THIRD AMENDMENT TO SENIOR SECURED, SUPER-PRIORITY, DEBTOR-IN-POSSESSION CREDIT AGREEMENT
Exhibit
10.1
THIRD AMENDMENT TO SENIOR
SECURED, SUPER-PRIORITY,
DEBTOR-IN-POSSESSION CREDIT
AGREEMENT
This
Third Amendment to Senior Secured, Super-Priority Debtor-in-Possession Credit
Agreement (the “Third Amendment”) is made as of the 17th day of January, 2009 by
and among
CIRCUIT
CITY STORES, INC., as debtor and debtor-in-possession, a corporation organized
under the laws of the State of Virginia having a place of business at 0000
Xxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxx, as Lead Borrower for the Borrowers,
being
said
CIRCUIT CITY STORES, INC., as debtor and debtor-in-possession;
CIRCUIT
CITY STORES WEST COAST, INC., as debtor and debtor-in-possession, a corporation
organized under the laws of the State of California having a place of business
at 000 X. Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000;
Circuit
City Stores PR, LLC, as debtor and debtor-in-possession, a limited liability
company organized under the laws of the Commonwealth of Puerto Rico having a
place of business at San Xxxxxxxx Plaza 3369, Local X-00 Xx Xxxxx &
Xxxxxxxx, Xxxxxxxx, Xxxxxx Xxxx;
InterTAN
Canada Ltd., as a debtor company, a corporation organized under the laws of the
Province of Ontario, Canada, having its head office at 000 Xxxxxxx Xxxxx,
Xxxxxx, Xxxxxxx, Xxxxxx X0X 0X0;
the
LENDERS party hereto;
BANK OF
AMERICA, N.A., as Administrative Agent and Collateral Agent for the Lenders and
the Issuing Bank, a national banking corporation, having its principal place of
business at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000;
BANK OF
AMERICA (acting through its Canada branch), as Canadian Administrative Agent and
Canadian Collateral Agent for Lenders having a Canadian Commitment, a banking
corporation carrying on business under the Bank Act (Canada), having a
place of business at 000 Xxxxx Xxxxxx Xxxx, Xxxxxxx; Xxxxxxx, Xxxxxx X0X
0X0;
GENERAL
ELECTRIC CAPITAL CORPORATION, N.A., as Co-Collateral Agent;
XXXXX
FARGO RETAIL FINANCE, LLC, as Syndication Agent; and
GENERAL
ELECTRIC CAPITAL CORPORATION and JPMORGAN CHASE BANK, N.A., as Co-Documentation
Agents;
in
consideration of the mutual covenants herein contained and benefits to be
derived herefrom.
WITNESSETH
WHEREAS,
the Lead Borrower and the other Borrowers, the Agents, the Lenders, the Issuing
Bank, the Co-Collateral Agent, the Syndication Agent, the Co-Documentation
Agents have entered into a Senior Secured, Super-Priority Debtor-in-Possession
Credit Agreement dated as of November 12, 2008 (as amended, modified or
supplemented prior to the date hereof, the “DIP Credit Agreement”);
and
WHEREAS,
the Lead Borrower and the other Borrowers, the Agents, the Lenders, the Issuing
Bank, the Co-Collateral Agent, the Syndication Agent, and the Co-Documentation
Agents have agreed to amend certain provisions of the Credit Agreement, on the
terms and conditions set forth herein.
NOW
THEREFORE, it is hereby agreed as follows:
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1.
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Definitions:
All capitalized terms used herein and not otherwise defined shall have the
same meaning herein as in the DIP Credit
Agreement.
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2.
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Amendments to Article
I. The provisions of Article I of the DIP Credit
Agreement are hereby amended as
follows:
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a.
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The
definitions of “Excess Availability”, “Liquidation”, and “Permitted
Overadvance” are hereby deleted in their
entirety.
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b.
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The
definition of “Budget” is hereby deleted in its entirety and the following
substituted in its stead:
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“Budget” means the
thirteen (13) week cash flow of the Canadian Loan Parties, furnished from time
to time pursuant to Section 5.01(b)(ii) hereof, in substance reasonably
satisfactory to the Required Lenders, reflecting on a line-item basis, among
other things, anticipated sales, cash receipts, inventory levels, expenditures,
the Canadian Borrowing Base and Canadian Availability for the subject period,
which Budget may be amended and modified solely with the written consent of the
Required Lenders.
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c.
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The
definition of “Canadian Availability” is hereby deleted in its entirety
and the following substituted in its
stead:
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“Canadian
Availability” means (a) the lesser of (i) $40,000,000 or (ii) the
Canadian Borrowing Base, minus (b) the
aggregate unpaid balance of Credit Extensions made to, or for the account of the
Canadian Borrower.
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d.
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The
definition of “Maturity Date” is hereby deleted in its entirety and the
following substituted in its stead:
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“Maturity Date” means
(i) with respect to the Obligations of the Domestic Borrowers, the earlier of
(A) the termination or completion of the Sale (as defined in the Agency
Agreement) or (B) April 30, 2009, and (ii) with respect to the Canadian
Liabilities, the earlier of (A) the consummation of a sale of the Canadian Loan
Parties or substantially all of their assets, or (B) June 30, 2009.
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e.
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The
definition of “Other Carve Out Amounts” is hereby deleted in its entirety
and the following substituted in its
stead:
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“Other Carve Out
Amounts” means the “Carve Out” as defined in the Final Borrowing Order
(as amended in connection with the Third Amendment).
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f.
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The
definition of “Reported Fee Accruals” is hereby deleted in its entirety
and the following substituted in its
stead:
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“Reported Fee
Accruals” means Professional Fees and Expenses which have been incurred,
accrued or invoiced (and remain unpaid), in an amount not to exceed 110% of the
aggregate amount set forth in the line items for “Debtors’ Professional Fees”
and “Committee’s Professional Fees” in the Wind Down Budget. Any such
Professional Fees and Expenses which have been incurred, accrued or invoiced
(and remain unpaid) in excess of 110% of the amount thereof set forth in the
Wind Down Budget shall not constitute “Reported Fee Accruals.”
