EXHIBIT 5
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XXXXXX LOAN AUTHORIZATION AGREEMENT
The Company referred to below has applied for, and Xxxxxx Trust and Savings
Bank, Chicago, Illinois ("Bank"), has approved the establishment of, a loan
authorization account ("Loan Account") from which the Company may from time to
time request loans up to the maximum amount of credit shown below (the "Maximum
Credit"). Interest on such loans is computed at a variable rate which may change
daily based upon changes in the Bank's Prime Rate. The Company may make
principal payments at any time and in any amount. The request by the Company
for, and the making by the Bank of, any loan against the Loan Account shall
constitute an agreement between the Company and the Bank as follows:
Name of Company: CRAFTS RETAIL HOLDING CORP., a Delaware corporation
Address: 0000 Xxxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxx Xxxxx, XX 00000
Attn:
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Type of Loan Account: /X/ Revolving, which means as principal is repaid,
the Company may reborrow subject to this
Agreement.
/ / Multiple Advances, which means that the Company
may not reborrow any amounts that have
been repaid but may still borrow the
difference between the Maximum Credit and
the principal amounts of prior borrowings.
Amount of Maximum Credit: $8,000,000
Each Loan Requested Shall Be At Least: $100,000
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Variable Interest Rate: The interest rate applicable prior to the Maturity
Date equals the rate per annum announced by
the Bank from time to time as its prime commercial
rate (the "Prime Rate") plus 0.25%.
Maturity Date: The Loan Account terminates, and Loans are payable, ON DEMAND
(but if no demand, no later than one year from the date hereof).
Periodic Statement reflecting accrued interest will be sent and interest will be
payable: [X] Monthly; [ ] Quarterly
Payments shall be due at the Bank's principal office in
Chicago, Illinois, paid to the order of the Bank, and made by:
/ / Debit to Xxxxxx Account #______________;
/X/ By Check
1. Using the Account. All loans and advances from the Loan Account are
referred to in this Agreement as "Loans". Loan requests must be in
writing (including by facsimile) or by telephone and shall be sent to
the Company's Xxxxxx Account Officer on or before the date of such
proposed borrowing. Loan proceeds shall be credited to the Company's
deposit account at the Bank unless the Bank is directed otherwise by
special written directions from the Company. The amount of each loan
requested shall be at least the minimum amount shown above, and the
Bank shall have the right to refuse to honor any loan requested by the
Company which is less than that minimum amount, even if the Bank has
previously honored a loan request for less than the minimum amount. The
Company shall not request any Loan which, when taken together with the
Loans then outstanding, would exceed the Maximum Credit. Upon each
request for a Loan, the
Company shall furnish to the Bank certificates in the form of Exhibit B
hereto, properly completed and duly certified by Sun Capital Partners
III, LP and Sun Capital Partners III QP, LP (individually, a
"Guarantor" and collectively, the "Guarantors"). If Loans are secured
directly or indirectly by securities traded on a national exchange or
by other "margin stock" (as defined by the Federal Reserve Board in
Regulation U), then the Company promises to furnish the Bank a duly
executed and completed Form U-1 statement and agrees that the proceeds
of Loans from the Loan Account will not be used to purchase or carry
stock, convertible bonds or warrants unless the Company has obtained
the prior written consent of the Bank.
Loans will be made available from the Loan Account subject to the
Bank's approval on a loan-by-loan basis as and when Loans are requested
by the Company.
All Loans shall be made against and evidenced by the Company's demand
note payable to the order of the Bank in the principal amount of
$8,000,000 such note to be in the form of Exhibit A attached hereto
(the "Note"). The Bank agrees that notwithstanding the fact that the
Note is in the principal amount of $8,000,000 it shall evidence only
the actual unpaid principal balance of Loans made under the Loan
Account. All Loans made against the Note and the status of all amounts
evidenced by the Note shall be recorded by the Bank on its books and
records or, at its option in any instance, endorsed on a schedule to
the Note and the unpaid principal balance and status and rates so
recorded or endorsed by the Bank shall be prima facie evidence in any
court or other proceeding brought to enforce the Note of the principal
amount remaining unpaid thereon, the status of the Loans evidenced
thereby and the interest rates applicable thereto, absent manifest
error; provided that the failure of the Bank to record any of the
foregoing shall not limit or otherwise affect the obligation of the
Company to repay the principal amount of the Note together with accrued
interest thereon. The Bank agrees that if it transfers or assigns the
Note, the Bank will stamp thereon a statement of the actual principal
amount evidenced thereby at the time of transfer. The Company agrees
that in any action or proceeding instituted to collect or enforce
collection of the Note, the amount shown as owing the Bank on its
records shall be prima facie evidence of the unpaid balance of
principal and interest on the Note, absent manifest error.
2. Interest. The Company shall pay the Bank interest on the unpaid
principal balance of Loans in accordance with the terms of this
Agreement. Accrued interest will be billed monthly, and is due by the
last day of each month (each, an "Interest Payment Date"). Interest for
each billing period is computed by applying a daily periodic rate based
on the Bank's Prime Rate plus 0.25% to each day's ending Loan balance.
