OVERADVANCE AGREEMENT
AND
FIRST AMENDMENT TO FINANCING AGREEMENT
October 3, 2001
VIA TELECOPIER
Xxxxxxxxx Xxxxx Corporation Sweet Factory, Inc.
0000 Xxxx Xxxxxxx Xxxx. 0000 Xxxx Xxxxxxx Xxxx.
Xxxxxxx, Xxxxxxxx 00000 Xxxxxxx, Xxxxxxxx 00000
RE: Financing Agreement dated as of June 28, 2001 (the "Financing
Agreement") among The CIT Group/Business Credit, Inc., as Agent
(the "Agent"), the Lenders that are parties thereto, and Xxxxxxxxx
Xxxxx Corporation and Sweet Factory, Inc. (collectively, the
"Companies"), as borrowers
Ladies and Gentlemen:
Reference is made to the Financing Agreement. Capitalized terms used in
this letter and not specifically defined herein shall have the meanings given to
such terms in the Financing Agreement.
1. OVERADVANCE FACILITY. The Companies have requested that the Agent and
the sole Lender agree to make available to the Companies, Revolving Loans of up
to $5,000,000 in the aggregate in excess of Availability (the "Overadvances")
during the period commencing on the date hereof and ending on December 28, 2001.
The Agent and the sole Lender have agreed to this request on the following
terms:
(a) The aggregate amount of the Overadvances shall not exceed $5,000,000
from the effective date of this letter through December 27, 2001. The
Overadvance shall reduce to zero and be due and payable in full on
December 28, 2001.
(b) All Revolving Loans comprising the Overadvance shall constitute
Obligations under the Loan Agreement.
(c) The Companies failure to reduce and repay the Overadvance as required
herein shall constitute an Event of Default.
Xxxxxxxxx Xxxxx Corporation
Sweet Factory, Inc.
October 3, 2001
Page 2
2. CONDITIONS TO OVERADVANCE. In consideration of the agreement of the
Agent and the sole Lender to provide the Overadvances to the Companies, the
Companies hereby agree as follows:
(a) The Companies shall pay to the Agent a fee of $250,000 (the
"Overadvance Fee"), $125,000 of which shall be for the benefit of the
sole Lender and $125,000 of which shall be for the benefit of the
"Participants" (as that term is defined in paragraph 2(b) below). The
Overadvance Fee shall be fully earned by Lender on the date of the
effectiveness of this letter agreement and shall be nonrefundable under
all circumstances, but shall be due and payable on December 28, 2001.
The Agent may charge such fee to the Companies' Revolving Loan Account
on the due date thereof.
(b) On or prior to the date hereof, certain shareholders of Parent (the
number and identity of which shall be satisfactory to the Agent)
(collectively, the "Participants") shall execute and deliver to the
Agent a participation agreement in form and substance satisfactory to
Agent.
(c) The Companies, the Agent and the banks at which the Companies have
their operating accounts shall have entered into lockbox and blocked
account agreements in form and substance satisfactory to the Agent.
3. AMENDMENT TO FINANCING AGREEMENT. This letter also shall confirm the
agreement of the Agent, the sole Lender and the Companies to amend the Section
7.10 of the Financing Agreement by inserting at the end thereof two new Sections
7.10(j) and 7.10(k) that read as follows:
"(j) The Companies shall not suffer or permit
Consolidated EBITDA to be less than $28,000,000 as of the end
of the Companies' fiscal quarter ending in February 2002 for
the six-month period ending on such date.
(k) On or prior to March 31,2002, Xxxxxxxxx shall have
(i) received not less than $5,000,000 in cash from an equity
contribution from Parent or otherwise or (ii) completed a
sale-leaseback (or a series of sale-leasebacks) of Xxxxxxxxx'x
owned real estate resulting in not less than $8,000,000 in net
cash proceeds to Xxxxxxxxx, in each case on terms satisfactory
to the Agent."
Xxxxxxxxx Xxxxx Corporation
Sweet Factory, Inc.
October 3, 2001
Page 3
4. MISCELLANEOUS MATTERS. The Agent and the sole Lender have granted their
consent to the Overadvances in this particular instance in light of the facts
and circumstances that presently exist, and the grant of such consent shall not
constitute a course of dealing or impair the Agent's or the Lenders' rights to
withhold their consent to any similar request in the future, or to condition
such consent on different terms. Except as expressly modified by this letter,
all terms and provisions of the Financing Agreement shall remain unmodified and
in full force and effect, and shall apply with such force and effect to this
letter agreement.
