtedness by the Borrower or any of its Subsidiaries, the excess of (i) the
sum of the cash and cash equivalents received in connection with such transaction
over (ii) the underwriting discounts and commissions, and other reasonable and
customary out-of-pocket fees, costs and expenses, incurred by the Borrower or such
Subsidiary in connection therewith.
(xvi) Revolving Loan Threshold shall mean $10,000,000 (without giving effect to
the aggregate undrawn face amount of outstanding Letters of Credit up to $5,000,000
(any such amounts in excess of $5,000,000 being included in the calculation of the
Revolving Loan Threshold)).
(xvii) Tax Escrow Account means a deposit account of the Borrower maintained
with the Agent into which solely that portion of the Net Proceeds from any sale,
transfer or other disposition of any property of the Borrower or any of its
Subsidiaries constituting income taxes reasonably estimated to be actually payable
within one year of the date of such sale, transfer or other disposition as a result
of any gain recognized in connection with such sale, transfer or other disposition;
provided that any such amounts not utilized to pay such taxes shall be paid to the
Agent and applied to the Term Loan in accordance with Section 4.05(d) hereof..
(xviii) Third Amendment shall mean that certain Third Amendment to Credit
Agreement dated as of February 23, 2009, by and among the Borrower, the Guarantors
party thereto, the Revolving Credit Lenders party thereto, the Term Loan Lenders
party thereto and the Agent.
(xix) Third Amendment Effective Date shall mean February 24, 2009.
3. Amendments to Article II of Credit Agreement. The provisions of Article II of the Credit
Agreement are hereby amended as follows:
(a) The provisions of Section 2.01(a) of the Credit Agreement are hereby amended by
deleting clause (ii) thereof and substituting the following in its stead:
(ii) the Revolving Facility Usage at any one time outstanding shall not exceed
the Revolving Credit Commitments of all of the Revolving Credit Lenders,
provided that if a Borrowing Base Testing Period is then applicable, the
Revolving Facility Usage at any one time outstanding shall not exceed the lesser of
(A) the Revolving Credit Commitments of all of the Revolving Credit Lenders or (B)
the Borrowing Base.
(b) The provisions of Section 2.05 of the Credit Agreement are hereby amended by adding
the following new clause (c) at the end thereof:
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(c) Notwithstanding anything to the contrary herein contained, the Borrower
may not request a Revolving Credit Loan or Swing Loan in excess of the
Revolving Loan Threshold unless and until it has utilized its Excess Cash,
if any, and is holding cash in an amount not to exceed the Minimum Cash
Amount.
(c) The provisions of Section 2.11 of the Credit Agreement are hereby deleted in their
entirety and the following substituted in their stead:
2.11 Intentionally Omitted.
(d) The provisions of Section 2.12 of the Credit Agreement are hereby deleted in their
entirety and the following substituted in their stead:
2.12 Intentionally Omitted.
4. Amendments to Article III of Credit Agreement. The provisions of Section 3.01(c) of the
Credit Agreement are hereby deleted in their entirety and the following substituted in their stead:
(c) Change in Fees or Interest Rates. Any increase or decrease in Applicable
Facility Fee due to an increase or decrease in the Leverage Ratio Level after the
Closing Date shall be effective on the first calendar day following the date on
which the Compliance Certificate evidencing the computation of such Leverage Ratio
Level is due to be delivered under Section 7.03(d). If the Applicable Facility Fee
Rate is thereby increased or reduced with respect to any period for which the
Borrower has already paid Facility Fees, the Agent shall recalculate the Facility
Fees due from or to the Borrower and shall, within fifteen (15) Business Days after
the Borrower notifies the Agent of such increase or decrease, give the Borrower and
the Lenders notice of such recalculation.
(i) Any additional Facility Fees due from the Borrower shall be paid to the Agent
for the account of the Lenders on the next date on which a fee payment is due;
provided, however, that if there are no Loans outstanding or if the Loans are due
and payable, such additional Facility Fees shall be paid promptly after receipt of
written request for payment from the Agent.
(ii) Any Facility Fees refund due to the Borrower shall be credited against payments
otherwise due from the Borrower on the next fee payment due date or, if the Loans
have been repaid and the Lenders are no longer committed to lend under this
Agreement, the Lenders shall pay the Agent for the account of the Borrower such
Facility Fees refund not later than five (5) Business Days after written notice from
the Agent to the Lenders.
