Exhibit 10.2
NINTH AMENDMENT TO DEBTOR IN POSSESSION
LOAN AND SECURITY AGREEMENT
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THIS NINTH AMENDMENT TO DEBTOR IN POSSESSION LOAN AND SECURITY
AGREEMENT (this "Ninth Amendment") is entered into and effective as of July 31,
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 Ninth 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 Ninth 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 Ninth 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 "$35,000,000."
(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:
"February 1, 2002, provided, that if all Bankruptcy Court approvals
and orders relating to this Ninth Amendment deemed necessary by WFRF
are not obtained and entered on or before August 31, 2001, then the
definition of "Maturity Date" shall be August 31, 2001, provided,
further, that if the Bankruptcy Court prior to August 31, 2001
affirmatively denies the Borrower's request for authority to enter
into this Ninth Amendment, the Maturity Date shall be the date of
such denial."
(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 during the period from August 15, 2001
through and including November 30, 2001, the outstanding
Special Sub-Line Advances to Borrower shall be in an amount
not to exceed such Lender's Pro Rata Share of an amount
equal to 17% of the Cost Value of Eligible Inventory, and
provided further, however, that in no event will Advances
(on a combined basis under Sections 2.1 (a)(i)(y) and 2.1
(a)(ii)) exceed 90% 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
$35,000,000.
(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 "$35,000,000."
2. Representations and Warranties; Confirmation of Representations,
Warranties.
This Ninth 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
Ninth 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 Ninth 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 Ninth Amendment shall become a part of the Loan Agreement and shall be a
Loan Document.
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3. Waiver of Events of Default. The Agent and the Lenders hereby
waive all Events of Default, if any, that exist at time of this Ninth Amendment.
4. Conditions Precedent. The obligation of the Agent and the Lenders
to execute this Ninth Amendment and make the accommodations to the Borrower
described herein is subject to the following conditions, the satisfaction of
which shall be determined by the Agent and the Lenders in their sole discretion:
(a) This Ninth Amendment shall have been executed and
delivered by each of the parties hereto;
(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
$200,000 (the "Amendment Fee"). The Amendment Fee shall be fully earned, due,
and payable upon the execution of this Ninth Amendment by all parties hereto.
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 Ninth 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 Ninth 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 Ninth 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 Ninth 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 Ninth 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 Ninth
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 Xxxxxxxxxxx
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Name: Xxxxx Xxxxxxxxxxx
Title: Sr. VP and CFO
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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