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g.
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The
definition of “Termination Date” is hereby deleted in its entirety and the
following substituted in its stead:
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“Termination Date”
shall mean the earliest to occur of (i) with respect to the Domestic Borrowers,
(A) the Maturity Date applicable to the Domestic Borrowers, (B) the date on
which the maturity of the Loans are accelerated and the Commitments are
terminated in accordance with Section 7.01, and (C) the Consummation Date, and
(ii) with respect to the Canadian Borrower, (A) the Maturity Date applicable to
the Canadian Borrower, (B) the date on which the maturity of the Loans are
accelerated and the Commitments are terminated in accordance with Section 7.01,
and (C) the Consummation Date. Any references to the Termination Date
in this Agreement shall mean and refer to the Termination Date applicable to the
Domestic Borrowers and/or the Canadian Borrower, as the case may
be.
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h.
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The
following new definitions are hereby added in appropriate alphabetical
order:
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“2009 Agency
Agreement” means the Agency Agreement between, among others, certain of
the Borrowers and Great American Group WF, LLC, Xxxxxx Capital Partners, LLC, SB
Capital Group, LLC and Tiger Capital Group, LLC dated January 15, 2009 for the
disposition of Inventory at certain of the Domestic Borrowers’ stores, as in
effect on the Third Amendment Effective Date.
“Loan to Value Ratio”
as defined in Section 6.14 hereof.
“Required Consenting
Lenders” shall mean, at any time, Lenders (other than Delinquent Lenders)
having Commitments at least equal to 60% of the Total Commitments outstanding
(excluding the Commitments of any Delinquent Lender), or if the Commitments have
been terminated, Lenders (other than Delinquent Lenders) whose percentage of the
outstanding Credit Extensions (after settlement and repayment of all Swingline
Loans by the Lenders) aggregate not less than 60% of all such Credit Extensions
(excluding the Credit Extensions of a Delinquent Lender).
“Third Amendment”
means that certain Third Amendment to Senior Secured, Super-Priority,
Debtor-in-Possession Credit Agreement dated as of January 17, 2009 by, among
others, the Borrowers, the Agents, and the Required Lenders.
“Third Amendment Effective
Date” means January 17, 2009.
“Wind Down Budget”
means the six (6) week cash flow projections for the Domestic Loan Parties,
substantially in the form of the initial Wind Down Budget annexed to the Third
Amendment as Schedule
I, and any subsequent cash flow projections approved by the Required
Lenders. Any Wind Down Budget approved by the Required Lenders may
thereafter be amended and modified solely with the written consent of the
Required Lenders.
“Wind Down
Certificate” shall have the meaning given to such term in Section
5.01(b)(iii) hereof.
“Wind Down Variance
Report” means a report prepared by the Lead Borrower’s management
reflecting on a line-item basis the Domestic Loan Parties’ actual performance
compared to the Wind Down Budget for the immediately preceding week and on a
cumulative basis for the period after the Third Amendment Effective Date and the
percentage variance of the Domestic Loan Parties’ actual results from those
reflected in the then extant Wind Down Budget, along with management’s
explanation of such variance. In preparing such Wind Down Variance Report, the
Lead Borrower may aggregate expenses for “Corporate Office Costs During GOB” and
“DC & Service Costs During GOB” (rather than reporting such expenses on a
line item basis for each such location as reflected in the initial Wind Down
Budget) for (a) payroll and taxes, (b) rents and utilities, and (c) general
operating expenses.
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3.
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Amendment to Article
II. The provisions of Article II of the DIP Credit
Agreement are hereby amended as
follows:
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a.
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Section
2.01(a) of the DIP Credit Agreement is hereby deleted in its entirety and
the following substituted in its
stead:
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“(a) Each
Domestic Lender severally and not jointly with any other Lender, agrees, upon
the terms and subject to the conditions herein set forth, to extend credit to
the Domestic Borrowers, and each Canadian Lender severally and not jointly with
any other Lenders, agrees upon the terms and subject to the conditions herein
set forth, to extend credit to the Canadian Borrower on a revolving basis, in
the form of Revolving Loans and Letters of Credit, subject to the following
limitations:
(i)
Subject to Sections 2.01(a)(iii), (a)(iv), (a)(vi), (a)(vii), 2.21(c) and 5.11
hereof, the aggregate outstanding amount of the Credit Extensions shall not at
any time exceed the lower of (x) (A) prior to February 16, 2009, $900,000,000
(of which $850,000,000 shall be Domestic Commitments and $50,000,000 shall be
Canadian Commitments), (B) from February 16, 2009 through February 27, 2009,
$265,000,000 (of which $225,000,000 shall be Domestic Commitments and
$40,000,000 shall be Canadian Commitments), and (C) thereafter, $140,000,000 (of
which $100,000,000 shall be Domestic Commitments and $40,000,000 shall be
Canadian Commitments); and (y) such lesser amount to which the Total Commitments
have then been decreased by the Borrowers pursuant to Section 2.17
hereof.
(ii)
No Lender shall be obligated to issue any Letter of Credit, and Letters of
Credit shall be available from the Issuing Bank, subject to the ratable
participation of all Lenders, as set forth in Section 2.07; provided that no
Letters of Credit shall be issued or extended for the account of the Domestic
Loan Parties on or after the Third Amendment Effective Date. The Borrowers will
not at any time permit (A) the aggregate Letter of Credit Outstandings with
respect to the Domestic Loan Parties to exceed (i) the aggregate Letter of
Credit Outstandings with respect to the Domestic Loan Parties as of the Third
Amendment Effective Date, minus (ii) all amounts paid by the Issuing Bank with
respect to such Letters of Credit minus (iii) the maximum stated amount of all
such Letters of Credit which expire in accordance with their terms or which are
returned undrawn, minus (iv) the amount of any reduction in the maximum stated
amount of any such Letter of Credit, or (B) the aggregate Letter of Credit
Outstandings with respect to the Canadian Loan Parties to exceed
$20,000,000.