5. Amendments to Article IV of Credit Agreement. The provisions of Article IV of the Credit
Agreement are hereby amended as follows:
(a) The provisions of Section 4.05(a) of the Credit Agreement are hereby deleted in
their entirety and the following substituted in their stead:
Scheduled Payments on Term Loans. The aggregate unpaid principal balance of all Term
Loans made by such Term Lender to the Borrower pursuant to this Agreement shall be
made in accordance with the following payment schedule: (i) on the last Business Day
of each calendar month (other than the last calendar month of each Fiscal Year),
commencing February 28, 2009, principal payments in the amount of $500,000 each
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calendar month, (ii) in addition to the payments described in clause (i), annually,
on the last Business Day of each Fiscal Year of the Borrower, commencing with the
Fiscal Year ending January, 2010, principal payments in an amount equal to
$8,750,000 each year, and (iii) no later than 12:00 p.m on the Expiration Date, a
final payment in an amount equal to the entire outstanding principal balance of the
Term Loans, together with accrued and unpaid interest thereon and other amounts
payable under this Agreement.
(b) By adding the words “or Section 7.02(o)” after the words “Section 7.02(n)” in
Section 4.05(b) and Section 4.05(c) of the Credit Agreement.
(c) The provisions of Section 4.05(d) of the Credit Agreement (to be re-lettered as (g)
as provided below) are hereby amended by deleting the last two sentences thereof.
(d) The provisions of Section 4.05 of the Credit Agreement are hereby amended by
re-lettering clauses (d), (e) and (f) as clauses (g), (h) and (i) and inserting the
following new clauses (d), (e), and (f):
(d) Mandatory Prepayment Upon Designated Asset Transaction; Prepayment of Term
Loans; Mandatory Reduction of Credit Commitments. Within five (5) Business Days of
any Designated Asset Transaction by any one or more Loan Parties, the Term Loans
shall be prepaid (or if there are no Term Loans outstanding, the Revolving Credit
Loans shall be repaid without any reduction in the Revolving Credit Commitments
(unless the Agent is not reasonably satisfied that the Borrower will be in pro forma
compliance with the covenants set forth in Sections 7.02(m), (n), and (o) for the
following four fiscal quarters , in which case the Revolving Credit Commitments
shall be automatically and permanently be reduced) in an amount equal to the Net
Proceeds of such Designated Asset Transaction. On the date of any reduction of the
Revolving Credit Commitments pursuant to this Section 4.05(d), the Borrower shall
make a mandatory prepayment of so much of the Revolving Credit Loans as shall be
necessary in order that the Revolving Facility Usage will not exceed the Revolving
Credit Commitments after giving effect to such reduction. Notwithstanding the
foregoing, no prepayment of the Term Loans and no reduction of the Revolving Credit
Commitments shall be required to the extent of that portion of the Net Proceeds from
any casualty loss, condemnation award or other recovery event which the Borrower
certifies to the Agent that it reasonably expects to use to purchase substitute or
replacement assets for use in the business of the Borrower or another Loan Party
within one hundred eighty (180) days of the date of such loss, award or recovery
event. All such substitute or replacement assets shall be subject to or, if
necessary in the reasonable judgment of Agent, made subject to the Security
Documents. In the event that such substitution or replacement purchase has not
occurred within such one hundred eighty (180) day period, the Borrower shall make a
mandatory prepayment of all Net Proceeds not so expended. All Net Proceeds not
certified as expected to be so expended on substitute or replacement assets for use
in the business of the Borrower or another Loan Party within such one hundred eighty
(180) day period shall be subject to the first sentence of this Section 4.05(d). Any
prepayment hereunder shall be subject to the Borrower’s Obligation to indemnify the
Lenders under Section 4.06(b)[Indemnity]. All payments made under this Section
4.05(d) applied to the Term Loans shall be applied to reduce each subsequent
principal installment on a pro rata basis and any subsequent principal installments
shall not be deferred on account thereof. The provisions of this Section 4.05(d)
are in addition to, but not duplicative of, any prepayments required under clauses
(b) and (c) hereof. In the event of a conflict between
the provisions of this Section 4.05(d) and either Section 4.05(b) or (c), the
provisions of this Section 4.05(d) shall control.
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(e) (i) Subject to the provisions of clauses (ii) through (v) hereof, after the
occurrence and during the continuation of a Cash Dominion Event, all cash receipts
of the Loan Parties constituting proceeds of the property upon which the Agent has
been granted a Lien pursuant to the Security Documents, shall be transferred to the
Agent by automated clearinghouse transfer or wire transfer daily to the
Concentration Account (as defined in the Security Agreement).