Interest shall be computed on the basis of a year of 360 days for the
actual number of days elapsed. The Bank's Prime Rate reflects market
rates of interest as well as other factors, and it is not necessarily
the Bank's best or lowest rate. The daily Loan balance shall be
computed by taking the principal balance of Loans at the beginning of
each day, adding any Loans posted to the Loan Account that day, and
subtracting any principal payments posted to the Loan Account as of
that day. Interest begins to accrue on the date a Loan is posted to the
Loan Account. The principal balance of Loans which remains unpaid after
demand for repayment shall bear interest until paid in full at a
post-maturity rate of 2% per annum above the interest rate otherwise
applicable to the Loans (determined as aforesaid). The interest rate
payable under this Agreement shall be subject, however, to the
limitation that such interest rate shall never exceed the highest rate
which the Company may contract to pay under applicable law.
3. Fees. The Company agrees to pay to the Bank a non-refundable Closing
Fee in the amount of $20,000.
4. Guaranty. The Guarantors shall at all times guarantee all Loans.
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5. Maturity Date; Payments. The Company shall pay to the Bank the
principal balance of outstanding Loans together with any accrued
interest ON DEMAND (but if no demand, no later than one year from the
date HEREOF). Payments received by the Bank shall be applied first to
accrued interest and then to the principal balance of outstanding Loans
unless otherwise directed. If any payment from the Company under this
Agreement becomes due on a Saturday, Sunday, or a day which is a legal
holiday for banks in the State of Illinois, such payment shall be made
on the next bank business day and any such extension shall be included
in computing interest under this Agreement.
6. Periodic Statements. The Bank will furnish the Company with a statement
for each billing period (either monthly or quarterly as shown on the
front of this Agreement) which has any transaction or balance.
7. Financial Statements. The Company agrees to furnish financial
information of the Company and each Guarantor to the Bank upon request
of the Bank from time to time. Such information shall be furnished as
soon as reasonably possible, but in any event within 30 days after
request by the Bank. Without any such request, the Company shall
furnish, or cause to be furnished, to the Bank:
(a) as soon as available, and in any event within 30
days after the last day of each month, a copy of the
consolidated balance sheet of the Company and its subsidiaries
as of the last day of such month and the consolidated
statements of income, retained earnings and cash flows of the
Company and its subsidiaries for the month and the fiscal
year-to-date period then ended, each in reasonable detail
showing in comparative form the figures for the corresponding
date and period in the previous fiscal year, prepared by the
Company in accordance with general accepted accounting
principles ("GAAP"), except as otherwise stated therein, and
certified to by its chief financial officer or such other
officer reasonably acceptable to the Bank;
(b) as soon as available, and in any event within 90
days after the close of each fiscal year of the Company, a
copy of the consolidated and consolidating balance sheet of
the Company and its subsidiaries as of the close of such
period and the consolidated statements of income, retained
earnings and cash flows of the Company and its subsidiaries
for such period, and accompanying notes thereto, each in
reasonable detail showing in comparative form the figures for
the previous fiscal year, accompanied by an unqualified
opinion thereon of Ernst & Young or another firm of
independent public accountants of recognized national
standing, selected by the Company and reasonably satisfactory
to the Bank, to the effect that the financial statements have
been prepared in accordance with GAAP and present fairly in
all material respects in accordance with GAAP the consolidated
financial condition of the Company and its Subsidiaries as of
the close of such fiscal year and the results of their
operations and cash flows for the fiscal year then ended;
(c) as soon as available, and in any event within 45
days after the last day of each month, a certificate as of
such date in the form, or substantially the form of Exhibit B
hereto, properly completed and certified by each Guarantor;
(d) as soon as available, and in any event within 45
days after the close of each fiscal quarter of each Guarantor,
a copy of each Guarantor's balance sheet as of the last day of
such fiscal quarter and its statements of income, retained
earnings and cash flows for the fiscal quarter and for the
fiscal year-to-date period then ended, each in reasonable
detail showing in comparative form the figures for the
corresponding date and period in the previous fiscal year,
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prepared by such Guarantor in accordance with GAAP and
certified to by its chief financial officer or such other
officer reasonably acceptable to the Bank; and
(e) as soon as available, and in any event within 90
days after the close of each fiscal year of each Guarantor, a
copy of such Guarantor's balance sheet as of the last day of
the fiscal year then ended and its statements of income,
retained earnings and cash flows for the fiscal year then
ended, and accompanying notes thereto, each in reasonable
detail showing in comparative form the figures for the
previous fiscal year, accompanied by an unqualified opinion of
Xxxxx Xxxxxxxx or another firm of independent public
accountants of recognized standing, selected by such Guarantor
and reasonably satisfactory to the Bank to the effect that the
financial statements have been prepared in accordance with
GAAP and present fairly in all material respects in accordance
with GAAP the consolidated financial condition of such
Guarantor as of the close of such fiscal year and the results
of our operations and cash flows for the fiscal year then
ended.