(iii) The
Credit Extensions made to the Domestic Borrowers shall not, as to any Domestic
Lender, exceed such Lender’s Domestic Commitment.
(iv) The
Credit Extensions made to the Canadian Borrower shall not as to any Canadian
Lender, exceed the lesser of such Lender’s Canadian Commitment or such Canadian
Lender’s Commitment Percentage of the Canadian Borrowing Base.
(v) The
Loans made to and the Letters of Credit issued on behalf of, the Canadian
Borrower by the Canadian Lenders may be either in $ or CD$, at the option of the
Canadian Borrower, as herein set forth.
(vi) The
aggregate outstanding amount of Credit Extensions to the Canadian Borrower shall
not at any time exceed the lower of (A) the Canadian Total Commitments or (B)
the amounts available under the Canadian Borrowing Base.
(vii) The
aggregate outstanding amount of Credit Extensions to the Domestic Borrowers
shall not at any time exceed the Domestic Total Commitments.
(viii) No
Lender shall be obligated to make any Credit Extension (A) to the Domestic
Borrowers in excess of such Lender’s Domestic Commitment, or (B) to the Canadian
Borrower in excess of such Lender’s Canadian Commitment.
(ix) Subject
to all of the other provisions of this Agreement, Revolving Loans that are
repaid may be reborrowed by the Domestic Borrowers or Canadian Borrower, as
applicable, prior to the applicable Termination Date.
(x) Notwithstanding
anything to the contrary contained in this Agreement, upon payment in full of
all Revolving Loans made to the Domestic Borrowers, no additional Revolving
Loans shall thereafter be made to the Domestic Borrowers and all Commitments of
the Domestic Lenders to make such Revolving Loans shall be
terminated. Without limiting the foregoing, except as set forth in
Section 2.23(m), the Lenders shall have no obligation to fund any items included
in the Wind Down Budget which have been incurred, accrued or invoiced prior to,
and remain unpaid at the time of, the payment in full of all Revolving Loans
made to the Domestic Borrowers (to the extent and as contemplated in the Wind
Down Budget).
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b.
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Section
2.02 of the Credit Agreement is hereby deleted in its entirety and the
following substituted in its stead:
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SECTION
2.02 Intentionally
Omitted.
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c.
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Section
2.04 of the Credit Agreement is hereby amended by adding the following new
clause (e) at the end thereof:
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“(e) Notwithstanding
anything to the contrary set forth in this Section 2.04 or elsewhere in this
Agreement, on and after the Third Amendment Effective Date, all Loans made to
the Domestic Borrowers shall only be Prime Rate Loans.”
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d.
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Section
2.05 of the Credit Agreement is hereby deleted in its entirety and the
following substituted in its stead:
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SECTION
2.05 Overadvances. The
Agents and the Lenders have no obligation to make any Loan or to provide any
Letter of Credit if an Overadvance or a Canadian Overadvance would result. The
Canadian Agent may, in its reasonable discretion, make Permitted Canadian
Overadvances to the Canadian Borrower without the consent of the Lenders and
each Lender shall be bound thereby. Any Permitted Canadian Overadvances may
constitute Swingline Loans. The making of any Permitted Canadian Overadvance is
for the benefit of the Canadian Borrower; such Permitted Canadian Overadvances
constitute Revolving Loans and Obligations. The making of any such Permitted
Canadian Overadvances on any one occasion shall not obligate the Canadian Agent,
or any Lender to make or permit any Permitted Canadian Overadvances on any other
occasion or to permit such Permitted Canadian Overadvances to remain
outstanding.
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e.
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Section
2.06(b) of the Credit Agreement is hereby amended (i) by deleting “(B) for
Permitted Overadvances or Permitted Canadian Overadvances, as applicable”
in the fourth line thereof and by substituting “(B) for Permitted Canadian
Overadvances” in its stead, (ii) by deleting “(other than Permitted
Overadvances or Permitted Canadian Overadvances, as applicable)” in the
twelfth line thereof and by substituting “(other than Permitted Canadian
Overadvances)” in its stead, and (iii) by deleting “(other than Permitted
Overadvances)” in the seventeenth line
thereof.
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f.
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Section
2.07(a) of the Credit Agreement is hereby deleted in its entirety and the
following substituted in its stead:
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“(a) Upon
the terms and subject to the conditions herein set forth, the Lead Borrower on
behalf of the Domestic Borrowers and the Canadian Borrower for itself, may
request the Issuing Bank or the Canadian Agent in the case of the Canadian
Borrower, at any time and from time to time after the date hereof and (x) with
respect to the Domestic Borrowers, until the Third Amendment Effective Date, and
(y) with respect to the Canadian Borrower, prior to the Termination Date, to
issue or to cause to be issued, and subject to the terms and conditions
contained herein, the Issuing Bank or Canadian Agent in the case of the Canadian
Borrower shall issue or cause to be issued, for the account of the relevant
Borrower one or more Letters of Credit; provided that no
Letter of Credit shall be issued if after giving effect to such issuance (i) the
aggregate Letter of Credit Outstandings with respect to the Domestic Loan
Parties shall exceed (A) the aggregate Letter of Credit Outstandings with
respect to the Domestic Loan Parties as of the Third Amendment Effective Date,
minus (B) all amounts paid by the Issuing Bank with respect to such Letters of
Credit, minus (C) the maximum stated amount of all such Letters of Credit which
expire in accordance with their terms or which are returned undrawn, minus (D)
the amount of any reduction in the maximum stated amount of any such Letter of
Credit, (ii) the aggregate Letter of Credit Outstandings with respect to the
Canadian Loan Parties shall exceed $20,000,000, or (iii) the limitations set
forth in Section 2.10(a) would be exceeded; and provided, further, that no
Letter of Credit shall be issued (A) if the Issuing Bank shall have received
notice from the Administrative Agent or the Canadian Agent, as applicable, or
the Required Lenders that the conditions to such issuance have not been met, (B)
if any order, judgment or decree of any Governmental Authority or arbitrator
shall by its terms purport to enjoin or restrain the Issuing Bank from issuing
such Letter of Credit, or any Applicable Law binding on the Issuing Bank or any
request or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over the Issuing Bank shall prohibit,
or request that the Issuing Bank refrain from, the issuance of letters of credit
or acceptances generally or such Letter of Credit in particular or shall impose
upon the Issuing Bank with respect to such Letter of Credit any restriction,
reserve or capital requirement (for which the Issuing Bank is not otherwise
compensated hereunder) not in effect on the Closing Date, or shall impose upon
the Issuing Bank any unreimbursed loss, cost or expense which was not applicable
on the Closing Date and which the Issuing Bank in good xxxxx xxxxx material to
it (for which the Issuing Bank is not otherwise compensated hereunder), (C) the
issuance of such Letter of Credit would violate one or more policies of the
Issuing Bank applicable to letters of credit generally, (iii) a default of any
Lender’s obligations to fund hereunder exists or any Lender is at such time a
Delinquent Lender or Deteriorating Lender hereunder, unless the Issuing Bank has
entered into arrangements satisfactory to the Issuing Bank with the Borrowers or
such Lender to eliminate the Issuing Bank’s risk with respect to such
Lender.”