(ii) Upon the occurrence of a Cash Dominion Event arising from the fact that
the outstanding Revolving Credit Loans (including Swing Loans) exceed the Revolving
Loan Threshold, that portion of such receipts and proceeds arising from the
collection of accounts receivable or the sale or other disposition of inventory
after the date of commencement of a Cash Dominion Event and any Excess Cash shall be
applied to repay the Revolving Credit Loans (including Swing Loans) until the
outstanding principal amount of all Revolving Credit Loans (including Swing Loans)
do not exceed the Revolving Loan Threshold without any reduction in the Revolving
Credit Commitments. As long as no Specified Default then exists or the time for
payment of the Obligations has not been accelerated, after such funds are applied to
so repay the Revolving Credit Loans (including Swing Loans), any excess shall be
transferred to the Borrower’s Operating Account.
(iii) Upon the occurrence of a Cash Dominion Event arising from the existence
of a Specified Default (and the time for payment of the Obligations has not been
accelerated), that portion of such receipts and proceeds arising from the collection
of accounts receivable or the sale or other disposition of inventory after the date
of commencement of a Cash Dominion Event and any Excess Cash shall be applied to
repay the Revolving Credit Loans (including Swing Loans) until all Revolving Credit
Loans (including Swing Loans) have been paid in full. After such funds are applied
to so repay the Revolving Credit Loans (including Swing Loans), any excess shall be
transferred to the Borrower’s Operating Account.
(iv) Upon the occurrence of a Cash Dominion Event arising from the acceleration
of the time for payment of the Obligations and the commencement of exercise of
remedies, that portion of such receipts and proceeds arising from the collection of
accounts receivable or the sale or other disposition of inventory, whenever received
(including that portion constituting Excess Cash and the Minimum Cash Amount) shall
be applied first to repay the Revolving Credit Loans (including Swing Loans) until
all Revolving Credit Loans (including Swing Loans) have been paid in full, second to
repay the Term Loans until all Term Loans have been paid in full, and thereafter to
repay any and all other Obligations. After such funds are applied to so repay the
Obligations, any excess shall be transferred to the Borrower’s Operating Account.
(iv) Upon the occurrence and during the continuance of any Cash Dominion Event,
any receipts and proceeds from any property upon which the Agent has been granted a
Lien pursuant to the Security Documents not constituting proceeds from the
collection of accounts receivable or the sale or other disposition of inventory
shall be applied to the Term Loan in the manner set forth in the penultimate
sentence of Section 4.05(d).
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(f) If during any Borrowing Base Testing Period, the Revolving Facility Usage exceeds
the lower of (i) the then amount of the aggregate of the Revolving Credit Commitments, and
(ii) the then amount of the Borrowing Base, the Borrower will immediately upon notice from
the Agent (A) prepay the Swing Loans in an amount necessary to eliminate such excess, (B)
if, after giving effect to the prepayment in full of all outstanding Swing Loans, such
excess has not been eliminated, prepay the Revolving Credit Loans in an amount necessary to
eliminate such excess, and (C) if, after giving effect to the prepayment in full of all
outstanding Swing Loans and Revolving Credit Loans such excess has not been eliminated,
deposit cash with the Agent in an amount equal to 102.5% of the Letters of Credit
Outstanding to the extent necessary to eliminate such excess. Upon and to the extent that
(1) the lesser of (x) the Revolving Credit Commitments or (y) the Borrowing Base plus (2)
the amount of such cash collateral exceeds the Revolving Facility Usage, the Agent shall
release and return an amount of such cash collateral equal to such excess to the Borrower
upon its request.
6. Amendments to Article VII of Credit Agreement. The provisions of Article VII of the Credit
Agreement are hereby amended as follows:
(a) The provisions of Section 7.01 of the Credit Agreement are hereby amended by adding
the following new clause (l) thereto:
(l) Appraisals and Environmental Site Assessments. (i) Upon the request of
the Agent, the Loan Parties shall permit the Agent to conduct appraisals of any real
property upon which the Agent has been granted a Lien pursuant to the Security
Documents by appraisers reasonably satisfactory to the Agent. The Borrower shall
pay the fees and expenses of the Agent or such appraisers with respect to only one
such appraisal, unless a Specified Default exists and is continuing, in which event
the Borrower shall pay the costs of all such appraisals undertaken thereafter. The
Borrower will, and will cause each of its Subsidiaries to, cooperate in all respects
with the Agent and such third parties to enable such appraisals to be timely
completed in a manner reasonably satisfactory to the Agent.
