Exhibit 10.2
EIGHTH AMENDMENT TO DEBTOR IN POSSESSION
LOAN AND SECURITY AGREEMENT
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THIS EIGHTH AMENDMENT TO DEBTOR IN POSSESSION LOAN AND SECURITY
AGREEMENT (this "Eighth Amendment") is entered into and effective as of March
19, 2001, by and among Factory Card Outlet of America Ltd., an Illinois
corporation and a debtor and debtor in possession (the "Borrower"), on the one
hand, and Xxxxx Fargo Retail Finance, LLC (successor in interest to Foothill
Capital Corporation and Paragon Capital, LLC) ("WFRF"), as Agent and Lender, and
the financial institutions listed on the signature page of the Loan Agreement
referred to below (such financial institutions, together with their respective
successors and assigns, are collectively referred to herein as the ("Lenders"),
on the other hand. This Eighth Amendment amends certain provisions of the Debtor
in Possession Loan and Security Agreement dated as of March 23, 1999 by and
among the Borrower and WFRF, as Agent, and the Lenders (as amended by and
through the date of this Eighth Amendment, and as hereafter amended and/or
restated from time to time, the "Loan Agreement"). Capitalized terms used herein
and not otherwise defined shall have the same meanings herein as in the Loan
Agreement.
BACKGROUND
This Eighth Amendment is entered into to amend the Maturity Date of
the Commitment and to amend certain of the provisions governing the availability
of "Special Sub-Line Advances" under the Loan Agreement, in accordance with the
terms and conditions hereof.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower, the Agent and the
Lenders hereby agree as follows:
1. Amendments to Loan Agreement.
(a) Amendments to Subsection 1.1.
(i) Subsection 1.1 of the Loan Agreement is hereby amended
by deleting the term "Maximum Revolving Amount" appearing in the
definition of "Average Unused Portion of Maximum Revolving Amount"
and inserting in lieu thereof the term "$32,500,000".
(ii) Subsection 1.1 of the Loan Agreement is hereby amended
by deleting the existing subsection (i) of the definition of
"Maturity Date" appearing therein and inserting in lieu thereof the
following:
(i) July 31, 2001.
(b) Amendment to Subsection 2.1 (a)(ii). Subsection 2.1 (a)(ii) of
the Loan Agreement is hereby amended by deleting such subsection in its entirety
and inserting in lieu thereof the following:
(a)(ii) Special Sub-Line Advances. The term "Borrowing
Base" shall also include amounts available in respect of the Special
Sub-Line Advances in accordance with this Section 2.1 (a)(ii).
Subject to the terms and conditions of this Agreement, each Lender
agrees to make special sub-line advances ("Special Sub-Line
Advances") to Borrower in an amount at any one time outstanding not
to exceed such Lender's Pro Rata Share of an amount equal to 13% of
the Cost Value of Eligible Inventory, provided, however, that in no
event will Advances (on a combined basis under Sections 2.1 (a)(i)(y)
and 2.1 (a)(ii)) exceed 87.5% of the Net Retail Liquidation Value of
Eligible Inventory.
(c) Limitation on Borrowing, The Borrower, the Agent and the Lenders
hereby agree that, notwithstanding anything to the contrary in the Loan
Agreement, the Lenders shall have no obligation to make Advances under the Loan
Agreement to the extent they would cause the aggregate amount of Advances plus
the outstanding balance of all undrawn or unreimbursed Letters of Credit to
exceed $32,500,000.
(d) Amendment to Subsection 2.12(a)(ii). Subsection 2.12(a)(ii) of
the Loan Agreement is hereby amended by deleting the term "Maximum Revolving
Amount" appearing therein and inserting in lieu thereof the term "$32,500,000".
2. Representations and Warranties; Confirmation of Representations,
Warranties.
This Eighth Amendment has been duly authorized, executed and
delivered by the Borrower. The Loan Agreement, as amended hereby, and each of
the other Loan Documents, as amended by and through the date hereof, constitute
legal, valid and binding obligations of the Borrower, enforceable against the
Borrower in accordance with their respective terms. The Borrower, by execution
of this Eighth Amendment, certifies to the Agent and each of the Lenders that
each of the representations and warranties set forth in the Loan Agreement and
the other Loan Documents is true and correct as of the date hereof, except to
the extent such representations and warranties expressly relate to an earlier
date, as if fully set forth in this Eighth Amendment, and that, as of the date
hereof, no Default or Event of Default has occurred and is continuing under the
Loan Agreement or any other Loan Document. The Borrower acknowledges and agrees
that this Eighth Amendment shall become a part of the Loan Agreement and shall
be a Loan Document.
3. Waiver of Events of Default. The Agent and the Lenders hereby
waive all Events of Default, if any, that shall exist at time of this amendment.
4. Conditions Precedent. The obligation of the Agent and the Lenders
to execute this Eighth Amendment and make the accommodations to the Borrower
described herein is subject to the following conditions, as determined by the
Agent and the Lenders in their sole discretion:
(a) This Eighth Amendment shall have been executed and delivered by
each of the parties hereto;
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(b) The Borrower by its execution hereof shall have agreed to pay to
the Agent, for the benefit of the Lenders, an amendment fee of $100,000 (the
"Amendment Fee"). The Amendment Fee shall be fully earned upon the execution of
this Eighth Amendment and shall be due and payable on the earlier to occur of
the Maturity Date or the date of the acceleration of the Borrower's Obligations
(the earlier of such dates being referred to as the "Termination Date").
5. No Novation; Effect; Counterparts; Governing Law.
Except to the extent specifically amended hereby, the Loan Agreement
and each of the other Loan Documents shall be unaffected hereby and shall remain
in full force and effect; this Eighth Amendment shall not be deemed a novation
of the Loan Agreement or any other Loan Document. The Borrower hereby
acknowledges, confirms and ratifies its obligations under the Loan Agreement and
each of the other Loan Documents. This Eighth Amendment may be executed in any
number of counterparts, and by the different parties on separate counterparts,
each of which, when so executed and delivered, shall be an original, but all the
counterparts shall together constitute one instrument. This Eighth Amendment
shall be governed by the internal laws of The Commonwealth of Massachusetts
(without reference to conflicts of law principles) and the United States
Bankruptcy Code and shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. The
Borrower acknowledges that the reasonable out-of-pocket expenses of the Agent
and the Lenders incurred in connection with the preparation, execution and
delivery of this Eighth Amendment shall be "Lender Group Expenses", as such term
is defined in the Loan Agreement.
6. Construction.
The Borrower, by execution hereof, acknowledges and confirms that for
all purposes of the Loan Agreement and the other Loan documents, the term "Loan
Agreement" shall mean the Loan Agreement as amended by and through the date of
this Eighth Amendment and as further amended and/or restated from time to time
hereafter.
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IN WITNESS WHEREOF, the parties hereto have executed this Eighth
Amendment to Loan and Security Agreement as a sealed instrument as of the date
first above written.
FACTORY CARD OUTLET OF AMERICA, LTD.
By: /s/ Xxxxx X. Xxxxxxxxxxx
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Name: Xxxxx X. Xxxxxxxxxxx
Title: Senior Vice President and
Chief Financial Officer
XXXXX FARGO RETAIL FINANCE, LLC,
for itself and as Agent for the Lenders
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Vice President
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