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g.
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Section
2.17(a) of the Credit Agreement is hereby deleted in its entirety and the
following substituted in its stead:
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“(a) On
February 16, 2009, the Domestic Commitments shall be automatically and
permanently reduced to $225,000,000, without any further action on the part of
the Agents, the Lenders or the Borrowers. On February 28, 2009, the
Domestic Commitments shall be automatically and permanently further reduced to
$100,000,000, without any further action on the part of the Agents, the Lenders
or the Borrowers. Such reductions shall be applied ratably to the
Domestic Commitments of each Lender. At the effective time of any
such reduction, the Domestic Borrowers shall pay to the Administrative Agent for
application as provided herein (i) all Commitment Fees accrued on the amount of
the Domestic Commitments so reduced through the date thereof, and (ii) subject
to the provisions of Section 2.23(m), any amount by which the Credit Extensions
outstanding on such date exceed the amount to which the Domestic Commitments are
to be reduced effective on such date (and, if, after giving effect to the
prepayment in full of all outstanding Loans such Credit Extensions have not been
so reduced, deposit cash into the applicable Cash Collateral Account in an
amount equal to 103% of the Letters of Credit Outstanding to the extent
necessary in order that the Credit Extensions do not exceed the Domestic
Commitments as so reduced), in each case pro rata based on the
amount prepaid.”
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h.
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The
provisions of Section 2.17(e) of the Credit Agreement are hereby deleted
in their entirety.
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i.
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Section
2.20(a) of the Credit Agreement is hereby deleted in its entirety and the
following substituted in its stead:
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“(a) (i) Intentionally
Omitted.
(ii) If
at any time the amount of the Credit Extensions to the Canadian Borrower exceeds
the lower of (i) the then amount of the Canadian Total Commitments, and (ii) the
amounts available under the Canadian Borrowing Base, including, without
limitation, as a result of one or more fluctuations in the exchange rate of the
CD$ against the dollar, the Canadian Borrower will immediately upon notice from
the Administrative Agent prepay such Loans in an amount necessary to eliminate
such excess.
(iii) Subject
to Section 5.11 hereof, if at any time the amount of the Credit Extensions to
the Domestic Borrowers exceeds the then amount of the Domestic Total
Commitments, the Domestic Borrowers will immediately upon notice from the
Administrative Agent prepay such Loans in an amount necessary to eliminate such
excess.
(iv) Notwithstanding
anything in this Agreement or the Wind Down Budget to the contrary, the amount
of the outstanding Credit Extensions to the Canadian Borrower shall not be
required to be repaid by the Domestic Borrowers or from the proceeds from the
disposition or liquidation of their assets until such time as all Domestic
Obligations (other than Domestic Obligations arising from Canadian Liabilities)
have been paid in full and/or cash collateralized.
Without
in any way limiting the foregoing provisions, the Administrative Agent shall,
weekly or more frequently in the Administrative Agent’s sole discretion, make
the necessary Dollar Equivalent calculations to determine whether any such
excess exists on such date.”
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j.
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Section
2.23 of the Credit Agreement is hereby amended by adding the following new
clause (m) at the end thereof:
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(m) Notwithstanding
anything to the contrary herein contained, the “Ending Cash Balance” reflected
in the initial Wind Down Budget (adjusted to reflect the actual cash and not the
amounts projected in such Wind Down Budget, and increased by the amount of the
Credit Extensions to the Canadian Borrower outstanding on January 24, 2009)
shall be deposited in the Cash Collateral Account established for the Domestic
Borrowers referred to in this Agreement as the “Circuit City Cash Collateral
Account” as collateral for the Letter of Credit Outstandings related to the
Domestic Borrowers and the Canadian Liabilities, provided that, to the extent
that expenses included in the initial Wind Down Budget are not paid at the times
projected in the Wind Down Budget but are required to be paid on or before
February 28, 2009, such portion of the “Ending Cash Balance” so deposited in the
Cash Collateral Account shall be transferred by the Collateral Agent, upon the
request of the Lead Borrower, to the Lead Borrower’s disbursement account for
the payment of such expenses; provided further that the
Collateral Agent shall not be obligated to so release or transfer funds in the
Cash Collateral Account, if, after giving effect thereto, less than $10,000,000
shall remain on deposit in the Cash Collateral Account. In connection with any
such request, the Lead Borrower shall contemporaneously certify to the
Collateral Agent the expenses to be paid with any amounts so
transferred. In no event shall the Collateral Agent or the Lenders
have any obligation to release any amounts in the Cash Collateral Account after
February 28, 2009 whether for the purpose of funding any items included in the
Wind Down Budget which have been incurred, accrued or invoiced prior to, and
remain unpaid, or otherwise. From and after March 1, 2009 any amounts
in the Cash Collateral Account (whether deposited prior to or after March 1,
2009) may not be used by the Loan Parties, except (i) as the Lead Borrower, the
Collateral Agent and the Required Consenting Lenders may agree, (ii) in
accordance with a further order of the US Bankruptcy Court, or (iii) to
reimburse the Issuing Bank for any amounts drawn and paid on account of such
Letters of Credit or in payment of any Canadian Liabilities; provided that the amounts in
the Cash Collateral Account shall first be utilized to cash collateralize and
repay the Letter of Credit Outstandings related to the Domestic Borrowers prior
to payment on account of the Canadian Liabilities, and further provided that the right of
the Loan Parties to seek an order from the Bankruptcy Court to utilize the
amounts at any time on deposit in the Cash Collateral Account shall not be
deemed to constitute a modification or waiver of, or extension of time set forth
in, any provision of this Agreement, the Final Borrowing Order, or any other
Loan Document which requires the Loan Parties to cash collateralize and/or repay
the Letters of Credit Outstanding or other Obligations, each of which provisions
remain in full force and effect as written.