(ii) Upon the request of the Agent, the Loan Parties shall permit the Agent to
engage a geohydrologist, an independent engineer or other qualified consultant or
expert, reasonably acceptable to the Agent, at the expense of the Borrower, to
undertake Phase I environmental site assessments of any real estate upon which the
Agent has been granted a Lien pursuant to the Security Documents. Environmental
assessments may include detailed visual inspections of such real estate, including,
without limitation, any and all storage areas, storage tanks, drains, dry xxxxx and
leaching areas, and the taking of soil samples, surface water samples and ground
water samples, as well as such other investigations or analyses as are reasonably
necessary for a determination of the compliance of the real estate and the use and
operation thereof with all applicable Environmental Laws. The Borrowers will, and
will cause each of their Subsidiaries to, cooperate in all respects with the Agent
and such third parties to enable such assessment and evaluation to be timely
completed in a manner reasonably satisfactory to the Agent.
(b) The provisions of Section 7.02(e)(i) of the Credit Agreement are hereby deleted in
their entirety and the following substituted in their stead:
(i) any Loan Party other than the Borrower may consolidate or merge with and into
(A) the Borrower, so long as the Borrower is the surviving entity, or (B) another
Loan Party which is wholly-owned by one or more of the Borrower or any other Loan
Party.
10
(c) The provisions of Section 7.02(e)(ii) of the Credit Agreement are hereby deleted in
their entirety and the following substituted in their stead:
(ii) Intentionally Omitted.
(d) The provisions of Section 7.02(f) of the Credit Agreement are hereby amended by
renumbering clause (vii) as clause (viii) and adding the following new clause (vii):
(vii) Subject to the provisions of Section 4.05(d), Designated Asset
Transactions; and
(e) The provisions of Section 7.02(i)(ii) of the Credit Agreement are hereby deleted in
their entirety and the following substituted in their stead:
(ii) Intentionally Omitted
(f) The provisions of Section 7.02(m) are hereby deleted in their entirety and the
following substituted in their stead:
(m) Maximum Leverage Ratio. The Loan Parties shall not permit the Leverage
Ratio to exceed the following amounts for the following test dates:
| Test Date | Maximum Leverage Ratio | |
Fourth Fiscal Quarter End for Fiscal Year 2009
|
7.65:1.00 | |
First Fiscal Quarter End for Fiscal Year 2010
|
7.50:1.00 | |
Second and Third Fiscal Quarters End for Fiscal
Year 2010
|
7.25:1.00 | |
Fourth Fiscal Quarter End for Fiscal Year 2010
|
6.75:1.00 | |
First Fiscal Quarter End for Fiscal Year 2011
|
6.50:1.00 | |
Second Fiscal Quarter End for Fiscal Year 2011
|
6.25:1.00 | |
Third Fiscal Quarter End for Fiscal Year 2011
|
6.00:1.00 | |
Fourth Fiscal Quarter End for Fiscal Year 2011 and
each Fiscal Quarter End thereafter
|
5.75:1.00 |
11
(g) The provisions of Section 7.02(n) are hereby deleted in their entirety and the
following substituted in their stead:
(n) Minimum Coverage Ratio. The Loan Parties shall not permit the Coverage
Ratio to be less than the following amounts for the following test dates:
| Test Date | Minimum Coverage Ratio | |
Fourth Fiscal Quarter End for Fiscal Year 2008
|
1.00:1.00 | |
First three Fiscal Quarter Ends for Fiscal Year 2009
|
0.80:1.00 | |
Fourth Fiscal Quarter End for Fiscal Year 2009
|
0.90:1.00 | |
First three Fiscal Quarter Ends for Fiscal Year 2010
|
1.00:1.00 | |
Fourth Fiscal Quarter End for Fiscal Year 2010
|
1.05:1.00 | |
First three Fiscal Quarter Ends for Fiscal Year 2011
|
1.10:1.00 | |
Fourth Fiscal Quarter End for Fiscal Year 2011 and
each Fiscal Quarter End thereafter
|
1.20:1.00 |
(h) The provisions of Section 7.02(o) of the Credit Agreement are hereby deleted in
their entirety and the following substituted in their stead:
(o) Maximum Capital Expenditures. The Loan Parties shall not permit the
Capital Expenditures (net of tenant allowances actually received by the Loan
Parties during such period) to exceed the following amounts for the
following periods:
| Period | Maximum Capital Expenditures | |
Fiscal Year 2009
|
$10,000,000 | |
Fiscal Year 2010
|
$15,000,000 | |
Fiscal Year 2011
|
$20,000,000 | |