8. Representations and Warranties. In consideration of establishing and
maintaining the Loan Account, the Company hereby represents and
warrants to the Bank that: (a) the Company is a corporation duly
organized, validly existing, and in good standing under the laws of its
state of incorporation; (b) the execution, delivery, and performance by
the Company of this Agreement and the Note are within its powers, have
been duly authorized by all necessary action, and do not contravene the
Company's articles of incorporation or by-laws or any law or
contractual restriction binding on or affecting the Company; (c) no
authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required
for the Company's due execution, delivery, and performance of this
Agreement or the Note; (d) this Agreement is, and the Note when
executed and delivered by the Company will be, the Company's legal,
valid, and binding obligation enforceable against the Company in
accordance with its terms except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar state
or federal debtor relief laws from time to time in effect which affect
the enforcement of creditors' rights in general and the availability of
equitable remedies; (e) the Company is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock
(within the meaning of Regulation U issued by the Board of Governors of
the Federal Reserve System), and no proceeds of the Loans will be used
to purchase or carry any margin stock or to extend credit to others for
the purpose of purchasing or carrying any margin stock; and (f) there
is no pending or threatened action or proceeding affecting the Company
before any court, governmental agency or arbitrator, which may
materially adversely affect the Company's financial condition or
operations or which purports to affect the legality, validity, or
enforceability of this Agreement or the Note.
9. DEMAND OBLIGATION; ENFORCEMENT. THE LOANS ARE PAYABLE "ON DEMAND."
ACCORDINGLY, THE BANK CAN DEMAND PAYMENT IN FULL OF THE LOANS AT ANY
TIME IN ITS SOLE DISCRETION EVEN IF THE COMPANY HAS COMPLIED WITH ALL
OF THE TERMS OF THIS AGREEMENT.
No delay by the Bank in the exercise of any right or remedy shall
operate as a waiver thereof, and no single or partial exercise by the
Bank of any right or remedy shall preclude any other or further
exercise thereof or the exercise of any other right or remedy. The
Company agrees to pay to the Bank all reasonable expenses incurred or
paid by the Bank in connection with the establishment and maintenance
of the Loan Account and the collection of the Loans and any court costs
and other reasonable amounts due under this Agreement, including,
without limitation, reasonable attorneys' fees. The Bank shall have the
right at any time to set-off the balance of any deposit account that
the Company may at any time maintain with the Bank against
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any amounts at any time owing under this Agreement, whether or not the
balance of Loans under this Agreement is then due.
10. Termination; Renewal. The availability of additional Loans under this
Agreement will automatically terminate ON DEMAND (but if no demand, no
later than one year from the date hereof). The Bank reserves the right
at any time without notice to terminate the Loan Account, suspend the
Company's borrowing privileges or refuse any Loan request even though
the Company has complied with all of the terms under this Agreement.
The Company may terminate this Agreement at any time effective upon
receipt by the Bank of at least 15 days prior written notice. No
termination under this Section shall affect the Bank's rights or the
Company's obligations regarding payment or default under this
Agreement. Such termination shall not affect the Company's obligation
to pay all Loans and the interest accrued through the date of final
payment. The Bank may also elect to honor Loan requests after
termination of this Agreement, and the Company agrees that any such
payment by the Bank shall constitute a Loan to Company under this
Agreement.
11. Notices. The Bank may rely on instructions from the Company with
respect to any matters relating to this Agreement or the Loan Account,
including telephone loan requests (including by facsimile) which are
made by persons whom the Bank reasonably believes to be the persons
authorized by the Company to make such loan requests. All notices and
statements to be furnished by the Bank shall be sufficient if delivered
to any such person at the billing address for the Loan Account shown on
the records of the Bank. All notices from the Company shall be sent to
the Bank at X.X. Xxx 000, Xxxxxxx, Xxxxxxxx 00000, to the attention of
the Loan Accounting Division. The Company waives presentment and notice
of dishonor. This Agreement constitutes the entire understanding of the
parties with respect to the subject matter hereof and any prior
agreements, whether written or oral, with respect thereto are
superseded hereby. No amendment or waiver of any provision of this
Agreement or the Note, nor consent to any departure by the Company
therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Bank and the Company. If any part of this
Agreement is unenforceable, that will not make any other part
unenforceable. This Agreement shall be governed by the laws of the
State of Illinois.
12. Consent to Jurisdiction. THE COMPANY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS AND OF ANY ILLINOIS STATE COURT SITTING IN XXXX
COUNTY, ILLINOIS, FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
13. Jury Trial Waiver. THE COMPANY AND THE BANK WAIVE ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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The Company Agrees to the Terms Set Forth Above.
Signed by Company on September 13, 2004
CRAFTS RETAIL HOLDING CORP.
By: /s/ Xxxxx Xxxxxxxx
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Name: Xxxxx Xxxxxxxx
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Title: Vice President
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Accepted and agreed to this 13th day of September, 2004.
XXXXXX TRUST AND SAVINGS BANK
By: /s/ Xxxxxxxx X. Xxxxxxx
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Name: Xxxxxxxx X. Xxxxxxx
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Title: Vice-President
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