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4.
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Amendment to Article
III. The provisions of Article III of the DIP Credit
Agreement are hereby amended as
follows:
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a.
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Section
3.04 of the DIP Credit Agreement is hereby amended by inserting “Except
for transactions evidenced by the 2009 Agency Agreement” at the beginning
thereof.
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b.
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Section
3.09 of the DIP Credit Agreement is hereby amended by inserting “To the
extent set forth in the Budget and the Wind Down Budget” at the beginning
thereof.
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c.
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Section
3.11 of the DIP Credit Agreement is hereby amended by adding “Wind Down
Budgets,” after “Budgets,” in the second line
thereof.
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5.
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Amendment to Article
IV. The provisions of Article IV of the DIP Credit
Agreement are hereby amended by deleting Section 4.02(e) in its entirety
and by substituting the following in its
stead:
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“(e) Wind Down Certificate;
Canadian Borrowing Base Certificate. The Administrative Agent
shall have received the most recently required Wind Down Certificate or Canadian
Borrowing Base Certificate, as applicable, with each such Wind Down Certificate
or Borrowing Base Certificate, as applicable, including schedules as required by
this Agreement.
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6.
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Amendments to Article
V. The provisions of Article V of the DIP Credit
Agreement are hereby amended as
follows:
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a.
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Section
5.01 of the DIP Credit Agreement is hereby deleted in its entirety and the
following substituted in its stead:
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SECTION
5.01 Financial Statements and
Other Information.
(a) The
Borrowers will furnish to the Administrative Agent for further distribution to
the Lenders, promptly after the same become publicly available, copies of all
reports on Form 8-K filed by the Lead Borrower with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all of the
functions of said Commission, or with any national securities exchange, as the
case may be.
(b) The
Borrowers will furnish to the Administrative Agent (for further distribution to
the Lenders) and the Co-Collateral Agent:
(i) On
Wednesday of each week (or, if Wednesday is not a Business Day, on the next
succeeding Business Day), (A) a Variance Report, and (B) a Wind Down Variance
Report; and
(ii) On
the 10th day of
each calendar month (or, if such day is not a Business Day, on the next
succeeding Business Day), an updated Budget; and
(iii) Daily,
a certificate substantially in the form of Exhibit D-1 (a “Wind Down
Certificate”), certified as complete and correct in all material respects
on behalf of the Lead Borrower by a Financial Officer of the Lead Borrower, (a)
showing (i) the Cost Value of Merchandise (as each of such terms are defined in
the 2009 Agency Agreement) as of the close of business on the immediately
preceding day, (ii) the daily sales tracking sheet showing gross proceeds
relating to Merchandise sales under the Agency Agreement as of the
close of business on the immediately preceding day, (iii) the aggregate
outstanding amount of Credit Extensions of the Domestic Borrowers as of the
close of business on the immediately preceding day, (iv) a calculation of the
Loan to Value Ratio as of such date (notwithstanding that the Loan to Value
Ratio is not tested on such date under Section 6.14 hereof), and (b) certifying,
to the best knowledge of such Financial Officer, as to whether a Default has
occurred and, if a Default has occurred, specifying the details thereof and any
action taken or proposed to be taken with respect thereto; and
(iv) Daily,
a certificate substantially in the form of Exhibit D-2 (a “Canadian Borrowing Base
Certificate”) showing the Canadian Borrowing Base as of the close of
business on the immediately preceding day, each Canadian Borrowing Base
Certificate to be certified as complete and correct in all material respects on
behalf of the Canadian Borrower by a Financial Officer of the Lead Borrower;
provided that the amount of Eligible Inventory shall be required to be updated
only weekly; and
(v) on
or before February 18, 2009, an updated Wind Down Budget for such period as the
Agent may reasonable require; and
(vi) On
Friday of each week (or, if Friday is not a Business Day, on the next succeeding
Business Day), a copy of the Weekly Sale Reconciliation (as defined in the 2009
Agency Agreement); and
(vii) after
the occurrence and during the continuance of an Event of Default, promptly upon
receipt thereof, copies of all reports submitted to the Lead Borrower by
independent certified public accountants in connection with each annual, interim
or special audit of the books of the Lead Borrower and its Subsidiaries made by
such accountants, including any management letter submitted by such accountants
to management in connection with their annual audit, but excluding any
accountant “agreed upon procedures” report; and
(viii) promptly
after the furnishing or filing thereof, copies of any statement, report or
pleading furnished to or filed with the US Bankruptcy Court, the Canadian
Bankruptcy Court or the Creditors’ Committee in connection with the Cases,
including, without limitation, all Monitor’s reports in the Canadian Bankruptcy
Case; provided that the receipt of such documents by counsel to the
Administrative Agent and the Co-Collateral Agent in accordance with normal
noticing provisions and practices under the Bankruptcy Code or the CCAA shall
satisfy this requirement; and
(ix) promptly
after receipt thereof, copies of all reconciliations with respect to the Initial
Store Closing Sale; and
(x) promptly
following any reasonable request therefor, such other information regarding the
operations, business affairs and financial condition of any Loan Party, or
compliance with the terms of any Loan Document, as the Administrative Agent or
any Lender may reasonably request.