Fiscal Year 2012
|
$30,000,000 |
12
(i) The provisions of Section 7.03(c) of the Credit Agreement are hereby deleted in
their entirety and the following substituted in their stead:
(c) Monthly Financial Statements; Borrowing Base Certificates (i) Within thirty
(30) calendar days after the end of each fiscal month, (A) inventory stock ledger
reports as of the end of such fiscal month, (B) unless required more frequently as
provided in clause (ii), below, a Borrowing Base Certificate, and (C) financial
statements of the Borrower, consisting of a consolidated balance sheet as of the end
of such fiscal month and related consolidated statements of income, and cash flows
for the fiscal month then ended and the fiscal year through that date, all in
reasonable detail and certified (subject to normal year-end and quarter end audit
and similar accounting adjustments and except for the absence of footnotes thereto)
by the Chief Executive Officer, President or Chief Financial Officer of the Borrower
as having been prepared in accordance with GAAP, consistently applied, and setting
forth in comparative form the respective financial statements for the corresponding
date and period in the previous fiscal year.
(ii) At any time that cash and cash equivalents of the Borrower (excluding amounts
in the Designated Escrow Accounts) is less than the Minimum Cash Amount, a Borrowing
Base Certificate on Friday of each week.
(j) The provisions of Section 7.04 of the Credit Agreement are hereby deleted in their
entirety and the following substituted in their stead:
Collateral Security for Obligations. The Obligations are and shall continue to be
secured by Liens on the property described in the Security Documents and the
Ancillary Security Documents. The Loan Parties hereby covenant and agree that they
shall, upon the reasonable request of the Agent, take all such actions and execute
and deliver (or cause to be executed and delivered) all such Ancillary Security
Documents as may be reasonably requested by the Agent, to ensure that the Liens
granted pursuant to the Security Documents and the Ancillary Security Documents
shall constitute a valid, binding and enforceable first priority Lien in all
Collateral (as defined in the Security Agreement), subject to any Permitted Liens
having priority over the Agent’s Lien under applicable law.
7. Amendment to Schedules. Schedules 1.01(B) and 5.01(B) to the Credit Agreement are hereby
deleted in their entirety and replaced by Schedules 1.01(B) and 5.01(B) in the form attached
hereto.
8. Conditions Precedent to Credit Extensions. Prior to the Third Amendment Effective Date,
certain conditions precedent to the making of Revolving Credit Loans and issuance of Letters of
Credit under Section 6.02 were not satisfied in all material respects. The Agent and the Lenders
agree that no such failure to satisfy a condition precedent to such credit extensions of which the
Agent was aware prior to the Third Amendment Effective Date shall be applicable to any request for
to the making of Revolving Credit Loans and issuance of Letters of Credit after the Third Amendment
Effective Date. The foregoing shall not be deemed to otherwise modify the provisions of Section
6.02.
9. Conditions to Effectiveness. This Amendment shall not be effective until each of the
following conditions precedent have been fulfilled to the satisfaction of the Agent:
13
(a) This Amendment shall have been duly executed and delivered by the Loan Parties, the
Agent and the Required Lenders, and the Agent shall have received a fully executed copy
hereof, of all Security Documents and of each other document required hereunder.
(b) The Agent shall have received (i) evidence reasonably satisfactory to it that all
action on the part of the Loan Parties necessary for the valid execution, delivery and
performance by the Loan Parties of this Amendment shall have been duly and validly taken,
(ii) evidence that all necessary consents and approvals to the Amendment have been obtained,
and (iii) a legal opinion of counsel to the Borrower and Guarantors reasonably satisfactory
in form and substance to the Agent.
(c) The Agent shall have completed all due diligence which it deems appropriate with
respect to the assets which are to constitute collateral for the obligations under the
Security Documents.