In order to induce the Agent and the Lenders consent to the Overadvances
described above, the Companies represent and warrant to the Agent and the
Lenders that no Default or Event of Default exists under the Financing Agreement
as of the date hereof after giving effect to this letter agreement. The
Companies further represent and warrant that:
(a) the execution, delivery and performance by each Company of this letter
is within its corporate power, has been duly authorized by all
necessary corporate action, has received all necessary governmental,
regulatory or other approval (if any are required) and does not and
will not contravene or conflict with any provision of (i) law, (ii) any
judgment, decree or order or (iii) its certificate of incorporation or
by-laws and does not and will not contravene or conflict with, or cause
any lien to arise under, any provision of any agreement or instrument
binding upon it or upon any of its property;
(b) this letter and the Financing Agreement, as amended by this letter, are
the legal, valid and binding obligations of such Company, enforceable
against it in accordance with their terms, except as enforcement
thereof may be subject to the effect of any bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors' rights
generally and general principles of equity (regardless of whether such
enforcement is sought in equity or law or otherwise); and
(c) all of the representations and warranties contained in the Financing
Agreement are true and correct as of the effective date of this letter,
except to the extent that such representations and warranties relate
solely to an earlier date, in which case such representations and
warranties were true and correct as of such earlier date.
THIS LETTER IS A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF
THE STATE OF ILLINOIS. Wherever possible, each provision of this letter will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this letter is prohibited by or invalid under such law,
such provision will be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this letter. This letter may be executed in any number
of counterparts and by the different parties on separate counterparts and each
such
Xxxxxxxxx Xxxxx Corporation
Sweet Factory, Inc.
October 3, 2001
Page 4
counterpart is deemed to be an original, but all such counterparts together
constitute but one and the same letter. This letter is binding upon each
Company, the Lenders, the Agent and their respective successors and assigns and
inures to the benefit of each Company, the Lenders, the Agent and their
respective successors and assigns. No Company has the right to assign its rights
or delegate its duties under this letter. The Companies affirm and acknowledge
that Section 8.4 of the Financing Agreement applies to this letter and the
transactions and agreements and documents contemplated under this letter.
Please indicate the Companies' agreement to the terms and provisions of
this letter by executing this letter where indicated below. In addition, Parent
and each Subsidiary Guarantor also must execute this letter where indicated
below to confirm that the foregoing agreements and amendments to the Financing
Agreement shall not affect, modify or diminish its obligations to the Agent and
the Lenders under any instrument of guaranty or any related pledge or security
agreement executed in favor of the Agent in connection with the Financing
Agreement. This letter shall become effective upon CIT's receipt of this letter
executed by the Companies, Parent and all Subsidiary Guarantors.
Very truly yours,
THE CIT GROUP/BUSINESS CREDIT, INC., as
Agent and the sole Lender
By: /s/ Xxx Xxxxxx
--------------
Title: VICE PRESIDENT
Agreed to this 3rd day of October, 2001:
XXXXXXXXX XXXXX CORPORATION SWEET FACTORY, INC.
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
--------------------- ---------------------
Title: V.P. & CHIEF FINANCIAL OFFICER Title: V.P. & CHIEF FINANCIAL OFFICER
Xxxxxxxxx Xxxxx Corporation
Sweet Factory, Inc.
October 3, 2001
Page 5
Each of the Guarantors hereby agrees and confirms that such Guarantor's
obligations and liabilities to the Agent and the Lenders under any guaranty
agreement, pledge agreement, security agreement or other agreement executed by
such Guarantor in connection with the Financing Agreement remain unmodified and
in full force and effect notwithstanding the agreement of the Agent and the sole
Lender to permit the Overadvances to the Companies and to amend the Financing
Agreement in the manner contemplated above.
XXXXXX MAY HOLDINGS, INC. SWEET FACTORY GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
--------------------- ---------------------
Title: V.P. & CHIEF FINANCIAL OFFICER Title: V.P. & CHIEF FINANCIAL OFFICER
SF PROPERTIES, INC. SF CANDY COMPANY
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
--------------------- ---------------------
Title: V.P. & CHIEF FINANCIAL OFFICER Title: V.P. & CHIEF FINANCIAL OFFICER
XXXXXXXXX XXXXX (CANADA) CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
---------------------
Title: V.P. & CHIEF FINANCIAL OFFICER