Documents
required to be delivered pursuant to Section 5.01 may be
delivered electronically and, if so delivered, shall be deemed to have been
delivered on the date (i) on which the Lead Borrower posts such documents, or
provides a link thereto on the Lead Borrower’s website on the Internet at the
website address listed on Schedule 5.01(B); or
(ii) on which such documents are posted on the Lead Borrower’s behalf on an
Internet or intranet website, if any, to which each Lender and the
Administrative Agent have access (whether a commercial, third-party website or
whether sponsored by the Administrative Agent); provided that: (i)
the Lead Borrower shall deliver paper copies of such documents to the
Administrative Agent or any Lender that requests the Lead Borrower to deliver
such paper copies until a written request to cease delivering paper copies is
given by the Administrative Agent or such Lender and (ii) the Lead Borrower
shall notify the Administrative Agent and each Lender (by telecopier or
electronic mail) of the posting of any such documents and provide to the
Administrative Agent by electronic mail electronic versions (i.e., soft copies) of
such documents. The Administrative Agent shall have no obligation to
request the delivery or to maintain copies of the documents referred to above,
and in any event shall have no responsibility to monitor compliance by the Loan
Parties with any such request for delivery, and each Lender shall be solely
responsible for requesting delivery to it or maintaining its copies of such
documents.
The Loan
Parties hereby acknowledge that (a) the Administrative Agent will make available
to the Lenders and the Issuing Banks materials and/or information provided by or
on behalf of the Loan Parties hereunder (collectively, “Borrower Materials”)
by posting the Borrower Materials on IntraLinks or another similar electronic
system (the “Platform”) and (b)
certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do
not wish to receive material non-public information with respect to the Loan
Parties or their securities) (each, a “Public
Lender”). The Loan Parties hereby agree that they will use
commercially reasonable efforts to identify that portion of the Borrower
Materials that may be distributed to the Public Lenders and that (w) all such
Borrower Materials shall be clearly and conspicuously marked “PUBLIC” which, at
a minimum, shall mean that the word “PUBLIC” shall appear prominently on the
first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Loan Parties
shall be deemed to have authorized the Administrative Agent, the Issuing Banks
and the Lenders to treat such Borrower Materials as not containing any material
non-public information (although it may be sensitive and proprietary) with
respect to the Loan Parties or their securities for purposes of United States
Federal and state securities laws; (y) all Borrower Materials marked “PUBLIC”
are permitted to be made available through a portion of the Platform designated
“Public Investor”; and (z) the Administrative Agent shall be entitled to treat
any Borrower Materials that are not marked “PUBLIC” as being suitable only for
posting on a portion of the Platform not designated “Public
Investor.”
|
b.
|
Section
5.03(a) of the DIP Credit Agreement is hereby amended by deleting “with
the delivery of the financial statements required pursuant to Section
5.01(a)(i) hereof” in the eleventh line
thereof.
|
|
c.
|
Section
5.05 of the DIP Credit Agreement is hereby amended by adding “and to the
extent set forth in the Budget and Wind Down Budget” after “Effect of
Bankruptcy” in the first line
thereof.
|
|
d.
|
Section
5.09(b) of the DIP Credit Agreement is hereby amended by deleting “provided that
if, commencing five months after the Petition Date, Excess Availability is
not less than (x) 35% of the lesser of the Total Commitments or the
Borrowing Base for five consecutive Business Days or (y) 25% of the lesser
of the Total Commitments or the Borrowing Base at any time, Inventory
appraisals will only be undertaken on a quarterly basis”
therefrom.
|
|
e.
|
Section
5.11 of the DIP Credit Agreement is deleted in its entirety and the
following substituted in its stead:
|
SECTION
5.11 Use of Proceeds and Letters
of Credit. The proceeds of Loans made hereunder to the
Canadian Borrower and Letters of Credit issued hereunder for the account of the
Canadian Borrower will be used only (a) to finance the acquisition of working
capital assets of the Borrowers, including the purchase of inventory and
equipment in the ordinary course of business, (b) to finance capital
expenditures of the Canadian Borrower, (c) to pay fees, costs and expenses in
connection with the transactions contemplated hereby, and to the extent approved
by the Bankruptcy Courts and as set forth in the DIP Orders and the Initial
Order, in connection with the Cases, (d) for other payments permitted to be made
by the DIP Orders, the Initial Order and any other order of the US Bankruptcy
Court or Canadian Bankruptcy Court, and (e) for general corporate purposes, in
each case to the extent expressly permitted under Applicable Law, the Loan
Documents, the DIP Orders, the Initial Order and in accordance with the Budget,
subject to Section 5.17. On and after the Third Amendment Effective
Date, the proceeds of Loans made hereunder to the Domestic Borrowers will be
used only to pay expenses of the Domestic Borrowers as set forth in the Wind
Down Budget, subject to Section 5.17, to pay fees, costs, expenses and interest
with respect to the Obligations and to fund any drawings under any Letters of
Credit from January 17, 2009 until the earlier of the Termination Date and such
time as the Lenders cease making Loans pursuant to Section 2.01(a)(x)
hereof. No part of the proceeds of any Loan will be used, whether
directly or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board, including Regulations U and X.
|
f.
|
Section
5.16 of the DIP Credit Agreement is hereby amended by adding “and the Wind
Down Budget” after “the Budget” in the fourth line
thereof.
|
|
g.
|
Section
5.17 of the DIP Credit Agreement is hereby deleted in its entirety and the
following substituted in its stead:
|
SECTION
5.17 Performance Within Budget
and Wind Down Budget.