(d) The Agent (i) shall have filed all such financing statements and mortgages, as may
be necessary for the Agent to perfect its security interest in the property which is the
subject of the Security Documents for the benefit of the Lenders and the Agent and to assure
its first-priority status therein (subject to Permitted Liens having priority under
applicable law), and (ii) unless otherwise agreed by the Agent, shall have obtained all such
control agreements and shall have given all such notices as may be necessary for the Agent
to perfect its security interest in the property which is the subject of the Security
Documents for the benefit of the Lenders and the Agent and to assure its first-priority
status therein (subject to Permitted Liens having priority under applicable law).
(e) No event shall have occurred that could reasonably be expected to result in a
Material Adverse Change.
(f) There shall not be any action, suit, investigation or proceeding pending or, to the
knowledge of the Borrower threatened in any court or before any arbitrator or governmental
authority that could reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), operations, assets, or income of the Borrower and
Guarantors or could reasonably be expected to result in a Material Adverse Change.
(g) The Loan Parties shall have paid all fees payable to the Agent and the Lenders
hereunder and otherwise due in connection herewith and the Loan Parties shall have
reimbursed the Agent for all of its reasonable out-of-pocket expenses incurred in connection
with negotiation and preparation of this Amendment, including all reasonable attorneys’ fees
and expenses.
(h) After giving effect to this Amendment, no Potential Default or Event of Default
shall have occurred and be continuing.
(i) The Loan Parties shall have provided such additional instruments, documents, and
agreements to the Agent as the Agent and its counsel may have reasonably requested.
10. Representations and Warranties. Each Loan Party hereby represents and warrants to the
Agent and the Lenders that, after giving effect to this Amendment: (i) no Potential Default or
Event of Default has occurred or exists under the Credit Agreement or under any other Loan
Document, and (ii) except with respect to those representations and warranties which relate solely
to an earlier date, all representations and warranties contained in the Credit Agreement and the
other Loan Documents are true and correct as of the date hereof.
14
11. Miscellaneous.
(a) Except as provided herein, all terms and conditions of the Credit Agreement and the
other Loan Documents remain in full force and effect and are hereby ratified and confirmed
in all respects.
(b) This Amendment may be executed in counterparts, each of which when so executed and
delivered shall be an original, and all of which together shall constitute one agreement.
Delivery of an executed counterpart of a signature page hereto by facsimile or electronic
means (such as PDF) shall be effective as delivery of a manually executed counterpart
hereof.
(c) This Amendment expresses the entire understanding of the parties with respect to
the transactions contemplated hereby. No prior negotiations or discussions shall limit,
modify, or otherwise affect the provisions hereof.
(d) The Loan Parties shall execute and deliver to the Agent such other documents,
instruments, and agreements that the Agent may reasonably require in order to implement the
terms and conditions of this Amendment.
(e) Any determination that any provision of this Amendment or any application hereof is
invalid, illegal, or unenforceable in any respect and in any instance shall not affect the
validity, legality, or enforceability of such provision in any other instance, or the
validity, legality, or enforceability of any other provisions of this Amendment.
(f) In connection with the interpretation of this Amendment and all other documents,
instruments, and agreements incidental hereto:
(i) The captions of this Amendment are for convenience purposes only, and shall
not be used in construing the intent of the Agent, the Lenders and the Loan Parties
under this Amendment.
(ii) In the event of any inconsistency between the provisions of this Amendment
and any of the other Loan Documents, the provisions of this Amendment shall govern
and control.
(iii) The parties hereto have prepared this Amendment and all documents,
instruments, and agreements incidental hereto with the aid and assistance of their
respective counsel. Accordingly, all of them shall be deemed to have been drafted
by each of them and shall not be construed against either party.
(g) This Third Amendment shall be governed by, and construed in accordance with, the
internal laws of the State of Ohio without regard to its conflict of laws principles,.
[Signature Pages Follow]
15
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have
executed this Amendment as of the day and year first above written.