(a) The
Domestic Borrowers shall perform in accordance with the Wind Down Budget with
respect to the following: (i) the Domestic Borrowers’ cumulative total cash
expenditures (other than those described in clause (ii) below) shall not be
greater than 100% of the projected cumulative total amount set forth in the Wind
Down Budget, and (ii) the Domestic Borrower’s cumulative cash expenditures
reflected in the Wind Down Budget with respect to customer rebates, customer
deposits and gift cards (A) shall not exceed the lesser of (x) the projected
total amounts for such cumulative expenditures set forth in the Wind Down Budget
and (y) the cumulative amounts actually presented by customers of the Domestic
Borrowers for payment with respect to such line items, and (B) to the extent not
fully paid as projected in the Wind Down Budget, shall not be utilized by the
Domestic Borrowers to pay other expenses or to make other disbursements whether
set forth in the Wind Down Budget or otherwise. The covenant
described in clause (i) shall be tested each week, as of Friday of the
immediately preceding week, pursuant to the Wind Down Variance Report delivered
by the Lead Borrower to the Administrative Agent hereunder.
(b) The
total cash expenditures of the Canadian Borrower shall not be greater than 110%
of the projected total amount set forth in the Budget, as tested each week
pursuant to the Variance Report delivered by the Canadian Borrower to the
Administrative Agent on Wednesday of each week for the immediately preceding
week, on a four (4) week trailing basis.
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h.
|
Section
5.18(e) of the DIP Credit Agreement is hereby deleted in its entirety and
the following substituted in its
stead:
|
(e) Intentionally
Omitted.
|
7.
|
Amendments to Article
VI. The provisions of Article VI of the DIP Credit
Agreement are hereby amended as
follows:
|
|
a.
|
The
provisions of Section 6.06(b) of the DIP Credit Agreement are hereby
amended by adding “and the approved Wind Down Budget” after “the approved
Budget” in clause (v) thereof.
|
|
b.
|
The
provisions of Section 6.08 of the DIP Credit Agreement are hereby amended
by adding “the 2009 Agency Agreement,” after “Material Contracts” in the
sixth line thereof.
|
|
c.
|
The
following new Sections 6.14 and 6.15 are hereby added to the DIP Credit
Agreement:
|
SECTION
6.14 Loan to Value
Ratio. From the Third Amendment Effective Date through
February 28, 2009, the Borrowers shall not permit the ratio (the “Loan to Value Ratio”)
of (i) the sum of (A) 70.5% of the Cost Value of the then remaining Merchandise
(as each of those terms is defined in the 2009 Agency Agreement) plus (B) the
“Ending Cash Balance” reflected in the initial Wind Down Budget (adjusted to
reflect the actual cash and not the amounts projected in such Wind Down Budget)
to (ii) the outstanding Credit Extensions to or for the account of the Domestic
Borrowers to be less than 1.50:1.00. The Loan to Value Ratio covenant
shall be tested on Saturday of each week as of the end of the immediately
preceding week.
SECTION
6.15 Credit
Extensions. The Borrowers shall not permit the outstanding
Credit Extensions as of the end of any week to be in excess of the aggregate
amount of such Credit Extensions outstanding as of Saturday of the immediately
preceding week.
|
8.
|
Amendment to Article
VII. The provisions of Article VII of the DIP Credit
Agreement are hereby amended as
follows:
|
|
a.
|
The
provisions of Section 7.01 of the DIP Credit Agreement are hereby amended
by adding the following new clause (z) at the end
thereof:
|
“(z) any
Loan Party that is party to the 2009 Agency Agreement shall fail to observe or
perform materially any covenant, condition or agreement set forth therein, which
failure continues for a period of five (5) Business Days, or the Agent (as
defined in the 2009 Agency Agreement) fails to make any payment to the Loan
Parties under the 2009 Agency Agreement in an amount in excess of the then
amount available to be drawn under the Agent Letter of Credit (as defined in the
Agency Agreement) as and when due thereunder;”
|
b.
|
The
provisions of Section 7.04(a) of the DIP Credit Agreement are hereby
amended by deleting clause ELEVENTH thereof in its entirety and by
substituting the following in its
stead:
|
“ELEVENTH,
to the Lead Borrower for distribution to the Loan Parties, their successors or
assigns, or as a court of competent jurisdiction may otherwise
direct.”
|
9.
|
Amendment to
Exhibits. Exhibits D-1 (Form of Domestic Borrowing Base
Certificate) and E (Form of Notice of Borrowing for Domestic Borrowers) to
the DIP Credit Agreement are hereby deleted in their entirety and the
Exhibits D-1 and E attached hereto substituted in their
stead.
|
|
10.
|
Amendment to
Schedules. Schedule 1.1 (Lenders and Commitments) to the
DIP Credit Agreement is hereby deleted in its entirety and the Schedule
1.1 attached hereto substituted in its
stead.
|
|
11.
|
Permitted
Sale. The Agents and the Required Lenders hereby
acknowledge and agree that the sale of the inventory and furniture,
fixtures and equipment located at 567 of the Domestic Borrowers’ retail
store locations and distribution centers pursuant to the 2009 Agency
Agreement, as approved by the US Bankruptcy Court pursuant to that certain
Order Approving Agency Agreement, Store Closing Sales and Related Relief
by the US Bankruptcy Court dated January 16, 2009, is a Permitted Sale
under the DIP Credit Agreement.
|
|
12.
|
Utilities
Reserve. The Agent, the Required Lenders and the
Borrowers agree that the Availability Reserve in the amount of $5,000,000
imposed under the Borrowing Base pursuant to that certain consent and
first amendment dated December 4, 2008 among the Agent, the Required
Lenders and the Borrowers is hereby eliminated and that, upon satisfaction
of the condition precedent set forth in Section 14(e) below, the Agent
shall fund the Utility Blocked Account in the amount of
$5,000,000.
|
|
13.
|
Waiver. The
Required Lenders hereby waive, effective as of the Third Amendment
Effective Date, any Default and/or Event of Default that may have occurred
as a result of the Borrowers’ failing to comply with Section 5.18 of the
DIP Credit Agreement with respect to the consummation of a sale or
disposition of the Domestic Borrowers’ assets within the time frame set
forth in Section 5.18, any breach of the representations and warranties
set forth in Sections 3.04, 3.09 and 3.11 relating thereto, and, in each
case, any other Default and/or Event of Default arising directly as a
result thereof. The foregoing waiver relates to the Defaults or
Events of Default as set forth in this Section 13 only and shall not be
deemed a continuing waiver of any other Default or Event of Default under
the DIP Credit Agreement.
|
|
14.
|
Conditions to
Effectiveness. This Third Amendment shall not be
effective until each of the following conditions precedent have been
fulfilled or waived to the satisfaction of the
Agents:
|
|
a.
|
This
Third Amendment shall have been duly executed and delivered by the Loan
Parties, the Agents and the Required Lenders. The
Administrative Agent shall have received a fully executed copy hereof and
of each other document required
hereunder.
|
|
b.
|
All
action on the part of the Loan Parties necessary for the valid execution,
delivery and performance by the Borrowers of this Third Amendment shall
have been duly and effectively
taken.
|
|
c.
|
After
giving effect to this Third Amendment, no Default or Event of Default
shall have occurred and be
continuing.
|
|
d.
|
The
US Bankruptcy Court shall have entered an amendment to the Final Borrowing
Order and the Canadian Bankruptcy Court shall have entered an order
approving the terms and conditions of this Third Amendment in substance
reasonably satisfactory to the Administrative
Agent.
|
|
e.
|
The
US Bankruptcy Court shall have entered an amendment to the Utilities Order
in substance reasonably satisfactory to the Administrative Agent, which
amendment shall provide that, upon the funding of the Utility Blocked
Account by the Administrative Agent as set forth in Section 12 above, the
Agent and the Lenders shall be released of any further obligation with
respect to the Utility Blocked Account, including without limitation, any
funding or replenishment thereof.
|
|
15.
|
Miscellaneous.
|
|
a.
|
Except
as provided herein, all terms and conditions of the DIP Credit Agreement
and the other Loan Documents remain in full force and
effect. The Borrowers each hereby ratify, confirm, and reaffirm
(after giving effect to this Third Amendment) all of the representations,
warranties and covenants therein
contained.
|
|
b.
|
The
Borrowers shall pay all reasonable out-of-pocket costs and expenses
incurred by the Agent in connection with this Third Amendment, including,
without limitation, all reasonable attorneys’ fees, in each case in
accordance with the terms of the DIP Credit
Agreement.
|
|
c.
|
This
Third Amendment may be executed in several counterparts and by each party
on a separate counterpart, each of which when so executed and delivered,
each shall be an original, and all of which together shall constitute one
instrument. Delivery of an executed counterpart of a signature
page hereto by telecopy or electronic delivery shall be effective as
delivery of a manually executed counterpart
hereof.
|
|
d.
|
This
Third Amendment expresses the entire understanding of the parties with
respect to the matters set forth herein and supersedes all prior
discussions or negotiations hereon.
|
|
e.
|
Upon
satisfaction or waiver of the conditions precedent set forth in Section 14
above, this Third Amendment shall be deemed to be effective as of January
17, 2009.
|
|
f.
|
For
the avoidance of doubt, it is understood and agreed that the effectiveness
of this Third Amendment shall not be deemed an approval by the Canadian
Bankruptcy Court of the Second
Amendment.
|
IN
WITNESS WHEREOF, the parties hereto have caused this Third Amendment to be
executed and their seals to be hereto affixed as the date first above
written.
CIRCUIT
CITY STORES, INC.,
(“Lead
Borrower”)
By_________________________________
Print
Name:__________________________
Title:_______________________________
“The
Borrowers”
CIRCUIT
CITY STORES WEST COAST, INC.
By_________________________________
Print
Name:_________________________
Title:_______________________________
CIRCUIT
CITY STORES PR, LLC
By_________________________________
Print
Name:__________________________
Title:_______________________________
INTERTAN
CANADA LTD.
By_________________________________
Print
Name:__________________________
Title:_______________________________
BANK OF
AMERICA, N.A.
By_________________________________
Print
Name:__________________________
Title:_______________________________
BANK OF
AMERICA, N.A. (acting through its Canada branch)
By_________________________________
Print
Name:__________________________
Title:_______________________________
WACHOVIA
CAPITAL FINANCE CORPORATION (CENTRAL)
By_________________________________
Print
Name:__________________________
Title:_______________________________
GENERAL
ELECTRIC CAPITAL CORPORATION
By_________________________________
Print
Name:__________________________
Title:_______________________________
JPMORGAN
CHASE BANK, N.A.
By_________________________________
Print
Name:__________________________
Title:_______________________________
NATIONAL
CITY BUSINESS CREDIT, INC.
By_________________________________
Print
Name:__________________________
Title:_______________________________
GMAC
COMMERCIAL FINANCE, LLC
By_________________________________
Print
Name:__________________________
Title:_______________________________
XXXXX
FARGO RETAIL FINANCE, LLC
By_________________________________
Print
Name:__________________________
Title:_______________________________
BURDALE
FINANCIAL, LTD.
By_________________________________
Print
Name:__________________________
Title:_______________________________
FIFTH
THIRD BANK
By_________________________________
Print
Name:__________________________
Title:_______________________________
TEXTRON
FINANCIAL CORPORATION
By_________________________________
Print
Name:__________________________
Title:_______________________________
SUNTRUST
BANK
By_________________________________
Print
Name:__________________________
Title:_______________________________
UPS
CAPITAL CORPORATION
By_________________________________
Print
Name:__________________________
Title:_______________________________
XXXXXXX
BUSINESS CREDIT CORPORATION
By_________________________________
Print
Name:__________________________
Title:_______________________________
PNC BANK,
N.A.
By_________________________________
Print
Name:__________________________
Title:_______________________________
UBS LOAN
FINANCE LLC
By_________________________________
Print
Name:__________________________
Title:_______________________________
CAPITAL
ONE LEVERAGE FINANCE CORP.
By_________________________________
Print
Name:__________________________
Title:_______________________________
1129567.7