| BORROWER: | ||||
| TWEEN BRANDS, INC. | ||||
| By: | /s/ Xxxxxxx xx Xxxxxx | |||
| Name: | Xxxxxxx xx Xxxxxx | |||
| Title: | Executive Vice President and Chief Financial Officer | |||
| GUARANTORS: | ||||
| AMERICAN FACTORING, INC. | ||||
| By: | /s/ Xxxxxxx xx Xxxxxx | |||
| Name: | Xxxxxxx xx Xxxxxx | |||
| Title: | President | |||
| FLORET, LLC | ||||
| By: | /s/ Xxxxxxx xx Xxxxxx | |||
| Name: | Xxxxxxx xx Xxxxxx | |||
| Title: | Chief Financial Officer | |||
| TWEEN BRANDS DIRECT SERVICES, INC. | ||||
| By: | /s/ Xxxxxxx xx Xxxxxx | |||
| Name: | Xxxxxxx xx Xxxxxx | |||
| Title: | Executive Vice President and Chief Financial Officer | |||
| TWEEN BRANDS AGENCY, INC. | ||||
| By: | /s/ Xxxxx X. Xxxxxxx | |||
| Name: | Xxxxx X. Xxxxxxx | |||
| Title: | President and Chief Executive Officer | |||
| TWEEN BRANDS DIRECT, LLC | ||||
| By: | /s/ Xxxxx X. Xxxxxxx | |||
| Name: | Xxxxx X. Xxxxxxx | |||
| Title: | President, Chief Executive Officer and Executive Vice President | |||
Signature Page to Third Amendment to Credit Agreement
| TWEEN BRANDS PURCHASING, INC. | ||||
| By: | /s/ Xxxxxxx xx Xxxxxx | |||
| Name: | Xxxxxxx xx Xxxxxx | |||
| Title: | President and Chief Executive Officer | |||
| TWEEN BRANDS STORE PLANNING, INC. | ||||
| By: | /s/ Xxxxxxx xx Xxxxxx | |||
| Name: | Xxxxxxx xx Xxxxxx | |||
| Title: | Executive Vice President and Chief Financial Officer | |||
| TOO GC, LLC | ||||
| By: | /s/ Xxxxxxx xx Xxxxxx | |||
| Name: | Xxxxxxx xx Xxxxxx | |||
| Title: | President, Treasurer and Secretary | |||
| TWEEN BRANDS SERVICE CO. | ||||
| By: | /s/ Xxxxxxx xx Xxxxxx | |||
| Name: | Xxxxxxx xx Xxxxxx | |||
| Title: | Chief Financial Officer | |||
| TWEEN BRANDS INVESTMENT, LLC | ||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxx | |||
| Title: | President and Chief Executive Officer | |||
Signature Page to Third Amendment to Credit Agreement
| AGENT AND LENDERS: | ||||
| BANK OF AMERICA, N.A., individually as a Lender and in its capacity as Agent | ||||
| By: | /s/ Xxxxxxxxx X. Xxxxx | |||
| Name: | Xxxxxxxxx X. Xxxxx | |||
| Title: | Director | |||
Signature Page to Third Amendment to Credit Agreement
| FIFTH THIRD BANK | ||||
| By: | /s/ Xxxxxxx X. Xxxxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxxxx | |||
| Title: | Vice President | |||
Signature Page to Third Amendment to Credit Agreement
| KEYBANK NATIONAL ASSOCIATION | ||||
| By: | /s/ J. Xxxxx Xxxxxx | |||
| Name: | J. Xxxxx Xxxxxx | |||
| Title: | Senior Vice President | |||
Signature Page to Third Amendment to Credit Agreement
| US BANK, NATIONAL ASSOCIATION | ||||
| By: | /s/ Xxxxxxx X. Xxxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxxx | |||
| Title: | Vice President, U.S. Bank, N.A. | |||
Signature Page to Third Amendment to Credit Agreement
| HSBC BANK USA, NATIONAL ASSOCIATION | ||||
| By: | /s/ Xxxxxxx Xxxxxx | |||
| Name: | Xxxxxxx Xxxxxx | |||
| Title: | Senior Relationship Manager | |||
Signature Page to Third Amendment to Credit Agreement
| JPMORGAN CHASE BANK, N.A. | ||||
| By: | /s/ Xxxxx Xxxxxx | |||
| Name: | Xxxxx Xxxxxx | |||
| Title: | Vice President | |||
Signature Page to Third Amendment to Credit Agreement
| HUNTINGTON NATIONAL BANK | ||||
| By: | /s/ Xxxx X. Xxxxxxxx | |||
| Name: | Xxxx X. Xxxxxxxx | |||
| Title: | Vice President — Loan Syndications | |||
Signature Page to Third Amendment to Credit Agreement
| SOVEREIGN BANK | ||||
| By: | /s/ Xxxxx Xxxxxxxxx | |||
| Name: | Xxxxx Xxxxxxxxx | |||
| Title: | Senior Vice President | |||
Signature Page to Third Amendment to Credit Agreement
